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The Workforce 2020
The document outlines findings from a survey of 5,400 executives and employees regarding the future workforce trends, emphasizing increased reliance on flexible work arrangements and the need for leadership development. It highlights the importance of compensation and continuous learning for millennial employees, who have similar priorities to older generations regarding job satisfaction. Additionally, organizations face challenges in cultivating leadership and developing a learning culture to prepare for future workforce demands.
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The Workforce 2020
- 1. The Workforce 2020 GiancarloDavila Strategic Advisor, HR Line of Business
- 2. Global 27-country twinsurveys 5,400 People; 2,700 executives and 2,700 employees conducted by Oxford Economics Oxford Economics, The 2020 Workforce, 2014 SuccessFactors An SAP Company
- 3. Five research findingthemes The new face of work A Millennial misunderstanding What matters most The leadership cliff The learning mandate 1 2 3 4 5 SuccessFactors An SAP Company
- 4. The new faceof work
- 5. 83% Executives say theyare increasingly using contingent, intermittent, or consultant employees, which will require them to: Change compensation plans Conduct more training Invest more in HR technology The 2020 workforce will be increasingly flexible SuccessFactors An SAP Company
- 6. 32% 39% 40% 41% 41% 42% 43% 48% 51% 51% Labor shifts executivesare most concerned about Globalization of labor supply Millennials entering the workforce Difficulty recruiting employees with base-level skills Increasing number of intermittent/seasonal employees Increasing number of contingent employees* Employee expectations are changing Aging workforce Changing work models (e.g., telecommuting, flex time) Increasing number of consultant employees Difficulty recruiting specialized employees SuccessFactors An SAP Company
- 7. The top impediments tomaking progress are: 1. Lack of employee longevity/loyalty 2. Lack of adequate leadership 3. Lack of adequate technology 4. Lack of skilled talent 34% Good Companies are not making progress toward meeting workforce goals 47% Moderate 19% Slight SuccessFactors An SAP Company
- 8. Have ample datato understand strengths and potential vulnerabilities Use quantifiable metrics and benchmarking as part of workforce development strategy 39% 38% Know how to extract meaningful insights from the data available to them 42% A lack of metrics and tools holds HR back SuccessFactors An SAP Company
- 9. A millennial misunderstanding SuccessFactorsAn SAP Company
- 10. Millennials are notas different as we think Almost everyone wants training and development Compensation is the most important factor Even retirement plans are only slightly more important to non-Millennials Their top priorities are the same as non- Millennials SuccessFactors An SAP Company
- 11. Millennials care more aboutmaking a positive difference in the world Importance to job satisfaction Myth or truth? 21% 20% Millennials 29% 31% Millennials 32% 10% Income Learning & growing is more important to Millennials than meeting income goals Achieving work/life balance is more important to Millennials Non Non Learning 01 03 02 SuccessFactors An SAP Company
- 12. Millennials want feedback 50% more oftenthan non-Millennials Millennials do need to be managed differently in terms of feedback and development SuccessFactors An SAP Company
- 13. What matters mostat work SuccessFactors An SAP Company
- 14. When it comesto satisfied employees, compensation matters – a lot 0% 10% 20% 30% 40% 50% 60% 70% Education Flexible schedule Benefit plans Vacation time Flexible work location Supplemental training Retirement plans Bonuses/merit pay Competitive compensation Employees who want Employers who offer SuccessFactors An SAP Company
- 15. Executives value loyaltymore than job performance 1. High level of education 2. Loyalty & long-term commitment 3. Ability to learn 4. Diverse background 5. Interest in the wider business 6. Self-directed learner 7. Willingness to let others lead 8. Substantial field experience 9. Leadership ability 10. Job performance & results What executives value as top employee attributes 1 2 3 4 5 6 7 8 9 10 What employees think employers want 4 2 1 6 7 8 9 10 8 3 SuccessFactors An SAP Company
- 16. The leadership cliff SuccessFactorsAn SAP Company
- 17. Gaps in leadershipcapabilities spell trouble for future growth Have the skills to manage talent Executives cite a lack of adequate leadership as the number two impediment to building a workforce to meet future business objectives. 52% Are prepared to lead a global workforce Know how to inspire employees Can lead a diverse workforce Are able to drive change 51% 47% 44% 34% SuccessFactors An SAP Company
- 18. Most companies arenot cultivating leadership within their organizations 40% Employees who say it is easy for them to collaborate 37% Employees who agree their company is committed to diversity 19% 31% Executives who picked leadership as a top 3 attribute Employees who expect more feedback than they get now SuccessFactors An SAP Company
- 19. The development mandate SuccessFactorsAn SAP Company
- 20. For employees, obsolescence isa bigger concern than layoffs 18% 19% 19% 27% 31% 35% 40%Position changing or becoming obsolete Not enough advancement opportunities Inadequate staffing Wage stagnation Technology changes Economic uncertainty Layoffs SuccessFactors An SAP Company
- 21. Employees aren’t preparedfor the future 50% 34% The skills they have now will be what’s needed in 3 years Their company is able to give them the training they need SuccessFactors An SAP Company
- 22. Organizations struggle todevelop a learning culture 51% Has a culture of continuous learning 47% Is capable of retaining and sharing institutional knowledge 52% 47% 41% 52% 43% 45% Has a formal mentoring program Offers incentives for pursuing further education Employees say their company… Executives say their company… SuccessFactors An SAP Company
- 23. Companies need toprovide employees with a path and develop skills for the future 23 51% We are more merit-driven than tenure-driven 43% When a senior person leaves we tend to fill the role from within the organization 37% Long-term loyalty and retention is an important part of our talent strategy 31% We plan for succession and continuity in key roles SuccessFactors An SAP Company
- 24. 01 03 02 Development of employees andleaders will become the new employer differentiator • Learning • Succession planning • Feedback It may be time to rethink our compensation strategies HR should continue to push toward boardroom strategy setting We must prepare for a more diverse, flexible, and contingent workforce Key Takeaways 04 SuccessFactors An SAP Company
- 25. For more information,go to www.successfactors/workforce2020.com Questions? Giancarlo Davila giancarlo.davila@sap.com
Editor's Notes
- #2 (A note to presenters on the statistics used throughout: percentages are generally reported in one of two ways. In long lists, such as slide 6, respondents were asked to pick their top 3 priorities. The percentages reported are those who picked that item as a top 3. The other method was to report the percentage who agreed or strongly agreed on a 5-point scale, as shown in slide 8.)
- #3 2
- #4 The findings fell into five large categories. The future workforce is going to be more diverse, more global, and more flexible. What we understand about Millennials may be misunderstood; in many ways they want the same things as the other generations, but there are some key differences. The bigger gap is the difference between what executives say they offer and what employees want. What executives and employees agree on is that we are not preparing our leaders for the future workplace. And in many ways, all roads lead to development, both for employees and for leadership.
- #5 The future workforce, we know from international census bureau data, is going to be more ethically and gender diverse. We will also work in more internationally diverse teams as companies continue to grow globally. What we found new in this study is how companies are relying increasingly on a flexible workforce and how HR has yet to create a vision for this more diverse workforce. Big changes are coming to the workplace. The nature of employment itself is undergoing a transformation. So is the composition of the labor pool, as the entrance of the Millennial generation, along with globalization and social change, increases employee diversity. Understanding and accommodating these changes is critical to managing the 2020 workforce, but doing so will require companies to take a more strategic approach to HR—and to equip themselves with the right tools to manage the new workplace.
- #6 As one of our collaborators at Oxford Economics likes to say, it’s hard to get 83% of executives to agree that the sun rises in the east. Yet around the globe, executives agree that they are going to depend more and more on the flexible workforce. When you look at the recovery in the G20 countries, it is different than past recoveries. It used to be a reliable pattern that during a downswing, the contingent workforce went up and during recovery, permanent employment went up. That is not the case in this most recent recovery, which some analysts have dubbed the jobless recovery. It’s not truly jobless, but jobs look different. And execs say this increased use of a flexible workforce will require different HR responses: (read right-hand stats)
- #7 When we polled executives on what they worries them about the workforce, here are the results. The global workforce, made up of over half Millennials, tied as the number one concern. In the US, there was a higher concern about recruiting specialized employees but for much of the rest of the world, finding employees with base level skills ranks quite high. Again, you can see this emphasis on contingent workers. Diversity is another pressing issue. The 2020 workforce will be made up of a wider group of ages and nationalities than ever before, so companies will need to have a broader understanding of their people and the markets in which they operate. These changes are very much on the minds of executives, who cite globalization and Millennials entering the workforce as their top business concerns; over half of respondents say these two labor-market shifts have a great impact on their workforce strategies. Respondents from Asia Pacific (64%) and Middle East/Africa (57%) are more concerned with Millennials entering the workforce than other respondents, as are companies that report higher-than-average profit margins than other firms in their industry (56%).
- #8 People management will need to become more strategic and evidence-based to accommodate the increasingly flexible and diverse workforce of the future. But as things stand today, HR lacks both the clout and the tools to get the job done. The problems start at the top—or, more accurately, with lack of access to the top. While HR frequently works with C-suite executives, barely half of executive respondents say it drives strategy at the board level, and nearly one-quarter say that workforce issues are an afterthought in business planning. Getting top brass to buy into the urgency of workforce issues can be difficult—especially when HR is still refining its own message. Companies report having operational workforce goals for the year, but less of a long-term set of goals for the workforce. The top impediments are: (read slide). This lack of employee loyalty seems to be a high focus area for executives, even though tenure at most companies is decreasing. “It’s always tough to motivate for HR money in any business,” says Shani Naidoo, HR director at The Foschini Group, a large South African retail company. And when direct returns on something like improved training are hard to quantify, the purse-strings are drawn even tighter. “The board will not provide us with funds for something that’s not clear,” she says. “And I don’t think our HR strategy has been fully enunciated to allow for a very strong commitment from the board.”
- #9 Having an extended workforce will place new requirements on understanding the metrics of the workforce, and we’re already challenged with simply using data and metrics on our existing workforce. (Read stats)
- #10 It turns out Millennials are not that different in what they want as benefits, but they are different in some ways. We polled Millennials who are already working in organizations, so it may be that the differences that are widely reported include those Millennials who have become entrepreneurs or are working in not-for-profit organizations, where we did not do as much polling.
- #11 Perhaps the biggest news here is that all generations want much of the same thing. Compensation is far and away the biggest driver of employee satisfaction and loyalty. Other research organizations are reporting the same trend – compensation is growing in importance. In some countries, training and development was higher than compensation in importance to Millennials, but globally, compensation was the highest.
- #12 The ability to attract and retain Millennial workers will go a long way toward determining which companies are most successful over the next decade and beyond. As a result, forward-thinking executives are making it a point to target Millennial prospects. But there is a big difference between aggressively recruiting Millennials and making wholesale changes to accommodate them. And the latter approach may be unnecessary, or even detrimental to employee engagement. The extent to which Millennials have been painted as a new type of worker with unusual needs to fulfill has resulted in a long list of myths. Among them: (This is a build slide that you can use as a quiz with the group.) Regional views of Millennials Our research reveals a clear global story about Millennials in the workplace, but younger employees are seen differently by business leaders in different regions. Put simply, executives in North America and Latin America are much more likely than their peers in the Asia Pacific and Middle East/Africa regions to describe Millennials as having different values and expectations. For instance, North American (64%) and Latin American (63%) executives are more prone than executives in the Middle East/Africa (43%) or Asia Pacific (37%) regions to seeing Millennials as frustrated with the quality of management. They also are more likely to perceive Millennials as being frustrated with the technology they are provided. Even more dramatically, North American (61%) and Latin American (53%) executives are more than twice as likely as those in Asia Pacific (30%) and the Middle East and Africa (24%) to believe Millennials find business processes too bureaucratic. On the other hand, executives in Asia Pacific (61%) and the Middle East/Africa (58%) regions are far more likely than those in North America (45%) and Latin America (35%) to believe that Millennials consider quality of life to be a more important work consideration than potential career path. As it does in most of these categories, Europe (53%) falls in the middle.
- #13 One way in which Millennials are different is in the amount of feedback they expect. (read slide) Millennials, on average, expect to get feedback about their performance and development about once a month. Already most companies report that we have a hard time getting managers to give feedback to employees, and that need is going to increase as more of the workforce will be comprised of Millennials. (You can use this moment to ask the audience if this is a concern for them, in terms of managers giving feedback. What are they doing?) While younger workers have needs that are distinct from earlier generations—most notably in the areas of feedback and career development—Millennials are much more like their older coworkers than previously thought. The oft-adopted view of them as either altruistic do-gooders or spoiled whiners is a misinformed perspective that successful companies will avoid.
- #14 We surveyed to find out which benefits and work aspects matter most to employees, and we also asked both executives and employees what their companies offered. This was an area where we found a mismatch between what employees want and what companies focus on. Perhaps it is not surprising that only 39% say they are satisfied or highly satisfied with their jobs. How satisfied are you with your job overall? Highly satisfied – 5% Satisfied – 33% Neither satisfied nor dissatisfied – 32% Dissatisfied – 27% Highly dissatisfied – 1%
- #15 Employee engagement is built on more than money, but everyone has bills to pay. Our research suggests that companies are focusing excessively on offering benefits and perks that rank far below cash on employees’ priority lists. So while a healthy proportion of employees care about retirement plans (45% say it is important or very important), supplemental training programs to develop new skills (44%), a flexible working location (44%), and vacation time (43%), their top priority by a wide margin is competitive compensation. Compensation is especially important to employees in North America (81%), Latin America (74%), and Europe (68%), and its importance to employees in the Middle East/Africa (50%) and Asia Pacific (59%) regions is second only to the closely related category of bonuses and merit-based rewards. This universal desire to be paid fairly is not being satisfied, with less than one-third of employees (30%) saying that their employers offer competitive compensation. Our research suggests companies have significant opportunities to improve on their benefits mix. For instance, trendy amenities like recreational facilities, gourmet cafeterias, and on-site massages may grab headlines—and even lure some job candidates—but their appeal appears to be limited. Only 38% of employees say such perks are important or very important to them, suggesting that companies would be better off spending their money on other engagement methods. And despite the fact that 44% of employees rank flexible work locations this highly and 42% say flexible schedules are important/very important, only about one-third of employers are actually offering flexible work locations or schedules. On the development front, 44% of employees prioritize supplemental training to develop new skills. While a narrow majority of employees and executives agree that their companies offer such training, only 34% of employees say they can get the training they actually need. That is an important gap, as nearly one-third of employees say that such training would increase their loyalty and engagement. More ominously, 13% of employees—and nearly 30% in both North America and Latin America—say they have considered quitting due to lack of learning and development options.
- #16 Our research shows that 41% of executives consider loyalty an important part of their talent strategy, with nearly one-third identifying it as one of the three most important employee attributes. But more than one-third say lack of employee longevity and loyalty prevents them from meeting strategic workforce goals (only 77 of the Fortune 500 companies have an average employee tenure over five years, according to a PayScale survey). And with 83% of executives saying they are increasingly using contingent, intermittent, seasonal, or consultant employees, the need for successful engagement across all type of employment is paramount. It seems, then, that the widespread inability to consistently engage employees is undermining efforts to build loyalty. Consider that 41% of employees say they never or seldom interact with their managers, or that 22% say they are likely to leave their jobs within the next six months, and you start to get a sense of the work companies have to do on this front. Meanwhile, if employees want their employers to invest more in career development, they can demonstrate their commitment by participating in self-directed learning and other development alternatives in larger numbers. The companies with truly engaging work environments will find themselves creating the most successful 2020 workforces. To achieve this goal they must bring management and employee perceptions closer together on everything from compensation and development to working conditions and perks. If they fail, their ability to execute on strategy will be compromised, as they are forced to rely on unenthusiastic employees who are dreaming of their next jobs.
- #17 Strong leadership is essential to business performance, and all the more so when companies must navigate the complexities of globalization, increased diversity, and the changing nature of work. Yet employees and executives agree that corporate leaders are not ready for the future workforce.
- #18 More than one-third of the executives we surveyed say that a lack of adequate leadership impedes efforts to build the workforce needed to meet their objectives. Yet only half of these executives say their companies have well-defined processes and tools for developing talent, and even fewer (44%) say they plan for career advancement in a given role when hiring. Two-thirds of executives believe the lack of leadership capability is negatively affecting business performance. Barely half of executives say their companies possess the skills to effectively manage talent, and only 44% have faith that their leaders are capable of driving and effectively managing change. Ominously, just over one-third say their firms are prepared to lead a diverse workforce and have the ability to drive global growth. Employees share these negative perceptions, with just 44% saying their leaders can guide their companies to success. Barely half say their managers provide strong leadership, and fewer see them mastering such staples of the modern workplace as supporting a healthy work environment and being flexible about time off or working location. The leadership gap reaches across geographies and industries. In each region of the globe, as well as in the different sectors surveyed (financial services, retail, healthcare, professional services, and consumer goods), about one-third of executives feel the leadership gap is preventing them from establishing the workforces they need. In Japan, for instance, long-standing traditions may hinder efforts to cultivate the leadership needed for an increasingly global economy.
- #19 Just half of executives say their companies have well-defined processes and tools for developing talent, a powerful indicator of how uninspired many approaches to this critical topic have been. About the same number believe their companies are committed to recruiting a diverse leadership team and that their leaders possess the skills to inspire and empower employees. The result of this lack of preparation: a solid 42% of executives believe their companies’ growth plans are slowed by the lack of access to the right leadership. Employees take an even dimmer view of leadership development efforts. Fewer than one-third say their managers are doing a good job of providing them with a well-defined career path, and only slightly more say their managers do enough to sponsor them for training and development programs. A mere 40% say their employers make it easy for them to collaborate, and even fewer agree that the companies they work for are committed to diversity. Yet most employees do not see a path into leadership ranks. Only one in five says that management values leadership ability in employees. Specific leadership qualities also are undervalued: just one in nine employees (11%) feel that managers consider problem-solving skills to be important, while Only 5% believe that management values the willingness to take reasonable risks. Executives, meanwhile, are not making big progress in addressing the future of leadership. Nearly two-thirds say they do not plan for succession and continuity in key roles. Well over one-third of executives say that getting insights into leadership turnover and cost would help them in achieving business objectives, and nearly as many (35%) say that such insight into the strength of leadership pipeline would help, too. Never before has the need for enterprise leadership been greater. The increasingly global business landscape and changing nature of work are placing additional pressures on companies to develop leaders who can bring a host of skills to the table. Yet our research shows clearly that leadership is not what it should be, and that efforts to identify and develop future leaders are far from adequate. It is imperative that companies devote the required resources to address the leadership gaps that threaten to derail their business plans. By developing the talent and skills they need, companies can position themselves to thrive around the 2020 workforce.
- #20 Employees are clamoring to develop their skills and capabilities. Executives see that shortfalls in these areas are holding their companies back. Yet most companies have not established training, education, and development as the organizational priorities they should be.
- #21 The numbers are stark. Over half the executives we surveyed say problems with talent and key skills are affecting business performance. Meanwhile, employees say their greatest concern is their position becoming obsolete, with only 50% expecting the skills they have now to be adequate in three years. But fewer than half of respondents in either group say their company has a culture of continuous learning. Nearly half of executives say that challenges in recruiting employees with base-level skills are having an impact on their workforce strategies. Yet just 50% say their organizations have well-defined processes and tools for developing talent, and only 42% say they have the budget and resources they need to support those processes and tools. Similarly, nearly half of employees say their employers have outlined well-defined processes to help them grow and improve their job performance, but barely one-third say their company is actually able to give them the training they need.
- #22 Workers are concerned about getting left behind by changing job requirements, and they do not feel supported by their employers. Only 43% say their managers have a good understanding of their skill sets, and even fewer say their employers provide ongoing opportunities to expand those skill sets or encourage further career development via continuing education and training. Technology is one area of particular concern. Employee proficiency with key tools such as cloud and analytics will grow in the next three years, but not enough to keep up with demand. In order for companies to obtain these skills on the scale they need, they will have to focus on training their employees and providing the necessary technology. Currently, less than half (48%) of employees say their company provides ample training on the technology they need, and less than one-third (31%) say their company makes the latest technology available to them.
- #23 Building a learning culture is not an easy job, but it is an area of enormous opportunity for organizations that can get it right. Often, the essentials are lacking. Barely half of executives say their company is capable of retaining, updating, and sharing institutional knowledge, and only 41% say they offer incentives for pursuing higher education. And although more than half of employees say they want to learn about the entire business, only 38% of executives say they offer formal programs such as job rotation and shadowing
- #24 To build the 2020 workforce, companies must rethink the way they invest in their workers. Nearly half of executives admit that their companies do not offer supplemental training programs for employees to develop new skills, and nearly two-thirds of employees do not believe their managers adequately sponsor them for training and development programs. Worse, only 23% of executives say their companies offer education as a benefit, and incentives for pursuing educational opportunities also are uncommon. With more incentives to pursue education and participate in supplemental training programs, employees would expand their skill sets and their peers would likely follow suit. Leaders also are not sufficiently planning for succession and continuity in key roles. Only 44% of execs agree that their companies plan for expected career advancement and tenure in a given role when filling positions, and less than one-third say they fill roles from within the organization when a key person leaves. Investing in training and development allows companies to replace vital skills from within the organization and even inspires employees to stay with the company. Establishing an organizational culture that places a premium on learning and development requires a multi-faceted approach. By providing more opportunities for training and skills development, offering incentives for pursuing outside education alternatives, and fostering an environment in which sharing is encouraged and rewarded, organizations will find themselves better positioned to thrive in the information-centric world of business in the 21st century.
- #25 Building the 2020 workforce requires companies to focus on the many changes, opportunities, and risks at hand. Here are some key takeaways where we believe businesses must take action in order to thrive in the future. (read slide)