THE DEAD-END KIDS : Despite their degrees and expectations, few baby boomers will make it to the top

AS FAR AS SANDY WALES was concerned, up was the only direction to go. In a life that consisted almost entirely of work, her goal was to become a vice president of a large company. She was a market-research supervisor at Quaker Oats when her boss, the director, got sick. Wales filled in, and was confident that she had demonstrated how well she could do the work. But when the director’s job became open, it went to someone the company brought in from outside. Wales quit. “I was so angry that I didn’t want to be there. I felt I had done a good job, and I received no recognition,” she recalls.

She switched fields, but the same thing happened again. She rose rapidly, then lost out to another candidate for a management post. Again, she quit. When a third company passed her over for promotion--this time for someone younger--Wales started thinking. Maybe she didn’t have the rules of the game figured right. Or maybe the rules had changed. Being good, it appeared, was no longer good enough. “I always thought that if I proved myself competent, there would be no stopping me,” she says. “It’s a rude and nasty thing to discover that there’s a lid on you.”

Psychologists describe what is going on here as plateauing. Plateauing is the day you find out that the boss is younger than you are--and for that matter, so is the boss’s boss. Plateauing is the third time you get passed over for the same promotion. Often, plateauing has nothing to do with moving up--you just want to move somewhere. Your job is getting tedious, and you are ready for a change, but when you reach for the next rung, you discover that someone took away the ladder.

A mental alarm goes off. Deadwood. Failure. Over the hill. On the shelf. Burned out. Used up. Me? But look around the department, especially at those stars who used to be promoted every year or so. For the most part, no one else seems to be going anywhere either, though they all seem to be working just as hard as ever.

Plateauing happens to just about everyone, and always has. But the hard truth is that for baby boomers it is occurring earlier and earlier. With the first of these aging wunderkinder well into their middle years, the fast track is starting to look like the San Diego Freeway at rush hour. And it is going to get worse. Notice that cloud of dust coming up behind you? That’s the second half of the boom, the group whose values were hardened in the get-out-of-my-way 1980s. By the turn of the century, baby boomers--whose ages will span 35 to 54--will make up 49% of the work force and will be at stages in their careers where they have the greatest expectations of moving up.

Fewer and fewer will realize that goal. Barry D. Leskin, chairman of the USC Business School’s management and organization department, throws out this grim forecast: While there were about 10 potential candidates for every middle-management opening in 1975, the number will rise to 30 in 1995 and 50 by the year 2000. So where does that leave the vast majority who do not make it?

Actually, most plateaued people haven’t even figured out what the problem is, much less how to solve it. “I see the full spectrum of people who can’t put labels on it, who don’t know what’s wrong. All they know is they are unhappy,” says Eileen L. Brabender, a Los Angeles career counselor. “They call it being burned out. They complain about the repetition, the frustration, the boredom.”

This is the generation, after all, that thought that intelligence, drive and the right education could guarantee anyone a spot near the top. And few doubted that was where they wanted to be. Unless you are the lead dog in the pack, they used to joke, the scenery never changes. Many don’t find that crack so funny anymore.

“When I started here, I was one of nine MBAs who had been hired in my division,” says one oil-company executive in his mid-30s. He joined the firm in the early 1980s, when the energy business seemed boundless, as did the ambitions of those drawn to it. Now, he and his co-workers are grateful just to have survived successive waves of layoffs. Those who remain are making lateral moves, which a few years ago would have been considered black marks on their resumes.

As vice president of human resources for Hughes Aircraft Co., Ted G. Westerman grapples every day with employees’ expectations that don’t match the opportunities available. “It’s an issue every place,” he says, particularly at companies such as Hughes that are cutting thousands of mid- and upper-level management positions from their payrolls to remain competitive in a changing global market. “(Workers continue) to expect that the way you keep score of how you are doing is whether you get promoted. But that is running in the face of the competitive pressure we are under to work better with less bureaucracy.” When his daughter graduated from college two years ago, he warned her that she should consider herself successful if she received three promotions in her life.

But some reject a definition of success that doesn’t include regular movement up the ladder. As Digital Equipment Corp.’s growth started slacking off a few years ago, marketing manager Steve Sommer noticed something disturbing. “All the restructuring was causing career gridlock--a lot of lateral moves, but not a lot of upward moves,” says Sommer, who holds a master’s degree in business from Harvard. “I also looked at how long people were resident in their positions. It seemed to be stretching out--eight months, to two and a half years, to five years.”

When a headhunter approached him with an offer of a much higher position with a struggling software company that was 120 times smaller than Digital, he took it. “It was the toughest career move I ever made,” he says. “But I had the Harvard MBA paranoia, wondering, ‘Gee, will I be off the fast track if I stick around?’ I was very conscious of how many levels there were between me and the senior VPs.”

When people gauge their accomplishments this way, plateauing inevitably feels like failure--a truth so painful that they often have difficulty facing or admitting it. (Many of those interviewed for this article agreed to discuss their experiences only on the condition that their names not be used.) However, plateauing generally has little to do with how smart you are or how valuable, career-development experts say. For most people, it is a matter of simple arithmetic, an equation in which demographics and economics add up to a lot of frustration.

“For a long time, history was on the side of the ambitious,” writes Judith M. Bardwick, a La Jolla psychologist whose book “The Plateauing Trap” is considered the definitive treatise on the subject of career gridlock. From 1950 to 1975, America dominated the world market, and its businesses and institutions were expanding so rapidly that their major problem was finding enough qualified managers, she says. The available pool of candidates had been born around the time of the Depression, when the nation saw its lowest birthrate ever. What’s more, only white males were allowed into the executive fold. People began to talk about the Peter Principle--the idea that they could rise to a level exceeding their abilities.

Then into the work force came the nearly 80 million people born between 1946 and 1965. Among them were large numbers of women and minorities, allowed to enter the competition for the first time. Never had so many positioned themselves on the management ladder: This year, for example, an estimated 70,000 people will receive MBAs--more than 10 times the number who did in 1960. But before the oldest troops in the boomer army reached the halfway point in their careers, big companies started cutting the ranks by hundreds of thousands--at least 3 million jobs vanished from the Fortune 500 during the past decade, by some estimates. Mid-level management positions--the bureaucracy of most organizations--often were the first to go.

So you can forget the Peter Principle, Bardwick says. Far from rising above their capabilities, most people will never even get the chance to perform up to their potential, especially in big organizations.

Women and minorities are likely to plateau sooner, increasingly by the time they are in their mid- to late-30s, Bardwick says, partly because of lingering discrimination. Separate studies this year by Opinion Research and Wick & Co. consultants showed that women are more likely than men to leave big corporations, not because of difficulties in juggling career and family demands, but because of lack of opportunity--the infamous glass ceiling.

A few companies are beginning to recognize that they face big problems unless they deal with the frustrations and broken expectations of employees who are left behind. Some of their most valuable employees will leave, and those who remain, even top performers, are likely to become bitter, alienated and afraid. With promotion opportunities narrowing, former risk-takers are becoming more cautious, terrified of doing anything that could dampen their advancement chances even further. When Yes Men and Yes Women are born, innovation dies. So for American businesses, the plateau is also the precipice, and finding solutions to the problem is more than a matter of wanting to allay the psychic discomforts of disappointed baby boomers--it’s a matter of survival.

PLATEAUING SOLUTION NO. 1: NEW JOB

WITH MORE than a decade separating their ages, Harry Bernhard and Sandy Wales view plateauing from opposite sides of the baby boom. But each has faced a similar decision: whether to stay in a cushy position with a big organization that offered no advancement or to risk setting out on an entirely new career. Each took the gamble.

To Bernhard, challenge and excitement were always an important part of the job. In the mid-1950s, he joined a forward-thinking company called International Business Machines, which was transforming itself from a manufacturer of time clocks and meat-cutting machines into the leader in the burgeoning computer field. Opportunity seemed endless.

And from all outward appearances, Big Blue offered abundant opportunities to Harry Bernhard. He rose during 15 years in marketing and another 15 in human resources, where he helped run an executive-development program that served 40,000 people a year.

Eventually, though, his boss told him, “You’re not going anywhere.” With more than 10 years to go before he reached retirement age, Bernhard was not ready to be put out to pasture. So he took the company up on an early retirement plan that would give him, as he puts it, “$1,000 a week to stay away forever.”

Bernhard had spent two years as an IBM Fellow lecturing at the Harvard Business School and had taken a liking to academia. In 1987, he moved to Los Angeles and started a second career as an “executive in residence” at the USC business school. “I didn’t have to go to meetings with people I half-liked, or didn’t like,” Bernhard says.

USC soon made him an associate dean, but he was in that job only a few months before he was lured away by Emory University in Atlanta, where he has been in charge of executive education since March. In a new field, Bernhard is once again advancing--and he is earning twice what he made at IBM.

In many ways, Bernhard was lucky. He was born in an era when demographics worked for him, not against him. By the time he plateaued at IBM, he was set financially.

Sandy Wales, on the other hand, was just entering her 40s when she realized that her job was taking her nowhere. Stepping out of the corporate world was a big risk, but one that--thus far she is glad she took, because she was forced to discard the old ideas of success that had led her from one frustrating situation to another.

When Wales graduated from Purdue University in 1967, she had little idea of what she wanted from her career, she recalls, but after a few years in a large corporation, her goal became clear : to become a vice president. Wales believed that hard work alone would get her there.

Wales worked 10 years in market research for a couple of major firms in the Midwest, starting out as a door-to-door interviewer for Procter & Gamble and going on to become a market-research supervisor designing questionnaires for Quaker Oats in Chicago. She set her sights on her boss’s job, but when he left and she was not chosen to replace him, Wales decided to leave.

She moved to an advertising agency, where she helped clients compile market research. Each time Wales asked to be put in charge of something, she was told, “When we get another women’s account.”

She refused to stay at a firm where her advancement opportunities were limited, so she switched fields, making what she describes as “a sidestep” into executive recruiting. That eventually took her to Los Angeles and a job at Mattel in 1979. Wales also had to swallow a salary cut--but she was willing to pay that price for a chance to move up in a big organization.

She became a manager relatively quickly, and when the international director of human resources left, she was given that position temporarily. However, when it came time to fill the job permanently, the post again went to someone else.

In her last job, as director of placement services for American Medical International, she was passed over for a promotion yet again. This time, she’d had enough. With her divorce 15 years ago, she had abandoned plans for a family. That made work all the more important to her--and her setbacks even more devastating.

She realized, she says, that “I am no longer willing to give my life to a corporation.” So at the age of 42, she decided to become a marriage, family and child counselor. She went back to school full time, earning her master’s degree a year ago at a branch of Antioch University in Marina del Rey. To pay the bills, she took a part-time job with an outplacement firm.

“It’s an interesting way to live. The hardest part is financial. The wonderful part is freedom,” Wales says. “I’ll ultimately be working for myself. No one will tell me I’m not qualified. No one will say, ‘Aren’t you getting a little old for this?’ ”

PLATEAUING SOLUTION NO. 2: NEW ATTITUDE

SOME PEOPLE, having taken stock of their priorities, write their own definitions of success. Natalie Orlins, 36, is manager of the accounts payable department at USC. She started in the department as a clerk shortly after graduating from college 14 years ago, and she climbed steadily. Within a few years, she was assistant manager of the department, and when the manager’s job opened in 1981, she filled it.

Orlins, who is single, has always valued what she describes as “a balanced life”--one that allows time for friends, church and other interests. About two years ago, she considered applying for a higher-level job and decided against it. “There’s more politics. More money and more power are not worth the price,” she says.

She does not think of herself as plateaued; Orlins thinks of herself as happy. That, of course, does not necessarily mean that she wants to keep doing the same thing until she retires. If her job starts to bore her, Orlins might look for a position at the same level somewhere else. “It would broaden my field of experience and knowledge,” she says. “That, I think, I would find more of a challenge than just moving up.”

Beverly Kaye, a nationally known career-management consultant in Sherman Oaks, predicts that as more people are forced to come to grips with the inevitability of plateauing, more people will follow Orlins’ route. “It’s a question of balance,” she says. “Some of them choose it. They say, ‘Enough (of this). Give me something that makes my life simpler.’ ”

The idea here is that satisfaction, challenge and professional growth do not have to be linked to the next promotion.

If a promotion is not in the cards, workers increasingly welcome a chance to try something new. Pacific Gas & Electric in San Francisco urges employees to take assignments in different areas of the company, moving sideways rather than up. During the past decade, 43-year-old Chris Joyce has made four lateral moves. They have taken her into diverse roles that have ranged from managing building maintenance crews to supervising PG&E;’s affirmative-action programs, her current job.

“I don’t think I’m going to be the next vice president of any function at PG&E.; I’m realistic about that,” Joyce says. She considers herself a success and anticipates more lateral moves. “What turns me on when I move to a new job is thinking maybe I can make it better,” she says.

Still, many find no satisfaction in a career path that leads anywhere but up. That prompts companies to sell workers on lateral moves by making them sound like promotions. “Companies are reluctant to tell people they aren’t going anywhere, because they’re afraid they’ll lose their motivation,” says Harry Levinson, who directs the Levinson Institute, a Belmont, Mass., consulting firm that specializes in psychological aspects of management. Indeed, University of Connecticut management professor John Velga found that 85% of the managers he surveyed characterized their last job change as a promotion, but 60% of their companies described it as a lateral transfer or demotion.

Often, however, employees are sharp-eyed enough to see their future in those around them. Jeff Smallowitz enjoyed his first few years as an engineer with Hughes Aircraft Co., where he worked on projects, including the Galileo space probe. He quickly was promoted to managing a small team, but he soon realized that “the work that I was doing probably would not change dramatically. It was pretty much a set pattern. That was what caused me to leave. I didn’t like the feeling that everything was preplanned,” Smallowitz says.

After seven years at Hughes, Smallowitz went into business for himself as a consultant. Now 33, he is planning a more dramatic switch. Within a few months, he expects to open a discount hair-cutting shop in the Palos Verdes area--the first in what he hopes will be a string of Cost Cutters outlets. Buying a franchise appealed to him as an opportunity to put his entrepreneurial energies behind a proven business idea.

“I have a lot of say in what the future holds for me. I like the excitement in not exactly knowing how it pans out,” he says, adding, “I’m the best boss I ever had.”

PLATEAUING SOLUTION NO. 3: NEW PAYOFFS

EVEN WITH the growing awareness of plateauing, career-development specialists say that not enough companies have confronted the problem. “Basically what happens is plateaued people are ignored, and that’s the worst,” says psychologist Bardwick. “It’s a cruel and stupid system. We need to expand our idea of success to something that people can continue to get. They need the opportunity to earn new challenges, empowerment and significance.”

And businesses need satisfied employees if they hope to compete in a world where the quality of their work force will be their chief edge over their competitors.

Managers on the front lines are beginning to feel the urgency of finding solutions to plateauing, especially as they see valuable employees looking elsewhere. “What you’re essentially saying is there isn’t any opportunity. OK, I buy your concept. So how do I retain people?” snapped an executive for a leading high-technology firm in the Silicon Valley. “I lost a person last week. He said, ‘I know I’m competing with a large pool of candidates here, and I’m not going to get promoted.’ So he went to a smaller company. It’s really awful. We lose our good people.”

In Bardwick’s view, the payoff for a job well done should be recognition and new responsibilities. That used to mean a promotion, but now employers are experimenting with new rewards. Among their innovative approaches: incentives for employees who take lateral moves; team projects that give workers a sense of power; bonuses to remind people that they are valuable even if they are not promoted, non-management career tracks and assistance for those who want to leave.

Hughes has tried another tactic: It places “more authority, influence and power lower down in the organization,” says Westerman of the company’s human resources department. He points to Hughes’ Fullerton plant, where the company manufactures consoles for controlling radar on ships. Each individual involved in making the consoles used to have a specialized job. Now, the work is done by a team of 50 people involved in all phases of assembly, and “you cannot tell the inspectors from the supervisors,” Westerman says. Individuals can see the difference they have made in all stages of production. Absenteeism and discipline problems are down, he says, and quality of work has risen.

Like PG&E;, Hughes also encourages lateral moves. “In our kind of company, that’s a new thing,” Westerman explains. “In the past, if you were a technical guy, you’d probably stay technical your whole life.” Now, it is not unheard of for an engineer to move into finance.

“As they get the new skill, we pay them for that skill,” Westerman says. “They see themselves becoming more valuable. I think it’s going to be the late-’90s version of (traditional) kinds of promotions.”

But what is most needed, Bardwick and other experts agree, is a new honesty on the part of employers.

“In most of our companies, there is a level of graciousness that precludes telling the truth,” Bardwick says. “People are not told that they are not likely to be promoted, and so they think they are doing well.”

Surprisingly, Bardwick says, when managers talk honestly about a worker’s prospects, “people say, ‘Thank you. Now I understand what is happening. Now I know I’m not a failure. I’m normal.’ ”

Only then can people begin to assess their own values and write individual definitions of success. “Becoming plateaued,” Bardwick writes, “is an opportunity to pause, reflect and change. It is a personal sabbatical, a time for self-examination that becomes our opportunity to grow in ways we never imagined.”