Evaluation on Impact
Now that we have a good grasp of our diverse generations, let’s explore what all of this means for leadership in the workplace. An organizational leader does not want to end up with the opening statement of his or her annual report sounding like Fed Chairman Ben Bernanke’s February 14, 2007, address to senators. Bernanke
told them the nation hasn’t prepared well for the aging of the baby boom generation. Their retirement is one of the biggest demographic changes on the horizon. Bernanke says the resulting demand on entitlement programs could pressure the nation’s fiscal situation. More than half a million government workers will be eligible for retirement over the next five years….”1
Therein lies the problem. While it is true that the economic downturn has stretched retirement plans for many, it is also true that the loss of employment has forced many into early retirement. Our government and many of our companies have not prepared for this scenario. Our retirement programs, pension plans, and 401(k)s are just beginning the big drain that will start as a trickle and increase steadily until organizations from every industry and every state feel the full financial pressure of this shift. So the demographic change is much bigger than just replacing empty seats vacated by the Boomers. It is also about preparing financially. This will take organizational leaders working collaboratively, especially the CEO, CFO, COO, and Senior Human Resource Executive. This talent team must collectively create a plan to keep the organization stable and deal with the long-term implications of the shifting demographics both for talent to run the organization and the financial impact of the Boomer retirement. This plan must be designed, implemented, and constantly monitored and adjusted based on new information. Think of it as a “threat” just as the United States thinks of terrorism as a “threat.” The shifting demographics along with every other major “threat” to the organization’s long-term health and success must be constantly monitored. When and hopefully before a “threat” reaches a serious level, organizations must carry out plans to deal with the threat. We cannot wait until the threat is imminent. Then, it’s too late.
Organizations can do a lot to prepare. Leading organizations place a huge emphasis on getting the right people in the right places at the right time. From a macro level, managing the people side of business is not unlike the supply chain process. It is all about choosing the best quality at the right price and getting it/them in the right place at the right time. This is why we believe that Human Resource executives are equally as important in an organization as Operations executives. They are two sides of the same coin—one creates the systems and the processes for the product or service and the other creates the systems and the processes for the people who produce the products and services. Just like the Operations executive, the Human Resource leader must monitor supply and demand (of the talent) and make appropriate adjustments based on the market, increasing the supply of talent when business is up and decreasing the supply of talent when business is down. This balancing act takes extensive critical-thinking skills, decision-making skills, along with a good dose of intuition.
Let us insert a quick disclaimer here. We want to reiterate that we know, in no uncertain terms, that people are not products or supplies. We also know that companies do not “buy” people. They do, however, purchase or contract for their time and capabilities, so referring to the supply chain process when discussing people is simply an illustration and should by no means be taken as a devaluing of the human complexity and significance.
So one place organizations must start is in evaluating their Human Resource executive capabilities versus the organization’s current and future needs. Having the appropriate Human Resource leader(s) in place is critical to the organization’s success, especially during radical shifts in the employee demographics as well as the customer base. As with many organizational leaders, a company’s Human Resource executive may have come up through the ranks and now sits in the top hot seat for the people side of the organizational coin. This scenario is very beneficial in some aspects, because the Human Resource leader will ideally have a complete grasp on the culture, the leaders, the market, and the organization’s needs. And if the leader has been appropriately developed along the way, he or she should do an excellent job at supplying and managing the organization’s talent.
However, in many cases, the Human Resource leader has not had adequate development—or any for that matter—and has been expected to “figure it out.” These roles are every bit as complicated as those of the Operations executive and should be treated as such by the CEO, president, and the board of directors. Human Resource leaders must be developed to handle today’s sophisticated and often legally complex scenarios. If the organization has outgrown the Human Resource executive, it is imperative that the situation be corrected for the organization to be successful. Organizational leaders do not keep ineffective Operations executives, and they should not keep ineffective Human Resource executives either. This doesn’t have to mean that the current person loses his or her position, but it could mean that. There are other scenarios:
1. For example, the organization could take advantage of the Boomers’ wanting project work or limited-term assignments and bring in a successful semi-retired Human Resource executive to lead the HR Department for a 12-month period while mentoring and developing the current Human Resource leader to come up to today’s level of sophistication (assuming he or she has the capabilities necessary).
2. Another scenario is an extensive development plan. The organization could provide the Human Resource executive with a coach and/or a university program designed to develop and increase skill in this area.
3. Or the organization may realize that the Human Resource leader is no longer the right leader for the current and future organizational needs.
One way or another, the organization must tackle the issue and ensure that this position is appropriately vetted and established as a cornerstone before tackling all the other leadership and workforce issues that will be tied to the shifting demographics both inside and outside the organization.
When the right Human Resource executive is in place, he or she will know what to do to manage the supply and demand of the Human Resources side of the organization. In fact, “Savvy managers are right now learning all they can about changing demographics to prepare for radically shifting changes in their organizations’ customer and client bases and in their future pools of job applicants. The face of the world is changing and successful organizations and their managers are watching, learning, and making plans.” 2
This preparation is known as the Human Capital Strategy. The Human Capital Strategy is directly linked to the vision and strategy of the overall organization and is key to the success or failure of the overall organization. If an organization misses the mark on the people side, it will not be able to stay competitive in today’s market regardless of history or brand recognition. Hageman’s company Executive Development Associates has a talent management model that illustrates how all other aspects of managing the talent supply chain fall under the Human Capital Strategy.
Diagram provided by Executive Development Associates
Notes
1. “’America’s Changing Demographics’—Retirement Worries.” Nightly Business Report PBS. NBR Is Nationally Underwritten by Franklin Templeton Investments, 14 Feb. 2007. Web. 24 July 2010. http://www.pbs.org/nbr/site/onair/transcripts/070214c/.
2. Lieber, Lynn D. “Capitalizing on Demographic Change.” DiversityBusiness.com. 9 Sept. 2008. Web. 24 July 2010. http://www.diversitybusiness.com/news/ diversity.magazine/99200841.asp.