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Keeping the Workforce An acute workforce shortage stares us in the face

- Dr. Martin Lockstrom, Girish Khanzode

Abstract

20 countries around the world currently show zero or negative population growth. With birth rates on the decline, the aging

world may well be sitting on a demographic time bomb.

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Declining Birth Rates The worldwide fertility rates for developed and developing countries are

dropping and will stagnate. 4

One quarter of European Union now

has a declining population

3

Low birth rates will result in

shifting of talent base from

established geographies

(Europe as stated in slide) to

emerging geographies giving 2 rise to more remote work

FORECAST

1950-55 65-70 80-85 95-2000 2010-15 25-30 45-50

The shift in age pro le has serious implications for nations, industry and society, not least of which is an

acute workforce vacuum. By 2025, the United States alone will be short of around 29 million workers, as

77 million baby boomers (those born between 1946 and 1964) retire from the workforce, but only 48

million individuals belonging to Generation X (those born between 1965 and 1980) enter it. This

retirement will deal a double blow to organizations unless they nd a way to prevent the tacit

knowledge (which apparently accounts for 42% of a company's knowledge) and connections held by their

mature workers from leaving with them; for research shows that when even a few key members of a

network - such as those who possess important knowledge or integrate the network - leave, they leave a

disproportionate impact on its connectivity.

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Baby Boomer Retirement will

Create a Workforce Vacuum

By 2025, total 77 million The group of 48

US Baby Boomer would million Gen Xers is too

retire, creating a loss of small to replace

expertise boomers

77 48 Millions Millions

The young, tech-savvy generation that

will ll this gap has entirely di erent

work expectations from earlier

generations

Therefore, it is in the interest of employers to retain or re-hire their senior workforce. Studies indicate

that only 20 to 40% of 55 to 65 year olds say that they are fully retired, implying that the majority is still

open to the idea of employment. The desire to continue working beyond retirement age is primarily

driven by economic factors, including the rising cost of healthcare and the need to nancially provide

for longer life expectancy as well as bolster savings that were badly impacted by the nancial crisis. That

being said, companies must recognize that their older employees will stay on only if their expectations

(shorter/‚exible working hours, respect of colleagues or sense of ful llment) are met.

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Another way that organizations can bridge the workforce gap is by recruiting

millennials - those born in the two decades between 1980 and 2000. Once again,

they will only be able to retain these employees by catering to their important

needs, some of which are unique to their generation. At the top of the millennial

employees’ wish list is access to technologies at the workplace, which are at least

as, if not more sophisticated than what they’re habituated to in day-to-day life.

Balancing the idiosyncratic needs of two (or three, when including Generation

X) generations will be a daunting task for organizations and their HR managers.

Baby boomer retirement will affect

almost all industries, but have the

biggest impact on sectors, such as

energy and utilities, where nearly

3 in 5 workers were aged between

41 and 59 in 2005. Government,

aerospace and education sectors

will also be significantly affected.

The problem is compounded by

the fact that it takes very long to

train the new workforce in these

sectors (as long as 5 years in the

energy sector), where most of

the job-related knowledge is tacit

in nature.

With technological advancement

enabling automation of routine

work, specialized skills and

knowledge are rising in value.

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This paper suggests ways to meet this challenge.

One of the key reasons for high attrition rates and premature retirement is that

organizations often fail to take their employees’ expectations into account.

The risk of employee discontent is amplified in the case of a demographically

diverse workforce, where employees from different generations have varying

and often conflicting needs.

Accordingly, employers must pay closer attention to their demographic

structure, in order to assess who knows what and whom, as well as gain a

better understanding of work patterns and attitudes toward technology among

different age groups. One size does not fit all.

A comparison of the workplace expectations of baby boomers and millennials

reveals some interesting findings. As expected, the two groups have very

different career motives - while mature workers seek an income (or nest egg) to

live on and want to make productive use of their time, for the young workforce, a

job is all about career and skill development, and exposure to cutting edge

technology. But they also have several things in common, such as a desire to

contribute to society through work; a preference for flexible work arrangements

(albeit for different reasons: baby boomers want a lighter workload, whereas

millennials are very focused on work life balance and being single, can afford

“flexibility”); and an appreciation of the social connections formed at the

workplace. This is not surprising given that millennials are the children of baby

boomers, and therefore the inheritors of their values.

Generation X, on the other hand, is more concerned about the corporate ladder

and compensation.

It is imperative to reduce attrition among workers of all ages.

A significant proportion of people of retirement age want to continue working but

don’t because they feel that their companies’ structure, processes or culture, are

not supportive of their needs. On their part, organizations might be prejudiced

against extending the tenure of older workers, especially since they cost more

than inexperienced employees. Common stereotypes, painting older employees

as resistant to new ideas and technology, add to the bias. Before coming to a

hasty decision, HR managers must weigh the higher salaries of mature workers

against their higher productivity, the cost of recruiting and training fresh hires,

and of course, the loss of connectivity and tacit knowledge occasioned by their

exit. A closer look reveals that the workplace expectations of the baby boomer

generation are mostly about finding fulfillment and dignity. By providing an

intellectually stimulating environment, autonomy, exposure to new challenges

and recognition, organizations can hold on to their valuable and mature human

resource assets for a while longer. And what about the millennial generation?

Let’s take a look at some typical personality traits to understand

the influences shaping the millennial employee. The millennial is a

digital native, a technophile. He is spoilt for choice, in an Internet

world of instant gratification, and ever improving services and

experiences, many of which are available free of cost. His decisions

are shaped by peer opinion, flowing freely over the online social

networks that he is part of. As a consumer, the millennial is highly

demanding - (remember, he benchmarks against the Googles,

Amazons and Facebooks of the world) - and equally fickle. There’s

no reason to believe that he will be any different as an employee. In

contrast to the older generation worker who would spend an entire

lifetime in a single company, the millennial is expected to be a job

hopper. Born to financially secure (helicopter) parents, the millennial

can afford to be choosy about where he works.

Different problems require different What this means is that employers will have to make special efforts

to attract and retain millennial talent. In 2010, the Harvard Business

Review published that the millennials’ top expectation from their

employer was an opportunity to enhance skills for the future,

followed by adherence to strong values, customizable benefits,

work-life balance and a visible career path. They viewed the boss as

someone who would guide them in their career, and as a source of

honest feedback and mentoring. The millennials’ love of technology

was once again evident in their strong desire to learn new technical

skills on the job, which ranked above the need to improve personal

productivity, leadership abilities, functional knowledge and

creativity. This explains the findings of a survey in which more than

half the millennials said that (the quality of) technology would

strongly influence their choice of employer.

But as mentioned earlier, like the baby boomer, the millennial also

values relationships with colleagues, flexibility, peer recognition

and exposure to new experiences and challenges.

Such similarities open up many opportunities to organizations to

simultaneously mitigate premature retirement and attrition among

their baby boomer and millennial staff respectively. Flexible or part-

time hours and remote work arrangements answer the need of both

generations for a balanced personal and professional life. Mentoring

of various kinds - remote, group or anonymous - can bring both

age groups together to benefit mutually. For instance, during the

course of reverse mentoring, millennials can teach seniors how to

use technology, and hone their own leadership skills in the bargain.

Seniors can mentor young executives in functional areas, as well

as pass on their wealth of tacit knowledge during face-to-face

interaction. (This is much more effective than relying solely on a

collaborative technology platform to gather and disseminate such

hard-to-codify knowledge.)

Needless to say, this inter-generational interaction won’t materialize

by itself, needing a mandate from the top as well as internal

champions to spearhead the efforts.

solutions.

Although workforce aging is more of an issue

in the United States and Europe at present,

countries like India and China, despite large

youthful populations, also face talent shortage

of a different kind. These high-growth markets

haven’t yet developed a sufficiently deep middle

management resource pool, so necessary for

nurturing junior employees in any organization.

As a result, many employees do not realize their

full potential and become discontented. The usual

response of organizations is to raise salaries, which

rather than ameliorating the situation, worsens it,

as competitors continuously outbid each other to

induce a vicious cycle of job-hopping and wage

escalation. Instead, companies should focus more

on mentoring, coaching and basic orientation

training in order to lower the threshold at which

workers become productive.

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This is not just about the aging workforce.

Managing the aging workforce is only part of the story.

In order to ensure access to world-class talent in the

21st century and turn their human resources into a

competitive advantage, organizations need to configure

their workplaces to meet the future needs of their people.

Some key trends indicate what these might be

• Increasing female workforce. According to the

Bureau of Labor Statistics, women employees

are a two-thirds majority in 10 industries out of

15 that are tipped to grow the fastest over the

next few years. For example, in the United States,

women already make up half of the workforce. As

organizations hire more women to fulfill various

positions, they will have to accommodate their

dual responsibilities by offering flexible work

arrangement and other support services.

• Dynamic working schemes. Working schemes will

not only become remote and flexible, but also

more innovative. Solutions such as eLancing will

be used more frequently to quickly bring a trained

workforce on board.

• Flexible training. Not just jobs, even training will

become more flexible, as younger workers embrace on

demand, anywhere, anytime learning.

• Smarter communication. Increasing use of personal

devices like smartphones (even at work) will enable

millennials to maintain work-life balance.

• New assistive technologies. These will help the

ageing workforce remain productive longer.

• Virtual workplace. Distributed technologies will

enable all types of workers to work from anywhere to

improve productivity, reduce travel time and

infrastructure costs, and promote sustainability by

leaving a smaller carbon footprint.

Organizations that embrace these trends will improve

their supply of talent by making existing workers

more productive, reducing attrition and delaying the

retirement of older employees. Those that reject it may well

end up looking down the barrel.

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About the Authors Dr. Martin Lockstrom

Principal Consultant, Building Tomorrow’s Enterprise, Infosys Labs

Martin is a specialist in Supply Chain and Operations Strategy,

Outsourcing/Offshoring and International Management. During a

six-year stint in China, he established the research and education

activities at the SCM, Sustainability and Automotive academic

centers at China Europe International Business School, Shanghai.

He established the first endowed chair for Purchasing and SCM in China at Tongji

University, Shanghai, and was also responsible for setting up Supply Chain Management

Institute China, an international network of SCM research and education hubs.

Martin co-founded Procuris Solutions, an IT company specializing in SCM-related solutions,

offering consulting services to companies like Accenture, Ariba, BMW, Clariant, Dell, Dow, Ernst

& Young and Intel, among others.

He has a Ph.D. in Supply Chain Management from European Business School, Germany, a

bachelor’s and master’s degree in Industrial Engineering and Management, from Chalmers

University of Technology, Sweden. He speaks Swedish, English, German and Chinese,

has published over 50 articles and papers and presented at more than 60 conferences.

Girish Khanzode

Products & Platforms Innovator for futuristic technologies, Infosys

Girish has around 20 years of Enterprise Software Product

Development experience. He has built and led large engineering

teams to deliver highly complex products in various domains,

covering the entire product life cycle. Currently, he is engaged

in innovating and building the next generation products and

platforms in the area of future of work. Earlier, he worked on Enterprise Data

Privacy Product. Before joining Infosys, he setup a startup engaged in creating

financial technology products. Prior to that he worked at Symantec for 8 years

and delivered core security technology engines of the company. The products

using these engines had a combined revenue of more than US$ 2 billion. One of

his products, Symantec LiveUpdate, had 300+ million software client installations

with 24x7 operations to protect worldwide computers from emerging viruses in

real time.

Girish holds an M.Tech. degree in Computer Engineering and a bachelor ’s

degree in Electrical Engineering from Government College of Engineering, Pune.

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