One study, two views of a changing career-scape

Younger management:
Why it may be better

If the turbulence of today's economy and its career market has you tightening your seatbelt, check the average age in your company's cockpit. New research from the University at Buffalo -- and some compelling interpretation from Barry Libert and Dov Goldman -- indicate that a younger crew may mean smoother landings.

In this story: Dov Goldman: 'Cognification' Barry Libert: 'Intuition and influence' Carl Pegels: 'Less conflict' RELATED STORIES, SITES

By Porter Anderson
CNN.com/Career Editor

(CNN) -- "The information was quite surprising -- the age factor, as far as the averages was concerned. You have to be careful, because we're talking relatively younger management teams. We're not talking about 20-year-olds running an airline. I would say 40s to late 50s."

But "relatively younger" or no, the teams of airline bosses that averaged younger ages were turning a prettier penny than the older guys in C. Carl Pegels' research.

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	Before you reach for that flight attendant call button, tell us what you think. What kind of flight could you expect from a younger top management team at your company? It would give us faster takeoffs but rougher landings. We'd have a happier cabin of employees -- less worried about rank and more on a par with the flight deck. Biggest difference where I sit would be control. An older team never wants somebody younger even in the co-pilot's seat. No difference. My company's on permanent auto-pilot. View Results

Not surprised: Barry Libert of Arthur Andersen.

Not surprised: Dov Goldman of Cognet Corporation.

And Pegels says he thinks his research may -- he stresses "may" -- point to something that translates to upper management in most or all industries. He's a professor of management science and systems at the University at Buffalo School of Management. And his and Baik Yang's study is published in Team Performance Management: An International Journal.

"The lower the average age of the top-management team," Pegels says his study showed, "the better the firm performance" on the bottom line.

Pegels is speaking from Beijing where the university runs two MBA programs. The airline that has moved him there is among those studied for his statistical research, which looked at United States-based carriers in the 1990s in terms of management team members' time in their positions, time at their respective firms, time on the teams, education and, of course, average age.

"The rule of thumb for most industries," says Pegels, "is that the older the management team, the more wisdom a company can marshal to achieve better firm performance. But this study shows that younger top-management teams can achieve better results for a company."

"I feel it's generalize-able because there is mobility at the top management level among industries today. Look at General Electric and Home Depot." Pegels is talking about Home Depot's Robert Nardelli, CEO; Kenneth Langone, director; and Carey Dennis, CFO -- all with GE executive credentials.

And he gets quick resonance outside academia. Transferable? Yes, say Goldman and Libert. Understandable? Yes, again.

So for the sake of debate, let's get these two seasoned industry flyers to describe for us what they think Pegels' findings might mean. Both men come to the question with plenty of energy -- Goldman with the insights of a self-proven commodity, Libert with the zest of an advocate.

Dov Goldman: 'Cognification'

"I have never had a job. I've only run companies, since the middle of my college career. I've never worked for anyone else."

Dov Goldman, 36, is CEO of Cognet Corporation, based in Valhalla, New York. With 15 years in system and software integration, network design, implementation and automation, Goldman knows what it is to raise $16.5 million for a company and to acquire another in a stock-for-stock transaction valued at $7.5 million.

He approaches Pegels' research with what appears to be an almost organic understanding of what the Buffalo statistics mean. He represents his view readily as that of "a younger manager -- and my perspective is that this is about what kind of corporate culture younger people are looking for: collaboration; less hierarchy; project orientation; process orientation; and following where things go in such directions as automation -- which provides a shared communications medium."

Goldman is describing what his company calls "cognification" -- not a word that old-management master Webster might recognize, but it means at Cognet, in part, "to synchronize technology with the needs of the business or organization." More fundamentally: "to transform chaos into order."

A key component of the model -- and software -- Cognet purveys is openness. "The people who've been around business longer, tend to have a more need-to-know basis type of view. The younger ones are going to be more open to a broader sharing of information" within the company and even outside it. This, for Goldman, is a key aspect of breaking down hierarchy and building collaboration.

Here's the fun part. Get Goldman talking about a company sharing its information freely from sales to marketing to development -- so youthy a concept to the old-economy monsters still roaming the land. Then ask him who some of Cognet's clients are: "The Internal Revenue Service of the United States, and I'm pleased to say we're one of the few organizations that's succeeded in getting money from the IRS. Prudential. Donaldson, Lufkin & Jenrette. Bear Stearns." The list goes on. And it indicates that Goldman and Cognet can deploy a younger, freer, less hierarchical business model while working with the older folks of the field.

Dov J. Goldman, Cognet

"If you look at a small company, what makes it fly? What's the magic ingredient that makes it possible for something to fly with limited funding, no market recognition, insufficient resources? The magic is that it's a sort of a religion and there's a sort of ignorance about how hard the task is going to be. Had I known what it was going to take, maybe I wouldn't have done it.

"That younger manager is going to be more willing to take some risks because he can't see all the difficulties. And he's probably going to have the stamina, borne of passion and belief that he can make it through the storm."

So is it Mickey Rooney all over again, saying to Judy, "Hey let's put on a show?"

Not quite. "Younger managers can do a lot to bring a different element," says Goldman. "But they have to be surrounded by the experience and expertise necessary to operate a complex business."

Barry Libert: 'Intuition and influence'

"Here's our thesis. And as we see it, this is even more true in other industries than it is in airlines."

Barry Libert, 47 -- an Arthur Andersen principal and director of the company's Global Research and Innovation program -- takes to his topic like a teen to a Frisbee. Based near Boston, he's working here from preliminary research data culled from an Andersen study still under development.

"Here's why the University of Buffalo study is correct. I'm going to give it to you in three messages.

"Message One: Historically, the only things that have mattered are things and money. Land, plants, property, equipment, agriculture. They were called 'land lords,' right? -- 'I shall lord over you so long as I shall have the land and you shall be my tenant at sufferance.' This was true in all industry through all time until 1981. It really was there by about 1971 but not really evident until 1981.

"Said differently -- and using the airlines that Carl Pegels studied -- up until the early '80s, the value of the airlines was no more than the value of the planes they operated. No value to the airlines was attribute to or perceived to be things like: customers, employees, knowledge, brand -- they're called 'intangibles,' unowned assets. Until the early '70s

"Got that, then? Until 1981, what you had, what you owned -- not what you make, not what you know -- was 100 percent of everything."

"Message Two: From 1982 to the present day, what you don't own, what you don't have, what is not tangible rose from nothing to more than 75 percent of the market value of all companies. This is a once-in-human-history change.

"That which you don't own, that which is not physical, becomes the power in society. The gold. The currency."

Barry Libert, Arthur Andersen

"Message Three: Take 30 years off the ages of those managers who did better in the Buffalo study. That puts their upbringing in the time of the new value. And that means different skills were available to them.

"Younger managers grew up in a time in which the assets that matter weren't land or agricultural, they were people and communities and relationships and knowledge. Therefore the people who are the better managers are the people who understand handling that asset class."

Libert goes on to say that Andersen's coming research will indicate that women are in many cases better suited to management of the non-tangible asset class than men. They -- and younger men -- work more easily with "intuition and influence," he says, as opposed to the older male-oriented mechanisms of competition and ownership.

You hear a conclusion that echoes both Libert and Goldman in Pegels' comments about his Buffalo study's suggestion that relatively younger management teams' time may have come.

"There's a better distribution of power," Pegels says, "among management teams composed of team members of younger age and similar tenure -- which probably fosters better team performance and less conflict, leading to better firm performance."

C. Carl Pegels, University at Buffalo

It's hard to tell in a faltering market economy where dependable trends lie, of course. Goldman stresses that younger managers shouldn't throw overboard more experienced hands. Pegels is at pains to remind all comers that his work is a statistical study.

But if you'd like a nice, tangible bottom line to all the intangibles of a new economy's currencies -- and if you're getting onto a plane -- Libert points to customer service as the type thing an airline may be more inclined to improve under a more intuitive management.

May the skies you fly into be friendlier.

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Arthur Andersen
Cognet Corporation
University at Buffalo (State University of New York) School of Management

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