Turmoil and Trends in America’s Workforce

Alex Dodd, CEO M Squared Consulting

Agenda for today

• Current economic climate

• Talent supply and demand

• Flexible workforce

• Recommendations

Current Economic Climate

• Not likely to lose best talent• Belt tighten, but not so much that you

cannot take advantage of upturn• It’s tough, but use this opportunity to

address under performers• Do something different – embrace the

flexible workforce…

Talent supply & demand

• What’s happening on the demand side?– “the work that needs to be done”

• What’s happening on the supply side?– “the people that will do the work”

• Long-term relationship between supply and demand

3 Primary Drivers

Demographic trends… …impacting the workforce supply

Firmagraphic changes… …impacting the workplace environment and the nature of work itself

Psychographic evolution… …creating a “new” workforce

Demographic Trends

• Baby Boomers• Post-Boomer generations• Women in the workplace• “Non-traditional” households• College graduates• Immigration• Life expectancy• Birthrates• Cost of living

Baby Boomers

• Reaching retirement age…– Some retiring now– Some continuing to work, full-time– Some continuing to work, on their own

terms!

• Health benefits…• Financial ability to retire…

Post-Boomer Generations

• Generation X is not big enough to replace the Baby Boomers

• Generation Y is similar in size to the Boomers, but is not experienced (yet!)

• Gen X & Y are radically different in viewpoint than Boomers

Our Workforce

Source: 2005 U.S. Census

Boomers(1946-1964)

76.7m

49.1m

Generation X(1965-1980)

Generation Y(1981-2000)

73.5m

28.5m

Traditionalists(1925-1945)

Women in the Workforce

• A growing segment of the workforce• Make 83% of all consumer purchase

decisions• 60% of new college graduates• 60% of working age women work• Driving the creation of new career paths and

workplace flexibility

Traditional Households

Non-traditional households (i.e. the vast majority of households) want / require (demand!) flexibility

College Graduates

• College degree is a prerequisite in the knowledge economy

• Declining graduates with engineering and professional degrees

• Many foreign nationals are returning home

Immigration

• Highly politicized issue• H1B visa’s – 2008 lottery closed in first 24

hours.• No relief in sight…

Life Expectancy*

*Average, at birth, in the U.S. (Source: U.S. Social Security Administration)

Age

1900 1910 19301920 20001940 1950 1960 1970 1980 199040

80

60

50

70

45

55

65

75

Birth Rates

(Source: Age Wave)

Fertility Rate

US France CanadaUK Japan Germany Italy China India0

4

2

6

1

3

5

3.3

2.0

2.9

1.7

2.8

1.7

3.6

1.6

2.0

1.4

2.5

1.3

2.5

1.2

4.0

1.8

5.9

3.1

= 1960

= 2000

Cost of Living

• Most knowledge jobs are in or near major metro areas

• Housing• Commuting costs• Education

Workforce Projections…

Year

U.S

. Wor

kfor

ce

Projected Growth in Workforce (Supply)Projected Growth in Workforce (Demand)

Workforce Gap!

1980 1990 20102000 2020

Our Challenge:

Firmagraphic Drivers

• The knowledge economy• Economic conditions• Unemployment• Financial constraints of the firm• Change & Complexity• Outsourcing / Offshoring / Globalization• Employer loyalty

The Changing Nature of Work

• Knowledge economy is driving the need for specialized workers with specialized skills

• Work is becoming more team based• Work is becoming more project based• Technology intensive and enabled work can be

done from anywhere• New organizational structures, leadership and

management styles are emerging

The Changing Nature of Work

Psychographics: The Changing Workforce

4 Generations in 1 Workforce

TraditionalistsBorn: 1925 -1945

Respectful of authority

Hierarchical

Loyal to institutions

Rule makers and conformists

Baby BoomersBorn: 1946 -1964

Anti- authoritarian

Idealistic

Motivated by changing the world

Competitive

Generation XBorn: 1965 -1980

Self-reliant (latch- key kids)

Anti-institution

Rule-morphing

Tribal

Information-rich

Generation YBorn: 1981 - 2000

Confident and full of self-esteem

Impatient and eager to live life “now”. FUN!

Socially conscious

Highly tolerant

Plugged-in

Family-centric

Outcomes of the Changing Workforce

• Changing definition of retirement• Desire for greater work/life balance• More career flexibility/control• Looking for greater meaning in work• View work as a “series” of engagements• Diminished employee loyalty

So, the workforce has already radically changed, the nature of work is changing, now the workplace needs to catch up…

The Flexible Workforce

The Flexible Workforce is an innovative human capital strategy that:

• Recognizes the changes that are impacting “work”• Leverages the strengths of all 4 generations in the

workforce• Incorporates workplace flexibility, allowing people

to balance work/family/life• Provides greater flexibility and resiliency for the

organization

Developing a Model for Working with Flexible Resources

1. Define the work and desired results2. Define the skill/experience level required to

do the work3. Define the relationship between the worker

and the organization4. Select the resources to do the work5. Manage the work6. Capture and retain knowledge7. Measure results and satisfaction levels

Flexible Workforce Advantages

• Expertise: Brings in targeted expertise• Execution: Enables leadership to focus on

execution, accelerates time to market• Cost Control: Buy the expertise you need, as

you need it, where you need it. • Flexibility: Manage business peaks and valleys• Perspective: Objective outside experience• Recruiting: Broadens reach, “try before you

buy”• Retention: Demonstrates commitment to core

FTEs

The Time to Act is Now

Recommendations

• There is still talent. It has just changed, and the supply has gotten tighter.

• Many professionals no longer want a 9-5 job for life. Their definition of a “career” has evolved to being a “Free Agent”.

• You must now play on their terms to get their help.

There is no magic wand…

…and…

• Traditional FTE employment• Greater use of flexible workforce

• Technology• Productivity improvements• Outsourcing/offshoring• Enlightened employment policies• Management practices

Embrace the flexible workforce and make it a foundation of your

Human Capital strategy

• It demonstrates your commitment to innovation, supporting your staff, and getting work done

• It shows you care about success!• It enables you to get the best available

talent

Issues and Recommendations

www.msquared.com/blog

Alex DoddChief Executive Officeradodd@msquared.com

415-391-1038