Facing the New Challenge: Human Capital Management

July 1, 2008
The next frontier of cost management looms: what to do with aging workers and how to retain the new workforce.

What’s so new about the new workforce? According to experts in the human resources field, just about everything. An overriding issue is, or will be, the skills gap developing as Baby Boomers leave the workforce and younger workers, sometimes referred to as Millennials, enter.

“One point many companies are missing is that we already have a great workforce in place,” says Sandra Rousseau, manager, human capital management, Infor, Alpharetta, Ga. “Part of the solution is to extend the life of the current workforce.”

Rousseau points out that some of the things that might keep older workers on the job longer are the same things younger workers are seeking. The smart manager is the one who recognizes this and makes key moves that will keep both generations on the job.

For example, here is how these two seemingly diverse generations compare and contrast when it comes to being on the job. One reason people retire is because they want more free time. “A key move that a company can take,” says Rousseau, “is to institute flex scheduling. Many retiring workers are not ready to take that full step out of the workplace.”

Working flexible hours allows them to test the waters of retirement, thus keeping their on-the-job skills benefiting the company.

And, guess what? Younger workers are looking for employment with more flexible hours, either to pursue education while working, or to fit work into a hectic personal life. They are less willing than their parents to sacrifice a social life for a job—or to have the job become their personal life.

Breaking Up is Hard to Do
Leaving is difficult. And, if there’s no flexibility in the work schedule, says Rousseau, staying is equally difficult. “Loyalty is a twoway street,” she says. “Research seems to indicate that the employee needs to be engaged for there to be loyalty. A good way to engage workers is to make the workplace and job more social.” As luck would have it, a social experience in the workplace is one of the things high on the list of Millennials.

Apparently, younger workers will gravitate to companies with a lessattractive compensation package if they have a friend already working there. “Younger workers don’t take a job just to have a job as did previous generations,” explains Rousseau. “Previously, it was about getting ahead, grabbing the best opportunity. Now, social interaction is important.”

This fact is born out in research completed by Prologistix, an Atlanta-area firm specializing in placement of distribution center personnel. The results of its second survey indicate that advancement opportunities are low on the list of this workforce.

“Our results show that moving to another job for better pay is top priority these days for workers at these entry-level jobs,” says Brian Devine of Prologistix. “Getting ahead is way down on the list.”

A way to keep older workers on the job longer, thus retaining their vast knowledge, and to keep younger workers from job hopping, says Rousseau, is to push the social aspect of the workplace.

This does not mean more pizza parties. You can create a more social atmosphere through mentoring, or coaching, to engage both generations. “The other part of a mentoring program that’s critical,” says Rousseau, “is that it builds a bridge to transfer knowledge in the company.”

Why Mentoring Works
In today’s work climate, mentoring is taking on new look; however, the principles are still the same. For younger workers, mentoring is perceived as a way to learn more about the job, thus acquiring skills that will be valuable, either with the current employer or with a new company. Learning development opportunities are high on the list of wants for Millennials.

Many young people are willing to overlook what might be considered negative aspects of the older worker’s personality in favor of learning. Even the ‘we’ve-always-done-itthis- way’ attitude is tolerable if the younger worker gets his say in how he thinks something could be done.

Another approach to mentoring is using the tools young people understand and use in their daily lives. “Mentoring can use the approach of Facebook (,” says Rousseau. [Facebook is a social utility that connect s peopl e with friends and others who work, study and live around them.] “Millennials like to search out information.”

She says the approach might be to have the younger worker type in questions about the job or company from kiosks located on the shop floor or from home. When the older workers come in, they can access the questions and, if they’re knowledgeable, respond. Different people can answer different questions.

“This establishes a dialog with younger workers,” she says, “and can lead to more instant forms of mentoring through things like chat rooms or instant messaging.”

Another aspect of this is for the company to establish a databank of ‘mind profiles’ of older workers that the younger worker can tap into with specific questions. This leads to more interaction and match-ups between the new and older workers.

What do They Want?

What does the younger workforce want out of a job these days? Dan Charney, managing partner, Direct Recruiters (, Cleveland, specializes in placement of people in the material handling and packaging businesses.

“What we see and hear is that the younger workforce really wants to be appreciated,” says Charney. “They grew up in an environment that says everyone is a winner. It used to be that one team won and got the trophy. Everyone else just went home. Now, if you play, you get a trophy. Younger workers expect to be catered to. They need constant feedback.”

Charney adds that many young people don’t realize life is a process—they want it all, now.

“They are also looking for a fun atmosphere to work in, lots of toys,” he says. Technologically savvy companies have an edge with Millennials.

Whether you agree with this assessment, Charney advises you’d better embrace it because these folks are what you’ll have to work with. You’ll have to advertise in unconventional ways—on Facebook or YouTube for example.

“It’s not all negative,” Charney says. “Younger workers are intelligent, well educated and looking for mentors to learn from.”

What about the time factor in all of this? Rousseau says it’s not as great a problem as one might think. Younger workers will use their free time to look for information via Internet tools if the company establishes the network. “And, while the Boomers might not be spending time online after work, they are often on the job early in the morning, responding to requests from younger workers,” says Rousseau.

Talent Management
Managing what talent you have on the job to fulfill future openings is another part of the new workforce. Depending on the size of the company, knowing what talent is available can be daunting. For the person seeking to move to a better job, depending on the size of the company, knowing what jobs are available can be daunting. Technology to the rescue.

Fire the Boss

There are numerous facets to the new workforce dilemma. According to a study by Yan Zhang at Rice University’s Jones Graduate School of Management, of the 204 company leaders Zhang studied, 27% of newly hired CEOs left their job within three years. (To read the complete study, visit

The why of this falls, Zhang feels, on the board of directors. The board of directors doing the hiring knows less than the CEO candidates regarding the candidates’ true competencies. As a result, it is possible that the board makes a faulty hire, then dismisses the CEO shortly after the succession.

Unbalanced information can negatively impact the selection of a new chief executive in three ways. The first concerns the origin of the new CEO—whether he or she was an internal or external candidate. The second is the context of the preceding CEO’s departure—whether it was a voluntary departure or a dismissal. And, the third is the composition of the board of directors’ nominating committee—whether they are primarily in-house or independent directors and whether they serve on a number of other boards.

Talent management software packages are available that allow managers to look across the entire company for a person with the required skills. On the flip side, employees can use the tools to see what jobs are available and what skills are required.

These kinds of software packages are on the cusp of becoming mainstream because they offer so many advantages to employer and employee. Online learning is well known. Now, talent management tools are becoming the bridge that allows employees to do things like career planning and create their own management development plan.

“Millennials like to do these kinds of things on their own,” says Rousseau, “and from the management perspective, they are able to see which employees are looking for what.”

For this kind of program to succeed, the onus is on management to be sure all jobs within a company are fully explained, along with all skills and key competencies required for any position.

Another way to tap the resources already available within a company is to create an internal version of online recruitment. Companies need to connect with workers just as firms outside do with job availability Web sites.

Plan for Turnover
Employee turnover can be negative and positive. Finding and educating new people is a drain on the budget and nerves of many managers. However, educating and promoting people already on the job leads to positive management succession. Providing employees alternatives within the company, and making available tools for them to seek out these opportunities, can lower the need to recruit new people into the company. The key is to make all of this information available to employees. The new workforce likes to search for opportunities from within. The old rules of promoting from within (it’s who you know), are changing—for the better of many companies.

“Career advancement opportunities,” says Rousseau, “for Millennials, can mean lateral moves. It no longer means that, to get ahead, you have to covet your boss’s job. It now means there are opportunities within the company to explore or build skills sets for.”

Not all jobs in the factory or distribution center are sexy and exciting. How do you keep employees in these kinds of positions? One of the things Millennials look for is a balance between their lives and their jobs— called the work/life balance—along with earning a decent salary.

“Managers need to promote the key points of a job, not the industry,” says Rousseau. “Career advancement might mean moving from area to area within a company, not necessarily up the ladder. They’re looking for skills they can learn and take other places.”

A satisfying part of the work/life balance for Millennials (and Baby Boomers) can be resolved with flexible schedules. Again, technology can give an assist by matching work schedules with skills required at specific times in the factory or on the distribution center floor. Shift trading serves the purpose of making people feel they have some control of their work lives. If they can manipulate their work life to meet social responsibilities, i.e., taking care of children or aging parents, they are more likely to stay on the job.

Flexible schedules and shift trading also allows employers to react to cover seasonal challenges or rush orders. Since employees don’t necessarily want a nine-to-five job, employers are going to have to find ways to respond to that desire.

Rousseau sums all this up under the heading of “lean management of people.” To her, it means that employers can have people on the floor where the greatest skills are required. The right people in the right place at the right time. “It’s about managing the flow of people,” she says, “just as we manage the flow of material for better productivity.”

Scheduling the right people at the right time solves one of those management challenges that should be intuitive. A company wants to increase cost savings and profits at the same time. And, while cutting heads might reduce costs, it also reduces profitability because now less experienced (read: less productive) people are on the job.

Instant Gratification
You’re not a Millennial if you remember a time when there wasn’t an ATM machine on every corner. It’s just one example of instant gratification the younger generation has come to enjoy—and expect. Another is mobility and the lack of stigma from losing one’s job.

The ability to have instant answers at the tip of your fingers is not all bad when compared with the dated information previous generations found in dog-eared encyclopedias.

The fact is, says Rousseau, young people are self-service enabled. “Anything that slows them from reaching their goals tends to alienate or aggravate younger workers,” she says. “This aggravation motivates them to move to other companies that provide instant answers and access.”

Additionally, it marks your company (whether it’s true makes no difference) as one that is behind the times. While it’s tough to measure, there is an ROI for the company that provides online services for its employees. Word-of-mouth advertising is tough to buy and measure.

Making employees feel connected— that social piece of the puzzle—leaves many companies feeling stranded. It’s a tough thing to do. Pizza parties are fun and fattening, however, younger workers want more, and they want it now. Mentoring and chat rooms are a good start. Don’t worry about people spending company time doing personal communications. It’s already happening. The reality is, if the person is performing to a supervisor’s satisfaction and hitting established goals, there’s probably no time to be wasting on chatting with friends online any more than on the telephone.

“Chat rooms and instant messaging can be positive things in companies that are geographically spread out,” says Rousseau. “With many remote workers, from the road or at home, being able to contact someone immediately with a question is a real plus.”

There’s plenty of empirical evidence connecting workforce performance to profitability. Companies have to focus on this issue because, as Rousseau pointed out several times during our interview, people issues are the next frontier of cost management. “You have to manage the workforce like it’s your next best asset that you haven’t quite optimized,” she says.

So, where will the new workforce come from? In many ways, it has arrived or currently exists. If a manager is looking to promote people, the best place to start is with the people already on the job. If they’re already making money for the company, treat them right by rewarding them with more money. Experts advise that the best way to build loyalty in the workforce is to buy it.

For more Information

For more information on the subject of this article, visit any of the following Web sites:

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