Keeping the Workforce – An acute workforce shortage stares us in the face
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Keeping the Workforce – An acute workforce shortage stares us in the face

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A comparison of the workplace expectations of baby boomers and millennials reveals some interesting findings. While mature workers seek an income (or nest egg) to live on and want to make productive ...

A comparison of the workplace expectations of baby boomers and millennials reveals some interesting findings. While mature workers seek an income (or nest egg) to live on and want to make productive use of their time, for the young workforce, a job is all about career and skill development, and exposure to cutting edge technology. But they also have several things in common, such as a desire to contribute to society through work; a preference for flexible work arrangements and an appreciation of the social connections formed at the workplace. Generation X, on the other hand, is more concerned about the corporate ladder and compensation. How to encourage older workers? Convince them that they can still contribute. Managing the aging workforce is only part of the story. To ensure access to world-class talent and turn their human resources into a competitive advantage, organizations need to configure their workplaces to meet the future needs of their people.

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Keeping the Workforce – An acute workforce shortage stares us in the face Keeping the Workforce – An acute workforce shortage stares us in the face Document Transcript

  • Insights Keeping the Workforce An acute workforce shortage stares us in the face - Dr. Martin Lockstrom, Girish Khanzode Abstract 20 countries around the world currently show zero or negative population growth. With birth rates on the decline, the aging world may well be sitting on a demographic time bomb. www.infosys.com
  • 5 Declining Birth Rates The worldwide fertility rates for developed and developing countries are dropping and will stagnate. 4 One quarter of European Union now has a declining population 3 Low birth rates will result in shifting of talent base from established geographies (Europe as stated in slide) to emerging geographies giving 2 rise to more remote work FORECAST 1950-55 65-70 80-85 95-2000 2010-15 25-30 45-50 The shift in age profile has serious implications for nations, industry and society, not least of which is an acute workforce vacuum. By 2025, the United States alone will be short of around 29 million workers, as 77 million baby boomers (those born between 1946 and 1964) retire from the workforce, but only 48 million individuals belonging to Generation X (those born between 1965 and 1980) enter it. This retirement will deal a double blow to organizations unless they find a way to prevent the tacit knowledge (which apparently accounts for 42% of a companys knowledge) and connections held by their mature workers from leaving with them; for research shows that when even a few key members of a network - such as those who possess important knowledge or integrate the network - leave, they leave a disproportionate impact on its connectivity.2 | Infosys
  • Baby Boomer Retirement willCreate a Workforce VacuumBy 2025, total 77 million The group of 48US Baby Boomer would million Gen Xers is tooretire, creating a loss of small to replaceexpertise boomers 77 Millions 48 Millions The young, tech-savvy generation that will fill this gap has entirely different work expectations from earlier generations Therefore, it is in the interest of employers to retain or re-hire their senior workforce. Studies indicate that only 20 to 40% of 55 to 65 year olds say that they are fully retired, implying that the majority is still open to the idea of employment. The desire to continue working beyond retirement age is primarily driven by economic factors, including the rising cost of healthcare and the need to financially provide for longer life expectancy as well as bolster savings that were badly impacted by the financial crisis. That being said, companies must recognize that their older employees will stay on only if their expe ctations (shorter/flexible working hours, respect of colleagues or sense of fulfillment) are met. Infosys | 3
  • Another way that organizations can bridge the workforce gap is by recruiting millennials - those born in the two decades between 1980 and 2000. Once again, they will only be able to retain these employees by catering to their important needs, some of which are unique to their generation. At the top of the millennial employees’ wish list is access to technologies at the workplace, which are at least as, if not more sophisticated than what they’re habituated to in day-to-day life. Balancing the idiosyncratic needs of two (or three, when including Generation X) generations will be a daunting task for organizations and their HR managers. Baby boomer retirement will affect This paper suggests ways to meet this challenge. almost all industries, but have the One of the key reasons for high attrition rates and premature retirement is that biggest impact on sectors, such as organizations often fail to take their employees’ expectations into account. energy and utilities, where nearly The risk of employee discontent is amplified in the case of a demographically 3 in 5 workers were aged between diverse workforce, where employees from different generations have varying 41 and 59 in 2005. Government, and often conflicting needs. aerospace and education sectors will also be significantly affected. Accordingly, employers must pay closer attention to their demographic structure, in order to assess who knows what and whom, as well as gain a better understanding of work patterns and attitudes toward technology among different age groups. One size does not fit all. A comparison of the workplace expectations of baby boomers and millennials reveals some interesting findings. As expected, the two groups have very different career motives - while mature workers seek an income (or nest egg) to live on and want to make productive use of their time, for the young workforce, a job is all about career and skill development, and exposure to cutting edge technology. But they also have several things in common, such as a desire to The problem is compounded by contribute to society through work; a preference for flexible work arrangements the fact that it takes very long to (albeit for different reasons: baby boomers want a lighter workload, whereas train the new workforce in these millennials are very focused on work life balance and being single, can afford sectors (as long as 5 years in the “flexibility”); and an appreciation of the social connections formed at the energy sector), where most of workplace. This is not surprising given that millennials are the children of baby the job-related knowledge is tacit boomers, and therefore the inheritors of their values. in nature. Generation X, on the other hand, is more concerned about the corporate ladder and compensation. It is imperative to reduce attrition among workers of all ages. A significant proportion of people of retirement age want to continue working but don’t because they feel that their companies’ structure, processes or culture, are not supportive of their needs. On their part, organizations might be prejudiced With technological advancement against extending the tenure of older workers, especially since they cost more enabling automation of routine than inexperienced employees. Common stereotypes, painting older employees work, specialized skills and as resistant to new ideas and technology, add to the bias. Before coming to a knowledge are rising in value. hasty decision, HR managers must weigh the higher salaries of mature workers against their higher productivity, the cost of recruiting and training fresh hires, and of course, the loss of connectivity and tacit knowledge occasioned by their exit. A closer look reveals that the workplace expectations of the baby boomer generation are mostly about finding fulfillment and dignity. By providing an intellectually stimulating environment, autonomy, exposure to new challenges and recognition, organizations can hold on to their valuable and mature human resource assets for a while longer. And what about the millennial generation?4 | Infosys
  • Let’s take a look at some typical personality traits to understandthe influences shaping the millennial employee. The millennial is adigital native, a technophile. He is spoilt for choice, in an Internetworld of instant gratification, and ever improving services andexperiences, many of which are available free of cost. His decisionsare shaped by peer opinion, flowing freely over the online socialnetworks that he is part of. As a consumer, the millennial is highlydemanding – (remember, he benchmarks against the Googles,Amazons and Facebooks of the world) – and equally fickle. There’sno reason to believe that he will be any different as an employee. Incontrast to the older generation worker who would spend an entirelifetime in a single company, the millennial is expected to be a jobhopper. Born to financially secure (helicopter) parents, the millennialcan afford to be choosy about where he works. Different problems require differentWhat this means is that employers will have to make special effortsto attract and retain millennial talent. In 2010, the Harvard Business solutions.Review published that the millennials’ top expectation from theiremployer was an opportunity to enhance skills for the future,followed by adherence to strong values, customizable benefits,work-life balance and a visible career path. They viewed the boss as Although workforce aging is more of an issuesomeone who would guide them in their career, and as a source of in the United States and Europe at present,honest feedback and mentoring. The millennials’ love of technology countries like India and China, despite largewas once again evident in their strong desire to learn new technical youthful populations, also face talent shortageskills on the job, which ranked above the need to improve personal of a different kind. These high-growth marketsproductivity, leadership abilities, functional knowledge and haven’t yet developed a sufficiently deep middlecreativity. This explains the findings of a survey in which more than management resource pool, so necessary forhalf the millennials said that (the quality of ) technology would nurturing junior employees in any organization.strongly influence their choice of employer. As a result, many employees do not realize their full potential and become discontented. The usualBut as mentioned earlier, like the baby boomer, the millennial also response of organizations is to raise salaries, whichvalues relationships with colleagues, flexibility, peer recognition rather than ameliorating the situation, worsens it,and exposure to new experiences and challenges. as competitors continuously outbid each other toSuch similarities open up many opportunities to organizations to induce a vicious cycle of job-hopping and wagesimultaneously mitigate premature retirement and attrition among escalation. Instead, companies should focus moretheir baby boomer and millennial staff respectively. Flexible or part- on mentoring, coaching and basic orientationtime hours and remote work arrangements answer the need of both training in order to lower the threshold at whichgenerations for a balanced personal and professional life. Mentoring workers become productive.of various kinds - remote, group or anonymous - can bring bothage groups together to benefit mutually. For instance, during thecourse of reverse mentoring, millennials can teach seniors how touse technology, and hone their own leadership skills in the bargain.Seniors can mentor young executives in functional areas, as wellas pass on their wealth of tacit knowledge during face-to-faceinteraction. (This is much more effective than relying solely on acollaborative technology platform to gather and disseminate suchhard-to-codify knowledge.)Needless to say, this inter-generational interaction won’t materializeby itself, needing a mandate from the top as well as internalchampions to spearhead the efforts. Infosys | 5
  • This is not just about the aging workforce. Managing the aging workforce is only part of the story. In order to ensure access to world-class talent in the 21st century and turn their human resources into a competitive advantage, organizations need to configure their workplaces to meet the future needs of their people. Some key trends indicate what these might be • Increasing female workforce. According to the Bureau of Labor Statistics, women employees are a two-thirds majority in 10 industries out of 15 that are tipped to grow the fastest over the next few years. For example, in the United States, women already make up half of the workforce. As organizations hire more women to fulfill various positions, they will have to accommodate their dual responsibilities by offering flexible work arrangement and other support services. • Dynamic working schemes. Working schemes will not only become remote and flexible, but also more innovative. Solutions such as eLancing will be used more frequently to quickly bring a trained workforce on board. • Flexible training. Not just jobs, even training will become more flexible, as younger workers embrace on demand, anywhere, anytime learning. • Smarter communication. Increasing use of personal devices like smartphones (even at work) will enable millennials to maintain work-life balance. • New assistive technologies. These will help the ageing workforce remain productive longer. • Virtual workplace. Distributed technologies will enable all types of workers to work from anywhere to improve productivity, reduce travel time and infrastructure costs, and promote sustainability by leaving a smaller carbon footprint. Organizations that embrace these trends will improve their supply of talent by making existing workers more productive, reducing attrition and delaying the retirement of older employees. Those that reject it may well end up looking down the barrel.6 | Infosys
  • About the Authors Dr. Martin Lockstrom Principal Consultant, Building Tomorrow’s Enterprise, Infosys Labs Martin is a specialist in Supply Chain and Operations Strategy, Outsourcing/Offshoring and International Management. During a six-year stint in China, he established the research and education activities at the SCM, Sustainability and Automotive academic centers at China Europe International Business School, Shanghai.He established the first endowed chair for Purchasing and SCM in China at TongjiUniversity, Shanghai, and was also responsible for setting up Supply Chain ManagementInstitute China, an international network of SCM research and education hubs.Martin co-founded Procuris Solutions, an IT company specializing in SCM-related solutions,offering consulting services to companies like Accenture, Ariba, BMW, Clariant, Dell, Dow,Ernst & Young and Intel, among others.He has a Ph.D. in Supply Chain Management from European Business School, Germany, abachelor’s and master’s degree in Industrial Engineering and Management, from ChalmersUniversity of Technology, Sweden. He speaks Swedish, English, German and Chinese,has published over 50 articles and papers and presented at more than 60 conferences. Girish Khanzode Products & Platforms Innovator for futuristic technologies, Infosys Girish has around 20 years of Enterprise Software Product Development experience. He has built and led large engineering teams to deliver highly complex products in various domains, covering the entire product life cycle. Currently, he is engaged in innovating and building the next generation products andplatforms in the area of future of work. Earlier, he worked on Enterprise DataPrivacy Product. Before joining Infosys, he setup a startup engaged in creatingfinancial technology products. Prior to that he worked at Symantec for 8 yearsand delivered core security technology engines of the company. The productsusing these engines had a combined revenue of more than US$ 2 billion. One ofhis products, Symantec LiveUpdate, had 300+ million software client installationswith 24x7 operations to protect worldwide computers from emerging viruses inreal time.Girish holds an M.Tech. degree in Computer Engineering and a bachelor’sdegree in Electrical Engineering from Government College of Engineering, Pune. Infosys | 7
  • About InfosysMany of the worlds most successful organizations rely on Infosys todeliver measurable business value. Infosys provides business consulting,technology, engineering and outsourcing services to help clients in over30 countries build tomorrows enterprise.For more information, contact askus@infosys.com www.infosys.com© 2012 Infosys Limited, Bangalore, India. Infosys believes the information in this publication is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledgesthe proprietary rights of the trademarks and product names of other companies mentioned in this document.