The Leadership Deficit

The Leadership Deficit - Recruiting and Retaining the Multi-generational Workforce

INTRODUCTION

Businesses everywhere are grappling with an unfolding skills dilemma that is challenging the way we manage and plan the workforce of the future.

People are remaining in the workforce longer than they used to, yet there is a growing shortage of skilled talent. The aging and declining workforce is a global phenomenon taking place in all industries and across traditional boundaries.

Generational differences, which emerged over the last decade are beginning to solidify and have lasting implications for the management of human capital.

In addition, the rise of a new breed of self-employed “free agents” is injecting a volatile element into the mix which is forcing employers to reassess the way they select, deploy and interact with staff.

How do companies prepare for and manage these trends? What are the keys to success as the workforce continues to evolve?

This paper explains why talent is dwindling, and paints a detailed picture of the profile of those that comprise the contemporary workforce. It discusses the challenges employers face, and offers suggestions for recruiting and retaining top talent, as well as casting a spotlight on companies that are tackling these challenges in innovative ways.

01
THE AGING AND DECLINING WORKFORCE

Evolutionary shifts in the workforce are to be expected as the world changes. But today’s global workforce is undergoing an unprecedented transition—as companies everywhere are faced with recruiting and retaining top talent from a labor force that is shrinking overall, yet includes increasing numbers of older workers.

Longevity by the Numbers

In all countries, people are living longer and working longer. Advances in medical technology have improved health care and lowered mortality rates. As a result, people over age 50 constitute a larger part of the overall population, and a larger part of the global workforce.

Governments around the world are beginning to take notice and take steps to adapt to an aging workforce. More than one million French workers took to the streets in the latter part of 2010 to protest the government’s plans to overhaul pensions and raise the retirement age from 60 to 62. In the United States, the median age of workers has risen from 34 to 40 in the past 30 years.

Since 1980, the percentage of workers aged 50 and above in the United States has risen from 26 percent of the population to 37 percent. And by 2050, the share of workers aged 55 and older is expected to reach 19.1 percent, up from just over 14 percent in 2002.

But although a multi-generational labor pool presents challenges, it can also offer benefits. Organizations can capitalize on this new workforce by developing targeted strategies for managing generational segments of the talent pool in order to harness the unique contributions of each group.

From a demographic standpoint, “prime-aged” workers are 25 to 54 years old. This group has grown significantly over the past two decades, but in recent years, has flattened and is now declining. Meanwhile, the older workforce has been steadily creeping higher.

Since December 2007, the number of prime-aged workers in the U.S labor force has declined by 0.7 percent, while the number of workers over the age of 55 has increased by 7.6 percent. In fact, the number of workers aged 55 and older is higher now than any time since 1948.

What is behind this shift in the labor market, and why is the pool of top talent shrinking? The retirement of Baby Boomers is the leading factor behind projected labor shortages, leaving fewer numbers of skilled workers. And with technology advancing at a rapid pace, the need for skilled workers is increasing at an exponential rate around the world. Unfortunately, the numbers of college graduates is not keeping pace with what the global workforce requires.

In theory, there should be an abundance of skilled workers flooding the labor pool, because attendance at colleges and universities is at an all-time high. But attending is one thing—graduating is another, with completion rates at only 58 percent.

There are fewer young people graduating because there are fewer young people.

The Shock Heard Round the World

Many countries are feeling the pinch and seeing unprecedented changes to demographics and workforce trends. In European Union, the number of people aged 20 to 59 years is expected to decrease by nearly 25 percent by 2050, while the number of people over the age of 60 will climb by nearly 50 percent.

Japan is a prime example of the gravity of these statistics. In 2007, some 21 percent of the Japanese population was older than age 65; by 2055, that will rise to more than 40 percent. During this time, the population of Japan is projected to shrink from nearly 128 million to 95 million.

In Japan, biology is shaping destiny at a frightening pace. More Japanese women are working, so they are marrying and having children later in life, while more than 30 percent of Japanese women aged 30 and older are not married. The value system of many Japanese women has changed considerably, bringing a structural shift in the country’s demographic make-up.

The imbalance between supply and demand is further complicated by fertility rate issues. There are simply too few children being born in developed countries.

The total fertility rate (TFR) is a measure of the number of births per woman in the population and serves as a proxy for population growth. A rate of 2.1 children per woman is generally considered the replacement rate. Above this rate a population is increasing and below, it is generally falling.

Countries such as South Korea, Italy, and Germany have fertility levels at alarmingly low levels. South Korea’s fertility rate is less than half the replacement rate, 1.08; Japan’s is slightly higher at 1.26. It’s only in developing countries where fertility rates are at abundant levels – for instance, Nigeria at 4.91, and Guatemala at 3.47. The problem is that the higher fertility rates in developing countries do not balance out the shortage in developed countries, because developing countries simply do not have the educational infrastructure to convert these newborns into skilled workers.

The fertility rate in the United States was hovering around 2.05 in 2005, having risen from a low of 1.74 in 1976, but still not quite at replacement level. According to a 2006 United Nations study, from 2005 to 2010, 73 countries had fertility rates below the replacement level, whereas 122 countries had fertility levels at or above that rate. Among those, the fertility levels were at or above 5 children per woman in 27 countries—25 of which are the least developed.

Even if there were a sudden, miraculous rise in fertility rates, the effects wouldn’t be felt for decades. Babies born today will take a minimum of 22 years before they enter the workforce.

Yet in the developing world where birth rates are increasing, there will be equally perverse outcomes. Southeast Asia will likely see its workforce grow by 58 percent within the next 30 years. China is experiencing rapid labor force growth, but a significant lack of skilled labor. In India, the number of working-aged people will increase by 335 million by 2030—a number almost as large as the total working-aged population of the EU and the United States combined in 2000.

What this means is that in the developing world, there is a growing surplus of unskilled labor, at the same time as demand for unskilled labor is declining. It’s precisely the flip side of the problem in the developed world, where there is a growing shortage of skilled workers at a time when their need for skilled labor is becoming greater.

With the overall workforce aging, birth rates in mature markets dropping, labor pools in developed nations shrinking, the numbers of skilled workers dropping, and the demand for skilled workers accelerating along with technology evolutions —the global workforce could soon be in a world of trouble. Figure 5 gives an idea of what is looming.

Navigating the Challenges of a Workforce in Transition

These trends pose major challenges for individuals, businesses and indeed for nations. Many emerging economies simply do not have the ability to educate the populations they are producing. From an HR perspective, this trend may be irreversible. Already, high fertility rates and high levels of unemployment are significantly impacting the labor force in Central and South America. Even if steps could be taken now to build stronger education systems, it would still take decades to have any positive impact on the supply of skilled workers and middle managers in the global labor force. The problem from a global labor force perspective is that the countries that are the best equipped to educate people today, have the lowest birth rates.

We’re not running out of people—we’re running out of talent

Specific industries such as IT and healthcare are beginning to be significantly impacted by the dwindling availability of skilled labor. Workers with valuable skills are in demand and often leave their jobs to accept more lucrative offers, leaving behind vacancies that may be impossible to fill. A 2003 World Health Organization study of six African countries revealed that most health workers plan to migrate for higher salaries. Bettering their take-home pay is great for individual workers, but hard on the communities they leave behind. When a doctor in Ghana leaves a position that pays $300 a month to move to the United States to accept a job as a nurse making $4,500 a month, an American town gains a very skilled nurse—but a village in Ghana loses a doctor.

Sometimes the imbalances that exist in the labor market are “corrected” in ways that might appear plausible from a strict economic perspective, but which come at a terrible social cost.

02
FOUR GENERATIONS: A CALL FOR WORKPLACE AGILITY

A multi-generational workforce requires a transgenerational solution. For the first time, employers are challenged by the phenomenon of four distinct generations coming together in the workplace simultaneously. Each generation has its own unique attitudes toward work, and those diverse approaches often result in intergenerational conflict.

Generational differences may pose challenges for employers who want to get optimal performance from their entire workforce. Yet the diversity of experience and knowledge offered by four distinct generational mindsets can provide tangible benefits if managed well. The challenge for employers is to embrace the talent mix, tap into it, and use its strengths to deliver operational performance.

The Silent Generation – The Traditionalists

The Silent Generation is the segment of the population born between 1925 and 1945. The label was coined in a 1951 Time article about young people coming of age, who were born during the Great Depression and World War II. Almost two-thirds are married and 29 percent are widowed or divorced. Three-quarters are grandparents, and 26 percent earned a post-graduate degree. The technologies this generation developed included radio, movies, radar, and instant cameras, and these innovations laid the groundwork for many technological advances in the late 20th century.

They are usually the parents of Baby Boomers, and they value hard work, dedication, respect for authority, conformity, and adherence to rules. The work ethic of the Silent Generation was built around responsibility and long-term commitment, so they usually prefer the status quo and can be slow to embrace change. This generation of workers shared common experiences of hardships, war, and socioeconomic conflicts. Some even remember living through the Great Depression as children. For most of them, the experiences they shared and the challenges they faced brought a sense of camaraderie that subsequent generations have never experienced in quite the same way.

Baby Boomers – The “Me” Generation

Baby Boomers were born following World War II, between 1946 and 1964 - a time that was marked by a “booming” increase in birth rates. Baby Boomers are generally associated with rejecting or redefining traditional values in favor of personal gratification. Most are married, many have been married more than once, and onethird are grandparents. Seventy-seven percent of all Boomers are employed, and two-thirds work full-time. They are a highly educated group, with 39 percent having earned a post-graduate degree. Technological advances that these workers can take credit for include the microwave, VCRs, hand-held calculators, computers, color televisions, and credit cards. Many Boomers have delayed their retirement; 80 percent will continue to work as contractors or free agents part-time or part of the year.

Having grown up in a time of affluence, Baby Boomers are optimistic and genuinely expect society to improve over time. Their developmental years were marked by many turbulent times including the Cold War, the civil rights movement, women’s liberation, and political assassinations. A common bond that they came to depend upon was the emergence of music as a regular part of life and society.

Pursuit of personal growth is a key goal of Baby Boomers, who are often called the “me” or “ageless” generation. They are independent, over-achieving mult-itaskers who work long hours and struggle with balancing their life and work. Statistics show that they really care about the future of their companies, and they are loyal, strong performers. Kelly Services® data shows that Boomers who work as free agents or temporary contractors on assignment have a higher retention rate than their younger cohorts. They typically work 22 percent more hours than workers from other generations, average 3.32 years tenure with employers, and receive 94 percent positive feedback ratings from customers.

Generation X – The Bridge Generation

Generation X is the generation born after the end of the baby boom. Sometimes called the “Baby Busters,” demographers usually define this group as people born between 1961 and 1981, and they are small in number compared to the generations before and after them. Nearly two-thirds are parents, one-third are working parents, and the divorce rate among Gen X workers is nearly 50 percent. This is the best educated generation in the workforce today, with more than 40 percent having earned a college degree or higher. They tend to reject authority and embrace risk, and are willing to jump from job to job to pursue growth and opportunity. Gen X workers are self-reliant, techno-literate, global thinkers—and they place a high value on working to live, rather than living to work.

Considered a “bridge” generation, Gen X workers typically demand short-term payoffs with immediate feedback and rewards for a job well done. They are interested in climbing the corporate ladder, but can be cynical and frustrated by tradition. They often question hierarchy, formal authority, and traditional institutions, preferring to have more control over their time and their future. They are the first to blur the lines between the workplace and home, and they have brought about workplace changes such as telecommuting and on-site child care. Gen Xers do not value the same things Baby Boomers considered to be important, so employers should not expect management styles used for Boomers to work well with Gen X.

The developmental years of Gen X were marked by economic stagnation, with serious societal developments such as the AIDS crisis, increasing poverty, rising divorce rates, and moms going back to work. Gen X workers grew up with MTV and cable television, and are intimately familiar with technological innovations such as floppy disks, personal computers, cell phones, DVD, and e-mail. For Xers, computers have always been a part f their lives. But because PC networks and the Internet didn’t exist in their early years, this group became a group of technically apt people working independently. Although group interactions in person decreased, computers and cell phones still made it possible for Xers to collaborate—only in different ways than ever before.

Generation Y – The Millennials

Generation Y, also dubbed Generation Next or Echo Boomers, is now entering the workforce at a rapid pace, and there are about 70 million of them. Most demographers suggest that this generation was born between 1982 and the turn of the millennium. Nearly a third are currently attending a college or university, and their parents, family, religion, and generosity are of central importance. They display a high tolerance toward other cultures and lifestyles, and they volunteer in their communities more than prior generations did. Gen Yers join organizations and causes not because they have to, but because they want to—because they want to contribute to something significant. They are moral and committed, and they value personal achievement.

Often called the Millennials, Gen Y workers are definitely a different breed. Ambitious and demanding, they question everything and need constant feedback at work because they get it in every other aspect of their lives. If they don’t see a good reason for working late or making a long commute, they usually won’t do it. Loyalty to one company is not their strong suit, although they are generally very loyal to their profession and the people they work with. In a recent survey of Millennials, nearly all of the respondents said that having “meaning” in their work was of utmost importance. But when asked if they were actually getting meaning out of their work, only about a quarter of them said they were. So there is an enormous disconnection here.

Gen Y is the largest consumer group in history. Although they grew up in a time of economic prosperity, Gen Y workers have experienced life- defining events such as school violence and terrorism. The technological expertise of these hipsters has been influenced by the rapid growth of the Internet, iPods®, smart phones, text messaging, high-definition TV, and Xbox®/PlayStation® gaming. Their world is smaller than that of any other generation, thanks to technology that has brought the world to them. “Global” means something entirely different to Gen Y than it did to previous generations. They use iPhones® to talk to people on the other side of the planet, instantaneously. They communicate with each other via e-mail, Skype^TM, Facebook^TM, and Twitter^TM.

Tomorrow’s Generation

As Figure 6 below shows, Gen Y alone will represent almost 40 percent of the United States labor force by 2012. In aggregate, Gen X and Gen Y will represent 70 percent of the workforce by 2012.

And there’s another generation waiting in the wings to make its debut.

Generation Z – The Internet Generation

The next generation to hit the labor force will be the most technology-enabled generation yet. Generation Z, children born between 1990 and now, were holding Gameboys® and Leapsters® in their hands at a very early age. They are used to seeing computers in the kitchen; every classroom they have been in had a PC; and they probably started carrying a cell phone by the time they were 12 years old. They have watched their Gen X parents juggling cell phones and smart phones, and they are intimately familiar with texting and instant messaging. Many are likely to spend more time communicating electronically with their parents than sitting at the dinner table talking to them.

As the workforce continues to age and decline, this new generation will turn the supply and demand equation upside down—they will own their employers, and they will make unprecedented demands on the workplace. And, irony of ironies, the Millennials will have to manage them.

Understanding and Managing Generational Challenges

As we’ve discussed, today’s workforce is growing older. Workers aged 55 years and older are expected to comprise 24 percent of the workforce by 2018. More than 78 million Baby Boomers are being followed by a far smaller cohort of only 45 million Gen X workers, so there will be a shrinking pool of prime-aged workers to fill the gaps. The demand for talented Gen X leaders will increase, but the supply will decrease.

Meanwhile, Baby Boomers are staying in the workforce longer, in part because of the beating their pension plans took as a result of the global financial crisis. However,although the growing trend of delaying retirement is slowing down the exit of Boomers from the workplace, there will still be a significant deficit in leadership and the competition for older, more experienced leaders will intensify.

Unique trends are developing due to upheavals in the workforce. Younger workers are shifting their sights away from traditional career paths that involve loyalty to a single company for long tenures. Instead, they are assuming more responsibility earlier in their careers and focusing on developing skills that will make them marketable to multiple employers.

Differences in work ethics and values will continue to escalate as the age spectrum in our workforce becomes more pronounced. As a result, organizations will be forced to rethink, revamp, and adapt their recruiting, retention, and training strategies.

03
THE GROWTH OF FREE AGENCY

Throughout the last decade, a strong trend has emerged toward building more flexible, project based workforces. This trend began long before the current recession, largely because modern technology has made it possible for people to connect and work together from wherever they are.

One of the most important workforce trends of the past two decades has been the rise of the new breed of independent free agents – consultants, freelancers, contractors and ‘micropreneurs’.

Free agents are not traditional “9 to 5” employees working for one employer. They are untethered, independent professionals or consultants, temporary or contract employees, and they move from project to project, location to location. They span all ages, professions, incomes, and educational levels, and they are interested in working for themselves. Free agents prioritize freedom and flexibility over the security of traditional employment models, and they are always keeping an eye out for more interesting or rewarding assignments that afford the best work/life balance.

Many of these are professionals who have been dislodged from salaried careers as a consequence of business restructuring and economic upheaval. They may have been laid-off from well-paid full time jobs in 1990s recession or the most recent global downturn. Instead of waiting for new opportunities to come to them, they have started up their own businesses, providing labor or services to clients on a project-by-project basis.

Free agency can take many forms, ranging from the freelancer to the entrepreneur or business owner, working as a sole operator, or working with a small staff. Whichever way it is defined, the growth in this form of employment has been remarkable.

The Kelly Services Employment Trends Survey undertaken in early 2011 shows that the percentage of the U.S. population that describes themselves as free agents has virtually doubled from 26 percent in 2008 to 44 percent in 2011. Meanwhile the proportion which is directly employed has fallen from 74 percent to 56 percent over the same period.

The survey shows that the vast majority (87 percent) operate without any staff. What is also clear is that the rise of this form of employment has been directly related to global economic conditions. When downturns hit the economy, many of those who are laid off or who have been adversely impacted have little choice but to let their entrepreneurial instincts kick in and embark of some form of self-employment.

The percentage of those who became free agents because of “not being able to find work elsewhere” doubled since 2008. The number that chose free agency because they were terminated or laid off tripled over the same period.

Yet the main factors that drive the growth of free agency are not solely economic and have much to do with a desire to enjoy a degree of freedom and flexibility not afforded in a traditional employment relationship.

The reasons that people give for becoming free agents reveal much about the collective thinking that is evident across the workforce as a whole. It reflects a desire to be in command of one’s “self”, to be able to participate in meaningful work, and to be rewarded in a way that reflects the effort and quality of the input.

When asked about the criteria they used to determine which projects they take-on, the largest percentage of free agents said that they choose a job based on the type of work on offer and their interest in it. In effect, they choose projects that are of interest to them; presumably those that will keep them engaged; that will spur an added effort; that will produce a better quality outcome, and perhaps attract some price premium.

The rise of the free agency phenomenon has also had benefits for those enterprises that use contract or temporary labor. Free agency allows employers to react more quickly to the dynamics of business by being able to expand and contract their workforce according to changing needs. Employers can adopt a just-in-time workforce strategy to save money and streamline processes by maintaining a staff of core personnel responsible for day-to-day operations. When project needs increase or special skill sets are needed, the firm can quickly bring in contractors with the specific skill sets needed. Instead of spending time creating new staff positions and sourcing job candidates, managers can ramp up or scale down according to workflow.

Riding Out the Storm

These distinct shifts in the global workforce—demographic changes, a shortage of talent, the growing empowerment of skilled employees, and the rise of free agents—have converged into a perfect storm for recruiters and managers. The challenge for HR, then, is to develop hiring strategies that attract and keep the most talented people. Because job candidates are also consumers, organizations may want to consider capturing their attention using the same tools used in consumer marketing:

• Attract talent with a strong brand message targeted to specific people.
• Engage talent by offering a recruiting experience that supports the brand message.
• Retain talent in the workplace by validating the promises of the brand message.

Some analysts have said that today’s global economy is transitioning to a knowledge economy, where skills and expertise are a valuable commodity for organizations—just as important as economic resources. Because of the shifting dynamics of the workforce,companies are moving away from a focus on cost and speed to focus on the quality of each hire. They are willing to accept higher costs and slower results, as long as they get the right skills.

Companies depend on innovation to be successful. And talent innovates.

04
MANAGING GENERATIONAL DIVERSITY

The task of managing the generational mix in the workplace for maximum efficiency is one of the most challenging facing managers and business owners today.

The mix of different generations and their associated aspirations, together with the rise of a more entrepreneurial class of free agents is re-shaping the way that businesses operate, and the way employees are engaged and deployed.

In trying to unravel the complexity around this new era in human capital, Kelly Services has, since 2008, been surveying a large sample of individuals from around the globe to gain insights into their thinking about work and career. The Kelly Global Workforce Index (KGWI) seeks the views of respondents in some 30 countries, comprising Gen Y, Gen X and Baby Boomers.

The findings provide a valuable snapshot of just how the different generations in the workforce view some of the key issues that affect work and employment – issues such as training, skills, job mobility, ethics, technology, environmental sustainability, remuneration, globalization, and the role of social media in finding work.

Across each of the surveys, there is a picture emerging of a workforce that is more dynamic, flexible, and one seeking greater engagement with work and wanting to reach new levels of skill. The shape of the labor market is being driven by a more global approach to work; where individuals are willing to move for the right job, and where certain jobs can be performed in many different parts of the world.

There is also a new focus on training and skills development, as the pathway to expertise that will enable individuals to withstand career turbulence and economic uncertainty. Even on a more intangible level, there is evidence about the “value" of work, that goes beyond the direct financial rewards and touches on the dignity and identity that people derive from their jobs.

The explosion of social networking has opened up a whole new area for individuals to seek out work opportunities and discuss work, but also a platform for people to develop sophisticated online personas and to embark on their own personal marketing or “branding.”

For each generation, there are different priorities. Younger workers in the Gen Y group naturally have longer time horizons and their careers in front of them. They have fewer financial commitments and are generally more willing to assume some element of risk with jobs and careers. Gen X are in the prime of their careers, generally with families and financial commitments. Baby boomers will have a different set of priorities and timescale, developed after a lifetime in the workforce and an entirely different learning experience.

One of the enduring lessons from the academic business literature centers on the value that organizations derive from decision-making that is founded on a diversity of knowledge and opinion. Decisions that flow from a variety of inputs are, on the whole, superior to those that eventuate from just a few sources – what’s commonly known as “group think”.

The source of that diversity may vary. It may be generational, geographic, ethnic, occupational or socio-economic. In coming to complex decisions, it almost always pays to have as many varied inputs as possible. One of the critical advantages in a multigenerational workforce is the incredible diversity it can provide.

For managers, a multi-generational workforce may seem the source of much frustration, though it need not be. The challenge lays in recognizing both the similarities between the generations as well as the areas of divergence, and putting into practice measures that address each group’s priorities and interests. Businesses that can manage and capitalize on the generational divide actually have an enormous source of competitive advantage at their fingertips.

The trends and attitudes displayed in the KGWI surveys are revealing, but what should companies do with that information? With four generations in the workplace simultaneously, managers need to understand how to deal with the dynamics of change and how to maximize performance. One of the realities of this new era in workforce planning is that a new generation of employees is moving in and assuming many of the tasks and responsibilities, including many leadership roles, previously held by the baby boomers.

One of the key issues for enterprises is how to provide the emerging generations with the opportunities and challenges they deserve, while retaining the substantial repository of acquired knowledge held by the Baby Boomers. Managing this migration from the mindset of Baby Boomers to the viewpoints of Gen X and Y becomes critical.

Recruiting and Training Strategies

One of the most challenging aspects of managing a multi-generational workforce is overcoming the stereotypes inherent in traditional staffing strategies. Companies need to realize that the landscape has changed.

• Hiring managers need to be educated about the war for talent and the contributions offered by free agents. Because many companies are now using a just-in-time workforce and the job market is packed with free agents, job applicant resumes may not show large chunks of time spent with employers. But rather than being concerned by short employment lifecycles, hiring managers should evaluate the knowledge that workers have gained and the skills they have accumulated as a result of working for different employers in various positions.
• The age of the 9 to 5 workday is long gone. Companies must offer employees flexibility in work schedules and supportive structures, allowing people to build their own schedules that fit their work styles and their lifestyles. These changes are most important with Gen Y workers, who are perfectly comfortable making sideways career moves that years ago would have sounded a career death knell. Instead of climbing a corporate ladder, Gen Y workers are focused on a career lattice—lateral movement that brings new opportunities, chances for development, and intellectual challenges. These days a resume peppered with a variety of jobs doesn’t indicate an unstable employment history; it means that the candidate has had the chance to learn more skills and become more marketable, and probably more valuable. Gone are the days of a resume showing several decades of working for the same employer.
• Employers need to consider how each generational group interacts with other groups and with management, and focus on building teams—not just across generations, but across cultures as well. Exploiting the different strategies, insights, and ideas provided by multi-generational project teams can help increase productivity, efficiency, and quality.
• Employees should be educated on the benefits and challenges of generational diversity. Understanding the differences in values, work styles, and behaviors helps everyone understand the needs of each group. Taking proactive steps to build knowledge and empathy among all employees will keep different groups from judging others for their perspectives, desires, demands, and expectations.
• Companies need to start building benefits programs to leverage different workforce expectations. Retirement policies may be key to retaining experienced workers who have reached retirement age but want to continue working. Investments in “reinventing” or “transitioning” retirees will help keep workers in the labor force longer.
• Offering flexible options and performance rewards can help increase retention of Gen X workers. Training programs geared toward Gen Y workers will help to promote the growth of that segment of the workforce and boost retention rates by keeping employees engaged.
• In today’s project-driven business landscape, companies need to streamline staffing strategies by developing hiring practices that enable ease of entry and exit from the organization. Companies can quickly ramp up or scale down their workforce as needed.

Retention Strategies

Well-developed recruiting strategies that make a company attractive as an employer will help entice and recruit top talent. But hiring the right people is only half the battle—retention is equally important.

• To appeal to the widest pool of candidates, companies should build flexible work schedules and the physical and technological infrastructure to support them. Start out by establishing policies about flexible work schedules that will enhance employees’ work/life balance without adversely affecting their productivity.
• Invest in technology for mobile offices and online information sharing so flexibility can be seamlessly integrated into the work environment.
• Institute and encourage “career development” conversations with employees. Keep employees engaged by offering accelerated onboarding programs and cross-functional rotational work programs that offer lateral movement and prevent boredom. Provide opportunities for Gen Y workers to attain career goals that are self-defined, not pre-defined.
• Organize multi-generational project teams that will engage and empower Gen X, Gen Y, and mature workers to tap into the unique contributions of each group.
• Aggressively manage retirement policies and programs that provide special project opportunities for each generational segment of the workforce. Create mentoring and other internal development programs to encourage workers to share knowledge.

According to Dr. Nancy Ahlrichs, author of Manager of Choice, people will come to a company because of the company’s reputation, but they will stay—or not stay—because of a manager. Managers should focus on developing skills in talent scouting and building relationships, trust, skills, and a solid organizational brand. In today’s highly competitive global workforce, all generations are looking for innovations in the work environment that will attract them and encourage them to stay. Companies should use whatever tools they can find to connect with all candidates and interact with them in a targeted manner.

Branding and Communication

Companies need to stop thinking of their brand only as their external face to the world, and start thinking of it as an employer brand. The brand as a “business” may be very different from the brand as an “employer”. Sure, Google® is a great search engine, but they also have a brand as being a great employer. In order to attract top talent, it’s necessary to provide an employee value proposition so candidates clearly see the value on offer.

• Strengthen the organization’s recruiting and retention messaging to create a solid employer brand that appeals to all generations. Establish supporting policies and procedures that differentiate product/service and employer branding. Develop hiring strategies that attract and keep the most talented people.
• Build transparent internal and external corporate communication programs. The Internet has commoditized information, and as they say, “information is power.” Today’s technology allows younger generations much easier access to the truth, so employers should give it to them ahead of time to encourage loyalty and increase employee engagement.
• Create programs that entice the Gen Y community, and integrate other generations in the implementation of those programs. Traditional mentoring and reverse mentoring programs are excellent ways to take advantage of having different generations working together.
• Design and use tools that connect with target candidates in their own voice—but you must know what that is! Key messages, tone, and imagery used in employee communications should be appropriate for the generation they are targeted toward. Millennials in particular are interested in knowing why they should come and work for you.
• Consider designating someone to be a Chief Reputation Officer to protect your employer brand. The reputation of your company doesn’t depend only on how much people like your products and services—your reputation as an employer can affect your reputation as a company.

05
SUCCESS STORIES

Companies everywhere are sitting up and taking notice of the shift in control that’s taking place in the workforce. With skilled employees in demand and jobs plentiful, some employers have taken bold and unprecedented steps toward making their workplace more enticing so they can attract the best workers and retain them.

Cisco Systems

Cisco, a leader in advanced network technologies, goes to great effort to create a workforce that maximizes collaboration, and engages employees of all generations. The company has aggressively hired Gen Ys who will soon supplant Baby Boomers as the largest generation in the company. There is an almost fanatical preoccupation with communicating to employees the company’s “big picture” vision of strategy and future development. It uses Web 2.0 technologies to increase interactions across its virtual and global workforce.

The company puts a big investment into career development by identifying individual’s strengths and allocating roles that capitalize on those strengths. Executives are encouraged to help individuals build a very clear picture of what a future career path will look like. They also recognize that lifestyle and health are important, and that a major area for disengagement is through health problems. The firm’s wellness center at its headquarters in San Jose serves 18,000 employees and their dependents.

Its management structure is founded on maximizing collaboration and engagement. A complex network of cross functional councils and boards are the primary source of decision-making. Those who are in this creative loop have a rich source of input from a multi-generational perspective, and are actively engaged, not just in performing work, but contributing to the direction and strategy of the firm.

L’Oreal

L’Oreal, a world leader in the cosmetics industry has won a number of international awards for best practice in managing diversity in the workforce. It places a very high emphasis on diversity in all its forms as part of its culture and its operating principles. Diversity is stressed at every level – the individual, the teams and even among its clients.

The achievement of a diverse organization is facilitated by its structure which promotes autonomy and collaboration, and has a distinct lack of hierarchy, even to the point of emphasizing oral communication over written procedures.

With more than 50,000 employees worldwide, L’Oreal has a dedicated program to encourage career development and employee engagement, built on a system of employee stimulation, training and education, and appraisal. Employees are aided in their career development by a system of promotions to encourage cross-functional learning, with geographic promotion encouraged across the enterprise.

L’Oreal takes an intense interest in the individual, with regular evaluation to determine the needs and professional aspirations of each, so that they have a defined expansion plan within the company.

Sodexo Health Care

Sodexo Health Care needs a very considerable workforce to meets its growth plans. It is expected to hire some two million people over the next decade. To meet that target, it needs managers and staff from all generations. Juggling that workforce to achieve optimum performance is a skill that it has been developing over a number of years.

In essence, the key is in the culture. Sodexo has developed a culture of employee engagement that maximizes service quality while addressing key goals of the individual. It’s also about ensuring that Sodexo’s external focus is in line with what employees expect, so that there is no mismatch between what they are expected to do and what they feel is appropriate.

The Health care division manages food and facilities for almost 2,000 sites in the United States. Employees are engaged in acute hospital care, aged care and retirement facilities. It’s vitally important that employees care about what they do.

Central to their employee engagement strategy is the CARE training program; it emphasizes Compassion, Accountability, Respect, Enthusiasm and Service. They also employ in-field training to improve performance by dealing with various elements of diversity including gender and generational differences. Employees are immersed in highly interactive sessions to help them deal with diversity issues that may arise in the workforce or on the job.

It has embraced technology to help drive the uptake of its training modules and to promote discussion and debate about critical issues. Flexible work options such as shorter working hours for older employees and job sharing have helped to transcend the generational differences and encourage retention.

Another technique has been the adoption of “storytelling” where people from all generations talk about the way they help change people’s lives. It’s become a compelling way of imparting the unique culture of the organization and also a tool to build a bridge between different generations of workers.

Best Buy

Global retail giant Best Buy took workforce innovation to a new level with a radical experiment designed to reshape the workplace and redefine the meaning of work itself. At its Minneapolis headquarters, the company’s Results-Only Work Environment (ROWE) offers workers an extraordinary degree of work/life balance by doing away with most of the rules and restrictions that have traditionally applied to corporate jobs.

Employees can decide how, when, and where they do their work. They are not expected to keep regular hours or even show up at the office every morning. They can work at the office, in a spare bedroom, on the subway, or in a corner café, and they are required to put in only as much time as they need to get their work done. Hourly employees still must work a certain number of hours in order to comply with federal labor regulations, but they can choose when they want to work those hours.

Supervisors encourage interaction between employees, and workers are not criticized for spending too much time socializing or leaving early to take their child to soccer practice. Attending meetings in person is usually optional. The only criteria managers use to evaluate employees is whether or not they meet established productivity goals.

ROWE has significantly impacted the company in many ways, but the most measurable impact is in the statistics. Productivity at Best Buy headquarters increased by 41 percent, and voluntary turnover in some divisions decreased by up to 90 percent.

The cost of turnover per employee today can be in excess of $100,000, so the reduction in turnover at Best Buy has resulted in a stunning financial payoff for the company. The success of the initial experiment led to the company switching the headquarters campus to ROWE on a division-by-division basis in 2002. So far, 60 percent of the 4,000 people at the headquarters have converted to the new way of working.

Google

Google is another corporate giant famous for shaking up the traditional view of the workplace. The top-ranked search engine also continually takes the top spot in lists of best places to work, because the company regularly invests money in their employees to keep them happy and make sure they love their jobs. Fortune magazine estimated that Google spends $72 million dollars a year just on free food for their employees.

Google campuses worldwide are designed to be fun and pleasant places to work. Offices around the world offer such benefits as massages, laundry machines, gyms, organic food, bike repairs, volleyball courts, swings, table tennis, and on-site doctors. Employees have the best technology available to do their jobs, and the company encourages them to spend 20 percent of their time working on projects that contribute to their personal growth.

With its bold and innovative approach, Google hit on an idea that has been hugely successful. Creating an attractive, enticing work environment keeps people on campus engaged and innovative. Job turnover rates are dramatically low and competition is fierce among job candidates, with Google receiving more than 1,500 applications a day.

CONCLUSION

SURVIVING AND SUCCEEDING

With the global workforce aging and declining, it is the right time for companies to develop strategies for recruiting and retaining top talent from all generations. For workforce planning to be effective, HR managers need to sharpen their skills in interpreting and using workforce data to track trends and assess global insights. Knowing what attracts and keeps employees in their jobs is key to ensuring employee growth and satisfaction while supporting corporate goals and containing costs.

The colliding trends in the workforce are not going to change, and the challenges they present aren’t going away. Companies need to act to create a talent management strategy that conquers those challenges. By measuring, developing, and nurturing its human capital, an organization can ensure that its most valuable asset is used effectively and efficiently.

ABOUT THE AUTHORS

Lance J. Richards, GPHR, SPHR is senior director and global practice leader of the Human Resources Consulting practice of KellyOCG. He has overall accountability for the practice on a global basis, in addition to providing thought leadership, business planning, and strategic direction.

Jason S. Morga, PHR is Director of the Kelly Services Americas Marketing Group, which delivers a wide range of interactive and media-rich solutions to support internal and external Kelly clients. Jason has been engaged in human resources and marketing functions for more than 12 years.