Managerial Implications of Changing Workforce Dynamics

Published by MBA Skool Team, Published on February 20, 2015

Today’s organizations cannot assume demographic uniformity; Management strategies must evolve continuously to accommodate the changing demographic patterns. Strategies must reflect the reality of shrinking middle aged workforce. In the future, organizations must rethink their policies to mine out the maximum capabilities of older employees and still need to answer the super dynamic, change savvy younger crowd. In general, the war for talent shifts from young to seniors as it becomes difficult to find out talented senior professionals.

Companies cannot afford to ignore the demographic change in terms of age asymmetry, gender Diversity, expectations of remuneration, International labour migration, skilled labour shortage, shift to automation and barriers to labour communication. Management has a huge role in devising rules, policies and regulations which are acceptable equally on all grounds. If the department of the Human Resources is able to identify these changes and take necessary actions to manage it in the best possible way, this can lead to the hidden success mantra of the company in the long run and become a competitive advantage. The success and survival of a company would depend upon how agile it is in surmising the changes and how quick and effective it is in tackling the same. This can be explained by the fact that population changes are not instantaneously, but instead occur slowly, step by step. Many companies just do not react because they do not realize it directly. Visionary organizations, however, can gain an upper hand by understanding these changes and proactively managing their workforce.

The paper addresses the question of whether management can detangle various demographic convolutions or is management getting entangled under the complex demographic changes

Analysis of Demographic Shifts

There has been a rapid rise in the ratio of “working age” to “non-working age” population contributing to extremely fast economic growth. Bureau of labor statistics (BLS) projects that over the next decade 40 million people will enter the workforce, about 25 million will leave the workforce and 109million will remain. There is a high probability that this change will witness a rising share of young (less than 28) and old (over 40) workers and a decline in middle aged set of workers. Such a trend in composition is completely antithetical of what we saw in the last few decades.

Major demographics trends can be summarized as follows –

• Age asymmetry

• Gender Diversity

• Expectations of Remunerations

• Skilled Labor Shortage

• International Labor Migration

• Increasing labor cost and decreasing work force

• Gap between employability and qualification

• Change in employee value system

• Dynamic working conditions and diverse career path

Age asymmetry

In today’s organization, four generations of employees coexist. They are the WW II generation, the baby boomers, Gen-X and the Millennials. While the WW II generation is conservative, the baby boomers are more open to experimenting. They imbibe the organizational culture fully. Gen X differs from Baby boomers in a way that they think very dynamically but seldom do they go into questioning their bosses. Gen Y is the Yo-Yo category. They question everything that affects them. They never follow the culture blindly. A manager needs to strike a balance between all the three which is difficult.

Example: Proactive gap analysis technique in Deloitte to understand the possible losses for a company due to employee retirement.

A comparison of the four generations in the workforce is as follows-

Gender diversity

Gender diversity is a key marker of health of any modern organization. Around 47% of the total workforce in the world today comprises of women. Out of these 63% are full time and the rest are part time. Even though many of them are not in the higher cadre of the office, the participation rate is growing tremendously. Family responsibilities, single parenthood and workplace relationship of women employees are the various factors to be considered byHR managers.


Expectations of remuneration

Businesses are aware that the long term cost of human capital is increasing. This expected increase in costs is exacerbated in some countries by the fact that age is a decisive factor in compensation. As a result, even if there were no war for talent, an aging workforce would lead to higher costs. An increase in the younger and older age group of working force may lead to increased training and compensation costs which in turn may affect solvency and profitability. As there would be an increase in the aged group of people, there would be an increased spending on the health insurance premiums, since older workforce requires more medical care. This could create a financial burden on the health care system.

International labor migration

Globalization has allowed people to migrate from one country to another for want of jobs. People from different nationalities work under one organization. In developing nations, where earnings from labor is the mainstay, foreign direct investments [FDI] have helped create direct and indirect labor opportunities. This trend is expected to gain pace. Labor migration would also help in more intensive spread of technology and communication channels

Skilled labor shortage

Today, 4/5th of the worldwide human capital deficit exists because prospective employees lack the appropriate skill sets. Over the next twenty years, the baby boomers will retire, taking with them a wealth of solid experience, industry-specific knowledge, and long-term client rapport. New talent is relatively inexperienced. Transferring the experience of the next wave of retirees to new hires will determine a company’s future success

Managerial Implications of changing dynamics

In the light of the many shifts in the dynamics of the workforce, managers have to adapt to newer tenets of management.

Managing Multi-generations

Managers have to follow different approaches when working with different generations in the workforce.

• WW 2 generation

 Connect to them face-to-face with a personal touch

 Avoid digital communication

 Make them feel that their experience is an asset and not a liability

• Baby Boomers

 Offer flexible work options including phased retirement. For instance, at Stanley Consultants, about 75% of employees work in a reduced capacity in the first two years after retirement.

 Assign challenging work and allow ample horizontal movement and opportunity to learn

• Gen-X

 Offer flexible work options and use their adaptability

 Give more autonomy

 Give FAST (Frequent, Accurate, Specific, Timely) feedback

• The Millennials

 Offer flexible work options

 Involve them in CSR activities

 Use their tech expertise to collaborate more

 Pair them with Baby Boomers and WW II generation. The resultant team is more holistic and according to studies, behaviorally sound

Total compensation:

• Provide employees the right to decide when and how to work. Incentives such as part time, job-sharing, flex-time, compressed scheduling and working from home are excellent options.

• Allow flexibility to design the benefit bouquet. For instance, young employees might include education as a benefit, a married employee might include child care, and an older worker might be looking for care insurance and retirement savings.

• Offer incentives promoting health and wellness. Brevard Public Schoolsin Viera, Florida, sponsors a yearly Well¬ness Challenge to encourage workers and their families to imbibe healthy practices.

• Localize benefits. For instance, private childcare, healthcare and pension benefits are useful in India, but not so in Europe where Government provides it

Maintaining the Balance

• Re-designing processes and timings: Diverse teams should be given processes, tools and timelines suited to them

• Integrating new values: Innovation and creativity will be as much sought after in almost all industries as efficiency and productivity

• Developing relations with new stakeholders: More partners, communities and governments would become key stakeholders.

• Flexible allocation of resources:

Creative Learning Modes

• Employees would be given as much access to technology and knowledge as possible.

• Coaching and mentoring would be key value drivers in tomorrow’s workforce.

• With more tech savvy young employees in the workforce, bottom up mentoring would become a common feature.

Imaginative hiring

• Hiring the person and not the function would be the mantra.

• Recruiting would be localized with focus on recruitment through social networks.

Robust performance reviews

• More inclusive results with metrics captured via advanced technologies from managers, partners, teammates and customers.

• More stress will be laid on teamwork and collaboration

• A personal dashboard which dynamically updates improvements or degradation in performance in real time could be an innovation.

• Assessment would affect not only compensation but it would act as the basis for a comprehensive career plan which would be shared and updated dynamically.

Pervasive Collaboration

• Employees should be encouraged to network and collaborate more and more

• Participatory management with flatter hierarchies would be the new norm

• Organizations would decentralize and multi-centralize major operations.

• De-compartmentalization would be the norm as institutional walls are broken down

• Provision for employees to elect leaders through polls or rankings or an informal process.

• Use gaming and immersive, complex simulations to disseminate information on processes, tools and customer interactions.

 Swarming:

 Pattern sensitivity teams

This article has been authored by Chathurya, Angana sharma from LIBA, Chennai










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