STAYING AHEAD WITH PROGRESSIVE HUMAN CAPITAL STRATEGIES

STAYING AHEAD WITH PROGRESSIVE HUMAN CAPITAL STRATEGIES
Adapted from a research paper by Forrester Research


The professional workforce is dramatically changing as a new generation of younger, college-educated workers launches their careers at the same time that a large number of senior employees reach retirement age. To effectively manage this changing workforce at both ends of the age spectrum, companies need Chief Human Capital Officers (CHCOs), who have a different focus from traditional human resources executives. CHCOs should have business backgrounds and focus on aligning the workforce with the corporate strategy, whereas HR executives focus primarily on recruiting, benefits, promotion paths, evaluations, compensation, workplace diversity, equal employment, etc. Organizations need both types of human resource executives to address the needs of a workforce that is seeing a technically savvy generation begin to replace the retiring labor force.

Between 1946 and 1964, 76 million workers were born in the US. This massive population bulge is now are getting ready to retire, leaving a significant hole in their wake and creating serious concerns for many organizations with highly skilled workers who have built their expertise through years of on-the-job training. Industries now facing this problem include government, oil and gas, utilities, transportation, pharmaceuticals, manufacturing, education and healthcare. Most enterprises don’t realize the magnitude of this problem or the force with which it will hit businesses during the next five years. Those that do are grappling with the complexity of issues surrounding the knowledge drain. Some initiatives being considered and implemented are mentoring programs, contracting retired employees to work part-time, deploying new systems that reduce the reliance on knowledge-intensive work (for instance, through implementing self-diagnosing equipment to replace inspections by highly trained engineers) and by considering knowledge management initiatives.

The new generation of workers – the ‘Millennials’ (those born between 1980 and 2000) – have an innate ability to use technology, are comfortable multi-tasking while using a diverse range of digital media, and literally demand interactivity as they construct knowledge. Millennials lack the workaholic drive of their burned-out predecessors, but they compensate by using many technologies – often simultaneously – to get the job done quickly (and have a personal life as well). They don’t have the skills and experience of the many retirees they are replacing, but they look to technology to help fill this gap. Managers must understand the work style differences among the multi-generational workforce and develop collaborative work environments that give Millennials the information they need – just-in-time and integrated with the job.

Geographically, trends are consistent. Like their North American counterparts, European businesses and government agencies are beginning to grapple with the retiring workforce. Many European countries have an even bigger problem than the US and Canada, as declining birth rates and low immigration levels combine with early retirements to create acute skilled labor shortages in fields requiring extensive technical training and experience. European industries feeling the impact include government, banking, oil and gas, manufacturing, pharmaceuticals and airlines.

Human capital management is a critical initiative to help develop plans for mentoring, succession planning, recruiting and establishing a new mindset to come up with ways to address the challenges.

Several key best practices for human capital management initiatives include:

• Find out what you are up against. Don’t just guess about the timing and numbers of workers planning to retire – find out when employees plan to retire. Build a detailed knowledge base about who, when, the job role, the worker’s skills and experience, and the impact of their departure on the organization.

• Build a knowledge base of available skills. Identify the skills and competencies of all employees, and develop plans for building skills and experience in employees that are currently lacking.

• Designate a chief human capital officer. This new role complements traditional human resources management by addressing strategic business considerations while HR managers take care of the tactical nature of hiring such as recruitment and benefits.

• Implement succession planning. Develop a plan for identifying successors – even if the timeframes are long term – and for building the necessary skills of future candidates for promotion.

• Implement mentoring programs. Many agencies have found mentoring to be highly effective, and recommend it in conjunction with succession planning and hiring younger workers. However, be warned that finding effective mentors who are motivated to convey their knowledge to younger employees and are skilled at mentoring is difficult and often requires appropriate rewards.

• Consider a flexible workforce. Enterprises should not only draw on full-time, permanent workers but also incorporate part-time, seasonal and on-call workers. The key benefit from a nonstandard workforce is flexibility when fluctuations in work demand require to quickly scale up or reduce staff.

• Provide career planning. In addition to managers and leaders reviewing employees’ competencies on a quarterly basis, workers should indicate their career interests five years out and then work on development programs to achieve those goals.

• Focus on competencies instead of credentials. Given the outlook for tighter talent pools, the key to future success is to understand what competencies will be critical to future operations and focus recruiting and retention activities on ensuring these mission-critical skills are available to support operations.

• Overcome the bias against younger workers in some industries by implementing intern programs. This allows younger workers to see if they like the work environment and supervisors and managers can assess the interns' ability to perform the job within the company’s culture.

• Use human capital management software tools. Human capital management software tools assist in tracking all aspects of worker employment, from administrative transactions to strategic talent management and employee development.