A new study conducted by Oxford Economics for SAP busts several myths that we hear about Millennials. More important, it found evidence that shows Millennials will be the workforce majority soon. It isolates several key factors that companies need to act on now.
In Part 1 — The Looming Talent Crisis we debunked some of the myths about the Millennial workforce. Today we will focus on some answers to the most pressing questions: what we need to understand and how can we act on it.
An increase in the number of non-payroll positions for contingent workers will require changes to HR strategy and management — now.
- 83 percent of executives say they will be increasing the use of contingent, intermittent, or consultant employees.
- 41 percent of executives say their firm is increasingly using contingent workers.
- 42 percent say this increasing number of contingent employees is affecting their workforce strategy.
Ongoing globalization and macroeconomic shifts mean the 2020 workforce will be made up of a wider group of ages and nationalities than ever before.
In order to succeed, companies will need to have a broader understanding of their people and the markets in which they operate.
Executives cite globalization and Millennials entering the workforce as top business concerns — 51 percent say these labor market shifts have great impact on their workforce strategies. Our qualitative research — interviews with executives from around the world — will delve deeper into the reasons for these concerns.
One finding is that the Human Resources department too often lacks the information or insights needed to be truly strategic. HR most frequently works with C-suite executives but does not drive strategy at the board level.
“Only half (52 percent) of executives say workforce issues drive strategy at the board level, and nearly one-quarter say that workforce issues are an afterthought in business planning.”
A lack of metrics and tools prevents HR and the whole organization from developing strategies for building the workforce of the future:
“While over half (53 percent) of executives say workforce development is a key differentiator for their firm, they do not have the tools and organization to back it up.”
What matters most at work?
Companies often do not understand what their employees really want from them. When it comes to satisfied employees, compensation matters — a lot. Consistent with other recent findings, notably the Corporate Leadership Council, compensation is increasingly important to employees. As a result, companies should focus on monetary rewards.
“Only 39 percent of executives say their company offers competitive compensation. But when ranking the importance of benefits, competitive compensation and bonuses/merit-based rewards rank highest among employees — other benefits are far less important.”
The leadership cliff
Executives and employees agree that leadership is lacking — and companies are not focused enough on developing future leaders. The gaps in leadership capabilities spells trouble for future growth.
Executives cite a lack of adequate leadership as the number two impediment to achieving goals of building a workforce to meet future business objectives, and only 35 percent say talent available in leadership positions is sufficient to drive global growth.
Leadership is not equipped to lead a global, diverse workforce. Just one-third (34 percent) say their leaders are prepared to do so. And, 42 percent of C-level executives say their companies’ expansion plans are limited by a lack of access to the right leadership. Employees agree with executives that leadership is lackluster.