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Meeting the Needs of Tomorrow's Workforce

The impending retirement of the Baby Boom generation coupled with increasing restrictions on immigration could result in a labor shortage of some 10 million workers as early as 2010, according to Bill Cassidy, Founding Partner of the Human Resource Partnership. What must companies do to prepare themselves for these impending changes? First, they must understand the nature of the problem and its direct impact on their particular organization, said Cassidy at AEP's CEO Roundtable in November; then, they can begin to devise tactics to address the issue.

The War for Talent: Good news for employees, bad news for employers
The Baby Boom generation is a demographic term for the population born between 1946 and 1964 - or approximately 82 million people, according to the 2000 U.S. Census. The oldest boomers will reach retirement age (traditionally 66) in less than six years, and according to The Market Street Report, half will have hit that milestone by 2021, representing a mass exodus of workers. Add to that the Bush Administration's recent focus on immigration reform, which many predict will decrease the influx immigrant workers, and the result is a workforce environment that empowers the employee and leaves organizations scrambling for talent.

"The coming decade will be the decade of the employee," said Cassidy. "Anybody who is employable - and we will probably continue to redefine that - is not going to have to worry about unemployment."

The Leaking Bucket: Four Causes of Retention Failure and How to Plug Up the Leak
As the employee takes the driver's seat, recruitment and retention of available talent will become increasingly difficult. Cassidy described four trends that will cause the impending "leaking bucket," some of which are already beginning to take effect.

1. Pension Portability - With the emergence of 401(k) plans, employees are no longer bound to one organization by the promise of pensions. The result is enormous freedom for the employee and one less retention tool for the organization. However, there are ways to address this new environment.

-Hire employees that aren't expecting defined benefits. This won't be hard to do because today's employees aren't expecting this, said Cassidy.

-Make sure you get maximum credit for the benefits that you DO provide by regularly distributing personalized "benefits of working here" statements.

-Make new "golden handcuffs": offer employees new incentives for their longevity, such as phantom stock options.

2. Medical Benefits Portability - Cassidy foresees this as another inevitability in the future workplace environment, following fast on the heels of pension portability.

"There is more and more pressure to ensure that some kind of a system provides medical benefits for the people of the United States," said Cassidy. "Whether this is a good thing or a bad thing is irrelevant; it's already happening to some extent."

These plans, which will most likely take the form of a medical savings plan of some sort, will further reduce the ties that bind employees to corporations. Cassidy's advice to smaller players is to sit back and let the big companies implement these policies first.

"You don't want to be the first company to take away medical benefits. Let the big companies do it and then slide under the radar when you have to. And you will have to in order to remain competitive."

3. Redefining "Worker Attitudes" - Because of the dwindling numbers of qualified workers, the people who are coming into the workforce will have a lot of choices and somewhat more leverage in terms of what they can expect from their employers.

"[Employees of the future] are going to see themselves more and more as independent contractors because they're going to be more and more like independent contractors," said Cassidy.

With this new worker attitude will come different wants and demands, such as

-Time management: Incentives such as flex time, sabbaticals, and mid-career retirements will be more attractive to employees than offering them higher salaries.

-Convenient services: Big employers in Minneapolis are building villages and providing services such as dry cleaning, child care, elder care, even meal preparation, said Cassidy. Organizations will be doing more creative things than ever before to meet the needs of workers in terms of work/life balance.

-The importance of the immediate supervisor: "The days of working for the 'God-King,' with layer after layer between, are over," said Cassidy. In a one-over-one management structure, the supervisory position will become increasingly important, and employees will have the power to be pickier about the people under whom they work.

4. Revival of the Guild Concept - As a result of the shift in demographics, economics, and loyalty structures of the employer/worker relationship, Cassidy sees employees feeling more loyalty to their trade than to their employer. With less and less tying them to the corporation, said Cassidy, workers will define themselves by their trade first, and view employment as "renting their experience" to such-and-such firm.

While there are no proven solutions to these challenges - some of which have yet to even present themselves - organizations that are flexible and willing to reexamine the employer/employee relationship will be in a much better position than those that think they can continue on their old path.

Questions, ideas, or in need of more information? Please contact Stacey Pusey at 302-295-8349.

Click here for more on AEP's annual CEO Roundtable

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