How the Public Sector Can Beat the Upcoming Talent Crisis: Understanding the Multi-Generational...

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






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


Being Conversant With Macro Labor Trends


‘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


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


A Representative Example of What State Governments Face


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


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


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%)


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.


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


Bending the ‘Supply’ Curve

Motivation and Rewards◊


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


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


Generational Motivation


1925 1946 1964 1979 199 3


• 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


1925 1946 1964 1979 199 3


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


1925 1946 1964 1979 199 3


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


1925 1946 1964 1979 199 3


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


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


. . . 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


What Can Your Organization Do…Now?


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


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


Contact Information…

Tim Phoenix

Deloitte Consulting LLP

Tele: +1 (512) 226-4272

Email: [email protected]


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.

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Copyright © 2008 Deloitte Development LLC. All rights reserved.

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