A new study conducted by Oxford Economics for SAP busts several myths that we hear about Millennials. More important, it found evidence that shows Millennials will be the workforce majority soon. It isolates several key factors that companies need to act on now.
Inwe debunked some of the myths about the Millennial workforce. Today we will focus on some answers to the most pressing questions: what we need to understand and how can we act on it.
An increase in the number of non-payroll positions for contingent workers will require changes to HR strategy and management — now.
- 83 percent of executives say they will be increasing the use of contingent, intermittent, or consultant employees.
- 41 percent of executives say their firm is increasingly using contingent workers.
- 42 percent say this increasing number of contingent employees is affecting their workforce strategy.
Ongoing globalization and macroeconomic shifts mean the 2020 workforce will be made up of a wider group of ages and nationalities than ever before.
In order to succeed, companies will need to have a broader understanding of their people and the markets in which they operate.
Executives cite globalization and Millennials entering the workforce as top business concerns — 51 percent say these labor market shifts have great impact on their workforce strategies. Our qualitative research — interviews with executives from around the world — will delve deeper into the reasons for these concerns.
One finding is that the Human Resources department too often lacks the information or insights needed to be truly strategic. HR most frequently works with C-suite executives but does not drive strategy at the board level.
"Only half (52 percent) of executives say workforce issues drive strategy at the board level, and nearly one-quarter say that workforce issues are an afterthought in business planning."
A lack of metrics and tools prevents HR and the whole organization from developing strategies for building the workforce of the future:
"While over half (53 percent) of executives say workforce development is a key differentiator for their firm, they do not have the tools and organization to back it up."
What matters most at work?
Companies often do not understand what their employees really want from them. When it comes to satisfied employees, compensation matters — a lot. Consistent with other recent findings, notably the Corporate Leadership Council, compensation is increasingly important to employees. As a result, companies should focus on monetary rewards.
"Only 39 percent of executives say their company offers competitive compensation. But when ranking the importance of benefits, competitive compensation and bonuses/merit-based rewards rank highest among employees — other benefits are far less important."
The leadership cliff
Executives and employees agree that leadership is lacking — and companies are not focused enough on developing future leaders. The gaps in leadership capabilities spells trouble for future growth.
Executives cite a lack of adequate leadership as the number two impediment to achieving goals of building a workforce to meet future business objectives, and only 35 percent say talent available in leadership positions is sufficient to drive global growth.
Leadership is not equipped to lead a global, diverse workforce. Just one-third (34 percent) say their leaders are prepared to do so. And, 42 percent of C-level executives say their companies’ expansion plans are limited by a lack of access to the right leadership. Employees agree with executives that leadership is lackluster.
"Just 44 percent of employees say that leadership at their company can lead the organization to success. Only about 40 percent of employees say their company makes it easy for them to collaborate, and even fewer say their company is committed to diversity (37 percent)."
Most companies are not cultivating leadership within their organizations. Although executives cite a lack of employee loyalty and longevity as the biggest barrier to meeting strategic workforce goals, nearly two-thirds (63 percent) do not plan for succession and continuity in key roles.
Bridging the skills gap: The learning mandate
Better training and education opportunities would benefit employees and businesses alike. For employees, obsolescence is a bigger concern than layoffs.
"Employees — Millennials and non-Millennials alike — say their top concern is their position changing or becoming obsolete (40 percent). As only 19 percent say economic uncertainty is a concern, their concern over their job is likely skills-related."
Millennials are dissatisfied with their managers' ability to sponsor them for development and offering a career path. Only one-third of Millennials are satisfied with how much their managers support them for formal learning and development opportunities and in providing a well-defined career path. Although Baby Boomers and Gen X are equally dissatisfied, development is a slightly higher priority for Millennials.
Firms have difficulty finding adequately skilled employees, but they do not invest enough in identifying and developing talent within their organizations.
"Nearly half (48 percent) of executives say that difficulty recruiting employees with base-level skills has an impact on their workforce strategy."
However, companies with higher-than-average profit margins are less likely to have difficulty recruiting employees with base-level skills (44 percent vs. 54 percent of companies with lower-than-average profit margins). Fewer than one-quarter (23 percent) of executives say their companies offer education as a benefit to keep employees loyal and engaged.
Firms struggle to develop a learning culture within their organization. Roughly half (52 percent) of executives say their company is capable of retaining, updating, and sharing institutional knowledge, and 47 percent say their company has a culture of continuous learning. Only half say they have a mentoring program, though, and even fewer (41 percent) say they offer incentives for pursuing higher education. Fewer than 40 percent of executives say they offer formal programs such as job rotation and shadowing.
Leaders at most companies do not encourage learning to the extent they should. Only 41 percent of employees say their company offers them opportunities to expand their skill sets, and just over one-fifth of employees say self-directed learning is important to their employers.
Companies need to provide employees with a path and help them develop the key skills that will take the company forward.
You can explore more information and further findings here.
Now, how to tackle?
You need to implement solutions now that help to transform HR and transform strategies into business outcomes by maximizing employee engagement.
It's smartest to rely on a partner that can combine global and industry expertise with five key HR enablers: a modern user experience, talent and core HR apps, embedded content, analytics, and technology – all designed to engage employees and make each more committed, involved, and productive.
"A new approach to HR is required — one that focuses on employee engagement to help transform business strategies into business outcomes."
HR solutions have the potential to touch every employee in the organization, and they must be intuitive, social, collaborative, and available anywhere, any time. The focus is no longer just on process automation but on maximizing employee engagement by putting the employee at the center and leveraging their inherent skills, experience, and collaboration, as well as support for life-long learning.
Whether a manager, employee, executive, or a member of the HR department, HR technology should be tailored to each stakeholder’s unique needs in order to get the job done and deliver desired business outcomes for the individual and the organization. You need to maximize engagement of a globally dispersed, multi-generational, technology-savvy workforce and key stakeholders who are mobile, collaborative, and social. They need an employee-centric, highly engaging environment. And when it comes to leadership, they need the workforce insight to predict, plan, and measure against business results.
And don't forget IT. There is a need to provide the organization with the flexibility to react quickly, scale up or down, and deliver technology to a dispersed workforce. They need a blueprint to move to the cloud so innovation can be applied fast, with easier access to information and services, at lower costs.
We trust these findings are helpful and will fuel a needed debate in your company. For more action items, tune into the replays of SuccessConnect, where experts will talk in-depth about the findings. And don't forget those Millennials!
Make sure you are connected with us — and especially one person whom I admire most when it comes to people leadership topics around the workforce: Karie Willyerd. Follow her and follow us via @SuccessFactors, @SAPCloud and me via @SDenecken or LinkedIn to stay tuned.