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How the Public Sector Can Beat the Upcoming Talent Crisis:
Understanding the Multi-Generational Workforce
Tim Phoenix NSAA/NASC Joint Middle Management Conference Deloitte Consulting April 15, 2008
2 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Which Are You?
1925 1946 1964 1979 199 3
VeteransVeterans BoomersBoomers Gen XGen X Gen YGen Y
Birth years 1945 Birth years 1945
and prior and prior
Birth Years 1946 Birth Years 1946
through 1964through 1964
Birth Years 1965 Birth Years 1965
through 1978through 1978
Birth Years 1979 Birth Years 1979
through 1993through 1993
3 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Five Facts That Frame the Situation
Fact #1: The impact of the aging workforce is one of the premier issues in the eyes of State government leadership
Fact #2: Most States/Agencies are aware of the depth of the problem and many have even conducted detailed analysis and forecasts in this area
Fact #3: Most States/Agencies are relatively ‘frozen’ regarding how to attack and manage the problem
Fact #4: Most States/States are likely still viewing this as an ‘HR’ problem and solution
Fact #5: Those who maintain the status quo framing of the situation will likely be outperformed by others in the attraction of organization required talent
The impact of the aging workforce on State governments will pose dramatic challenges to serving the citizen over the next 25 years
4 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Being Conversant With Macro Labor Trends
5 Copyright © 2008 Deloitte Development LLC. All rights reserved.
‘Quantity’ Related Workforce Statistics
Corporate Leadership Council
State of the Workforce 2004: United States
For the first time in American history, the number of younger workers entering the
labor market will not replace those who are leaving
Every day 10,000 Baby Boomers turn 55 years old
One in six workers are age 55
For every two experience workers leaving the workforce, one will enter
Workers age 25 to 34 shrank by almost 9% over the last decade
By 2010, American businesses will face a labor shortage of more the 10 million
workers
By 2030, the gap will grow to 35 million
Key Demographic Trends
6 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Not only will there be fewer available workers ‘during the trough’, but new workers are not bringing with them the skills or education necessary to perform jobs being vacated by the retirement boom
‘Quality’ Related Workforce Statistics
Corporate Leadership CouncilState of the Workforce 2004: United States
Today, 85 % of jobs require education beyond high school, compared to 61% in 1991
Graduation rates at public universities has fallen from 48% in 1998 to 41% in 2002
Only 38% of the US labor force holds at least a 2-year degree
It is estimated that 60% of future jobs will require training that only 20% of the current workforce possesses
By 2012, the American labor force will experience a 33% shortage of four-year degree candidates (a shortfall of 6 million graduates)
Even with unemployment at a relatively high level in the recent recession, unemployment rates were deceptive because of the lack of qualified candidates in many professions
7 Copyright © 2008 Deloitte Development LLC. All rights reserved.
A Representative Example of What State Governments Face
8 Copyright © 2008 Deloitte Development LLC. All rights reserved.
A Real Life Example…
Age DistributionAge Distribution
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60+
Age Range
Em
ploy
ee C
ount
In this organization’s case the average employee age is 43 years old, the average tenure with the organization is 10.25 years and roughly 7% of the
workforce is retirement eligible right now.
<25
5% 25-29
9%
30-34
11%
35-39
13%
40-44
14%
45-49
16%
50-54
16%
55-59
11%
60+
5%
<5
32%
5-9
20%
10-14
20%
15-19
13%
20-24
8%
25-29
5%30+
2%
Tenure DistributionTenure Distribution
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
<5 5-9 10-14 15-19 20-24 25-29 30+
Service Range
Em
ploy
ee C
ount
9 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Anticipating the Talent Gap
2012 201420102006 20082004
Likely Scenario
(21.9%)
(-22.5%)
2012 201420102006 20082004
‘Status Quo’ Staffing Demand
Conservative Scenario
(-22.5%)
When considering the effect of retirement, coupled with a conservative level of turnover (15% per annum), this agency will have
to attract, select and place between the equivalent of 2-3 full employee cycles over the next decade. Many organizations have
even more extreme circumstances than this scenario.
When considering current Age and Tenure data, it is predicted that this client will face a workforce deficit of 22.5% in ten years due to the
affect of retirement alone…40% in 15 years
10 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Many government organizations are quantifying the impact of the aging workforce and anticipating dramatic competition for qualified
talent driving the immediate development of strategies and programs to ‘bend the curves’ and close the gap
Managing the Gap Between Supply & Demand
Closing the Gap through ‘Bending the Curves’
2012 201420102006 200820042012 201420102006 20082004
Example Gap Scenario
(21.9%)
(-22.5%)
11 Copyright © 2008 Deloitte Development LLC. All rights reserved.
The anticipated gap between supply and demand is so large that closing the gap will also require aggressive efforts to
reduce demand for employees
Bending the Demand Curve Down
The primary levers in bending the demand curve ‘down’ include:
2012 201420102006 20082004
Productivity Enhancement Develop aggressive productivity programs
to enhance overall organizational performance through business process reengineering, organizational consolidations, etc.
Automation ‘Raising the bar’ in terms of systems-based
automation, workflow management, decision support/management, work elimination and shifting, etc.
Sourcing Evaluate and implement beneficial
sourcing alternatives such as outsourcing, co-sourcing, shared service operations, etc.
Self-Service Redesign product and service programs to
capitalize on customer self-service, etc.
12 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Influencing the Supply Curve requires a comprehensive,
multi-faceted approach requiring a ‘talent portfolio’
perspective
Bending the Supply Curve UpThe primary levers in bending the supply curve ‘up’ include:
2012 201420102006 20082004
Attraction and Selection Develop aggressive programs that capture a
disproportionate share of available and qualified talent
Talent Retention/Extension Redesign retirement and rewards programs,
increase training and internal mobility, promote extended lengths of service and increase competitiveness for talent
External Talent Development Develop programs and alliances to train talent
that does not bring requisite skills
Alternative Work Programs Develop programs to reach new and emerging
talent pools and accommodate existing worker preferences
Capability Transfer Develop programs to retain knowledge as
talent leaves and share knowledge to aid in performance of junior staff
13 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Bending the ‘Supply’ Curve
Motivation and Rewards◊
14 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Total Rewards are “All transactions between an employee and employer, plus ‘personal workplace experience’, that influence the employee to contribute effort on the employer’s behalf”- i.e. “The Value of the Work Experience”
Compensation
BenefitsWork
Environment
● Base Pay● Annual bonuses● Long-term
incentives ● Other Financial
and Non-Financial Rewards
Career Opportunities
Culture
● Physical Environment● Nature of Work● Interactions With
Others ● Flexibility
Leadership QualityCommunication / Decision-Making
Employee EmpowermentReputation of Organization
● Career Planning● Mentoring Programs● Competency Development● Training Programs● Work Experience
● Health ● Dental● Vision Care● Paid Time Off● Life Insurance● Short / Long-Term Disability● Retirement Plans● Spending Accounts● Other Benefits
Key Concept for Governments
15 Copyright © 2008 Deloitte Development LLC. All rights reserved.
The “rewards” of employment is a potentially complex picture. Focus around just one portion of rewards (e.g. current compensation and incentives) may give a biased picture
It clear that employees are motivated by non-financial aspects of their employment – these may all be viewed as ‘Consumer Driven’ and ‘Career Driven’ rewards. Satisfaction with a career itself is a critical reward – both for its potential consumer rewards, and also as an end in itself
“Consumer-Driven”
Financial
“Career Driven”• Learning• Growth assignments• Personal connection• Quality organization
environment• Innovation and growth
Today
• Pay
• Benefits
• Stock
Future
• Promotion• Sharing
rewards of growth / success
Non-Financial• Environment• Enjoyable work• Work / life
balance• Fulfilment
The Rewards Spectrum
Total Rewards
16 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Generational Motivation
17 Copyright © 2008 Deloitte Development LLC. All rights reserved.
1925 1946 1964 1979 199 3
VeteransVeterans BoomersBoomers Gen XGen X Gen YGen Y
• Over 50 percent of the men of the Veteran generation served in the armed forces.
• Veterans tend to be dedicated, respecting of authority and willing to delay reward.
• Most of our traditional benefit plans were designed to meet the needs of this group.
• A 35-year time horizon for a defined benefit pension plan didn’t seem overwhelming to a Veteran who expected to work an entire career with one employer.
• This generation also trusted their company’s ability to fund their benefit plans and the government’s ability to secure and guarantee their benefits.
Bending the Curves – Understanding Veterans
Motivators
“Your experience is valued here.”
“We want to hear what has and hasn’t worked in the past.”
“Your hard work and service will be rewarded.”
Most-Valued ‘Rewards’
• Respect for experience
• Flexibility: part-time hours, temporary employment
Leah Reynolds, Deloitte Consulting, Communicating Total Rewards to the Generations, Benefits Quarterly, Second Quarter 2005
18 Copyright © 2008 Deloitte Development LLC. All rights reserved.
1925 1946 1964 1979 199 3
VeteransVeterans BoomersBoomers Gen XGen X Gen YGen Y
Bending the Curves – Understanding Boomers
• There are over 80 million people in the Baby Boomer, or “me” generation.
• Boomers have competed for everything all their lives
— the sandbox, the little league team, college admission
— and they’re still at it in their respective organizations.
• Boomers tend to be optimistic, value affiliation and are
driven to succeed.
• They’re also devoted to (or at least interested in)
personal growth, gratification and health and wellness.
• Boomers inherited the work world as the Veterans
created it.
• They have accepted the way it is, including its
traditional approach to benefit and reward plans.
Motivators
“Your contribution is important and unique”
“We need you”
“You’re one of us”
Most-Valued ‘Rewards’• Retirement planning assistance• Flexible retirement options• Training• Politically acceptable time off
Sabbaticals
19 Copyright © 2008 Deloitte Development LLC. All rights reserved.
1925 1946 1964 1979 199 3
VeteransVeterans BoomersBoomers Gen XGen X Gen YGen Y
Bending the Curves – Understanding Gen X’ers
• When the significantly smaller (40 million or so) group of Gen X’ers entered corporate America, times had changed, and not necessarily for the better.• This is the group that saw their 49 ½-year-old father (or neighbor or uncle) laid off six months before his pension• They also experienced non-traditional family settings— single parent homes and blended families—at a rate never before seen in America. • A key characteristic of Xers is adaptability. Roll with the punches. Deal with what life hands you. • This has resulted in their generation being characterized as pragmatic, informal and balanced, as well as cynical • The X’ers created “Me, Inc.”— the belief that everyone should take charge of their career and not place their employment fate in the hands of an employer.
Motivators“We look at your results, not how many hours you’re in the office”“You do particularly well at this and we want to give you an opportunity to learn and grow”“We don’t take ourselves too seriously and try to have some fun along the way”
Most-Valued ‘Rewards’• Skill development and real-time
performance feedback• Immediate, tangible recognition• Flexible work arrangements and
positive work environments
20 Copyright © 2008 Deloitte Development LLC. All rights reserved.
1925 1946 1964 1979 199 3
VeteransVeterans BoomersBoomers Gen XGen X Gen YGen Y
Bending the Curves – Understanding Gen Y’ers
----------------- Get ready for this group --------------------
• They match the Boomer generation in size and currently range in age from recent college graduates to middle school students.
• They are optimistic (having been raised, in large part, by the optimistic
• Boomers), self-confident, achievement-oriented and sociable.
• They seamlessly interact with technology, multi-task effortlessly and expect to work in a place that values their contributions and allows them to make a significant impact.
• They also view work/life balance as a given and do not see it as incongruent with a successful career.
• The Y’ers inherited “Me, Inc.” and it’s predicted they will take it to levels never before seen in the world of work.
Motivators“You can make a valuable contribution here”“We want to get you ‘up-to-
speed’ quickly”“You can work with bright,
creative people and mentors”
Most-Valued ‘Rewards’•Learning and development
opportunities•Credible and positive role
models•Work/life balance
21 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Attracting and Engaging Generation Y?
The following framework presents some specific strategies employers can use to understand, appreciate, and meet the Gen Y needs identified
Employ online recruiting, offer flexibility around media choice, offer gaming
simulations as a learning tool
Tech-savvy work environment
Solicit employee input, create flexible work-spaces/arrangements
Work/life flexibility
Create organizational agility, enable networking, mentoring, offer channels for
feedback
Open social networks that embrace honest communication
Enable individual goal development and pursuit, communicate corporate vision,
focus on strengths
Sense of purpose/meaning in the work
• Flexibility
• Balance
• Respect
• Accessibility
Enable career planning and mobility, train talent, foster mentoring, cultivate networks
Long-term career development and multiple experiences
Gen Y ValuesStrategies for EmployersGen Y Workplace Needs
22 Copyright © 2008 Deloitte Development LLC. All rights reserved.
. . . But, There Are Also Many Generational Similarities
• Notice any similarities?
— While the generations are markedly different, their expectations regarding their value of the work experience are surprisingly similar
— The greatest ‘value’ all generations recognize isn’t necessarily “hard dollar” items -many are “soft costs.”
— At a time when all organizations have a finite amount of money to put toward total rewards, discovering soft dollar ways to win with all age groups is a real coup
• First Step
— The first step is to make an honest assessment of where your organization is today relative to what the generations value most
• Review your work environment — The quality—not quantity—of communication within the organization is the biggest
indicator of the health of the work environment
— Healthy work environments thrive on meaningful communication, where the information people share is honest and useful
— People talk openly about their opinions and needs
— Both leadership and employees know their ideas are heard
23 Copyright © 2008 Deloitte Development LLC. All rights reserved.
What Can Your Organization Do…Now?
24 Copyright © 2008 Deloitte Development LLC. All rights reserved.
What You Can Do?
— Review leadership effectiveness and HR policies and programs. — Examine all the people practices that are driven by the organization’s people
philosophy
— HR policies and programs are a reflection of the organization’s beliefs about its people
— These beliefs play a tremendous role in creating the work environment— Invest in leadership development
— Leaders set the tone— Leaders demonstrate the values of the organization
— How leaders spend their time, who they spend time with, how they behave and what they reward and recognize sends a clear message to the organization
— Create multi-generational work teams to spearhead change initiatives— Bring members of each generation together to develop proposals for flexible work
arrangements or brainstorm ways to re-create work to allow for increased autonomy, challenge and variety
— Create project teams that combine generation members— Look beyond traditional coaching and mentoring programs to find ways to mix up the
generations in out-of-the-ordinary ways— Communicate reality
— Be careful not to oversell, particularly with the younger generations.
— If a Gen Y’er joins your workforce and then discovers his or her experience doesn’t match what they were told, at the push of an email button, that employee’s entire network will know the truth
25 Copyright © 2008 Deloitte Development LLC. All rights reserved.
In Closing - Four Key Views…
This is more than just an ‘HR’ issue. When quantifying the impact of retirement and recruiting challenges on your organizations, its likely evident that the gap between talent supply and demand cannot be managed by HR programs alone. It will take productivity, automation and sourcing solutions as well as HR program tuning to manage the problem
This is a ‘trough’, not a ‘cliff’. When looking at Boomer and GenY demographics, there is about a 25 year period where there will be more demand for talent than available supply. Managing your organization through this trough will have significant benefits ‘after the crisis’
Don’t ‘boil the ocean’. When formulating an action plan many look at the organization as a whole. Focus first on ‘scarce skills’ and ‘high demand positions’ first, then tend to the more ‘commodity’ skills
Develop an effective approach to developing a solution. Start with a low-disruption, low-cost, quick-time-to-results approach for developing a prioritized set of strategic and tactical actions to manage the gap between talent supply and demand
26 Copyright © 2008 Deloitte Development LLC. All rights reserved.
Contact Information…
Tim Phoenix
Deloitte Consulting LLP
Tele: +1 (512) 226-4272
Email: [email protected]
27 Copyright © 2008 Deloitte Development LLC. All rights reserved.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of approximately 135,000 people worldwide, Deloitte delivers services in four professional areas, audit, tax, consulting and financial advisory services, and serves more than one-half of the world’s largest companies, as well as large national enterprises, public institutions, locally important clients, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas.
As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names “Deloitte”, “Deloitte & Touche”, “Deloitte Touche Tohmatsu” or other related names.
In the United States, Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu and services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP. The subsidiaries of the U.S. member firm are among the nation’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through nearly 40,000 people in more than 90 cities. Known as employers of choice for innovative human resources programs, they are dedicated to helping their clients and their people excel. For more information, please visit the U.S. member firm’s Web site at www.deloitte.com
Copyright © 2008 Deloitte Development LLC. All rights reserved.