In just the last year alone, millions of First-Wave Boomers and pre-Boomers have left the North American workforce, while millions of Second-Wave Millennials have joined.
The long-dominant Boomers are on the wane, while the Second-Wave Millennials are on the rise. The oldest of the First-Wave Boomers are now in their seventies, and every single day in North America alone, another 10,000 First-Wave Boomers turn seventy. In terms of percentage, the trends are very similar throughout Europe and in Japan. By 2020, First-Wave Boomers will be well under 6 percent of the workforce. And those who do remain in the workforce will continue trending heavily toward “reinventing” retirement and late-career pre-retirement—working less than full-time, often partially telecommuting, and often working nonexclusively for more than one employer. At the same time and for the foreseeable future, the Second-Wave Millennials (and soon post-Millennials) will be the fastest-growing segment of the workforce. By 2020, those born 1990 and later will be greater than 28 percent of the workforce altogether (including post-Millennials).
The Forces Driving Change: No Ordinary Generation Gap
Why is this generation gap different from most? Throughout most of history, in most societies, every new generation has come along with new attitudes and expectations that differ—at least in part—from those of previous generations. That’s why every new generation prompts a “generation gap” of sorts.
Today’s generation gap, in contrast, is about much more than a clash of styles and preferences, much more than the creative energy of youth challenging the cautious wisdom of experience, and more than the new butting up against the old. The generational shift unfolding today is of historic significance, defined by the confluence of macro forces driving change at an extraordinary magnitude and pace. The Second-Wave Millennials coming of age today have been shaped by those same forces of change. As such, the current generation gap not only is an important diversity issue, but also coincides with a qualitative transformation in the norms of life, work, and society—at every level. Everything is changing so much and so fast that the youngest, least-experienced people bring to the table a unique wisdom that comes from being in sync—much more so than older, more-experienced people—with the immediate and intermediate future, like so many “canaries in the coal mine.” That’s why generational differences evident in today’s youth can serve as a powerful lens through which to understand the trajectory of today’s changing world.
Efforts remain focused on understanding today’s changing workforce, changing workplace, changing nature of employment, and even changes in the very nature of work itself. To that end, generational researchers continue tracking the same six profound historical forces of change we’ve watched unfolding in plain sight now for more than two decades:
3. Institutional insecurity
4. The information environment
5. Human diversity
6. Virtual reality
Can there be any doubt that these same six macro forces driving change continue to accelerate and continue to define the transformations evident in every aspect of life and work? Does anyone remember a year prior to 2016–2017 with more object lessons demonstrating the impact of each and every one of these forces of change?
Human Capital Management 2017: What the Generational Shift Means for Employers
As employers are constantly trying to become more lean, flexible, and high performing, downsizing, restructuring, and reengineering are now accepted as constants of the workplace—taken for granted now as “continuous improvement.”
Employers are more likely to undertake major organizational changes that eliminate jobs regardless of employees’ lengths of service. Such changes include mergers, acquisitions, spin-offs, restructurings, and liquidations. Employers are also more likely to implement new technologies that eliminate jobs due to reengineering. Meanwhile, there is a strong trend among employers of hiring fewer “employees” (full-time, exclusive workers) and more contingent workers. And most employers’ staffing strategies for the future continue to move in this direction. As a result, the number of traditional “employees” is diminishing as a percentage of the overall workforce, while the percentage of “contingent workers” is increasing.
There has been a fundamental change in employment practices, away from long-term, stable employment relationships and toward a more efficient supply-chain management approach known as human capital management. The goal is to optimize human resources. That means having the right people in the right places at the right times, employing them exactly as long as you need them and no longer, and paying them the market value of their contributions and no more. Because of these new realities, employers are now less likely to make formal or informal guarantees about continued employment and job security.
In most companies, organization charts have become flatter, layers of management have been removed, reporting relationships are more temporary, and more employees are being managed by short-term project leaders instead of “organization chart” managers. Instead of awarding status, prestige, authority, flexibility, and rewards on the basis of seniority, employers are more likely to award status, prestige, authority, flexibility, and rewards on the basis of short-term measurable goals. Employers are also reducing long-term fixed pay as a percentage of overall employee compensation, while increasing the percentage of variable performance-based pay. Compensation strategies for the future reflect this change. Part of this new compensation strategy includes a reduction in the percentage of employee benefits (paid for by the company for full-time, exclusive workers) in relation to overall compensation. Further, employers are increasing the percentage of “employee services” (paid for by the worker on a pre-tax basis), such as health insurance and retirement savings.
The question leaders and managers should be asking is this—given the great generational shift, what kind of organization do we need to create to make sure we can continue to still be known for our great people? What kind of workplace do we need to create to bring out the very best work in the very best people on a consistent and sustainable basis?
Here’s the answer—the successful organization of the near future will have one or more core groups of critical talent, but it will also rely on a fluid, flexible talent pool. It will have a wide repertoire of ways to employ people and leverage talent—full-time, part-time, flex-time, on-site, off-site, telecommuting; as consultants, temps, partners, vendors, franchisors, franchisees; and upside down and inside out.
Successful organizations will be able to get people on board, up to speed, and into meaningful roles very quickly, not to mention providing ongoing training and development to stay one step ahead of the constantly changing needs for new skills and knowledge.
Successful organizations will continue to cut waste to the bone, improve efficiency, implement new technologies to streamline operations and eliminate labor, drive employee productivity, and try to get more and more work out of fewer and fewer people.
Meanwhile, they will be forced to pay high premiums with lush benefits and lavish work conditions for in-demand talent—dream jobs for superstars—and at least some of the dream job factors for any employee an employer wants to retain for any significant period of time.
The successful organization will have as many different career paths as they have people.
EDITOR’S NOTE: This article was excerpted from The Great Generational Shift: Update 2017. Download the complete white paper at rainmakerthinking.com/whitepapers.