Facing the Challenges of a Diversified Workforce
According to Pew Research Center, by 2020, Millennials will make up half of the U.S. labor force. While companies are focused on Millennials’ impact on business and the economy, they are not the only generation of workers to consider in the coming years.
By the end of the decade, Generation Z will enter the workforce, leading to the most diverse mix of workers ever. Companies will need to accommodate not only Millennial workers, but also anticipate the workplace needs of those following, while continuing to support the older Generation X and Baby Boomers so that all four groups can work effectively together. With each group’s distinct characteristics and preferences, how can businesses manage a workforce of various generations? Business leaders must focus on three key elements: talent recruitment, retention, and communication – and do it in today’s market of near-zero interest rates which affect compensation and retirement planning.
Each generation will be preparing for a different stage of their lives and therefore value different aspects of employment and company offerings. The key to recruiting and retaining the best talent from each generation will require a balance of attractive benefits for each. For example, as Baby Boomers near retirement, retirement savings, pensions and healthcare costs will be top of mind. Michael Thompson, Chairman of S&P Investment Advisory Services, recently published an article in The Wall Street Journal, noting that, “in place of the Treasurys and investment-grade corporate bonds that had been the hallmark of retirement investment strategy for decades, current retirees, and those soon to retire, have resorted to investing in equities and high-yield corporate bonds to generate the returns they need to avoid outliving their nest eggs.”
On the other hand, as illustrated by research from S&P Ratings’ U.S. Chief Economist Beth Ann Bovino, many Millennials are saddled with student debt and still living at home with their parents. These workers will be interested in student loan payback programs. Dr. Bovino found that the burden of student debt can force those entering the workforce into settling for jobs they don’t want. Citing a Pew Research Study from 2012, she found that a phenomenon known as “cyclical downgrading” is happening among the group with almost half (49%) saying they’ve taken a job, just to have a job, with about a quarter taking unpaid positions to gain experience. Further, the study found that more than one-third of Millennials report having gone back to school specifically because of the state of the economy. For employers, this means the workforce they are training in today’s job market, may not be there when better work opportunities arise.
Higher wages for paying off student loans, commuter benefits, and also flexible work environments and tech focused processes are workplace priorities among the youngest employees. However, earlier generations of workers may not be as comfortable or native to these types of digital communication tools. In addition, Dr. Bovino notes, “Millennials are also the first generation to have had access to the Internet and all its benefits during their formative years—an environment that has shaped their worldview in a number of ways. Finding the right balance to successfully communicate with all employees in this new, diverse workforce will be imperative to retaining talent.
As each generation passes through the labor force, it presents new and varied challenges for employers.
As corporations enter an environment with four vastly different generations interacting simultaneously, business leaders must adjust accordingly to create a workplace environment that is inclusive and engaging to all employees, a great challenge for less nimble large corporations. More flexible medium sized enterprises may be better situated to adapt to the varied workforce needs and certain workers may be more attracted to certain types of companies based on their needs going forward.