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michaelhopkins
FM Editor
Member Since:
06 Dec 2005
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25 Apr 2006 6:23 PM |
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Workforce Crisis author Tamara Erickson on managing the next demographic wave
Testifying before the U.S. Senate last year, Workforce Crisis coauthor Tamara Erickson might as well have been speaking directly to the concerns voiced by FutureMonitor Trend Survey respondents when they predicted that the aging world population and changing demography in general would be among business's top concerns in two years. Erickson--no surprise--agrees. So we invited her and her coauthors to join this special forum and explore the issue. She'll be online through Thursday, April 27, to respond and weigh in on the conversation.
Workforce Crisis (Harvard Business School Press) argues that key demographic forces--increasing longevity, declining fertility, and the size of the baby boom generation--are reconstituting the age distribution of the labor pool, and resulting in a "chronic" shortage of necessary labor and skills as the pig-in-a-python generation retires. (See a summary of the underlying statistics and research in this useful report, which Erickson helped produce at the Concours Group, the research and strategy consultancy she helps run.) The book then examines the makeup and mindsets of the multi-faceted new workforce, and what companies will need to do to successfully manage it.
Turns out the Senate testimony (in full here, and worth reading) is an excellent intro to Workforce Crisis as a whole. In short form, the testimony describes the demographic characteristics of the coming workforce, lists critical evolutions of technology and workstyle that are helping shape that workforce, and itemizes the major aspects of the radically changing employee/employer relationship.
Main points:
--The workforce is older, and limited in availability. There won't be enough workers of traditional work age to meet corporate needs.
--The workface will lack key skills, due to retirement of certain high skill workers already in short supply. "For example, the average age of petroleum engineers in the U.S. is approaching 54, while many of the oil companies still have lucrative early retirement programs that will allow these scarce resources to leave the workforce at 55."
--The workforce will be increasingly diverse "in virtually every conventional dimension--race, gender, age, religion and cultural identity."
--Corporations don't get "values," which are radically shifting. "Corporations as we know them today are not well aligned with the values of many individuals within this century's workforce. Hierarchical structures, rigid job designs, unilateral employment relationships, and cascading decision-making are at odds with the idealistic values of the Baby Boomer cohort and the independence of cohorts to follow."
--There's an "engagement" crisis. "[Research shows] today's workforce already experiences alarmingly low levels of engagement in work.... Only 20% of the U.S. workforce is currently significantly engaged in work."
--Resulting trend: "Retirement" will end as we know it, "to be replaced by a more flexible view of work, intermingled with periods of leisure throughout all of adulthood. Already, 34% of all U.S. workers say they never plan to retire."
--Resulting trend: "Fair, but not equal" treatment of employees will become standard. "Customized 'deals' will be the norm.
As Erickson told the Senators, "Using the skills and capabilities of the workforce effectively...will require new and more flexible approaches to the 'deal' between employers and employees.... Most importantly, it involves new assumptions about work and workers."
We spoke with Erickson (see more background on her here) to ask what she's seeing as she watches company leaders grapple with the circumstances that Workforce Crisis describes:
FutureMonitor: You speak often to business audiences and company leaders, not just to the U.S. Senate. How do they react to your message in Workforce Crisis about imminent labor/skills shortages?
Tamara Erickson: It's interesting. Ken [Dychtwald, coauthor, noted demographer, and founder of the firm Age Wave], who's more likely to hit a general audience, gets more pushback. I do business audiences and I don't get any pushback at all. I ask who's feeling a pinch already and invariably somewhere between a third or a half the hands go up.
FM: Do they react in any ways that surprise you?
Erickson: I'm not sure I'm really surprised by this--because it's about a part of the problem that I myself don't feel I have the most thorough answer to--but at a certain point I always see a switch in attitude. I talk about turning every stone to address the skills shortage--looking at every pool of talent that exists and engaging it in novel ways [customized "deals" with every employee, cyclic employment, flex roles, job-sharing, contracting, virtual workplaces, project-hiring, etc.] And businesspeople pretty much nod along with me about this...until suddenly they say, "But that would be really difficult. It would mess up all our management processes. We have metrics for headcount and we'd have to come up with new metrics." They finally recognize that lots of pieces about how they run their corporations would change utterly.
FM: Is it really just the logistical challenge of this "customizing" that worries managers?
Erickson: No. There's also a psychic or attitudinal challenge. I talk a lot--as our book does--about the shifting values underneath the shifting demographics. My key point is that there are so many different value sets in the workforce today that there are big differences in how people want to approach work. For example, people in their 20s want to work 35 hours, 40 if pushed. And the perception among older managers is that these guys are bums, because the managers work 60. That's a simple example. The variations are infinite and complex.
FM: In Workforce Crisis you describe many tactics for creating new, customized employee/employer relationships. What gets in the way when companies try them?
Erickson: The challenge is that it's very hard to do it, no matter how good the ideas are. It's simple to say, for instance, "Retire retirement." But its easier said than done. Many factors cause trouble, such as age prejudices, for example. How do people get used to stepping down in responsibilities--and stature, and pay--but still remain associated with the organization. Interestingly, organizations seem able to manage that, but for the individuals involved it's hard.
FM: What do individuals find easy but organizations find hard?
Erickson: Well, dealing with flex time, for one--it's difficult for companies. But people find that really easy.
FM: If you were a manager facing this new labor-pool reality, what one thing would you do first?
Erickson: Get good at project-based work. Figure out how to use contractors, how to let employees work 3 months on and 3 off. Our research shows that that's in more demand than, say, a 4-day week. And both young and old--over 55 and under 35--are demanding it. Again it comes down to: How do I make smartest use of people who want to work differently. Because there's no escaping that they're going to work differently.
FM: Meaning, you can choose to work with those differences or not--but the "not" will increasingly not be a choice?
Erickson: That's the demographic fact. The changing values [among varied parts of the changing labor pool] will force changes in how companies work. You can be ahead of the changes or behind them. Once our research got into the changing values, it became clear that lack of engagement [by workers] was going to become more and more critical. That took us in a whole other direction--how to manage for engagement.
FM: Seems like "managing for engagement" has been on the table for a long time, though. Weren't companies consciously trying all through the late '80s and '90s to re-engage workers, often by trying to make work feel more meaningful? Entrepreneurs certainly were.
Erickson: But I'd say there's a difference now, which is that a huge group of people in the idealistic baby boom cohort is going through a complete rethinking of their lives. And where they turn is outside of work. You see it anecdotally when I ask audiences who knows someone who's left corporate life for an alternative, you see it in church membership suddenly growing again. Where once there was a hunger for meaning in work, now there's a hunger for meaning, but not in work. Companies will have to understand that, and think about engagement differently.
NOTE TO MEMBERS:
Questions, comments, experiences to share? REPLY BELOW or ADD A NEW TOPIC in this special forum.
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NGSA
Member Since:
27 Apr 2006
Posts:1
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27 Apr 2006 8:26 PM |
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With these demographic shifts, we hear about the need for companies to think about alternatives to retirement as well as different ways to retain young workers, but what about those "in between" these two age groups? What is the impact on this group, and what should managers consider both to retain and prepare this group for the impact on workforce?
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edward_nathan
Member Since:
27 Apr 2006
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27 Apr 2006 8:32 PM |
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This certainly makes a strong case for being more flexible on immigration policy as related to labor -- wouldn't you say?
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donkil
Member Since:
30 Mar 2006
Posts:3
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27 Apr 2006 8:38 PM |
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What is going to happen to the federal budget when so many folks become senior citizens and start demanding ever increasing pieces of the federal pie? Baby boomers have always exercised their demographic clout to their own advantage, why would they stop?And where is the funding for all of this coming entitlement? Deficits? New taxes (individual and corporate)? And what will be the negative effects to the economy?
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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27 Apr 2006 8:59 PM |
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Posted By donkil on 4/27/2006 3:38:45 PMWhat is going to happen to the federal budget when so many folks become senior citizens and start demanding ever increasing pieces of the federal pie? Baby boomers have always exercised their demographic clout to their own advantage, why would they stop?And where is the funding for all of this coming entitlement? Deficits? New taxes (individual and corporate)? And what will be the negative effects to the economy? Excellent questions! Add in the fact that in the U.S. people tend to "vote their age" - only about one-third of 30-year-olds bother to vote, but two-thirds of seniors do - and the country may become a "gerontocracy" with enormous political power concentrated among older citizens. The federal government recognizes this and is trying to appeal to older Americans in various ways (ineptly in the case of Medicare and the prescription drug benefit). How Boomers exercise their clout as older voters will be the ultimate test of the generation's character. Will they hearken back to the ideals of their youth and conserve resources for future generations? Or gobble up resources for their own indulgence? Here's hoping they (actually, in my case, we) act wisely in old age. Meanwhile, some European countries will face a crisis in public pensions long before the U.S. does. Low birthrates plus earlier retirement ages plus the Boomer retirement wave equals, for example, projections of France having to spend 20% of its GNP on public pensions.
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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27 Apr 2006 9:16 PM |
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Posted By edward_nathan on 4/27/2006 3:32:43 PMThis certainly makes a strong case for being more flexible on immigration policy as related to labor -- wouldn't you say? It does, particularly in the high skill categories. Unfortunately, today the combination of stricter immigration policies and increased opportunities in their home countries are causing about 1000 of our most highly educated, highly skilled immigrants to return their home countries each DAY.
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TammyErickson
Member Since:
27 Apr 2006
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27 Apr 2006 9:25 PM |
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To add to the discussion about the impact of a growing number of senior citizens on the federal budget, I'd like to add an optimistic note. It's important to remember that most of the gloomy projections assume that all the Baby Boomers will retire and spend their golden years doing nothing more than relaxing in a hammock. This is highly unrealistic. Every Boomer I know is far too energetic to spend 20 or 30 YEARS in a hammock -- and that's the amount of time that many of us will have -- of healthy, intellectually competent adult life -- unencumbered with child care responsibilities. We have no precedent for predicting what the impact of all that adult energy will have on our society. Some will jump into charitable work, some will take on jobs that have more social significance perhaps than they feel their first career has provided. I predict that many will do something entrepreneurial. What's to say that the decades ahead won't be a real reinassance of creative and philanthropic activity? The challenge I see is for large corporations, traditional businesses, to tap into some of that talent and energy.
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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27 Apr 2006 9:40 PM |
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Posted By NGSA on 4/27/2006 3:26:02 PMWith these demographic shifts, we hear about the need for companies to think about alternatives to retirement as well as different ways to retain young workers, but what about those "in between" these two age groups? What is the impact on this group, and what should managers consider both to retain and prepare this group for the impact on workforce? We very much agree! The solution to the looming talent shortage is to tap into every age group more effectively. There HAS been a lot of discussion of the two ends of the spectrum, but our research shows that some of the greatest opportunity comes in better addressing the needs of the mid-career worker. Its the biggest group and, our research shows, the least engaged. As we said in a recent Harvard Business Review article, called "Managing Middlescence," this group is often burned out, bottlenecked, and bored. The types of strategies that successful companies are following to re-engage employees in the 35-55 age group include fresh assignments, career changes, training, mentoring opportunities, and sabbaticals.
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jdevoll
Member Since:
27 Apr 2006
Posts:1
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27 Apr 2006 10:06 PM |
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I'm wondering what industries are facing this crisis right now. The automotive industry, for example, seems to be facing the opposite problem - not enough jobs. Is your research striking a nerve with some groups over others? I would image that workers who have been unemployed for a while may have trouble believing that there's a workforce crisis.
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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27 Apr 2006 10:31 PM |
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Posted By jdevoll on 4/27/2006 5:06:32 PMI'm wondering what industries are facing this crisis right now. The automotive industry, for example, seems to be facing the opposite problem - not enough jobs. Is your research striking a nerve with some groups over others? I would image that workers who have been unemployed for a while may have trouble believing that there's a workforce crisis. Industries facing skills and labor shortages right now include healthcare and various forms of engineering, including aerospace and petroleum. Automotive is tricky - GM and Ford have problems, but Toyota and Honda build factories. Jobs with a United Auto Workers package of security and benefits are disappearing, but the industry as a whole is not doing badly. Also note that GM's buyout offer to 100,000+ employees seems staggering, but under 20% of employees (typically far under) take such buyouts, so the resulting job loss amounts to a fraction of a fraction of a percent of the American workforce. Our discussion of pending shortages does, indeed, strike a nerve with middle-aged and older employees who have been out of work, and we empathize with them. Employers may have been very shortsighted in downsizing too much. The demographic pressures and shortages are building gradually - not fast enough for people who would like the equivalents of their old jobs back. We encourage them to be flexible and creative - try something new, even if it means undergoing some catch-up training, or try to repackage their skills and experience to fit a different type of employer or industry.
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AlaineDilling
Member Since:
27 Apr 2006
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27 Apr 2006 11:06 PM |
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Ms. Erickson, have you worked with companies that have truly been able to "retire retirement"? Or, will this need to wait until Generation X hits retirement age in many years? Obviously, as I’m sure you would agree, that will have dire consequences.
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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27 Apr 2006 11:21 PM |
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Posted By AlaineDilling on 4/27/2006 6:06:20 PMMs. Erickson, have you worked with companies that have truly been able to "retire retirement"? Or, will this need to wait until Generation X hits retirement age in many years? Obviously, as I’m sure you would agree, that will have dire consequences. Hi Alaine, Yes a number of companies are beginning to take steps in that direction. We found 85 year old aerospace engineers working productively (on a cyclic or project basis) at The Aerospace Company, an innovative employer on the West Coast. Several retail companies, including CVS (a chain of retail drug stores) and Home Depot, have had tremendous success hiring older employees -- and increasing customer satisfaction in the process, by providing sales staff more closely mirroring the customer demographic. We profile a number of other progressive companies, and practices that we hope many companies will begin to implement today, in our book. Beyond just meeting the talent shortage, smart companies are finding that people in the over-60 generation today bring a lot of great assets to the workplace -- generally good interpersonal skills (compared with some of the Gen X and Y folks who prefer communicating via technology), for example, and company loyalty (I remind companies that in many cases they'll have longer tenure from a 60-year old "new" hire than they're likely to achieve with a 20-year-old, who may only stay a few years!). We're hoping that increasing awareness of the looming shortage will prompt a number of companies to make changes now in their policies and practices that will open many more doors for today's generation of seniors.
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ErikSmith
Member Since:
27 Apr 2006
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27 Apr 2006 11:48 PM |
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Great discussion, thanks.My question has to do with the extent that the demographic trends being talked about here apply internationally. The Baby Boomers are almost always mentioned in a US context, but do other countries besides the US face such distinct generational demography? And if not, then might some sort of international labor strategy be helpful?On a secondary note -- and as a member of GenX -- I have a question about the age profile of respondents to the FutureMonitor Trends Survey? If it was predominantly Boomer, could that have skewed the interest in Baby Boom-driven demographic shifts higher? I'd be interested in knowing if the Millenials rank Baby Boom-driven demographic shifts so high, or if they simply see the looming labor shortages predicted here as opportunity...
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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28 Apr 2006 12:19 AM |
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Posted By ErikSmith on 4/27/2006 6:48:34 PMGreat discussion, thanks.My question has to do with the extent that the demographic trends being talked about here apply internationally. The Baby Boomers are almost always mentioned in a US context, but do other countries besides the US face such distinct generational demography? And if not, then might some sort of international labor strategy be helpful?On a secondary note -- and as a member of GenX -- I have a question about the age profile of respondents to the FutureMonitor Trends Survey? If it was predominantly Boomer, could that have skewed the interest in Baby Boom-driven demographic shifts higher? I'd be interested in knowing if the Millenials rank Baby Boom-driven demographic shifts so high, or if they simply see the looming labor shortages predicted here as opportunity... Hi Erik,I can only answer part of your question -- I'll have to let the folks from FutureMonitor tell you more about the demographics of their survey.Your international question is a good one. The reality is most international markets are facing an even more significant shortage than we are. Growth in working age population will actually DECLINE in countries like Germany, France, Spain, Italy, Russia and Japan over the decades ahead! Many of these countries, particularly those in Europe, will address their shortages in part by tapping supplies from other countries -- those in Eastern Europe, for example, where both numbers and, even more importantly, skill levels remain high. But many countries will be competing to attract talent from increasingly limited sources. And, as I mentioned in an earlier response, the US is currently loosing many of our most highly educated immigrants, as they return to opportunities in other countries.Another important point -- the Baby Boomer phenomenon is only one factor contributing to the dramatic changes that are underway in the workforce -- in fact, in my view, the least important of three. The two more important issues are the astonishing increase in life expectancy that we've experienced throughout the industrialized world over the last century, and the dramatic decrease in birth rates that occurs in country after country as the local economy develops and more women enter the workforce. These two factors will be with us long after the Baby Boom bulge passes through, and are present in most industrialized countries today. Together, they create a possibility for a workforce crisis (in the form of a shortage of available talent) in many areas of the world.
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BobMorison
Member Since:
27 Apr 2006
Posts:8
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28 Apr 2006 12:36 AM |
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I’ll add my response to Tammy’s, and you’ll pardon the repetition. The trends that form the backdrop of Workforce Crisis are definitely international, especially with respect to Europe and Japan. Increasing longevity and low birthrates equal an aging population and workforce. Those trends are even more pronounced in Western Europe and Japan than in the U.S. And those same countries (and Canada and Australia) had post-war baby booms of their own. The U.S. working-age population (in traditional terms of 20-64) will continue to grow, albeit modestly. Between now and 2020, the working age populations in Germany, Italy and Japan are all projected to decline. An international labor strategy might focus on countries with different (and younger) demographics - India, Brazil, China (though so much is going on there - the one-child policy with favoritism for males, eventual population shrinkage, the transition from an agrarian to an industrial base - that the situation is very unpredictable). For these countries to emerge as talent suppliers for the world, they need infrastructure, both physical and educational. Brazil seems to be missing the opportunity. India and China are cranking out college graduates, which by sheer numbers makes a difference. However, much of their populations remain largely unaffected by the educational progress, and recent studies call into question the quality of the degrees granted. Fascinating developments all around.
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donkil
Member Since:
30 Mar 2006
Posts:3
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28 Apr 2006 4:10 PM |
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I fear that the baby boomers you know are not representative of the population as a whole.
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TammyErickson
Member Since:
27 Apr 2006
Posts:11
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28 Apr 2006 4:49 PM |
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Posted By donkil on 4/28/2006 11:10:11 AMI fear that the baby boomers you know are not representative of the population as a whole. Fair point. One of the big difficulties of providing an overall picture of the workforce today, and certainly going forward, is that it is HIGHLY diverse. Our initial research, which began about four years ago, was based on qualitative work -- focus groups and case studies of how leading corporations were begining to flex to meet the challenge. We quickly came to the conclusion that the granularity was so significant, and the variations so wide, that we need to get a quantitative handle on today's mix. We then worked with Harris Interactive to conduct a major, statistically valid survey of the US workforce -- we think one of the broadest that's been done, at least recently, to understand the psychodemographic drivers (why people work, the role of work in people's lives), their preferenences re what they want back from corporations (the components of "deal"), and how engaged they are with work today. Its very clear that different people view work in very different ways -- I'd say the most significant axis of "diversity" today is in our values toward work. And, you're totally right that this variation occurs even within the broad age cohorts we've been discussing in this forum -- Baby Boomers are a very diverse group. That said, we've tried hard to present and discuss the trends that are most generally representative of that group as a whole.
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AnnStetson
Member Since:
26 Apr 2006
Posts:2
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28 Apr 2006 5:46 PM |
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--MARKET OPPTY'S that are unexpected??First of all, Tammy I just read the Senate testimony (haven't read your book yet) and--pardon my Italian--you kick ass. Very good synthesis of what what's happening demographically and technologically and how ti fits together.BUT I want to ask a different question than most of what's been discussed so far if I can:Have you identified industries or service opportunities--markets of any kind--that will offer unexpected opportunity as the population ages. I mean besides the obvious (health care, housing, etc.) Are there some that you think are getting overlooked?Thanks. Great discussion.
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aTOE
Member Since:
26 Apr 2006
Posts:3
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28 Apr 2006 6:01 PM |
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Posted By TammyErickson on 4/28/2006 11:49:27 AM
Posted By donkil on 4/28/2006 11:10:11 AMI fear that the baby boomers you know are not representative of the population as a whole. Fair point.
Well, more than fair point, I'd say. I hate to be a wet blanket here--and I grant your thoughtful comments, Tammy, about the diversity within all generational cohorts--but speaking from managerial experience I'm almost ready to say "I'll never hire a retirement-age worker again!"
That's ridiculous, of course, and I don't completely mean it. But I run a decent-sized co. that's partly high-tech (what co. isn't anymore?), about 480 emps, and I've tried hard to hire/retain older workers over the past 7-8 years. Two big problems arose:
1. Legal trouble. Not everyone works out (irrespective of age), but this country has made it very hard to fire older people. And if you can't fire, you can't hire. The risks are too great. So, do you see any movement toward changing the legal treatment of older workers? This is a huge impediment.
2. Unpredictability of the olders. Reason I tried so hard to incorporate older workers in the first place was just what you mentioned: it's where the skills were. But I found them unreliable, frankly--except for the few extraordinary stars (who will be with me in some capacity until they can't get out of bed--and maybe then I'll still find a way to beg them to stay involved). They think they want to take on responsibilities, but it's too easy, circumstantially, for them to change their minds and jet. True, everyone says twentysomthings do the same, but that hasn't been my experience.
Not sure my question here. Maybe it's just: Do you see the attitudes of the retirement age pool becoming more "worker-normal" as it grows and gets more routinely included in the workforce?
Sorry for long post. Appreciate the good info you guys are giving.
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michaelhopkins
FM Editor
Member Since:
06 Dec 2005
Posts:82
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28 Apr 2006 6:10 PM |
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Posted By ErikSmith on 4/27/2006 6:48:34 PM
....On a secondary note -- and as a member of GenX -- I have a question about the age profile of respondents to the FutureMonitor Trends Survey? If it was predominantly Boomer, could that have skewed the interest in Baby Boom-driven demographic shifts higher? I'd be interested in knowing if the Millenials rank Baby Boom-driven demographic shifts so high, or if they simply see the looming labor shortages predicted here as opportunity... Erik, good question--to which we unfortunately don't have the answer, only a guess. Though we know the survey respondents are widespread internationally (and included responses from 19 countries), we don't know their ages.
My guess, though, is that you're at least partly right. Our Financial Times colleagues agree that our collective panels probably included a disproportionate number of people in their 40s (almost all of whom would officially be "boomers").
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