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HayGroup_Mind The Gap_ Managing Across Generations_Feb2013

What does it take to lead Indonesia's inter-generational tribes towards 2020?

By 2020, Indonesia will have the third fastest-growing workforce in the world. Our population will stand at 262 million; 60% of whom will be living in cities. As such, the workplace in Indonesia is facing a generational adjustment of values, learning and working styles that will have a huge impact on how leaders think and act.

In preparation for this seismic shift, what can companies in Indonesia do to ensure continued growth? What are the gaps between employee expectations and our HR tools? How can these gaps be bridged?

Read to find out.

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HayGroup_Mind The Gap_ Managing Across Generations_Feb2013

  1. 1. 1 Managing across generations in Indonesia What does it take to lead Indonesia’s inter-generational tribesFeb 2013 towards 2020? Introduction By 2020, Indonesia will have the third fastest-growing In this paper, we will discuss the above questions, workforce in the world. Our population will stand at examine some of the ground work that needs to be 262 million; 60% of whom will be living in cities. As done now, using a Hay Group client as an such, the workplace in Indonesia is facing a illustration. The company is a premier financial generational adjustment of values, learning and services firm in Indonesia with over 400 employees. working styles that will have a huge impact on how leaders think and act. Acknowledging that they are primarily a knowledge- based company where employees are a key driver In preparation for this seismic shift, what can com- of growth, the company conducts annual employee panies in Indonesia do to ensure continued growth? engagement surveys. Its 2012 results had highlighted What are the gaps between employee expectations the inter-generational needs of its workforce, thus and our HR tools? How can these gaps be bridged? making them re-think the current HR tools for motivation and retention. ©2013 Hay Group. All rights reserved
  2. 2. Managing across generations in Indonesia One size doesn’t fit all Take a look around any organization in Indonesia today. Just simmering below the calm surface, there is a serious new challenge. And it has nothing to do with the current economic boom, intense competition, or clueless bosses. Instead, it is the problem of distinct generations — the Baby Boomers, Generation X and Generation Y — working together and often colliding as their paths cross. The situation is no different at one of Employees also are attracted to the Indonesia’s financial services company. chance to learn new skills, work-life Their employee engagement survey balance and competitive pay as key threw up two interesting top-level attraction factors. insights: These attraction factors did not happen ƒƒ The five-year mark seems to be a by accident. Their Head of Human tipping point. Employees who have Resources commented that, “not only served less than five years felt less have we invested in building talent, engaged compared to their career and performance management colleagues who had served for more systems, we also invested in than five years. communicating our employer brand ƒƒ Employees who were younger than 45 to the candidate pool. This means that years old felt less engaged than those consistently for the past ten years, we who were over 45 years old. have had our first choice of candidates.” Hay Group was then commissioned to Why employees stay conduct an in-depth survey to ascertain When it comes to employeeUnderstanding the the attraction, motivation and retentiongenerations retention, there is certainly more factors of the company’s workforce. This diversity of reasons. However, for allBaby Boomer : 1940s – 1959 provided useful action steps to help three generations, the pay must be(50 ~ 69 years old) them fight the talent war in Indonesia, competitive so that they can keep upGeneration X : 1960s – 1979 which rages fiercely in Indonesia’s with their peers (Figure 2).(30 ~ 49 years old) financial services sector.Generation Y : after 1980s For Baby Boomers, accessibility to(up to 29 years old) Why employees join company leaders and opportunity to When it comes to attracting employees, mentor the younger generation are the company’s sterling corporate within the top three reasons for staying reputation and employer brand stands on. Inspired by these findings, the it in good stead (Figure 1). All company is exploring the possibility employees surveyed listed the of tapping this desire to mentor with a company’s reputation as either the first system that co-opts the Baby Boomers or second reason that enticed them to in the development of the next join and its brand as an employer of generation. choice as the fifth reason. ©2013 Hay Group. All rights reserved
  3. 3. 3Figure 1: Why employees joined the companyBaby Boomers Generation X Generation Y Opportunity to learn newCompany reputation Company reputation skillsInternational Opportunity to learn new Company reputationassignments skillsCompetitive pay Competitive pay Competitive payOpportunity to learn new Work-life balance Work-life balanceskillsEmployer branding Employer branding Employer brandingFigure 2: Why employees stay with the companyBaby Boomers Generation X Generation Y Opportunity to learn new Opportunity to learn newCompetitive pay skills skillsLeadership accessibility Competitive pay Competitive payMentoring programs Retention bonus Work-life balance Accelerated careerInternational Long-term incentives developmentassignments opportunitiesOpportunities to learn Leadership accessibility Retention bonusnew skillsLeadership accessibility is also competitive to the market to ensure it isimportant to Generation X, but not able not only to attract, but to retain thementioned at all by Generation Y. This is best talent.not surprising as the older group ofemployees want to work in As for Generation Y, what is crucial isorganizations where their contribution their career development path – it hasis valued and recognized by top to be clear and it has to be So while money is important to them,Interestingly enough, three out of the learning and career opportunities andtop five reasons why Generation X stay work-life balance are also important toon at the company have to do with them. In other words, if a competitorreward: competitive pay, retention were to offer more career opportunitiesbonus and long-term incentive. Over without significantly more pay, chancesthe past few years, the company has are, they will go.adopted a policy of making itself
  4. 4. Managing across generations in Indonesia What motivates employees When it comes to motivation, the Interestingly, as with their peers around generation split between Baby the world, the Generation Y here are Boomers and the other employees are also motivated by appreciation and in stark contrast (Figure 3). For Baby recognition, which must be quick and Boomers, cash reward, company culture, instantaneous. Year-end performance benefits and company focus are reviews and annual bonuses have less important motivation factors. motivating power with this generation. Instead what seems to work better are on-the-spot praise and more frequent In contrast, Generation X and Y are appraisals and reward. motivated by development opportunities, job fulfillment and benefits. For Generation X, the integrity Indeed this is what the company of the company also counts as a practices. “Managers are given the motivation factor, as they believe that discretion to present coffee and meal they are not only serving their direct vouchers to reward exceptional clients but Indonesia’s national interest performance in team meetings. This as well. type of on-the-spot recognition is much appreciated by all employees,” says the company’s Head of Human Resources. Figure 3: What motivated employees at the company Baby Boomers Generation X Generation Y Development Development Cash reward opportunities opportunities Fulfilling & challenging Company culture Benefits provided job Mentoring programs Retention bonus Work-life balance Opportunities for Company focus Company integrity advancement Fulfilling & challenging Appreciation & job recognition©2013 Hay Group. All rights reserved
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  6. 6. Managing across generations in Indonesia Figure 4: Why employees leave the company Baby Boomers Generation X Generation Y Limited growth Limited growth External inequity of opportunities within the opportunities within the compensation organization organization Lack of career Lack of career Lack of career development programme development programme development programme External inequity of Performance assessments Lack of recognition compensation External inequity of Under-utilisation of skills Lack of recognition compensation Limited growth The way people are Internal inequity of opportunities within the managed compensation organization Why employees leave When it comes to reasons for leaving, leaving based on perception – a there is a corollary to why employees perception that they are not joined in the first place (Figure 4). All appreciated, not fairly treated in terms three generations cite external inequity of pay, and not fully valued. This usually of pay, limited growth and career boils down to how their managers treat opportunities. them. Interestingly Generation Y stated Whether these perceptions are accurate “internal inequity of compensation”, or not is immaterial. Like it or not, the whether real or hearsay as a reason for perception is reality that the employees leaving. As with many companies in the experience and they will act based on talent-scarce financial services that experience. sector, this company has seen its pay bands being “stretched elastically.” Hence, the successful retention of employees is contingent on the Baby Boomers leave because they feel leadership and management skills of that their skills are under-utilized. For their direct supervisors. Generation X, their direct manager could also be a reason for leaving. Both This begs the question, how are our Generation X and Y also cite a lack of managers being trained and enabled recognition for their efforts. to retain their employees? Do we know whether our line managers are This is a prime example of the familiar creating high-performance or saying, “people join brands but leave demotivating climates? bosses.” In this case, their reasons for©2013 Hay Group. All rights reserved
  7. 7. 7Managing multiple generationsThe company’s employee survey sheds ƒƒ Not only must there be a Careersome very interesting insights on Management System, there must bemanaging employees in Indonesia. clear communications to employees about the objectives, measurements,ƒƒ Benefits are a very important motivat- and expectations from them. ing factor for all three generations. ƒƒ Awards and recognition, be it a This is a phenomenon seldom report- certificate of appreciation or a ed in other countries and seems to be restaurant voucher, needs to be a peculiarity of the Indonesian market. instantaneous and consistentlyƒƒ The reasons employees join you delivered across the organization. are usually not the same reason for ƒƒ Engage employees in discussions their leaving. With the exception of about their career aspirations and competitive pay, employees join a development needs – today’s younger company because they are attracted generation want an active hand in to the employer brand or corporate planning their future rather than reputation. However, once they are being passive recipients of onboard, competitive pay becomes a management’s will. hygiene factor. ƒƒ The leadership skills of managers andƒƒ The experience of our older the climate they generate are of generation is a valuable resource. paramount importance in motivating Tap on their willingness to share and and retaining employees. mentor their younger colleagues and we will be assured that institutional knowledge is kept within our companies.
  8. 8. Managing across generations in Indonesia From this study, it is obvious that there Hence, I encourage you to conduct such is a no “one-size fits all” approach for surveys, if you haven’t already. If you managing a cross-generational work- already have, then cut your data by force. Each generation comes with its generations and see if there are any own set of values, needs, attitudes and significant trends. In this way, you will expectations of job requirements. not be caught unaware of the shifting mood. The key lies in knowing what each group wants and tailoring our To be ready to cope means getting management and reward systems in a people on the same plane of how to fair and equitable way. Age differences interact and collaborate; can create an insurmountable challenge encouraging and rewarding people if they take us by surprise. who help to build networks and relationships. These important behaviours should be the responsibility So let us not assume that we know what of all managers and is certainly not just motivates the different tribes within our HR’s responsibility alone. Only through workforce. The point of inflexion will be a concerted organizational effort can here soon for all companies in the generational gap be bridged. Indonesia; in fact for some, they are already in the throes of a generational shift. Contact Nidthia Chelvam, Managing Consultant for Hay Group Indonesia, helps companies and family businesses to About Hay Group transform their business strategies into results. He also has Hay Group is a global management extensive line and operational management consulting firm that works with leaders experience with global companies across three continents. to transform strategy into reality and to help people and organizations realize their potential. Visit e| Nidthia.Chelvam@haygroup.comThe content in this report is provided solely for informational purposes. This report does not establish any client, advisory, fiduciary or professional relationship between Hay Group and you.Neither Hay Group nor any other person is, in connection with this report, engaged in rendering accounting, advisory, auditing, consulting, legal, tax or other professional services or advice. ©2013 Hay Group. All rights reserved