An options-based model of career mobility in professional service firms: Theoretical development and empirical testing in a sample of large law firms

Contemporary career mobility models (human capital, structural, and tournament models) do not fully explain up-or-out promotional systems in professional service firms (PSFs). A model of PSF career mobility is proposed which views the hiring of PSF associates as investments in options on future human capital acquisitions, and the promotion of associates as exercise of those options. Training, mentoring, deferral of compensation, and the promise of partnership serve to bond associates to firms until their human capital value can be developed and assessed. Promotional outcomes depend primarily on the extent of firm-specific human capital development and business conditions at the time of partnership consideration. The model provides a potential explanation for seemingly paradoxical firm behavior, such as dismissal of non-promoted but otherwise productive professional employees. Relationships among mobility-related constructs suggested by the conceptual basis underlying the proposed model are investigated in the context of large law firms. Data from three separate archival sources are used to categorize those firms which appear to utilize promotional systems amenable to characterization as relatively options-based, versus those which appear to utilize other (e.g., project-based) mobility practices. Hypotheses are tested, and research questions are investigated, which differentially predict mobility-related outcomes for each category of firms. Results provide support for characterization of PSF career practices as amenable to options-based analysis with respect to several important mobility-related processes, including associate professional development and turnover. Results also provide support for the utility of both options-based and project-based mobility practices in achieving different types of effectiveness outcomes (e.g., professional development, profitability). Suggestions for future research to explore practical implications of PSF and other career mobility systems are presented.