April 1, 2006

The sky is falling, except when it isn't

Boomer retirement histrionics good for everyone

By Robert L. Whiddon

Some say that baby boomer retirements will cripple the American economy. Others say the twin trends of anemic retirement savings and longer life spans will ensure there will be legions of wrinkled workers to man all posts. Either way, the workforce is changing, and boomer retirements (or lack therof) will have a significant impact.

In their new book "Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent," authors Ken Dychtwald, Tamara J. Erickson and Robert Morison lay out the trends, the players, and the strategies that employers will need to navigate both short and long-term workforce demographic changes.

The authors contend that a tighter labor market demands that employers raise the level of their recruitment and retention play. The table stakes of traditional health, retirement and compensation benefits are no longer sufficient. Winning employers will not only have to up the ante on those, but also offer flexible work environments and lifelong learning opportunities. Where and how much to wager depends on the worker. The authors carefully segment and identify three major employee categories, offering tips and suggestions for recruiting and retaining each.

Co-author Morison, executive vice president of The Concours Group and an expert on the strategic implications of workforce changes, recently shared his thoughts on the book and the looming problems presented by the continued maturation of the "me generation."

Why did you write this book?

I think the subtitle of the book covers what we're about. This is a guide to business management about how to ensure their future talent supply.

Are we really looking at a labor supply "crisis"? The whole debate has me thinking of Y2K. Is it one of those things that's all hype and no heat?

I think the analogy may be sound. I would like a Y2K-like outcome where nothing really bad happens.

What got people's attention was in fact some bad analysis of Bureau of Labor Statistics data that said we were going to be 10 million workers shy by 2010. People, including Peter Cappelli of the Wharton School, have made a project out of debunking that. [Still,] there is a fundamental problem in terms of workforce demographics in the disproportionate size of the baby boom generation.

The next cohort behind the baby boomers is smaller, so you have fewer people moving into the most responsible, most experienced positions. You've got a younger cohort that is fairly ample, thanks to the echo boom, but they are by definition inexperienced and less skilled. In fact, they are taking longer to get college degrees and they are not really getting college degrees in numbers or percentages that much greater than their parents did. It's essentially level these days. As boomers retire, you are trading experience for inexperience.

Which would be less of a problem if the job mix was the same as it was in the past. But we're losing all the manufacturing jobs. We're only going to have skilled job openings.

That's what I see as the long-term problem. I like to separate the question, "Do we have the skills needed?" from "Have we got enough warm bodies?" The shorter-term problem, we make clear in the book, is around skills. In the longer term, virtually all of the net new jobs created in the U.S. call for a college degree or a fair amount of technical skill.

The book cites a number of best-of-breed employers. In the benefits area, you mention Cary, N.C.-based software company SAS. If I am an employer, I can imagine myself saying, "Sure SAS is great, but what about the rest of us?"

The qualitative part of our research was focused on finding best-recommended practices. We do believe that a lot of organizations would do well to start erring on the side of emulating SAS, [rather] than squeezing their employees to the bone. We can't solve the kind of economic dilemma of pensions and especially health care costs. Those require some public policy changes.

Another one of your employer examples is GM. Given the automaker's troubles, how are they a good example for anything on the subject of workforce management?

I maintain they can still be cited and others have cited them ... for their attention and expertise to workforce planning and position filling, even though their business may be in some trouble. One of things we've done in this book is try to put together a composite picture of appropriate workforce practices good for you today, and especially important for you tomorrow as labor markets tighten and there are skill shortages. There is no company hitting on all these cylinders. We had to find the best examples of each.

The section of your book on the "new employment deal" covers flex work, flex learning and flexible comp and benefits. Flex work comes first, and your coverage is stronger than the other three. It sounds the most mature of the three aspects of the new deal. Is that accurate?

We try to provide a reasonable overview of all three. There is more de facto experience with flexible work. But the percentage of companies that offer it and workers taking advantage of it has not been growing all that fast. It's mature, but it's not mature across the board.

Does it cure more of the symptoms of the "workforce crisis" than the other two?

No. For purposes of the skills shortage crisis, learning is what's key. We make the distinction between satisfaction and engagement. Your basic compensation and benefits package is essential to satisfaction, to create the conditions under which you can work effectively. But real engagement-giving your all to the job that's rooted in the nature of the work, the variety of the work, and your sense of progress. Corporations must be in the learning business.

You describe basic comp and benefits as "table stakes," what's necessary to get in the game. Fifty years ago, the stakes were very high - expensive for the employer. Nowadays the stakes are less significant, right?

That's true. The trends are clear toward greater employee contribution to health care premiums and everything associated with it, and the same thing on pensions. There are a couple of generations that have really made out well with that version of the employment deal. The trend is away from those things.

Does that mean everybody is going to be doing it the same? I think there is going to continue to be room [for variety]. They don't have to be doing everything SAS is doing. There is opportunity for people to buck the trend and that will help retain many employees. At the same time, employees in the future are going to ask for a more robust deal. That's where it includes the table stakes, but it also includes work arrangements and learning opportunities.

Are you saying that employers should start working aggressively on the others areas - life-long learning, skills retention and mentoring - because table stakes are going to become uniform and uniformly bad?

I don't know if they are going to become uniform or uniformly bad. They are going to be a smaller part of the mix because they are smaller economically. That trend we can agree upon, the one thing we stress in the compensation and benefits chapter is, for crying out loud, make what they have got accessible to them. Do them that service. And that is a benefit in itself. [Make sure they] know what's available or they know what works best for them. Studies I have seen [show that] where employers do that, their health care costs in particular go down because people are more informed.

Much of what you talk about in the book falls directly on the benefit manager's plate or at least in their department. Are they sufficiently engaged?

It's on their plate and on the plate of others in the organization, so they have to work together. That's one of the things we pointed out. The dividing line between work arrangements and benefits is blurring.

[Our research shows] roughly 20% of workforce is really turned on and excited by their work. An almost equivalent number is pretty disillusioned, and everyone else is in between. There is enormous potential, even if you wrote off the disillusioned, to raise business performance and productivity by being better at engagement.