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Tuesday, August 30, 2005

The Disappearing Corporate Ladder

Paul Graham writes, "In the past there existed a corporate ladder. In the past, a position on the corporate ladder was genuinely valuable, because big companies tried not to fire people, and promoted from within based largely on seniority. A position on the corporate ladder had a value analogous to the "goodwill" that is a very real element in the valuation of companies. It meant one could expect future high paying jobs. One of main causes of the decay of the corporate ladder is the trend for takeovers that began in the 1980s. Why waste your time climbing a ladder that might disappear before you reach the top?

That's less the rule now. Our generation wants to get paid up front. Instead of developing a product for some big company in the expectation of getting job security in return, we develop the product ourselves, in a startup, and sell it to the big company. At the very least we want options. The corporate ladder was one of the reasons the early corporate raiders were so successful. It's not only economic statistics that ignore the value of safe jobs. In the new model, it seems a bad plan to treat jobs as rewards. Plenty of good engineers got made into bad managers that way. And the old system meant people had to deal with a lot more corporate politics, in order to protect the work they'd invested in a position on the ladder.The big disadvantage of the new system is that it involves more risk. If you develop ideas in a startup instead of within a big company, any number of random factors could sink you before you can finish. For better or worse, the idea of the corporate ladder is probably gone for good. The new model seems more liquid, and more efficient. But it is less of a change, financially, than one might think.

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