Serving the Multigenerational Workforce

Leading People. Leading Organizations.

Serving the Workforce of the Future

Dr. Shirley Davis
Chief Diversity & Inclusion Officer
Society for Human Resource Management

What We’ll Cover Today

• Building Inclusive Organizations: The New Business
Imperative

• Changing Demographics: A New Workforce

• Leading a Multigenerational Workforce

• Designing & Implementing Benefit Plans for a
Multigenerational Workforce

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Building Inclusive Organizations:
The New Business Imperative

Diversity + Inclusion = Diversity Management

Diversity
“the collective mixture of differences and similarities that
includes, for example, individual and organizational
characteristics, values, beliefs, experiences, backgrounds,
preferences, and behaviors.”

Inclusion
“the achievement of a work environment in which all
individuals are treated fairly and respectfully, have equal
access to opportunities and resources, and can contribute
fully to the organization’s success.”

Diversity management
“the comprehensive organizational and managerial
process for leveraging diversity and achieving inclusion
that maximizes the potential of all employees.”

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Workplace Diversity

The collective mixture of differences and similarities that includes
individual and organizational characteristics, values, beliefs,
experiences, backgrounds, preferences, and behaviors.

GENDER
Geographic Location
WORK
Personality BACKGROUND Skin Color/Ethnicity

`tÜ|àtÄ fàtàâá

age
VISIBLE DIVERSITY TRAITS
BELIEFS
Sexual Orientation THINKING Level in Organization
Native born/non native
STYLES DIVERSITY TRAITS
V
A

Behaviors Culture L

Ethnicity
Religion Parental Status
Education
MILITARY EXPERIENCE socio-economic status
U
E
S
Functional Specialty Smoker/Non smoker
Physical Attributes Communication Style Physical Abilities/Qualities
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Why Diversity & Inclusion?

Compliance Case
“Diversity is something
we’re forced to do … by law.”
Business
Case
“Diversity is the smart
thing to do … for
Values Case our business.”
“Diversity is the right thing
to do … for our people.”

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Changing Demographics:
A New Workforce

Changing Demographics: A New Workforce

Workforce 2000 Workforce 2020
The workforce will grow more slowly than at Workforce planning will become more
any time since the 1930s uncertain as retirement ages become
increasingly less predictable

The proportion of women and minorities in The proportion of women in the workforce
the workforce will rise dramatically will have gradually increased to about 50%*

The average age of the workforce will rise, The presence of top-level older employees
and the pool of young workers entering the may cause dissension among their middle-
labor market will shrink aged subordinates eager for promotion

The workforce is aging and thus becoming Older workers will need different benefits,
less willing to relocate, retrain or change such as elder care programs
occupations, yet the economy is
demanding more flexibility

Immigrants will represent the largest share The U.S. population and workforce will
of the increase in the workforce since gradually become more ethnically diverse
Hudson Institute 2000 I
World War Hudson Institute 2020
*U.S. Census Bureau 8
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Changing Demographics: A New Workforce

Workforce 2000 Workforce 2020
Need to recognize the importance of a To increase workforce participation,
flexible workforce through company firms and governments will need to
and national policies accommodate unconventional working
arrangements to encourage
(e.g., flexible workforce programs, people to return or remain in the
revised pension systems, promotion workforce
of retraining and lifelong learning).
(e.g., parents, older workers)

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Changing Workforce Demographics

• By 2050 Asians, Hispanics, African Americans and American Indians
will account for 47.2% of the population
– Currently: 75% of new entrants to the workforce is
women and people of color

• By 2012, the Hispanic labor force is expected to reach 23.8 million

• 10% of the workforce is gay or lesbian

• It is estimated that one in three people has a disability

• The mobile workforce in the U.S. (which has the largest percentage of mobile workers
in the world) is set to become 73 percent of the nation’s workforce by end of 2011*

• More than 28 million Americans now work at least one day per month from home, with
an estimated 100 million tele-working by 2010**

*International Data Corporation
Source: Bureau of Labor Statistics **WorldatWork “Telework Trendlines” survey report 10
10

Changing Workforce Demographics

• Increase in religious diversity

• Growth in number of employees whom English is a second
language

• More than 12 percent of U.S. population is foreign-born;
record increases since 2000

• By 2013, Gen Y will represent the largest percentage of the U.S. workforce
– By 2016 it will be bigger than all other age groups combined.

• Baby boomers want/need to work longer

Planning HR practices and benefits programs to address the needs of
all generations and ethnicities is complex and constantly changing

Source: Bureau of Labor Statistics 11
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The Business Case for Diversity

Over a 10-year period, the index of publicly
traded companies in DiversityInc’s Top 50
Companies for Diversity list outperformed the:

• NASDAQ by 28%
• Standard & Poor’s 500 by 25%
• Dow Jones Industrial Average by 22%

Source: – DeGroat, TJ, No Way to Measure Diversity's Value? Mainstream Article Ignores the Hard Facts, DiversityInc.com
http://www.diversityinc.com/public/19452.cfm
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• A 2009 study by CalPERS found that
companies with a high ratio of diverse
board seats exceeded Dow Jones
average returns

• Each of the selected companies had
an executive responsible for diversity
initiatives

• Women make up more than half of the
U.S. population but hold only 17
percent of Fortune 100 corporate
board seats

• These big companies may be missing
out on a key tool for competitive
advantage
Source: 2009 CalPERS Board Diversification Strategy: Realizing Competitive Advantage and Shareowner Value
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2007 Catalyst Survey Leading People. Leading Organizations.

Higher female representation on Board = Higher returns

Source: 2007 The Bottom Line: Corporate Performance and Women’s Representation on Boards, Catalyst
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1. Demographic shifts in U.S. population
2. Attracting and retaining the best talent
3. Greater adaptability and flexibility in a rapidly changing
marketplace (INNOVATION)
4. Job satisfaction and reducing costs associated with turnover,
absenteeism and low productivity/employee engagement
5. Changing consumer, client, and customer marketplace
6. Contributes to company performance
7. Mitigates and minimizes legal risks
8. Global Trends

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Leading a Multigenerational Workforce

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Two Different Views of Diversity

Why are generations important?
Socio-economic Generation

Culture & Ethnicity Expectations of life/work
Gender orientation Trusted influencers
Assets, debt and income Stage in life
Geography Attitudes towards authority/peers
Lifestyle

Individuals with similar socio-economic backgrounds may have
substantially different values and preferences regarding HR programs,
benefits, communications and loyalty to the company.

Key implications for establishing employer brand and recruiting talent

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Leading a Multigenerational Workforce

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The Multigenerational Workforce

“Understanding what drives each generation,
and what their underlying experiences are, is
the key to creating a cohesive work
environment where our people feel valued and
empowered to work together effectively. This
appreciation of generational diversity, and
initiatives customized to meet the needs of
each generation, allows each group to fully
contribute and be a part of the growth and
success of the organization.”

Dr. Rohini Anand
Senior Vice President & Chief Global Diversity Officer
Sodexo

Source: The Multigenerational Workforce: Opportunity for Competitive Success, SHRM, 2009 19
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Two Theories of Understanding Each Generation

• The oldest, wealthiest, and most
visible members of a generation
define the behavior and attitude for
those that follow

• Identify a generation’s heroes and
you’ll learn their value systems

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Source: Cam Marsten, 2007

The Multigenerational Workforce

Today’s workforce is comprised of four generations, covering an 80+- year
span whose effectiveness in working together impacts the overall success
of the organizations they work for.

Generational Cohort Example Impacts
Traditionalists (1925-1945) Climate/culture
over 65 years of age Communication
(7% of workforce)
Work-life balance
Boomers (1946-1965) Benefits
45-66 years of age Revenue
(40% of workforce) Management
Development & Coaching
Generation X (1960s/1970s)
Work ethic
34-44 years of age
(32% of workforce) Coaching/mentoring
Use of technology
Generation Y (1977-present) Networking
under 33 years of age Where, when, & how work gets done
(21% and increasing rapidly)
Overall success of the company

(1) Although age equals years of age, it is “coming of age” that aligns more to a generational cohort and its impacts 21
21

Traditionalists

Traditionalists (1925-1945)
EVENTS CHARACTERISTICS
• WWII, Korean War • Human Relationship Skills
• Civil Rights/Women’s • Ability to negotiate
Movements Leaders • Decisive leadership
• First Peace Corps volunteers • Adopted elders values of loyalty,
• Helped to rebuild American dedication, commitment
economy in the 1950s • Age=Seniority
• Great Depression • Values face time
• B/W TV; transistor radio • Prefer structure
• Loyal

(1) Coming of age during key socio-historical events influences how each cohort reacts and responds
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Baby Boomers

Baby Boomers (1946-1965)
• Assassinations: JFK, Robert • Flexible working arrangements
Kennedy, Martin Luther King • Coaching style managers; mentors
• Walk on the moon • Look for respect, respect, respect in
• Vietnam the workplace and work hard to
• Civil Rights Movement secure it
• Environmental movement • Strong work ethic
• Protests, riots • I am what I do
• Woodstock/drug experimentation • Self focused
• Watergate • Values face time
• Oil embargo/gas shortages • Service oriented
• Raging inflation • Cynical but loyal
• Child-focused

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Generation X

Generation X (1960s/1970s)
• Challenger Explosion • Independent/self-reliant
• Iran Contra • Technologically savvy
• Fall of Berlin Wall • Hard workers when focused and motivated
• AIDS/Safe Sex • Seek flexible work arrangements that
• High Divorce Rate/Single Parent facilitate work-life balance
Families • Risk takers
• Latchkey kids • Innovative
• Parents as “friends” • Seek challenging work
• Terrorism • Goal oriented
• Computer games • Outside of the box thinkers and want to
• End of employment contracts manage own time
• Embraces Diversity/Thinks globally

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Generation Y

Generation Y (1980s/1990s)
• Rise of the Internet • New confidence, upbeat and full of
• Terrorism/Bombings: Oklahoma self-esteem
City, Atlanta Summer Olympics, • Need to know WHY
World Trade Center • Most education-minded generation in
• Cultural Diversity history
• Two wars in Iraq (Desert • Tend to be highly pressured to
Storm/Operation Freedom) “succeed”
• Largest demographic group since the • Many aspects of their lives scheduled
Boomers (Echoes) by their parents
• First true cohort of global citizens • Very tolerant towards multiculturalism
• Expansive economy and internationalism
• Learns quickly
• Technically savvy
• College degree expected

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Generations at a Glance

Generation % of Workforce Assets in the
Workplace

Traditionalists Hard working, stable, loyal, thorough,
Born 1922-1945 8% detail-oriented, focused, emotional
(Ages 63-86) maturity
Baby Boomers 44% Team perspective, dedicated,
Born 1946-1964 experienced, knowledgeable, service-
(Ages 44-62) oriented
Generation X 34% Independent, adaptable creative,
Born 1965-1980 techno-literate, willing to challenge the
(Ages 28-43) status quo

Millennials 14% Optimistic, able to multitask, tenacious,
Born 1981-2000 (increasing rapidly) technologically savvy, driven to learn
(Ages 8-27) and grow, team oriented, social
responsibility

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Designing & Implementing Benefit Plans
for a Multigenerational Workforce

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Challenge for Human Resources

Manage Manage
Diversity Cost

Support Diverse Workforce Streamline Benefit Administration
Multiple benefit choices Self-serve Administration
Personalized Communications Consolidate Vendors
Flexible Work Environment Reduce Plan Options

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Benefits Packaged for Specific Life Stages

Sample Benefit Portfolio

Health Other Other Other
Insurance Health
Insurance
Health
Insurance

Savings
Savings Take-home Savings Take-home
Take-home Pay
Pay
Pay

Employee Age 22 Employee Age 45 Employee Age 60
• Single • Married with two kids • Preparing to retire
• Just starting career • Employed for 20+ years • Employed for 40+ years
• $40,000 base pay • $75,000 base pay • $100,000 base pay

Source: Fidelity Perspectives, Fall 2008 29
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Approaching Older Age = Increased Happiness

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The Next Wave of Benefits Planning

Source: Fidelity Generation Study, 2009 31
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Benefits and Generation Y

75% Work/life balance drives career choices at
a significant level

Quality of benefits packages influences
choice of employer 62%
44% Value of the benefits package should be
tied to workplace performance

Managing everyday finances (mortgage or credit card
debt) is more crucial than saving for retirement

Source: Fidelity Generation Study, 2009
47% 32
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Benefit Plan Utilization by Generation

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Gen Y Driving Changes in Benefits

Source: CareerBuilder.com, 2007 34
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Changes in Benefits to Include Gen Y

Benefits/ Compensation

Pros Cons Employer Action

Variety of choices Expensive for Need employee decision-making
at reasonable employers to support to increase awareness
costs provide and of value offerings
manage

Less New benefits trends Make it simple
complex/easy to are reducing the
understand perceived value to
employees

Benefits offer Identify optimal spend for benefit
more effective dollars and compensation
cost management programs that suit life stage
for employers
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Talent management

Longer tenure Employers now Provide greater flexibility and
results in stability faced with value of benefits while more
for both tremendous sea effectively managing employer
employers and change in expenses
employees workplace
demographics;
“brain drain”

Opportunity for Creates additional Incorporating holistic financial
employers to offer talent management health solutions and advice and
creative solutions challenges for guidance that can result in
to attract and employers, thus increased loyalty and retention
retain the Gen Y increasing
worker of the expenses
future
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Communication

Open to Traditional paper Effective communication and
technology as communications education is key component to
an information are less effective successfully help drive financial
vehicle and more security and wealth
expensive than accumulation for employees
electronic
distributions

Technology Demands new Leverage the Internet as the
provides the most engagement primary vehicle for
cost effective, strategies to reach advice and guidance for most
robust, and this demographic effective results
measurable and most efficient spend
communication
vehicle Move from annual enrollment
communication
model to ongoing engagement 37
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Evaluating Your Plan

Source: Fidelity Perspectives, Fall 2008 38
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Evaluating the Options

Tactics for a Multigenerational Workforce

Approach/ Segment Key Factors
Compensation

Traditional approach/ Baby Accustomed to paternalistic benefits such as pension plans
Benefits/

Boomers and retiree health care
Increased individual responsibility
Emerging trends/ Gen Y Facing less paternalistic benefits such as DC and HSAs
High salary expectations
Traditional approach /Baby Long-tenured employees (age 55–64, average tenure 9.3 years)
Boomers Facing retirement challenges, both financially and in terms
management

of personal well-being
Talent

Short-tenured employees (age 25–34, average tenure 2.9 years)
Emerging trends /Gen Y No strong commitment to any one employer
View job as financial transaction
Strive for work/life balance
Traditional approach /Baby Prefer in-person interaction to build relationships, but are
Boomers growing technology users for information and transactions
Communication

Want simplicity and convenience
Want relatable, personalized information
Need total financial solutions
Emerging trends / Gen Y Technology and the Internet are essential to their livelihood
Prefer informal communications
Need spending/debt management support 39
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Designing & Implementing Benefit Plans
for a Racially and Ethnically
Diverse Workforce

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Racial Demographics for Employee Participants

African-
American Asian Hispanic White All
Average Age 39 39 37 42 41
Average Tenure 8 7 7 10 10
Gender (% Fem
Ale) 60% 54% 54% 48% 51%

Source: The Ariel /Hewitt Study 2010. The findings in this study are based on year-end 2008 information collected from nearly 3 million eligible employees
working for 57 of the largest U.S. companies across a variety of industries and sectors. 41
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Participation Rates by Salary

$0- $30,000- $60,000- $90,000- $120,000
$29,999 $59,999 $89,999 $119,999 +
African- 50% 75% 83% 88% 91%
American
Asian 54% 84% 92% 94% 94%
Hispanic 50% 75% 85% 89% 90%
White 56% 80% 88% 92% 92%

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Plan Participation

Overall, African-American and Hispanic employees are about 10 percentage
points less likely than white and Asian employees to have a 401(k) account.

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Savings Rates Among Plan Participants

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Average Account Balance by Salary

$0- $30,000- $60,000- $90,000- $120,000
$29,999 $59,999 $89,999 $119,999 +
African- $3,956 $21,224 $51,594 $98,432 $154,902
American
Asian $6,707 $32,590 $70,393 $104,233 $161,259
Hispanic $4,036 $22,017 $60,782 $104,549 $150,456
White $8,184 $35,551 $79,018 $139,724 $223,408

In 2007, average account balances in 401(k) plans were considerably
lower for African-American and Hispanic employees – even at the
highest pay levels – than for white and Asian employees

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Hardship Withdrawals

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Ethnicity’s Role in 401(k) Participation

• Savings and participation rates:
– Regardless of age and income, African-American and Hispanic workers are
less likely to participate in their company 401(k) plans
• When they do contribute, they save at much lower rates than whites.
– Asian employees have the highest participation and savings rates

• Stock exposure:
– African- American workers are less likely than other workers to invest in
equities
• This behavior may limit the long-term growth potential of their accounts
– Historically, equities have been the highest-yielding investment over
the long term

Source: Ariel/Hewitt Study. 401(k) Plans in Living Color: A Study of Savings Disparities Across Racial and Ethnic Groups, 2010.
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• Loans and hardship withdrawals:
– African-Americans are more likely to take a loan
• More than twice as likely to take a hardship withdrawal
– Hispanics borrow from their retirement accounts at a higher rate
than whites
• But not to the same degree as African-Americans.
– Asian employees are the least likely to take early distributions
from their 401(k) plan accounts

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• Account balances:
– Smaller average account balances can be contributed to lower
participation, contribution rates, equity exposure and higher withdrawal
rates
– Employees with a similar range of income show a significant difference
in account balances:
• African-Americans ($21,224)
• Hispanics ($22,017)
• Asians ($32,590)
• White ($35,551)
– Results are influenced by other factors, such as age, job tenure, and
pay within the range, but variations exist, even after adjusting for these
factors

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• African-American employees are the most likely group to take a
hardship withdrawal from their 401(k) plan accounts

• For most groups, both genders are equally as likely to take a hardship
withdrawal

• 9% of African-American women are taking a hardship withdrawal
compared to 6% of African-American men

• Hispanics are 50% more likely to take a withdrawal when compared to
whites (with other differences held constant)
– African-Americans are 167% more likely, all else being equal

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Designing Benefit Plans and Reward Packages

• Use research and employee surveys to understand generational differences in
employee needs and preferences

• Consider innovative workplace practices to allow flexibility

• Offer more choices in benefits such as health care coverage and retirement accounts

• Consider a range of financial benefits to appeal to employees of different ages/
ethnicities

• Eliminate penalties for older employees who choose to work after "retirement" (within
ERISA parameters)

• Communicate benefits in multiple ways
– Consider comfort levels with technology and different needs for face-to-face or
print communication

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Additional Considerations for
HR Benefits Planning

HR Policies and Programs

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Source: The Multigenerational Workforce: Opportunity for Competitive Success, SHRM, 2009

Considerations for Workplace Flexibility

• All generations respond favorably to more flexible workplaces

– Many traditionalists are on their second career
• Having left more high-profile (and high-pressure) roles in the past; they
might describe themselves as “working to live, not living to work”
• Many expected to be retired by now, and they want more autonomy.

– Many boomers are part of “The Sandwich Generation”
• Taking care of elderly parents while still caring for children at home
• Creates its own set of work/life demands

– Generation X and Generation Y grew up in a “wired” world and don’t define the
“workplace” as brick & mortar
• It’s about the results of one’s efforts, not when and where the work was
completed

• Organizations must focus on flexibility to be an employer of choice across
all generations 54
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Considerations for Rewards and Recognition

• Important to Generation Y, who grew up in a “feedback-intensive” world

• Rewards should not be given for the sake of giving them just to satisfy Baby
Boomers and Generation X

• Awards that are given for excellence should only be given to those who
deserve them
– “Perks” given to everyone should not claim to be rewards for excellent work

• For Generation Y, a culture that encourages a high level of feedback (not
necessarily all positive, contrary to the stereotype) will result in an engaged
employee
– Silence is neither positive nor negative – it’s just silence

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Considerations for Health Care Benefits

• Perception of health benefits closely matches life stages
– It becomes more important to each generation as they age and enter new stages
of life that require more medical attention

• Most important to Traditionalists, Baby Boomers, and – increasingly –
Generation X (who are beginning to enter their 40s)

• Should include multiple options to attract top performers within Generation Y

• Wellness programs are very attractive to all generations (as shown in slide 34)
– All seem to recognize the benefits of a healthy lifestyle

• Health care costs continue to rise (see Exhibit 1-2 next page)

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Health Care Costs 2010

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Health Care Costs 2010

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Considerations for Training & Development

• Generation Y enters the workplace with high expectations of advancement
and will remain engaged if they feel as though they are growing as
professionals
– Training should be offered in multiple formats including e-learning

• Generation X is motivated by training & development if increased knowledge
can help them achieve greater autonomy and independence
– They will feel appreciated and engaged

• As Baby Boomers and Traditionalists age they don’t want to feel as though
they’ve been “put out to pasture”
– Opportunities must exist for all employees, not just the younger ones

• Be creative in your approaches to Training & Development
– For many employees, on-the-job learning trumps a day in the classroom
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Succession Planning

Different generations have different ideas about what qualifies
an individual for advancement

Traditionalists believe Baby Boomers expect Generation X prefers Generation Y
leadership is earned leaders to match their transparency in the believes anyone who
through faithful and own work ethic, ways potential leaders can deliver impact
loyal service resume and years of are identified and should be considered
experience developed for a leadership role

It is crucial that organizations codify and execute solid succession planning based
on widely known competencies and conducted in a fair and transparent manner.

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Summary

• Workforce demographics are shifting dramatically but the goal of benefits
decision-makers remains consistent
– Provide an effective mix of compensation, benefits, flexible work arrangements,
and opportunities for every individual

• Balance changing needs of employees with organization’s increasingly
complex priorities
– Helps you gain a competitive edge, while helping meet your attraction and
retention goals

• Do not view each aspect of savings and benefits plans in isolation
– Help employees make the most of their opportunities to accumulate wealth and
provide for lifetime financial security

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Summary

• Take a holistic approach to total compensation and benefits plans
– Goal is to maximize the return on investment for employers, while maximizing the
value to employees

• Ensure that the money being committed by organizations to benefits
programs is delivering the best possible value for the organization and its
employees
– Optimizing the value of total compensation and benefits spending will become
increasingly important as competition for talent increases

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Questions/Comments

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Serving the Multigenerational Workforce

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