Serving the Multigenerational Workforce

Leading People. Leading Organizations.

Serving the Workforce of the FutureServing the Workforce of the Future

Dr. Shirley DavisChief Diversity & Inclusion Officer

Society for Human Resource Management


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What We’ll Cover Today

• Building Inclusive Organizations: The New Business Imperative

• Changing Demographics: A New Workforce

• Leading a Multigenerational Workforce

• Designing & Implementing Benefit Plans for a Multigenerational Workforce


Building Inclusive Organizations: The New Business Imperative


Diversity + Inclusion = Diversity Management

Diversity management“the comprehensive organizational and managerial

process for leveraging diversity and achieving inclusion that maximizes the potential of all employees.”

Diversity“the collective mixture of differences and similarities that

includes, for example, individual and organizational characteristics, values, beliefs, experiences, backgrounds,

preferences, and behaviors.”

Inclusion“the achievement of a work environment in which all individuals are treated fairly and respectfully, have equal access to opportunities and resources, and can contribute fully to the organization’s success.”

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Skin Color/EthnicityGENDER

age

Education

Ethnicit

y

Native born/non native

Ge

og

ra

ph

ic L

oc

at

ion

MILITARY EXPERIENCE

Parental Status

Smoker/Non smoker

WORK BACKGROUND

ReligionFunctional Specialty

Communication Style

BELIEFS

Culture

VALUES

Behaviors

VISIBLE DIVERSITY TRAITS

The collective mixture of differences and similarities that includes individual and organizational characteristics, values, beliefs,

experiences, backgrounds, preferences, and behaviors.

Sexual Orientation

Physical Abilities/Qualities

Personality

Level in Organization

Physical Attributes

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Workplace Diversity

THINKINGTHINKINGSTYLESSTYLES DIVERSITY TRAITS

`tÜ|àtÄ fàtàâá

socio-economic status


Why Diversity & Inclusion?

Compliance Case“Diversity is somethingwe’re forced to do … by law.”

Values Case“Diversity is the right thingto do … for our people.”

BusinessCase“Diversity is the smartthing to do … forour business.”

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Changing Demographics: A New Workforce


Workforce 2000 Workforce 2020The workforce will grow more slowly than at any time since the 1930s

The proportion of women and minorities in the workforce will rise dramatically

The average age of the workforce will rise, and the pool of young workers entering the labor market will shrink

The workforce is aging and thus becoming less willing to relocate, retrain or change occupations, yet the economy is demanding more flexibility

Immigrants will represent the largest share of the increase in the workforce since World War I

Workforce planning will become more uncertain as retirement ages become increasingly less predictable

The proportion of women in the workforce will have gradually increased to about 50%*

The presence of top-level older employees may cause dissension among their middle-aged subordinates eager for promotion

Older workers will need different benefits, such as elder care programs

The U.S. population and workforce will gradually become more ethnically diverse


88Hudson Institute 2020

Hudson Institute 2000*U.S. Census Bureau



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Workforce 2000 Workforce 2020Need to recognize the importance of a flexible workforce through company and national policies

(e.g., flexible workforce programs, revised pension systems, promotion of retraining and lifelong learning).

To increase workforce participation, firms and governments will need to accommodate unconventional working arrangements to encouragepeople to return or remain in the workforce

(e.g., parents, older workers)


Changing Workforce Demographics

• By 2050 Asians, Hispanics, African Americans and American Indians will account for 47.2% of the population

– Currently: 75% of new entrants to the workforce is women and people of color

• By 2012, the Hispanic labor force is expected to reach 23.8 million

• 10% of the workforce is gay or lesbian

• It is estimated that one in three people has a disability

• The mobile workforce in the U.S. (which has the largest percentage of mobile workers in the world) is set to become 73 percent of the nation’s workforce by end of 2011*

• More than 28 million Americans now work at least one day per month from home, with an estimated 100 million tele-working by 2010**

1010Source: Bureau of Labor Statistics*International Data Corporation

**WorldatWork “Telework Trendlines” survey report


Changing Workforce Demographics

• Increase in religious diversity

• Growth in number of employees whom English is a second language

• More than 12 percent of U.S. population is foreign-born; record increases since 2000

• By 2013, Gen Y will represent the largest percentage of the U.S. workforce– By 2016 it will be bigger than all other age groups combined.

• Baby boomers want/need to work longer

1111Source: Bureau of Labor Statistics

Planning HR practices and benefits programs to address the needs of all generations and ethnicities is complex and constantly changing


• NASDAQ by 28%• Standard & Poor’s 500 by 25%• Dow Jones Industrial Average by 22%

Source: – DeGroat, TJ, No Way to Measure Diversity's Value? Mainstream Article Ignores the Hard Facts, DiversityInc.comhttp://www.diversityinc.com/public/19452.cfm

Over a 10-year period, the index of publicly traded companies in DiversityInc’s Top 50 Companies for Diversity list outperformed the:

The Business Case for Diversity

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• A 2009 study by CalPERS found that companies with a high ratio of diverse board seats exceeded Dow Jones average returns

• Each of the selected companies had an executive responsible for diversity initiatives

• Women make up more than half of the U.S. population but hold only 17 percent of Fortune 100 corporate board seats

• These big companies may be missing out on a key tool for competitive advantage

Source: 2009 CalPERS Board Diversification Strategy: Realizing Competitive Advantage and Shareowner Value


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Leading People. Leading Organizations.2007 Catalyst Survey

Higher female representation on Board = Higher returns

Source: 2007 The Bottom Line: Corporate Performance and Women’s Representation on Boards, Catalyst


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1. Demographic shifts in U.S. population

2. Attracting and retaining the best talent

3. Greater adaptability and flexibility in a rapidly changing marketplace (INNOVATION)

4. Job satisfaction and reducing costs associated with turnover, absenteeism and low productivity/employee engagement

5. Changing consumer, client, and customer marketplace

6. Contributes to company performance

7. Mitigates and minimizes legal risks

8. Global Trends

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Leading a Multigenerational Workforce

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Two Different Views of Diversity

Socio-economic Generation

Culture & Ethnicity

Gender orientation

Assets, debt and income

Geography

Lifestyle

Expectations of life/work

Trusted influencers

Stage in life

Attitudes towards authority/peers

Why are generations important?

Individuals with similar socio-economic backgrounds may have substantially different values and preferences regarding HR programs,

benefits, communications and loyalty to the company.

Key implications for establishing employer brand and recruiting talent

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Leading a Multigenerational Workforce

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The Multigenerational Workforce

“Understanding what drives each generation, and what their underlying experiences are, is the key to creating a cohesive work environment where our people feel valued and empowered to work together effectively. This appreciation of generational diversity, and initiatives customized to meet the needs of each generation, allows each group to fully contribute and be a part of the growth and success of the organization.”

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Dr. Rohini AnandSenior Vice President & Chief Global Diversity Officer

Sodexo

Source: The Multigenerational Workforce: Opportunity for Competitive Success, SHRM, 2009


Two Theories of Understanding Each Generation

• The oldest, wealthiest, and most visible members of a generation define the behavior and attitude for those that follow

• Identify a generation’s heroes and you’ll learn their value systems

2020Source: Cam Marsten, 2007


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The Multigenerational Workforce

Today’s workforce is comprised of four generations, covering an 80+- year span whose effectiveness in working together impacts the overall success of the organizations they work for.

Generational Cohort Example ImpactsTraditionalists (1925-1945)over 65 years of age(7% of workforce)

Boomers (1946-1965)45-66 years of age(40% of workforce)

Generation X (1960s/1970s) 34-44 years of age(32% of workforce)

Generation Y (1977-present)under 33 years of age(21% and increasing rapidly)

Climate/cultureCommunicationWork-life balanceBenefitsRevenueManagementDevelopment & CoachingWork ethicCoaching/mentoringUse of technologyNetworkingWhere, when, & how work gets doneOverall success of the company

(1) Although age equals years of age, it is “coming of age” that aligns more to a generational cohort and its impacts


Traditionalists

Traditionalists (1925-1945)

EVENTS CHARACTERISTICS

• WWII, Korean War• Civil Rights/Women’s

Movements Leaders• First Peace Corps volunteers• Helped to rebuild American

economy in the 1950s• Great Depression• B/W TV; transistor radio

• Human Relationship Skills• Ability to negotiate• Decisive leadership• Adopted elders values of loyalty,

dedication, commitment• Age=Seniority• Values face time• Prefer structure• Loyal

(1) Coming of age during key socio-historical events influences how each cohort reacts and responds2222


Baby Boomers

Baby Boomers (1946-1965)

EVENTS CHARACTERISTICS

• Assassinations: JFK, Robert Kennedy, Martin Luther King

• Walk on the moon• Vietnam• Civil Rights Movement• Environmental movement• Protests, riots• Woodstock/drug experimentation• Watergate• Oil embargo/gas shortages• Raging inflation• Child-focused

• Flexible working arrangements• Coaching style managers; mentors• Look for respect, respect, respect in

the workplace and work hard to secure it

• Strong work ethic• I am what I do• Self focused• Values face time• Service oriented• Cynical but loyal

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Generation X (1960s/1970s)

EVENTS CHARACTERISTICS• Challenger Explosion• Iran Contra• Fall of Berlin Wall• AIDS/Safe Sex• High Divorce Rate/Single Parent

Families• Latchkey kids• Parents as “friends”• Terrorism• Computer games• End of employment contracts

• Independent/self-reliant• Technologically savvy• Hard workers when focused and motivated• Seek flexible work arrangements that

facilitate work-life balance• Risk takers• Innovative• Seek challenging work• Goal oriented• Outside of the box thinkers and want to

manage own time• Embraces Diversity/Thinks globally

Generation X

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Generation Y

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Generation Y (1980s/1990s)

EVENTS CHARACTERISTICS• Rise of the Internet• Terrorism/Bombings: Oklahoma

City, Atlanta Summer Olympics, World Trade Center

• Cultural Diversity• Two wars in Iraq (Desert

Storm/Operation Freedom)• Largest demographic group since the

Boomers (Echoes)• First true cohort of global citizens• Expansive economy

• New confidence, upbeat and full of self-esteem

• Need to know WHY• Most education-minded generation in

history• Tend to be highly pressured to

“succeed”• Many aspects of their lives scheduled

by their parents• Very tolerant towards multiculturalism

and internationalism• Learns quickly• Technically savvy• College degree expected


Generations at a Glance

Generation % of Workforce Assets in theWorkplace

TraditionalistsBorn 1922-1945

(Ages 63-86)8%

Hard working, stable, loyal, thorough, detail-oriented, focused, emotional maturity

Baby BoomersBorn 1946-1964

(Ages 44-62)

44% Team perspective, dedicated, experienced, knowledgeable, service-oriented

Generation XBorn 1965-1980

(Ages 28-43)

34% Independent, adaptable creative, techno-literate, willing to challenge the status quo

MillennialsBorn 1981-2000

(Ages 8-27)

14% (increasing rapidly)

Optimistic, able to multitask, tenacious, technologically savvy, driven to learn and grow, team oriented, social responsibility

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Designing & Implementing Benefit Plans for a Multigenerational Workforce


Challenge for Human Resources

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Manage Diversity

Manage Cost

Streamline Benefit AdministrationSelf-serve Administration

Consolidate Vendors

Reduce Plan Options

Support Diverse WorkforceMultiple benefit choices

Personalized Communications

Flexible Work Environment


Benefits Packaged for Specific Life Stages

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Take-homePay

Savings

HealthInsurance

Other

Employee Age 22• Single• Just starting career• $40,000 base pay

Take-homePay

Savings

HealthInsurance

Other

Employee Age 45• Married with two kids• Employed for 20+ years• $75,000 base pay

Take-homePay

Savings

HealthInsurance

Other

Employee Age 60• Preparing to retire• Employed for 40+ years• $100,000 base pay

Source: Fidelity Perspectives, Fall 2008

Sample Benefit Portfolio


Approaching Older Age = Increased Happiness

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The Next Wave of Benefits Planning

3131Source: Fidelity Generation Study, 2009


Benefits and Generation Y

3232Source: Fidelity Generation Study, 2009

75%62%

Work/life balance drives career choices at a significant level

Quality of benefits packages influences choice of employer

44% Value of the benefits package should be tied to workplace performance

47%Managing everyday finances (mortgage or credit card debt) is more crucial than saving for retirement


Benefit Plan Utilization by Generation

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Gen Y Driving Changes in Benefits

3434Source: CareerBuilder.com, 2007


Changes in Benefits to Include Gen Y

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Pros Cons Employer Action

Variety of choices at reasonable costs

Less complex/easy to understand

Benefits offer more effective cost management for employers

Expensive for employers to provide and manage

New benefits trends are reducing the perceived value to employees

Need employee decision-making support to increase awareness of value offerings

Make it simple

Identify optimal spend for benefit dollars and compensation programs that suit life stage

Benefits/ Compensation



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Longer tenure results in stability for both employers and employees

Opportunity for employers to offer creative solutions to attract and retain the Gen Y worker of the future

Employers now faced with tremendous sea change in workplace demographics;“brain drain”

Creates additional talent management challenges for employers, thus increasing expenses

Provide greater flexibility and value of benefits while more effectively managing employer expenses

Incorporating holistic financial health solutions and advice and guidance that can result in increased loyalty and retention

Talent management



Open to technology asan information vehicle

Technology provides the most cost effective, robust, and measurable communication vehicle

Traditional paper communications are less effective and more expensive than electronic distributions

Demands new engagementstrategies to reach this demographic

Effective communication and education is key component to successfully help drive financial security and wealth accumulation for employees

Leverage the Internet as the primary vehicle foradvice and guidance for most effective resultsand most efficient spend

Move from annual enrollment communicationmodel to ongoing engagement


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Communication


Evaluating Your Plan

3838Source: Fidelity Perspectives, Fall 2008


Evaluating the Options

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Approach/ Segment Key FactorsTraditional approach/ Baby Boomers

Emerging trends/ Gen Y

Accustomed to paternalistic benefits such as pension plans and retiree health care

Increased individual responsibilityFacing less paternalistic benefits such as DC and HSAsHigh salary expectations

Traditional approach /Baby Boomers

Emerging trends /Gen Y

Long-tenured employees (age 55–64, average tenure 9.3 years)Facing retirement challenges, both financially and in termsof personal well-being

Short-tenured employees (age 25–34, average tenure 2.9 years)No strong commitment to any one employerView job as financial transactionStrive for work/life balance

Traditional approach /Baby Boomers

Emerging trends / Gen Y

Prefer in-person interaction to build relationships, but are growing technology users for information and transactionsWant simplicity and convenienceWant relatable, personalized informationNeed total financial solutions

Technology and the Internet are essential to their livelihoodPrefer informal communicationsNeed spending/debt management support

Ben

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Tale

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Com

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Tactics for a Multigenerational Workforce

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Designing & Implementing Benefit Plans for a Racially and Ethnically

Diverse Workforce


Racial Demographics for Employee Participants

Source: The Ariel /Hewitt Study 2010. The findings in this study are based on year-end 2008 information collected from nearly 3 million eligible employees working for 57 of the largest U.S. companies across a variety of industries and sectors. 4141

African-American Asian Hispanic White All

Average Age 39 39 37 42 41Average Tenure 8 7 7 10 10Gender (% Fem Ale) 60% 54% 54% 48% 51%


Participation Rates by Salary

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$0-$29,999

$30,000-$59,999

$60,000-$89,999

$90,000-$119,999

$120,000+

African-American

50% 75% 83% 88% 91%

Asian 54% 84% 92% 94% 94%Hispanic 50% 75% 85% 89% 90%White 56% 80% 88% 92% 92%


Plan Participation

Overall, African-American and Hispanic employees are about 10 percentage points less likely than white and Asian employees to have a 401(k) account.

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Savings Rates Among Plan Participants

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Average Account Balance by Salary

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$0-$29,999

$30,000-$59,999

$60,000-$89,999

$90,000-$119,999

$120,000+

African-American

$3,956 $21,224 $51,594 $98,432 $154,902

Asian $6,707 $32,590 $70,393 $104,233 $161,259Hispanic $4,036 $22,017 $60,782 $104,549 $150,456White $8,184 $35,551 $79,018 $139,724 $223,408

In 2007, average account balances in 401(k) plans were considerably lower for African-American and Hispanic employees – even at the

highest pay levels – than for white and Asian employees


Hardship Withdrawals

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Ethnicity’s Role in 401(k) Participation

• Savings and participation rates: – Regardless of age and income, African-American and Hispanic workers are

less likely to participate in their company 401(k) plans• When they do contribute, they save at much lower rates than whites.

– Asian employees have the highest participation and savings rates

• Stock exposure: – African- American workers are less likely than other workers to invest in

equities• This behavior may limit the long-term growth potential of their accounts

– Historically, equities have been the highest-yielding investment over the long term

4747Source: Ariel/Hewitt Study. 401(k) Plans in Living Color: A Study of Savings Disparities Across Racial and Ethnic Groups, 2010.



• Loans and hardship withdrawals: – African-Americans are more likely to take a loan

• More than twice as likely to take a hardship withdrawal – Hispanics borrow from their retirement accounts at a higher rate

than whites• But not to the same degree as African-Americans.

– Asian employees are the least likely to take early distributionsfrom their 401(k) plan accounts

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• Account balances: – Smaller average account balances can be contributed to lower

participation, contribution rates, equity exposure and higher withdrawal rates

– Employees with a similar range of income show a significant difference in account balances:

• African-Americans ($21,224)• Hispanics ($22,017)• Asians ($32,590)• White ($35,551)

– Results are influenced by other factors, such as age, job tenure, and pay within the range, but variations exist, even after adjusting for these factors

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• African-American employees are the most likely group to take a hardship withdrawal from their 401(k) plan accounts

• For most groups, both genders are equally as likely to take a hardship withdrawal

• 9% of African-American women are taking a hardship withdrawal compared to 6% of African-American men

• Hispanics are 50% more likely to take a withdrawal when compared to whites (with other differences held constant)– African-Americans are 167% more likely, all else being equal

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Designing Benefit Plans and Reward Packages

• Use research and employee surveys to understand generational differences in employee needs and preferences

• Consider innovative workplace practices to allow flexibility

• Offer more choices in benefits such as health care coverage and retirement accounts

• Consider a range of financial benefits to appeal to employees of different ages/ ethnicities

• Eliminate penalties for older employees who choose to work after "retirement" (within ERISA parameters)

• Communicate benefits in multiple ways – Consider comfort levels with technology and different needs for face-to-face or

print communication

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Additional Considerations for HR Benefits Planning


HR Policies and Programs

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Source: The Multigenerational Workforce: Opportunity for Competitive Success, SHRM, 2009


Considerations for Workplace Flexibility

• All generations respond favorably to more flexible workplaces

– Many traditionalists are on their second career• Having left more high-profile (and high-pressure) roles in the past; they

might describe themselves as “working to live, not living to work”• Many expected to be retired by now, and they want more autonomy.

– Many boomers are part of “The Sandwich Generation”• Taking care of elderly parents while still caring for children at home• Creates its own set of work/life demands

– Generation X and Generation Y grew up in a “wired” world and don’t define the “workplace” as brick & mortar

• It’s about the results of one’s efforts, not when and where the work was completed

• Organizations must focus on flexibility to be an employer of choice across all generations

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Considerations for Rewards and Recognition

• Important to Generation Y, who grew up in a “feedback-intensive” world

• Rewards should not be given for the sake of giving them just to satisfy Baby Boomers and Generation X

• Awards that are given for excellence should only be given to those who deserve them

– “Perks” given to everyone should not claim to be rewards for excellent work

• For Generation Y, a culture that encourages a high level of feedback (not necessarily all positive, contrary to the stereotype) will result in an engaged employee

– Silence is neither positive nor negative – it’s just silence

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Considerations for Health Care Benefits

• Perception of health benefits closely matches life stages– It becomes more important to each generation as they age and enter new stages

of life that require more medical attention

• Most important to Traditionalists, Baby Boomers, and – increasingly –Generation X (who are beginning to enter their 40s)

• Should include multiple options to attract top performers within Generation Y

• Wellness programs are very attractive to all generations (as shown in slide 34)– All seem to recognize the benefits of a healthy lifestyle

• Health care costs continue to rise (see Exhibit 1-2 next page)

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Health Care Costs 2010

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Health Care Costs 2010

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Considerations for Training & Development

• Generation Y enters the workplace with high expectations of advancement and will remain engaged if they feel as though they are growing as professionals– Training should be offered in multiple formats including e-learning

• Generation X is motivated by training & development if increased knowledge can help them achieve greater autonomy and independence– They will feel appreciated and engaged

• As Baby Boomers and Traditionalists age they don’t want to feel as though they’ve been “put out to pasture”– Opportunities must exist for all employees, not just the younger ones

• Be creative in your approaches to Training & Development– For many employees, on-the-job learning trumps a day in the classroom

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Succession Planning

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It is crucial that organizations codify and execute solid succession planning based on widely known competencies and conducted in a fair and transparent manner.

Different generations have different ideas about what qualifies an individual for advancement

Baby Boomers expect leaders to match their

own work ethic, resume and years of

experience

Traditionalists believe leadership is earned through faithful and

loyal service

Generation X prefers transparency in the

ways potential leaders are identified and

developed

Generation Ybelieves anyone who

can deliver impact should be considered for a leadership role


Summary

• Workforce demographics are shifting dramatically but the goal of benefits decision-makers remains consistent

– Provide an effective mix of compensation, benefits, flexible work arrangements, and opportunities for every individual

• Balance changing needs of employees with organization’s increasingly complex priorities

– Helps you gain a competitive edge, while helping meet your attraction and retention goals

• Do not view each aspect of savings and benefits plans in isolation– Help employees make the most of their opportunities to accumulate wealth and

provide for lifetime financial security

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Summary

• Take a holistic approach to total compensation and benefits plans– Goal is to maximize the return on investment for employers, while maximizing the

value to employees

• Ensure that the money being committed by organizations to benefits programs is delivering the best possible value for the organization and its employees

– Optimizing the value of total compensation and benefits spending will become increasingly important as competition for talent increases

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Questions/Comments

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Serving the Multigenerational Workforce

Education

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