Ownership path? Not impressed...
My, how times have changed. When I was a kid just starting my career, being offered partnership in the firm was a coveted opportunity, an important milestone indicating that all of the hard work you put in to developing your craft was really starting to pay off in big ways. I remember the day the offer was made to me - I was 34 and I couldn't say yes fast enough.
Things today, however, are a little different. The partnership track doesn't hold the same allure for many younger workers as it once did.
A recent study by Investment News found that only 36% of young people planning to enter the financial advisory business ranked an ownership path as one of their top three incentives that a firm could offer. Flexible hours, cutting-edge technology, and bonuses were ranked as more important than ownership opportunities.
Within the legal field, making partner isn't necessarily the golden ticket it once was. Robin Sparkman, Editor in Chief of The American Lawyer, says that not only does today's path to partner take longer, the demands are a lot more stringent. Many younger attorneys are thinking twice before making that kind of commitment to one firm.
Legal and financial advisory services may not be the only sectors affected. The Bureau of Labor Statistics estimates that the average worker today stays at his job for only 4.4 years. The average tenure is expected to be even shorter for Millennials. A survey conducted by Future Workplace found that among those born between 1977 and 1997, 91% expect to stay in a job for less than three years.
With less concern about long-term stability, less emphasis on long-term loyalty to one company, and a greater interest in building a career that provides fulfillment and stays true to personal values, saying no to partnership opportunities may be a growing trend.
This could pose some problems for the standard exit strategy for current business owners and partners. While they may want to sell to the next generation, the next generation may not be buying. According to Marjorie Fox of Fox Joss & Yankee, "we've talked in concept with some of our folks about passing on the reins over the next 10 years or so, and we've gotten a little push-back."
Succession planning is never easy. Senior partners may be reluctant to acknowledge that they're approaching the next phase of their lives. Handing over control of something you've worked your whole adult life to create can feel like a daunting task. It's even more difficult when the person you've chosen to pass the torch to doesn't extend his hand to receive it.
But the growing trend of choosing "employee" over "owner" may have an upside. According to Patrick Hammer, President of HFS Wealth Advisors, "it's important that we know what we're good at and what we're not good at, and some people would be bad at being a manager or owner." This self-selection may lead to a future generation of leaders that truly understands the great risks and responsibilities of ownership and is ready to rise to the challenge. It may mean that when the reins do get passed, they will be in the most capable hands possible.
Whether we view it as good or bad, we have to face the fact that workplaces are changing. Our total rewards strategies - and succession plans - must recognize that younger workers may say "thanks but no thanks" to equity compensation and the ownership path. They're not easily impressed with traditional rewards...
Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals.