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How's Your Workforce IQ?

 
4/3/2006
Lifelong learning has advanced from a nice-to-have to a business essential, write the authors of Workforce Crisis. Their book examines the business implications of trends in the pool of current and future employees. Here's an excerpt.

One of the largest companies in the oil and gas industry, BP LLP (formerly British Petroleum) is a federation of financially successful business units with over 100,000 employees. As BP's corporate leadership knows, size matters only if BP can leverage its knowledge of technology, customer relationships, and business methods across the company—without interfering with business unit autonomy. To promote such knowledge sharing behaviors, BP implemented three explicit "peer processes":

  • Peer groups of senior managers share know-how across business units and with the Executive Committee.
  • Peer reviews of specific unit activities or business processes by senior professionals from other units identify strengths, weaknesses, and opportunities to improve or learn from other groups.
  • Peer assists get the right corporate know-how to the right place at the right time. Anyone can request expert assistance from a peer anywhere in BP, and the in-demand expert must do his best to help.1

Such regularly shared knowledge and expertise has bolstered individuals' efforts, enriched customer outcomes, and improved BP's business methods directly. The collaborative learning here is more organic than systematic—that is, embedded in BP's culture and integrated into people's daily work. The increasingly valuable flow of knowledge among businesses and along leadership chains eliminates red tape and makes each business unit faster and more nimble. In short, BP's institutionalized learning through peer processes drives actual business results.

Not many corporations take this stance toward learning, but some of the most successful do. In his final annual report letter to shareholders (2000), General Electric's Jack Welch argued cogently for corporate learning: "The most significant change in GE has been its transformation into a Learning Company. Our true 'core competency' today is not manufacturing or services, but the global recruiting and nurturing of the world's best people and the cultivation in them of an insatiable desire to learn, to stretch, and to do things better every day."2 GE spends $1 billion annually in learning programs, including a pioneering corporate university and an enduring commitment to sharing best practices companywide, such as the Workout methods adopted by other companies. GE knows that learning enhances global growth and competitiveness.

Learning is integral to any organization's capability and productivity, recruiting and retention, and leadership and capacity for change. Learning—about customers, markets, technologies, competitors, and a variety of other business variables—boosts individual and organizational responsiveness, agility, and growth. It raises corporate performance and increases the value of talent. In short, lifelong learning is good for business.

More importantly, learning can mitigate the coming shortage of labor and skills in two ways. First, learning is an increasingly visible, important, and nonnegotiable component of the employment deal. Employees expect companies to invest in their professional development, thereby enhancing their "employability" within the company or in the job market; and the best and brightest—the ones worth retaining for the long haul—tend to be those who most enjoy learning. So lifelong learning has advanced from "nice phrase" to business performance imperative.

Second, with labor and skills shortages ahead, organizations must "grow their own" expertise by providing employees with opportunities, both on the job and off, to raise their skills level. Given the inevitable time lag in the capacity and performance of public educational systems, these shortages will especially enervate the skilled disciplines and fast growing technical fields such as healthcare. The level of educational attainment continues to rise, but too slowly. Just over one fourth of Americans hold college degrees, but most of the Bureau of Labor Statistics "hottest job" categories demand college education. What's more, the workforce population segments growing the fastest are neither the best educated nor the most upwardly mobile. Despite all efforts to improve access to education in the United States, academic achievement varies wildly among ethnic groups. Worse, the educational pattern of immigrant populations in the United States is skewed toward the extremes: Even though the average number of years of schooling among immigrants is only about one and a half years less than that of the native population, one third of immigrants do not have high school diplomas, whereas over one fourth have college degrees, many with advanced degrees in medicine, science, engineering, and other professions. The Employment Policy Foundation projects a shortfall of 6 million college degrees in the workforce in 2012.3 So, to safeguard their labor and skills supply, corporations must provide both advanced and remedial education.

Learning can mitigate the coming shortage of labor and skills in two ways.

Marvin Bressler, professor emeritus of sociology at Princeton University and an adviser to our research, argues, "A growing proportion of workers are inadequately schooled for their increasingly demanding jobs. Corporate education—technical, managerial, and humanistic—should thus not be conceived as an altruistic gesture but as an indispensable requisite for a robust bottom line. Moreover, since the American labor force is educated at immense public expense, it is in the enlightened self interest of the corporation—and as a means of restoring its moral authority at a time of widespread distrust of big business—to exercise greater social responsibility in supporting education at all levels beyond its own walls."4

Thus, learning is both a marketing and a productivity tool—a means for attracting and retaining key talent, as well as for ensuring that employees are equipped with the right capabilities both to perform well and to maintain competitive competency levels. Simply put, your company must excel at enabling employees to learn.

Good news: employees want to learn
In our nationwide survey of workers and their preferences, "Work that enables me to learn, grow, and try new things" ranked third among ten basic elements of the employment deal, behind a comprehensive benefits package and a comprehensive retirement package. It ranked higher than more pay, more vacation, flexible schedule, flexible workplace, work that is personally stimulating, and even (by a small margin) a workplace that is enjoyable.5

No single or standard approach is going to meet the needs of employers or employees.

Which employees value learning the most? Well-educated ones, those with postgraduate work or degrees, rank learning significantly higher than do employees in general. Other eager learners include professionals and managers, especially senior ones; people who describe themselves as ambitious and leaders among their peers; and employees who describe themselves as "extremely satisfied" with their jobs, ranking learning number two among deal elements.

Based on our survey, we segmented employees by how they relate to their work. One group includes employees who are the most innovative, entrepreneurial, and energized by their work, the most proud of their careers, and the most likely to lead the organization. They have the highest employee engagement level and value learning extraordinarily highly, ranking it number one among the ten deal elements. That's double the average preference level for learning and growth opportunities. We noticed several other correlations to employee preference for learning:

  • Employees at the two ends of the income spectrum—lowest and highest—value learning more than those in the middle.
  • Both young workers and mature ones show above-average preference for learning.
  • People with more time available—single, childless, with time to socialize—value learning above the average.
  • Employees of nonprofit organizations show above-average preference for learning opportunities.
  • Self-employed or part-time workers value learning higher than full-time employees.
  • People in small companies value learning more than those in large ones.
  • Employees who work over fifty hours per week show above-average preference for learning.
  • Those who work primarily from home also have above-average preference to learn.
  • People in professional and business services, information and technology, and construction show a significantly above-average preference to learn and grow than workers in other industries.
  • People in education and health services show a slightly above-average preference to learn.
  • Employees who are currently excited by a new project or assignment show a preference for learning well above the norm, ranking it number two among deal elements.

Workers of all ages need and want training in specific skills, as well as broader opportunities to learn and improve themselves, their performance, and their careers and lives. However, as we shall see, their needs, interests, and learning styles vary greatly. No single or standard approach is going to meet the needs of employers or employees.

Bad news: Employers are offering too few learning opportunities
Too many organizations fail to satisfy employees' desire and need for learning and growth, and the employer pays a price in lost capability, performance, and engagement. In addition to measuring employee preferences for the ten basic elements of the employment deal, we broke down the category of learning and development into four detailed elements.

People expressed the strongest preferences (almost a dead heat) for opportunities "to work with bright and experienced employees and managers" and "to grow through changes in roles, responsibilities, and projects." Third in the ranking, with about two thirds' the preference level of the first two, came professional development opportunities—courses, seminars, conferences either inside or outside the company. In a distant fourth was formal mentoring programs, and such a low preference likely reflects their scarcity.

We also asked employees—yes or no—whether each element in the learning category is available to them through their employers. How many said yes?

  • Professional development opportunities: 42 percent overall, 53 percent in large employers
  • Opportunities to grow through changes in roles: 39 percent overall, 50 percent in large employers
  • Opportunities to work with bright people: 36 percent overall, 47 percent in large employers
  • Formal mentoring programs: 9 percent overall, 17 percent in large employers

Most employees also believe that their learning isn't high on top management's agenda. When we asked for a level of agreement with the statement "Top management is committed to advancing the skills of our employees," more employees strongly disagreed (14 percent) than strongly agreed (13 percent). A bare majority expressed any level of agreement (slight, moderate, strong), and here the large employers fare less well, with only 8 percent of employees strongly agreeing. Employees are certainly getting the message that learning isn't high on management's priority list.

Here's a third indicator of employers' failure to appreciate the importance of employee learning and growth. One third of employees (38 percent in large organizations) feel at dead ends in their current jobs. One third of the workforce has its growth initiative—however high or low that may be individually—stalled. That number is simply too high, especially compared with the smaller number (28 percent) who are working on exciting new projects or assignments. The percentage feeling dead ended is extraordinarily significant because, regardless of segment, a low engagement score always correlated most strongly with the same variable—feeling at a dead end. So, to disengage employees, stall or appear to stall their growth.

Our survey revealed one other interesting phenomenon. Some 9 percent of employees (13 percent in large organizations) say they have inadequate training or knowledge for their current positions. Meanwhile, this group as a whole shows lower than average preference for learning and growth opportunities, and a significantly below-average engagement score. So an individual's general passion for knowledge prompts learning more than one's specific job demands do.

Excerpted by permission of Harvard Business School Press from Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. Copyright 2006 Ken Dychtwald, Tamara J. Erickson, and Robert Morison. All rights reserved.

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Ken Dychtwald, PhD, is the founder and CEO of Age Wave.

Tamara J. Erickson is an executive officer of The Concours Group.

Robert Morison is an executive vice president of The Concours Group.

Is Your Performance Management System Working Well?

There are several litmus tests to gauge how well your performance management system is working. For starters, the performance system must motivate the best performers. Of course, performance management is for all employees, and general excellence in performance management means greater overall productivity. But it's especially important that the system work well for the employees who contribute the most.

The system must also accurately reflect business objectives. Employees should understand that their rewards derive from doing what the business values most. For example, a business cannot insist upon superior customer service but reward call center employees for call volume instead of customer satisfaction and retention. Employees must feel that their work matters toward business performance.

The performance system must also be transparent and understandable, especially to those at lower levels in the organization. If employees say, "I don't really understand how things work; I just get my automatic once-a-year raise," then they're not being influenced or motivated by the system. They must understand the performance management process to participate in it.

In particular, the system must be explicit about the baseline of performance that everyone must meet, and the consequences for failing to meet it. Finally, employees understand and fully appreciate the value of their total reward packages. They must know what benefits and choices are available, be able to make and manage their selections, and value their compensation and benefits packages.

We recommend periodically "taking the pulse" of the performance management system. Talk with a selection of managers, top performers, and representative employees about how and how well the performance management system meets its objectives. Then discuss ways to improve the performance, perception, and results of your system. Keep in mind that assessing and meeting people's needs and influencing their performance are not exact sciences. When designing or revising a performance management system, keep in mind these four underlying realities.

First, people have a wide range of needs and values when it comes to work and benefits. As we have seen throughout this book, these preferences and responses differ by career cohort, as well as by life stage, lifestyle, and work stage. Second, employees may not be able or willing to tell you what they value. This can be a major obstacle in developing the data needed to craft a performance system. Unaware of the possibilities, they may not know how to express what work arrangements, benefits, or learning opportunities might mean the most to them. Alternatively, if they do not sufficiently trust the organization, or sense that the organization does not trust its employees, they will withhold information about their preferences, suspicious of what the organization tends to do with it.

Third, employees' expectations condition their motivation. If people's expectations regarding the job and workplace are not being met, specific attempts at motivation—including monetary—have little effect. This factor can be especially important with young workers who do not yet know the ropes. That's one reason why rapid incorporation into both organization and job are so important. Finally, job satisfaction leads to "membership" in the organization. Membership is a choice. Some people work but never become real members of the employer organization. Others become not just members but leaders in the organization's operational and social structure. Commitment comes when employees are satisfied in all facets of their jobs—the work they do, the deal they have, the respect they enjoy. A performance management system encourages membership by helping an employee appreciate how all these pieces fit together.

Excerpted by permission of Harvard Business School Press from Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. Copyright 2006 Ken Dychtwald, Tamara J. Erickson, and Robert Morison. All rights reserved.

Footnotes:

1. http://www.bp.com; and Chris Collison and Geoff Parcel, Learning to Fly: Practical Knowledge Management from Leading and Learning Organizations (Chichester, U.K.: Capstone, 2005).

2. GE Annual Report 2000.

3. Employment Policy Foundation, "Challenges Facing the American Workplace, Summary of Findings," The Seventh Annual Workplace Report, 2002.

4. Interview with Marvin Bressler, December 2003.

5. Unless otherwise cited, all statistics in this section and the next are drawn from The New Employee/Employer Equation. This research project included a nationwide survey of over 7,700 employees conducted in June 2004 by Harris Interactive for the Concours Group and Age Wave.