Open vs. Closed Sector Careers and What That Means for Consulting

Forrest ChristianOrganizations 2 Comments

Beneviste, Guy. “Survival inside bureaucracy”. In Markets, Hierarchies & Networks, ed. by G. Thompson, J. Frances, R. Levačić & J. Mitchell. London: SAGE Publications, 1991 [1977], pp. 141-

Closed sector careers take place either in a single organization or in other organizations that are similar. Knowledge and experience with the organization or the sector are of first importance. Transfers from organizations in other fields of endeavor in different sectors occurs only in rare instances. Once an individual initiates a career in such sectors as cinema, education, the military, banking and so on, the experience is most valued in the same area. A person may go from sales to production to assistant director for R&D to general manager. Moreover, in many such closed sector careers, career paths are strongly determined by the status of the initial appointment location. If one is first appointed as an assistant professor in an unknown junior college, the probability of ever being appointed in a large university is low; but if one is first appointed at Columbia, there is a higher probability that one may end as a full professor at Harvard.

Open sector careers are skill-oriented. It is not the sector that matters (banking, edcuation), but the kind of work performed. If one is a specialist in control system design or in public relation, the specialization may take one to different kinds of organizations as one acquires renown in the skill or profession: ‘This person is very good; she worked with the teachers’ union — got the in order and then went to . . .’

The level one occupies within an organization is related to the nature of the skill: ‘She is a top-notch personell manager — has a background in government service but worked several years with a private utility . . .’ Certain skills permit upward mobility within organizations: ‘He started as a production troubleshooter for an electric firm, later became a negotiator in international sales and, ultimately, became their lobbyist in Washington, DC . . .’

Location-dominated careers are controlled by desirable locations [e.g, city, state, region]. It is not the sector or skill that matters. The relevant progression is from less desirable to more desirable locations…

Several things on this:

If your first appointment in a Closed-Sector Career matters, it may be used as a proxy for capability. I may assume that you are low-capability because you were hired as on the shopfloor even though you are quite clearly more complex than your co-workers or boss. Likewise, if you are hired into a managerial position, I will assume that you have the complexity to advance according to the same rate I advanced. This lets me off the hook for personally evaluating you as a subordinate, and thereby not have to do one of the key elements of management.

This means that if you came into an organization at a low level, you will have to leave it to move up. Also, when people ask for your salary requirements, give a number that is bigger than you think that you would ever get. Ed, the guy who owned by house before I bought it from him, got a job in Florida this way. His in-laws live down there and wanted the grandkids nearby, so his father-in-law arranged for a interview with a trucking company. (Ed did logistics.) Ed was making $35k, barely able to make ends meet with the surprise second baby. After the interview, the company said, “We want you. What will it take to get you down here?” Ed thought about all the trouble that this would cause, with moving and all, and gave them a number he knew that they would refuse: “$115,000,” he said. Done. He’d left $20k on the table. But by coming in at a worthwhile rate, he not only raised his standard of living and allowed his wife to not work and stay home with the babies, he put himself into a position to move ahead.

Second point that interests me stems from my work in Insurance (Closed-Sector) but within Software Development (Open Sector). Insurance companies rarely if ever hire IT personnel from outside. They don’t go looking for great programmers with experience in another industry, if they ever even hire someone from another insurance company. In Development, you move from company to company as opportunities for your now advancing skills come available. But that won’t happen. So the career market that is standard for Developers doesn’t happen within the Insurance industry. They won’t hire a CIO from another industry, even finance and banking. Instead, they “promote” a non-computer person to the position and expect them to competently run the department. This is made worse because all Developers in the Insurance Company must come in at the entry level and work their way up. Since IT is considered blue-collar work, they cannot get promoted, nor will their functions be compensated properly, even if they are working with long Time-Spans of Discretion. Progressive may be the odd-man-out here.

This means that it is vitally important where you come into an insurance or banking organization. If you come in to consult to Level 2 of 7, you aren’t going to be consulting much higher than that. Ever.

Comments 2

  1. Post

    Nope, I really just read this and thought of INFOSEC and one of the guys there. But it does seem to be applicable to your situation. You are unlikely to move up, if this still holds true. I think that it does for most banks and insurance companies. High-performing organizations always prefer to hire and promote from within.

  2. Let me guess, this started out as a personal email to me, but since you’d invested the time in writing so much, you went ahead and posted it.

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