Performance record is now key to top job

Graduates with their eye on a future chairmanship have long sought out "learning" companies - the ones that provide executives with the experience and training they need to get to the top.

Companies such as Unilever, Procter & Gamble and Mars have been regarded as the Oxbridge of marketing. Ford's famous financial analysts have probably had a greater influence on British management than most business schools. Shell, BP and ICI have supplied a succession of chairmen and passed-over deputy chairmen to head official bodies.

Similarly, US companies such as GE, Texas Instruments, Hewlett-Packard and others can claim a seminal influence on management, and not just in the US. But this is changing. Today, learning companies have to compete for talent with each other and with the big accountancy and management consultancies. The latter now hire graduates and postgraduates by the hundred compared with the academy companies' tens. Meanwhile, the City draws more talent towards big investment banks and financial institutions.

New economy leaders such as Microsoft, Nokia and Vodafone keep a surprisingly low profile. They do recruit graduates: Microsoft hired 400 across Europe last year and expects to take on 600 this year. But these are mainly for technical roles in a highly decentralised organisation. Their managers can be expected to become familiar with technology and the new economy, but these companies have yet to carve out a reputation for providing general management experience.

Five or 10 years from graduation, it is the track record and not the qualifications that recruitment consultants are looking for. "In most of my briefs," says Ms Alison Hill, retail managing vice-president at Korn Ferry Europe, "the question is, `what can this person achieve?' "

She searches wherever executives have had the opportunity to demonstrate their ability. Here, learning companies have the edge in the range and quality of responsibility they offer.

"The whole debate has reached a new level of sophistication," she believes, as the competitive and financial pressures on clients increase. With the average tenure of a chief executive now no more than about three years and the list of qualities needed getting longer, the crucial question at every stage in a candidate's career is whether and where he or she has made sufficient impact and in what circumstances. The standard of proof required may be higher than in the past.

Over the past 30 years, many US companies have set up corporate universities to formalise their training programmes, and European companies have followed the trend. However, business schools continue to attract talented people who want to further their career with a professional qualification. But in Ms Hill's book, an MBA proves nothing, however valuable it may be as an indicator of academic ability. It is significant that many business schools have adopted part-time and sandwich courses that combine "action learning" - or learning on the job - with classroom-based courses.

It is not just chief executives for whom tenures are shortening. "Staying too long is a negative," warns Ms Hill. Her advice is "to stay long enough to gain the benefits and prove the track record, but not so long that it's difficult to change".

The trend is visible at graduate level: "Candidates arriving now aren't looking past three years. It's a `have-it-now' culture," says Ms Marion Peutherer, P&G's human resources manager for the UK.

P&G's well-known brand management structure means its people are "trained as general managers", she claims, but many don't stay longer than five years.

Mr David Crofts, UK head of management recruitment and training and her opposite number at Unilever, makes a similar point: "The whole psychological contract is changing. I see people in the future dipping in and out of Unilever several times."

Jobs for life, if the practice ever really existed, has largely disappeared, partly because of personal preferences and partly because in the leaner, flatter organisation there are fewer rungs on the ladder and less space on those rungs. The need for carefully nurtured leaders has never been stronger - companies without strong leadership have seen their growth prospects limited.

Shell, Procter & Gamble, Unilever and others now aim for a more diverse, entrepreneurial and, above all, international culture. Executives are encouraged to take responsibility for their careers, with a firm hint to move on when the time is right. The companies are then coming to the market for some middle and senior posts, perhaps for people who have been through business schools or consultancies. Mr Crofts says whereas a few years ago Unilever had a policy of "80 per cent make, 20 per cent buy" for management talent, within three years that proportion will have shifted to 50-50.

Others, such as ICI, have decentralised to such an extent that they no longer provide the flexibility and breadth of opportunity a learning company requires.

The increase in the number of business schools should mean that learning companies are becoming less important, but Ms Hill says they still have a big role to play: "Many clients insist they don't want a consultancy background for a general management role."

What counts more today is proof of good people-management and analytical skills. The search for these has had to be broadened: "We've stopped thinking along tramlines," says Ms Hill.

That has done nothing to dim the attraction to graduates of the bigger consulting firms. McKinsey, Bain, Boston Consulting Group and Booz Allen are undeniably powerful names to have on a CV, even though most consultancies encourage those who are not judged suitable for promotion to look for positions elsewhere.

It suits consulting firms to have a supply of energetic young analysts with drive and aspiration, trained, as Bain partner Mr Geoff Cullinan says, "to get to the heart of the problem very quickly, and then persuade people to do something [about it]". It suits the firms even more to have a growing band of alumni, some of whom might bring in clients a year or so down the line.

The academy companies are not above criticism, however good their general management experience, controls, project appraisal and so on.

"Breadth of opportunity" may invite a cynical recruitment consultant to add "master of none". Will the executive be able to function outside his or her cocoon of services or in a completely different culture?

Some of the learning companies have hit hard times recently. Marks & Spencer, which produced generations of successful retail managers, is is in deep trouble as nimbler high-street retailers steal their customers with fashionable clothes at competitive prices. Xerox is also experiencing great difficulty adapting to the demands of the new economy, in spite of its history of high-quality management training.

Paradoxically, executives are likely to learn as much from mistakes - theirs and others - as they are from success. Provided companies are robust enough to withstand their mistakes and hold out the promise of success, their role in developing business leaders seems assured. If not, they may join the likes of Metal Box, Courtaulds and Dunlop, graduate nurseries of old that have disappeared completely.