It’s no exaggeration to say that class plays an important role in whether people become executives. In fact, research shows that a worker with a working-class background is more than 30% less likely to be hired into a managerial position than his middle-class peers. It’s no surprise that only 12% of CEOs come from working-class backgrounds.
But that’s not always the case, according to research from the Ludwig-Maximilians-Universität Munich.
divide the conference room
Researchers analyzed more than 1,500 German companies (and their CEOs) to see if different industries have different boardroom social classes. The data reveals that he has four types of CEOs.
- Established Elite CEO – These fit the stereotype the most, having a high level of education and household income. They also came from families with prestigious jobs and were much wealthier than the average CEO household.
- middle class CEO – These are from more average family backgrounds, both in terms of household income and level of education.
- CEO moving upwards – Primarily, he was able to move up through the class system as a result of his higher educational background than not only his parents but also the average CEO.
- working class CEO – A person who grew up in a family with minimal social, cultural, or economic capital.
“Collapsing individuals with different educational backgrounds and incomes into one homogeneous CEO class (the ‘elite’) obscures potential differences among CEOs,” the researchers explain. “We argue that the social class of CEOs can only be understood when considering both their family background and the current resources (income and education) at their disposal.”
However, sectors such as finance, real estate and insurance scored particularly poorly, and social mobility potential was lacking even in various industries. In contrast, the IT and engineering sector was much more accessible to those from working-class backgrounds.
Recruitment and onboarding
Researchers believe that these differences are most likely driven by the different recruitment and onboarding practices deployed by organizations, with the financial sector being heavily influenced by the social class of individuals. If companies recruited using less elitist criteria, they believe the pool of available talent would be less limited.
“The first step is to embrace diversity when it comes to hiring and recruiting staff,” the researchers explained. Although it has become very important, it also includes other factors that can potentially contribute to discrimination, such as social background. ”
A good first step is to make managers and recruiters aware of the need for class diversity first, so that talent-related decisions are made with this in mind.
“For your organization, for your hiring and development programs, don’t let the ‘elitist standards’ of your potential new hires be the determining factor in who succeeds or not. That’s the key point of this study,” the researchers explained. I still find this important, even though it shouldn’t be, especially when it comes to the top of the organization. It doesn’t matter who your parents are when it comes to your career. ”
Also, in knowledge-intensive industries, there were overwhelmingly many “social class transitioners”. These CEOs transitioned classes as a result of their academic performance and had a high presence in areas such as technology, engineering, health, and education.
“Following the IT, engineering, health and education sectors, highly educated CEOs are more likely to work for management consultancies,” the authors continue. But in contrast to IT, engineering, health and education, management consultancies often have established elite CEOs. ”
However, the higher premium for highly educated in these sectors corresponds to the much lower proportion of middle or working class CEOs in this sector. Researchers believe this is likely due to the value placed on relationships and networks in the consulting sector, which benefits people from higher social class backgrounds.
Social mobility was much lower in fields such as construction, which the researchers believe was probably a result of the lesser importance of educational background in this field. A sector characterized by unique projects that require expertise and a collection of contractors. As a result, they believe the established elite are still valuable in this sense.
But this was not so much in the trade sector, where there were far fewer established elite or higher-educated CEOs. Instead, working- and middle-class CEOs dominated.
“Here again we refer to the stakeholders and business models of this industry. The trade sector is dominated by SMEs engaged in wholesale and retail sales of household goods (largest share in our sample). , furniture, plumbing, pharmaceuticals, etc.,” the researchers explained. “Those CEO employees will be trained[in retail sales]but they will have a lower need for higher education compared to the knowledge-intensive industries mentioned above.”
This result is a reminder that while it’s easy to think of CEOs as homogenous elite members, the reality is more subtle. As a result, if you want your board to be a more diverse environment, you need to consider this nuance when considering your approach and policies to make it happen.