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Driving Forces Affecting Human Resource Management

Driving Forces Affecting Human Resource Management

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  • Flexible Spending Account (or Cafeteria plans) - health plan, such as dental and vision expenses and over-the-counter drugs, child care, adult day care for senior citizen dependents that live with you, long term care, adoption assistance

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  • 1. Examining the Driving Forces Affecting Human Resource Management Richard N. Dettling MSHRM, PHR Human Capital Development University of Phoenix, Ft. Lauderdale South Florida Campus
  • 2. A Growing Shortage of Workers in the US: Palpable by the End of This Decade 154 152 Expected Labor Force and 150 Labor Force Demand 148 146 144 142 140 Millions of People 2004 2005 2006 2007 2008 250 200 150 Labor Needed 100 Labor Available 50 0 2012 2002 2004 2006 2008 2010 2014 2016 2018 2020 2022 2024 2026 2028 2030 Source: Employment Policy Foundation analysis and projections of Census/BLS and BEA data. 2005 © All Rights Reserved. 2
  • 3. A Flat or Shrinking Native Population in Almost All Industrialized Countries Percent Change in Working-Age Population % change 2000-2020 30% % change 2020-2050 20% 20% 15%16% 16% 10% 7% 2% 2% 0% -5% -5% -10% -7% -9% -14% -13% -20% -21% -30% -27% -28% US Canada UK France Germany Italy Japan China Source: US Census Bureau International Data Base 2005 © All Rights Reserved. 3
  • 4. Top Ten Countries Based on Population Size and Growth Rates (2005/2050) 3,000 2,500 2,000 1,437 1,628 1,500 2050 2005 1,000 1,304 1,104 500 420 308 260 295 231 258 110.5 100.6 296 222 184 162 144 143 132 128 0 China India United Indonesia Brazil Pakistan Bangladesh Russia Nigeria Japan States 2005 © All Rights Reserved. 4
  • 5. Foreign direct >500 investment (FDI) - 100-500 investment made to 50-100 acquire lasting interest 10-50 in enterprises operating <10 outside of the economy In billions of the investor. Source: Wikipedia , the free encyclopedia; Foreign Direct Investment 2005 © All Rights Reserved. 5
  • 6. Foreign direct investment (FDI %) by country 3.5 3.1 3 2.9 2.5 2.3 2.1 2 1.7 1.5 1.1 1 0.9 0.8 0.5 0.1 0 -0.1 -0.5 2005 © All Rights Reserved. 6
  • 7. Dramatically Different Patterns of Growth by Age 80% Percent Growth in U.S. Population by Age: 2000-2010 3. Rapid growth in the over-55 workforce 60% 48% 40% 18% 20% 15% 5% 5% 0% 2. Few younger workers entering -9% -20% 16-24 25-34 35-44 45-54 55-64 65+ 1. Declining number of mid-career workers Age of Workers Source: US Census Bureau International Data Base 2005 © All Rights Reserved. 7
  • 8. . . . Continuing for Our Working Lives! Percent Growth in U.S. Workforce by Age: 2000-2020 80% 73% 60% 54% 40% 20% 7% 8% 7% 3% 0% -10% -20% under 14 15-24 25-34 35-44 45-55 55-64 65+ Age of Workers Source: US Census Bureau International Data Base 2005 © All Rights Reserved. 8
  • 9. A Pattern Found „Round the Industrialized World The United Kingdom Change in Population by Age Group: 2000-2010 80% Italy Change in Population by Age Group: 2000-2010 60% 40% 80% Germany 22% 20% 60% 14% Change in Population by Age Group: 2000-2010 8% 3% 40% 0% -2% -1% -10% 20% 11% 80% 14% 13% 9% -20% 1% Under 25 25-34 35-44 0% 45-54 55-64 65+ 60% Total -20% Age -9% 40% -24% 27% Source: US Census Bureau International Data Base 24% -40% 20% 2005 © All Rights Reserved. Under 25 25-34 35-44 45-54 11 55-64 65+ Total 0% 0% Age -7% -7% -11% -20% -19% Source: US Census Bureau International Data Base 2005 © All Rights Reserved. -40% 13 Under 25 25-34 35-44 45-54 55-64 65+ Total Age Source: US Census Bureau International Data Base 2005 © All Rights Reserved. 12 Source: Demography is De$tiny, The Concours Group and Age Wave, 2003 2005 © All Rights Reserved. 9
  • 10. In 2000, A Fairly “Young” World . . . Under 5% 5% to 12.4% 12.5% to 20% Above 20% Percent of Population Age 60+ 2000 Source: U.S. Census Bureau 2005 © All Rights Reserved. 10
  • 11. . . . Rapidly Aging by 2025 Under 5% 5% to 12.4% 12.5% to 20% Above 20% Percent of Population Age 60+ 2025 Source: U.S. Census Bureau 2005 © All Rights Reserved. 11
  • 12. Why? Dramatic Increase in Life Expectancy 80 75 Average Life Expectancy at Birth in the U.S. 70 65 60 55 50 45 40 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: U.S. Social Security Administration 2005 © All Rights Reserved. 12
  • 13. The “Sudden” Boom in Life Expectancy Age 80 76.5 70 60 Life Expectancy at Birth: 1000 - 2000 50 47 38 40 36 35 30 30 25 20 10 0 1000 1200 1400 1600 1800 1900 2000 Source: Census Bureau, 2000 2005 © All Rights Reserved. 13
  • 14. Why? Dramatic Drop in Birth Rates 4 Total Fertility Rate 3.6 1960 2000 3.3 2.8 2.9 3 2.5 2.5 Total Fertility Rate 2.0 2.0 2 1.7 1.7 1.6 1.4 1.3 1.2 1 0 Source: Age Wave 2005 © All Rights Reserved. 14
  • 15. Why? The Baby Boom Pattern Every 7 seconds, a baby boomer turns 50 in the U.S. Source: Bureau of Labor Statistics 4.5 The Boom Years: 1946-1964 4.0 Birth in Millions 3.5 3.0 2.5 2.0 1930 1940 1950 1960 1970 1980 1990 Source: U.S. Census 2005 © All Rights Reserved. 15
  • 16. The Three Big Challenges for Human Resources about The Emerging Workforce Immigration • Will the U.S. encourage immigration to deal with the deficit in the workforce? • Immigration Reform? Outsourcing • How fast will it develop? Where? • Cheaper Labor vs. Quality and Control Retirement • Average retirement age continues to lower while life expectancy continues to rise. • More retirees remain active. • Will the average retirement age change? Source: Demography is De$tiny, The Concours Group and Age Wave, 2003 2005 © All Rights Reserved. 16
  • 17. Workforce Poses Many Secondary Challenges Impacting Your Ability to Attract, Retain, and Motivate the Talent You Need • Limited in availability – Workforce growing in the U.S. by only a fraction of a percent per year through the first half of the 21st century • Chronologically older – Individuals over 55 progressively larger proportions of the workforce: 11% in 2000; 20% in 2015; nearly one-third by 2050 • Lacking key skills – Shortages of needed talent, particularly in high skill areas, such as science and engineering disciplines • Global – Continuing growth in off-shoring and ―right shoring‖ • Highly diverse – Diverse in virtually every conventional dimension – race, gender, age, religion and cultural identity – and populated by individuals with widely differing values and assumptions about work itself • Sharing only healthcare as a core value – Unified in the U.S. only by a desire for premium health care benefits – heightened by increasing ―age‖ Source: Testimony by Tamara J. Erickson to the Senate Committee on Health, Education, Labor and Pensions, May 2005 2005 © All Rights Reserved. 17
  • 18. Complicated by the Changing Nature of Work Further Challenging Big Corporations‟ Response • Increased interdependence of countries and cultures–Understanding the international political and economic environment, implications of job creation and transfer, immigration, and familiarity with local regulatory environments. • Technology advancements –The need to work in remote locations, enhance security and increase operational efficiencies, will include more sophisticated, cost-effective means of global communication and self-service applications, among others.  Early 20th Century U.S. Labor was cheap and technology was expensive. Now in the 21st Century U.S. Labor is expensive and technology is cheap. • Outsourcing—transferring of a business process to an external provider • Offshoring —outsourcing of an operation to a firm with principal base of operations outside the country • Terrorism, Safety and Security – There will be continuing concern for general employee safety in the context of unstable countries. • Changing corporate culture – Multinationals will contribute to the expanding definition of coworkers: they are in the next cubicle or in the next country; they are colleagues or suppliers. Source: SHRM Special Expertise Panels 2005 Trends Report 2005 © All Rights Reserved. 18
  • 19. Not a Time of Quick Reactions to Clear, Urgent Signals . . . ... But One of Potentially Dangerous Acceptance of Slow-Moving Trends Source: Demography is De$tiny, The Concours Group and Age Wave, 2003 2005 © All Rights Reserved. 19
  • 20. The Three Big Challenges 1. Impact of Immigration "Our review of economic research finds immigrants not only help fuel the Nation's economic growth, but also have an overall positive effect on the income of native-born workers." -Council of Economic Advisers Chairman Edward P. Lazear; June 20, 2007 Source: The White House (2007, June 20 ) Immigration’s Economic Impact , Council of Economic Advisers, Government, retrieved from http://www.whitehouse.gov/cea/cea_immigration_062007.html 2005 © All Rights Reserved. 20
  • 21. The Three Big Challenges 1. Impact of Immigration • Immigrants are a critical part of the U.S. workforce and contribute to productivity growth and technological advancement • Foreign-born workers accounted for 15% of the U.S. labor force, and over the last decade they have accounted for about half of the growth in the labor force. • Approximately 40% of Ph.D. scientists working in the United States were born abroad. • Immigrants have lower crime rates than natives. Among men aged 18 to 40, immigrants are much less likely to be incarcerated than natives. • When immigrants are added to the US labor force, they increase the economy’s total output. Source: The White House (2007, June 20 ) Immigration’s Economic Impact , Council of Economic Advisers, Government, retrieved from http://www.whitehouse.gov/cea/cea_immigration_062007.html 2005 © All Rights Reserved. 21
  • 22. The Three Big Challenges 1. Impact of Immigration • In 2005, illegal migrants accounted for about 5% of the civilian labor force, or 7.2 million workers out of a labor force of 148 million • Many [illegal immigrants] are working under conditions that are appalling • Some are paid in violations of hours laws; some are children working in jobs they shouldn't be • The illegal immigrants will always win in jobs competition with U.S. citizens. Source: U.S. Census Bureau's March 2005 Current Population Survey 2005 © All Rights Reserved. 22
  • 23. The Three Big Challenges 1. Impact of Immigration Immigration‟s Economic Impact Other 18% Farming 24% Production, I nstallation and Repair 15% Cleaning 17% Food Preparation 12% Construction 14% Source: The White House (2007, June 20 ) Immigration’s Economic Impact , Council of Economic Advisers, Government, retrieved from 2005 © All Rights Reserved. http://www.whitehouse.gov/cea/cea_immigration_062007.html 23
  • 24. The Three Big Challenges 1. Impact of Immigration Foreign-Born U.S. Workers by Country of Origin Latin America Africa Asia Europe North America Oceania Source: DiversityInc Magazine, September 2007, p. 14; based on information from the Center for Labor Market Studies, Northeastern University, 2005 2005 © All Rights Reserved. 24
  • 25. The Three Big Challenges 1. Impact of Immigration Foreign-Born U.S. Workers by Country of Origin The U.S. foreign-born workforce grew by more than 96% from 1990 to 2005-nearly nine 1 times the rate of growth of the native-born 3 workforce. 13 Sources: Migration Policy Institute; 2005 American Community Survey Latin America 52 Africa 26 Asia Europe North America 5 Oceania Source: DiversityInc Magazine, September 2007, p. 14; based on information from the Center for Labor Market Studies, Northeastern University, 2005 2005 © All Rights Reserved. 25
  • 26. The Three Big Challenges 1. Impact of Immigration U.S. WORK FORCE 105 100 95 90 Foreign-born Native-born 85 80 75 1980 1990 2000 2006 Source: DiversityInc Magazine, September 2007, p. 14; based on information from the Center for Labor 2005 © All Rights Reserved. Studies, Northeastern University, 2005 Market 26
  • 27. Higher Homeownership Rates (Foreign-Born vs. Native-Born) Foreign-born Native-born 90 80 70 60 50 40 30 20 10 0 White Black Latino Asian Sources: DiversityInc Magazine, September 2007, p. 14; based on information from U.S. Census Bureau, 2007; Immigrants, Natives, and Homeownership, The University of Michigan, 2002 2005 © All Rights Reserved. 27
  • 28. Source: Migration Policy 2005 © All Rights Reserved. Institute, 2007, 28
  • 29. Immigrants have driven 47% of total US work-force growth since 2000. New immigrants and their children will account for 100% of the US work- force growth between 2010 and 2030* * Assumes net immigration of about one million per year. Sources: DiversityInc Magazine, September 2007, p. 14; based on information from Immigration: Shaping and Reshaping America, Population Reference Bureau, 2006 Source: Migration Policy Institute, 2007, 2005 © All Rights Reserved. 29
  • 30. Median Age of Foreign-Born Population for the United States: 1890 to 2000 70 60 55.9 57.2 51 52 50 43.9 38.5 40 39.9 40 37.1 37.2 37.3 38.1 30 20 10 0 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Source: Migration Policy Institute, 2007, based on the 2000 data are from Schmidley, A. Dianne, U.S. Census Bureau, Current Population Reports, Series P23-206, Profile of the Foreign-Born Population in the United States: 2000, U.S. Government Printing Office, Washington, DC, 2001 2005 © All Rights Reserved. 30
  • 31. Age Distribution of the Recently Arrived Foreign Born, 2005 55-64 4% 65+ 4% 0-15 13% 45-54 10% Eight in 10 recently arrived foreign born in 2005 were of working age. 16-29 33% 30-44 36% Source: Migration Policy Institute, 2007, 2005 © All Rights Reserved. 31
  • 32. Educational Attainment of the Recently Arrived Foreign Born Age 25 and Older, 2005 Master's or Bachelor's higher degree 12% Less than high 17% school 33% Some college High school 15% diploma/GED 23% Forty-four percent of recent immigrants to the United States in 2005 completed at least some college. Source: Migration Policy Institute, 2007, 2005 © All Rights Reserved. 32
  • 33. Spoken English Ability (Self-Reported) of the Recently Arrived Foreign Born Age 5 and Older by Age Group, 2005 Limited English proficiency Speaks English very well Speaks English only Source: Migration Policy Institute, 2007, 10 10 15 13 8 29 18 49 81 69 62 36 5-17 18-44 45-64 65+ 33 2005 © All Rights Reserved.
  • 34. The Three Big Challenges 2. Outsourcing Outsourcing Overview • Subcontracting a process, such as product design or manufacturing, to a third-party company. • Non-core business functions/Cost Center Functions Outsourcing - Clip 2005 © All Rights Reserved. 34
  • 35. The Three Big Challenges 2. Outsourcing 2005 © All Rights Reserved. 35
  • 36. Most Active Areas of Outsourcing Business Process Outsourcing IT Leads as Most Active All others Areas of IT Administrative 22% Outsourcing 27% 9% Human Finance Resources 11% Sales & 16% Marketing 15% Source: Talent Connections, 2005 2005 © All Rights Reserved. 36
  • 37. 2005 © All Rights Reserved. 37
  • 38. How Common is HRO? Source: Talent Connections, 2005 91% 100% In next 5 years, global spending on HRO will 90% double – from $40 From 2002 to 2004, billion to $80 billion. 14% increase in large 80% firms that would 70% 58% consider HRO. 60% 50% 40% 28% 30% 20% 10% 0% Companies Companies with $1 HRO Growth from Outsource Some HR billion+ Annual Second half of 2004 Function Revenues Are Now to First half of 2005 2005 © All Rights Reserved. Considering HRO 38
  • 39. 5 Most Commonly Outsourced HR Services Background Checks 73% FSA Administration 67% Employee Assistance/Counseling 66% Healthcare Benefits Administration 60% COBRA 55% 0% 20% 40% 60% 80% 2005 © All Rights Reserved. 39
  • 40. Other Types Outsourced HR Services Pension Benefits Administration 55% Temporary Staffing 54% Payroll & Software Services 48% Retirement Benefits Administration 47% Recruiting, Staffing & Search - Non-… 30% Recruiting, Staffing & Search - Executives 29% Employee Relocation 29% Training and Development 21% Incentives 19% HRIS & Web-based Services 15% 0% 10% 20% 30% 40% 50% 60% 2005 © All Rights Reserved. 40
  • 41. Least Commonly Outsourced HR Services Employee Communication Plans 10% Policy Development/Implementation 4% Strategic Business Planning 4% Performance Management 3% 0% 2% 4% 6% 8% 10% 2005 © All Rights Reserved. 41
  • 42. 89% 85% Satisfaction? 90% 80% 70% Recent survey of 129 large companies representing 2 million employees. 60% 50% 40% 30% 20% 20% 10% 0% Satisfied with Achieved Hoped-for Achieved Unexpected Outsourcing Benefits Benefits Source: Talent Connections, 2005 2005 © All Rights Reserved. Arrangement 42
  • 43. The Opportunity for a New Life Stage • Twenty-plus years: post- ―Empty Nest‖ and pre- ―Old Age‖ • Unprecedented opportunity Productive  For satisfaction Adulthood?  For exploration and creation  For productivity • Reinventing  Entrepreneurial  Charitable  Flexible • Potential for rejuvenation of the economy? Reap Rewards? Deploy Human Capital Assets? Source: Demography is De$tiny, The Concours Group and Age Wave, 2003 2005 © All Rights Reserved. 43
  • 44. More Years Spent in “Retirement” 30 25 Years 20-25 25 19.4 20 20 15 13.6 15 10 10 5 5 1.2 0 0 1900 1980 1990 2000 Source: Age Wave, based on U.S. data 2005 © All Rights Reserved. 44
  • 45. Many Employees Plan Not to Retire… 34% 25% 20% 16% 4% 1% 50 or Under 51-60 61-65 66-75 75 or older Never At what age do you plan to retire? Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 45
  • 46. Traditional Retirement: Plummeting from the Peak of Productivity, Power, and Prestige 50s or 60s 40s 30s 20s 2005 © All Rights Reserved. 46
  • 47. The Shape of Things to Come: “Down Shifting” for Continued Contribution 50s 60s 40s 70s 30s Career Deceleration 80s Career Development 20s Source: Demography is De$tiny, The Concours Group and Age Wave, 2003 2005 © All Rights Reserved. 47
  • 48. Cutting Back Has New Meaning: Cyclic Work 49% The most popular pattern for 39% working after ―retirement‖ is not part-time, but moving back and forth between periods of working and not working. 12% Working full-time Working part-time Moving back and forth between working full-time and not working Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 48
  • 49. Shifting Values create Changing Motivational Factors Respectful for Authority Anti-authoritarian Alienated Self reliant Loyal to institutions Idealistic Non-traditional Non-conforming Motivated by financial Motivated by Motivated by professional Motivated by social rewards and security changing the world development networks Hierarchical Competitive Information rich Information overloaded Technology as an Technology as a treat Technology as a tool Technology dependent extension of self Before 1946 1946-1964 1965-1978 1979-1997 2005 © All Rights Reserved. 49
  • 50. Core Values of Mature Workers: Traditionalist Shaped by Stable Teenage Years Character-Shaping Events • Stock Market Crash • World War II • First manned space flight • Significant increase in economic prosperity: home, TV, and automobile ownership • Growth in white collar jobs Prime life: Reaffirmation of economic success Red sports cars and trophy wives 2005 © All Rights Reserved. 50
  • 51. Today‟s Dominant Cohort: Baby Boomers Pulling Away from Corporate Life Character-Shaping Events • Assassinations of idealistic leaders, Kennedy and King • Vietnam War, with television coverage and widespread protests • Civil Rights movement • Feminism • Watergate and Nixon’s resignation Midlife: Volunteer work and a search for life‟s meaning Limited engagement with “work” 2005 © All Rights Reserved. 51
  • 52. The Pop Culture Cohort: GenXers Pulling Away from Corporate Life Character-Shaping Events • Iranian Hostages • Latch-key kids • Fall of the Berlin Wall and the end of the Cold War • United States only Super Power • Challenger disaster • War on Drugs • MTV: Heavy Metal, Punk, Grudge music • HIV/AIDS Establishing life: Looking to establish instant wealth Balancing work life and personal life 2005 © All Rights Reserved. 52
  • 53. The Internet Cohort: Nexters Reengineering Corporate Life Character-Shaping Events • Columbine School Massacre • September 11th terrorist attacks and World Trade Center destruction • War in Iraq and Afghanistan • Creation of the Department of Homeland Security • The Internet, iPods, MySpace Starting life: Limiting the risks of corporate assemblage Social needs are met in cyberspace 2005 © All Rights Reserved. 53
  • 54. 4 Generations in the Workplace Traditionalists Baby Boomers Generation X Nexters 15% 10% 29% 46% Source: A Look at Generational Diversity: Managing the Differences; Society for Human Resource Management 2005 © All Rights Reserved. 54
  • 55. U.S. Population 1984-2014 Source: Bureau of Labor Statistics 2005 © All Rights Reserved. 55
  • 56. Lower Organizational Connection Among Mid-Careers Mid-Career (35-54) 64% 60% Mature (55+) 58% 47% 51% 46% 43% 30% I really care about the fate I am proud to tell others I I am willing to put forth This organization inspires of this organization am part of this organization more effort than expected the best in me to help the organization succeed % strongly/moderately agree 2005 © All Rights Reserved. 56
  • 57. . . . And Less Passion and Alignment of Values Mid-Career (35-54) 61% Mature (55+) 53% 50% 49% 36% 43% 33% 34% Time seems to pass I feel very passionate I often feel energized by I find that my values and quickly when I am at work about my job my work the organization's are similar % strongly/moderately agree 2005 © All Rights Reserved. 57
  • 58. Begin Now: Create a New Relationship Between Employees and Employers • Retire “retirement” – The average American can expect twenty or more years of active, healthy life after traditional retirement. We need this talent, and must adopt a more flexible view of work to coax more to stay. • Create bell-shaped career paths – Individuals must be able to continue to contribute to businesses in respected, although less intense ways, into their 70s, 80s and beyond. • Encourage counterintuitive entry points – Allow individuals to begin ―entry‖ level jobs at multiple points throughout their lives, either as a way into new careers or to gain flexible options better suited to a preferred lifestyle. Many individuals will have two and even three distinct careers throughout their lifetime. • Design project-based, cyclical work – Already, 49% of U.S. workers who plan to work during traditional retirement years say they prefer periods of full-time work interspersed with periods of no work. • Accommodate blended lives – Make job sharing and other part-time options widely available • Customize work arrangements – Allow flexibility based on individual needs and preferences Corporations must vary how individuals are compensated, managed, and matched with different types of tasks to attract and retain key talent and create higher engagement Source: Testimony by Tamara J. Erickson to the Senate Committee on Health, Education, Labor and Pensions, May 2005 2005 © All Rights Reserved. 58
  • 59. What is Motivation? You know you are motivated when you . . . • Are excited and enthused about what you’re doing • Resist distractions • Tend to forget about time or place • Ponder current challenges even when you’re not directly involved in the activity • Invest your free time (discretionary effort ) • Identify with the activity Flow • Invite others in (emotional contagion) as defined by Mihaly Csikszentmihalyi, former Chairman of the University of Chicago Department of Psychology Source: Re.sults Project EMP: Excelling at Employee Engagement, The Concours Group, 2004 2005 © All Rights Reserved. 59
  • 60. Why? A Growing Body of Research Links Motivation to Productivity Improvement in Reduced Costs Traditional HR Investments focused only on Productivity Metrics those aspects of the employee Retention rates, ―deal‖ that matter most Acceptance rates Customer Satisfaction Employee Emotional contagion of Enhanced Desirable employees in customer- Discretionary Motivation facing roles Behaviors Innovation Correlation to Outcomes – Insight and intuition – Originality and inspiration Higher share price – Fortune ―100 Best Companies To Work For‖ list – Judgment outperformed the S&P 500 – Humor Collaboration Higher return on assets – Korean firms with higher organizational – Offered input commitment had a higher return on assets – Leadership – Friendship Lower mortality – U.S. hospitals with higher nurse retention have lower mortality Source: Re.sults Project EMP: Excelling at Employee Engagement, The Concours Group, 2004, based on the work of Dr. Jeffrey Pfeffer, Stanford University 2005 © All Rights Reserved. 60
  • 61. How? There Are No Universal “Best Practices” for Enhancing Motivation • Companies with highly motivated employees each do very different things! • But within each, the elements of the employee experience seem to make sense:  The individual’s personality: Tapping into their needs and values  The Organizational fit: Corporation’s values mesh with Individual’s needs  The human resource’s retention practices  The specific roles and tasks: Profile Matching  The day-to-day work environment: colleagues, first-line managers Significant diversity . . . but somehow internally aligned . . . Source: Re.sults Project EMP: Excelling at Employee Engagement, The Concours Group, 2004 2005 © All Rights Reserved. 61
  • 62. Corporate Activism: Encouraging Employees to Lead Better Lives . . . A Better Way Home A Corporate Philosophy Embedded in an Employer Brand Recruiting based on cultural fit, associate emergency fund, extensive training and standards • ―Customer satisfaction is the second priority. The first is employee satisfaction.‖  Chairman and CEO Patrick Flood • HomeBanc Mortgage Corporation defines its mission as showing employees how work can give them a sense of purpose and mission • Corporate philosophy based on the writings of Robert Greenleaf, an essayist and teacher who defined the "servant-leader" as a person who wants to serve first, before aspiring to leadership • Our role is helping ―people exchange ordinary living for an extraordinary life. To me, a job is too small to fill up a person’s spirit. I want to help them find purpose in what they do, see the bigger picture of what we’re trying to accomplish as an organization.‖  Chief People Officer, Dwight Reighard • "You have to realize that when your associates are happy, your customers are happy."  Barbara Aiken, a vice president in the Office of People and Culture 2005 © All Rights Reserved. 62
  • 63. Clear Choice: Flexibility Rules Calling Home Using flexible, at home work arrangements – finding extraordinary levels of engagement • From its launch in 1999, created a reservations ―call center‖ based entirely in employees’ homes • Employees have unlimited shift-trading privileges and participate in self- scheduling and a combination of full and part-time schedules • Results: a 30% boost in agent productivity, 38% increase in service levels, and a 50% decrease in manager workload per agent • Reservationists ―are the people who are the least compensated in the company, but generate its revenue and interface with the customers more than anyone else except the flight attendants. We cannot afford to pay them huge salaries, so let’s make them happier, let’s let them work from their homes. We train them, send them home, and they are happy.‖ —Founder David Neeleman 2005 © All Rights Reserved. 63
  • 64. Are You Relating to the Meaningful Diversity of the Changing Workforce? 2005 © All Rights Reserved. 64
  • 65. “Organizational Fit” – The Challenge of Motivation Productivity Segmentation – Motivation On what basis? Customization – Of which components? “Fit” Flexibility – In which dimensions? With what? 2005 © All Rights Reserved. 65
  • 66. Identifying “Fit” What is “Fit”? Employees fit with Organizations Organizations fit with Employees ―While many forces can operate to move a company toward ever higher levels of workforce homogeneity, some firms explicitly seek ―non–right types‖ in an attempt to effect organization change and to take advantage of workforce diversity‖. (Dreher & Doughtery, 2001, Chpt 3. pg 6.) 2005 © All Rights Reserved. 66
  • 67. Identifying your Culture – Corporate and Departmental Do your employees match: Styles of Management: X and Y styles Organizational Employee‟s Needs Offerings Corporate Values 2005 © All Rights Reserved. 67
  • 68. Searching for Meaningful Differences and Drivers of Motivation Survey of 7,718 Adult Employees Who Work 30+ Hours per Week Measured: • Current levels of motivation • Psycho-demographic characteristics related to the role of work in respondents’ lives, and • Preference for and satisfaction with various ―deal‖ attributes 2005 © All Rights Reserved. 68
  • 69. Sources Agree: Few Employees Are “Motivated” in Work Random samples of the working population in the U.S. over 18 years of age 100% 90% 29% 17% 20% Motivated 80% 64% 70% 62% 55% 60% Neutral 50% 40% 30% 20% 10% 19% 18% 16% Bitter 0% Gallup Towers Perrin EEE Source: The Gallup Organization, Towers Perrin, and The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 69
  • 70. Breakthrough Results from EEE • Six very different roles that work plays in our lives –  six statistically-valid segments • Each segment with distinct work-related preferences –  how work is structured, how they are managed, how they are compensated, and so on • Correlation between the extent to which the specific segment preferences are met and employee engagement levels Insight into the values and attributes that are most meaningful to each employee segment Beyond measurement – tangible ways to improve motivation 2005 © All Rights Reserved. 70
  • 71. Recognizing Meaningful Differences – The Six Segments in Today‟s Workforce that Link to Motivation Demanding Self-Empowered Disconnects Innovators 15% 14% Work is generally frustrating Work is about building and its value is largely the something with lasting value near-term economic gain beyond themselves Fair & Square Stalled Traditionalists Survivors 20% 19% Work is about the Work is a source of American dream – a livelihood but not yet (or not steady, predictable path currently) a very satisfying to success part of their lives Accomplished Contributors Seek lives filled with change 17% and adventure – work is one of multiple opportunities to Maverick Work is an opportunity to be a achieve these goals Morphers valuable part of a winning team 15% Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 71
  • 72. Self-Empowered Innovators • Work is a source of great personal satisfaction  Most likely of all employees to say they are energized  by their work, and that time passes quickly on the job • Entrepreneurial and creative  Choose jobs offering individual latitude  Avoid structure, routine and detail • Hard-working and long-working: half say they will never retire • Self-empowered: most likely to define success as being true to themselves • Motivated by stimulating work that enables them to continue to learn and grow  Less interested in traditional rewards: compensation, vacation, or benefits Work is about creating something of lasting value Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 72
  • 73. Fair & Square Traditionalists • Highly reliable and loyal  Longest average tenure with their employers of any segment  Enjoy and get satisfaction from their work • Motivated by fair, predictable rewards  Want concrete compensation, benefits and a solid retirement package  Less interest in ―softer‖ benefits like stimulating work or flexible arrangements  The least drawn to riskier compensation like stock or bonuses • Prefer stable, secure work environments  Choose work with structure and routine  Avoid careers requiring entrepreneurial risk-taking or individual latitude • Successful: Above average in household income • Traditional: Describe themselves as family men and women Work is about the American dream – a steady, predictable path to success Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 73
  • 74. Accomplished Contributors • Motivated by the organization’s success • Value teamwork:  Choose work that involves working with others  Place less value than others do on individual financial rewards  Express low need for individual variability: flexible work arrangements or vacation • Strong preference for environments that are congenial  Fun is the number one correlation with engagement within this group  Cooperation and teamwork are also very important (ranked third) • Value competence  Want work that is personally stimulating  Want to learn and grow • Loyal, hard-working, reliable  Willing to put in extra effort – but prefer stable and structured environments, in return Work is an opportunity to be a valuable part of a winning team Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 74
  • 75. Maverick Morphers • Value excitement: not afraid to take chances • Restless and inquisitive  Continuously exploring options and new ways of working  Willing to re-shape rules to fit their lifestyles  Tenures with employers are often brief • Motivated by personal (financial) opportunity: bonus compensation and stock • Independent and self-reliant  Motivated by flexible workplaces and schedules based on their own terms  ―Own‖ their career  Avoid work with significant structure and routine • Attracted to education and personal growth  41% have college degrees (highest percent of any segment)  Value organizations where they can work with other bright people Work is one of multiple opportunities to lead a life filled with adventure Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 75
  • 76. Stalled Survivors • Highly preoccupied by challenges outside of work  Feel pulled in multiple directions  Trying to balance their lives – personally, financially, and emotionally • View their current challenges as temporary  Many are starting their careers, attending school, getting married, having children • Looking for employers who can make it a little easier to cope  Seek flexible work arrangements and roles that allow more balance  Seek additional pay, vacation and family benefits or leave  Gravitate to work with well-defined routines  Tend to avoid work that involves direct personal interaction  Value work environments that are congenial and fun Work is a source of livelihood but not yet (or not currently) a very satisfying part of their lives Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 76
  • 77. Demanding Disconnects • Work is frustrating  Customers, bosses and colleagues are annoying  Do not describe themselves as achievers  Turned off by the nature of their work, by a lack of opportunity, or by perceived unfairness in their employment arrangements • Least committed to their employers and least engaged in their work  Gravitate to jobs that are relatively easy to come by, such as those in retail  Avoid work with significant individual latitude or entrepreneurial demands  Most feel that their current organizations do not bring out the best in them • Expect a lot  Place high value on traditional compensation and lucrative benefits packages  Want stability and security, more recognition and more reward Work is generally frustrating and its value is largely (only) its near-term economic gain Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 77
  • 78. Work is Clearly Not the Same Thing To All People, Therefore People are Not Motivated by the Same Thing • Not all people are equally well-suited to all types of work • Not everyone values the same things from the work experience • There is not one definition of a ―good‖ manager • It is smart to target employees; ―Profile Matching,‖ that are best for your firm and the type of work you need to do  Richard Dettling: First, get the right people on the bus  Old Management Wisdom: Hire for attitude; train for skill • Consistency is key:  Right segment(s) for your business  Fit with your corporate culture, values, and external image  Appropriateness for the type of work  Alignment of all parts of the employee experience – job design, compensation, management style, and so on  In short, a compelling, consistent employee brand 2005 © All Rights Reserved. 78
  • 79. Varying Motivational Preferences for the Employee/Employer Relationship Fair and Square Traditionalists Long-term/ Retirement Big Picture savings and Benefits or Impact pensions Self-Empowered Innovators Work that is worth-while to society Maverick Morphers Bonus payments and stock options Stalled5Survivors Immediate Raises and Benefit or Impact childcare Demanding Accomplished Disconnects Contributors Healthcare Cooperation and salary and teamwork Economic Psychosocial Rewards Rewards Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 79
  • 80. Rank-Ordering of Motivational Preferences: Wide Variation Self-Empowered Fair & Square Innovators Traditionalists  Work that enables me to learn and  Comprehensive benefits package grow  Comprehensive retirement package  Work that is personally stimulating  Workplace that is enjoyable  Workplace that is enjoyable  Flexible work schedule  Work that is worthwhile to society  Ten percent more in total compensation  Flexible work schedule  Work that enables me to learn and  Comprehensive benefits package grow  Comprehensive retirement package  Two weeks additional paid vacation  Flexible workplace  Work that is personally stimulating  Ten percent more in total  Work that is worthwhile to society compensation  Flexible workplace  Two weeks additional paid vacation Note: BLUE bold indicates that the segment places MORE importance on this element than most other segments do. RED bold italic indicates that the segment places LESS importance on this element than most other segments do. Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 80
  • 81. Are You Satisfied with Our Benefits Program? No . . . But it hardly matters to me. The fundamental work is so important and No . . . challenging And its really stressful for me. The security of my family and our future – making sure we‟re covered under every uncertainty – is very important. 2005 © All Rights Reserved. 81
  • 82. Motivation Preferences for Management Style: No Common Definition of a “Good Manager” "Catalyst” • Eliminate bureaucracy and remove logistical impediments Self- • Offer ―stretch‖ projects Empowered • Be aware of signs of burnout and over extension Innovators • ―Promote‖ their work "Accountant” • Be clear and up front on expectations; follow through • Tie compensation to clear goals Fair & Square • Create a path that respects experience and tenure Traditionalists • Provide regular professional development Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 82
  • 83. Are You Satisfied with Your Manager? No . . . X type management He drives me crazy with excessive structure and oversight. Yes . . . The communication is frequent and thorough. I appreciate the detailed feedback and regular reviews. Y type management 2005 © All Rights Reserved. 83
  • 84. Employee Preferences Vary Across the “4 C‟s” Construct Structure and definition of the work What’s the job? Degree of definition, pace, risk, degree of team interaction Compensation The entire scope of the “deal” What do employees Salary, benefits, deferred compensation, learning get in return? opportunities, satisfaction from giving back, pleasure from social networks Connection Preferred style of management How do we relate? Amount of interaction, frequency and formality of feedback, preference for hierarchy or participative management Communication Key messages and shared values Why do we care? Alignment with core values Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 84
  • 85. A Common Condition: 4 C Misalignment! Self-Empowered Fair & Square Accomplished Maverick Stalled Survivors Demanding innovators Traditionalists Contributors Morphers Disconnects Construct Career paths are well- defined and structured Compensate Salaried by level; generous monetary benefits Connect Expectations of high performance and teamwork Communicate Create a lasting legacy Collaborate with world leaders Source: The New Employee/Employer Equation, The Concours Group and Age Wave, 2004 2005 © All Rights Reserved. 85
  • 86. Immediate Contribution and Long-term Context Use newest hires to develop the next generation of strategic ideas, products and leaders • Significant challenge and risk: A three-month in-house immersion process for all new employees  Month One – Stretch challenges, resulting in intense teamwork, deep bonds with peers, character by being stretched beyond the point of failure  Month Two – Charged to come up with breakthrough new product or service ideas and to develop the business and marketing plan working with Trilogy’s best and most senior people • Responsibility to “own” your career  Month Three – Building on connections with projects or sponsors, a rigorous evaluation by section leaders, managers and fellow graduates, and a list of specific short and long-term goals, find own place in organization • Exposure to leaders and experts: Run by top management, including the CEO • Opportunity for broad impact: Dramatic benefits for the organization  Primary R&D engine  Development and proving ground for the company’s future generation of leaders  Constant source of organizational renewal and transformation Segment Alignment: Self-Empowered Innovators; Maverick Morphers 2005 © All Rights Reserved. 86
  • 87. Creating a Strong Link from the Past . . . to the Future Reminding Employees of the Heritage and the Goal Segment Alignment: Self-Empowered Innovators; Accomplished Contributors 2005 © All Rights Reserved. 87
  • 88. Employees Caught Doing Things Right Spot Reward Program in the Hands of Attentive Line Managers • Immediate, short-term, task-specific rewards: Outstanding overall employee recognition program  Little money available for cash awards  Uses day-to-day, informal, creative recognition, delivered with sincerity • Managers focused on close connections: Ability to give recognition seen as a key leadership capability  Sincere, specific, timely and personalized  Managers measured on recognition of their staff – who is being recognized, by whom, and how often  Managers held accountable for making and maintaining connections with employees • Customized: Programmatic support  Leadership training programs on personalized recognition  Tools and exercises available to help supervisors get to know individuals’ recognition preferences Segment Alignment: Stalled Survivors and Demanding Disconnects 2005 © All Rights Reserved. 88
  • 89. Investing in a Common Base of Competence A Well-Defined Career Path, with Detailed Training, Creates Fierce Loyalty • Specific well-structured process, clearly communicated: Extensive, well-defined training  New recruits start with a full 5-day training program  Managers expected to spend extensive amounts of time with each individual employee  During the first year, new employees get 235 hours of training  In following years, employees get an average of 160 hours of training  Continuing education program – a three-day intensive training program for career-minded employees from across the organization, including presentations by staff from every department, covering every facet of the firm • Long-term, career development focus: Success based on attracting, training and retaining a highly capable and fiercely loyal workforce through a culture of trust and openness  Employees motivated by an atmosphere of teamwork and service where helping customers is perceived as a public good  Extensive and ongoing investment in employee training and indoctrination in company values Segment Alignment: Fair & Square Traditionalists, Demanding Disconnects 2005 © All Rights Reserved. 89
  • 90. Recruiting for – and by – the Team Employee teams recruit new employees, using peer pressure to build performance • Team-based processes – hiring, workflow: Employees at Whole Foods have complete control on who becomes part of their team  Every store is divided into teams  New employees are hired into one of the teams on a provisional basis  After four weeks of work, the team votes whether the employee gets to stay or not; requires 2/3s ―yes‖ • Team-based compensation: Pay beyond base wages linked to team performance  People don't want buddies; they want workers -- people who are going to make them some money  Teams that do well share in the profits -- up to $2.00 extra an hour is paid right back to team members, every other paycheck (13 times a year) • "Customers experience the food and the space, but what they really experience is the work culture. The true hidden secret of the company is the work culture. That's what delivers the stores to the customers.‖ -- Chris Hitt, former President of Whole Foods Segment Alignment: Accomplished Contributors 2005 © All Rights Reserved. 90
  • 91. Multiple Brands Based on Segmentation Using its Customer Insight Unit, normally dedicated to understanding the brand among shoppers, to segment the workforce • Ambitious business needs: Goal to differentiate the Tesco deal from competitors’ by offering choice around pay, training, development and benefits • Thoughtful, in-depth understanding of meaningful differences: Understood drives and needs by segment • Customization: Tailored the employment proposition to enhance overall commitment levels and improve retention  Created a portfolio of programs to offer more choices to employees and reflect the values and motivations of the different types of employee  For example young parents can take advantage of childcare vouchers, or highly ambitious employees can choose share options Pleasure Seekers • Organizational reinforcement: Appointed internal ―Brand Managers‖ Want it All Work-Life Balancers Identified five broad attitude Live to Work segments within the Tesco workforce Work to Live Source: Case Study developed by Lynda Gratton, London Business School 2005 © All Rights Reserved. 91
  • 92. Plotting Your Journey to Extraordinary Motivation 3. Design What employer brand is optimum? Engagement How can you create a compelling Levels, Employee employee experience – high level design Segments and of the 4C’s – for each targeted segment? 1. Context Current Deal Satisfaction Business Brand Transition The Current Organization’s Outcomes Aspiration Plan for Employee Hidden Logic and Future and Target Alignment of Experience: and Change the 4C’s Workforce Segments’ the 4C’s Readiness Requirements Experience External 4. Transition What are the Brand Attributes What is the organization’s ability to elements of your implement realignment of the 4C’s? employees’ experience 2. Assessment What are the rules governing change today? What workforce do you have? in your current culture? How motivated are they today? What is the optimum transition What workforce do you need? process? What workforce have you promised? 2005 © All Rights Reserved. 92
  • 93. The Evolving Philosophy of Performance Management Focus on . . . Efficiency Talent Motivation Philosophical Management to Management by Management of Focus standards objectives (customized) employee experience Variation Vary what we Vary what the expect you to do corporation will for the do for you corporation 1950‟s 1980‟s Today 2005 © All Rights Reserved. 93
  • 94. Going Forward: Shaping the New Workforce – Five Key Shifts for HR Leaders  Shift your focus from reactive activity to thoughtful “what if” Create a long-term workforce strategy that addresses uncertainties related to future needs and counter-intuitive sources of talent. Address the uncertainties and options ahead.  Shift HR capabilities from “doing” to designing and measuring Design operations for world-class execution through efficient, flexible processes, at the necessary service levels, whether within the firm, or through outsourced relationships.  Shift the culture from competition to cooperation In a world where value is created through innovation and resources are coupled flexibly, cooperation becomes a critical organization capability. Become masters of cultural change.  Shift the goal from employee satisfaction to employee motivation Improving motivation is a powerful lever to improve productivity. Most companies have exhausted their ability to squeeze increased productivity through top-down pressure.  Shift the HR philosophy from “equal” to “fair” Evolve from treating everyone the same, to customizing arrangements to individual needs and preferences. Develop strong ―marketing‖ capabilities: world-class skills in survey research, segmentation, ―brand‖ management, targeting, and communication strategies. Source: Tamara J. Erickson, The Concours Group 2005 © All Rights Reserved. 94
  • 95. The Goal: The Employer of Choice for the Employees You Need • A company that outperforms competition in the attraction and retention of the type and quantity of talent needed for business success • An organization that is able to create extraordinary levels of employee motivation:  Above average levels of productivity  High customer satisfaction  Clear link between employee performance and business results • A distinct brand that improves the quality of candidates, improves retention, and enhances motivation A Compelling Employee Experience A Highly Productive, Appropriately-Skilled Workforce 2005 © All Rights Reserved. 95
  • 96. The Three Big Challenges 2. Outsourcing • HR Outsourcing Overview • Impact on Companies • Impact on HR Profession • Impact on Your Career • Selecting, Managing, and Measuring Outsourcing Providers • Helpful Resources 2005 © All Rights Reserved. 96