The Story Behind the TechCo Map

What specifically can be learned from the TechCo map shown in Figure 5-1? Quite a bit. First, it can be seen that the employee population bulges near the middle. Highly hierarchical companies are shaped like pyramids, with a handful of people at the top and more and more people filling each lower career level. This is true of TechCo within the leadership levels of the organization, levels 4 and above, but not below.

• The map reveals a large population (of engineers) congregated in level 3. Level 3 is a career bottleneck or “choke point.” As the percentages associated with the upward arrows indicate, employees at levels 1 and 2 have a high probability of promotion. The probability of moving beyond level 3 in a particular period (a year in this case), however, is low: 5.8 percent. It is even lower for engineers.

• Level 3 employees are leaving in large numbers. On average, almost 20 percent of employees at this level left the organization each year during the period in question.

• TechCo’s hiring practices are at odds with the need for firm-specific knowledge. How does the analyst know this? The ILM map indicates that the largest number of outside hires occurred at level 3, but a substantial percentage of new hires were coming into the management ranks at levels 4 and 5. By definition, those individuals arrived without the firm-specific knowledge, on which the company depends. Clearly the company is not developing its managerial talent from within.