Reskilling the Workforce Driving Strategic Change Through Learning Dave Wilkins OSA Platform Lead

My Goals Today Help your career How? Show you new opportunities to add value Help you see the big picture How? Connect your mission to the larger business challenge of talent How? Connect your mission to the larger talent challenges of the nation Help you think differently How? Pose some tough questions about where we’re heading

Natural Disasters

Technology Disruption

Strategic Shift

How many of you can: Accurately describe current attrition levels at your company? Accurately describe attrition for critical roles? List cost and time-to-hire metrics for critical roles? List the critical roles at your company? Describe the key capabilities for each critical role? Describe the typical career path people follow to get to these roles? Describe the critical experiences, skills, education for these roles? Articulate required workforce capabilities next year? Year after? Articulate company strategy and direction?

The Talent Business EY Top Business Challenges? #3 – Managing Talent http://www.ey.com/GL/en/Services/Advisory/The-top-10-risks-and-opportunities-for-global-organizations---The-top-10-risks---3--Managing-talent

The Talent Business EY Top Business Challenges? #3 – Managing Talent “Nearly 20% report that people with the right skill sets are simply not available — a factor that may in part reflect weaknesses in educational systems. This is a weakness that is likely to get worse.” http://www.ey.com/GL/en/Services/Advisory/The-top-10-risks-and-opportunities-for-global-organizations---The-top-10-risks---3--Managing-talent

The Talent Business EY Top Business Challenges? #3 – Managing Talent “Nearly 20% report that people with the right skill sets are simply not available — a factor that may in part reflect weaknesses in educational systems. This is a weakness that is likely to get worse.” http://www.ey.com/GL/en/Services/Advisory/The-top-10-risks-and-opportunities-for-global-organizations---The-top-10-risks---3--Managing-talent

Why Skills Shortages? Aging Workforces Smaller Pipeline One of the recurring findings from economic research over the last few years is that volatility is here to stay. Does not really matter which index you look at: oil prices, exchange rates or housing starts the picture looks the same and its not one that is easy to predict. In addition to significant volatility in key indices there are a number of material trends and events that compound the situation: Economic growth –slowing BRIC economies Regulation –Dodd-Frank Sustainability—now a competitive and economic necessity to demonstrate sustainable business practices Demographics—aging populations in many markets Trade patterns—Asia, Europe, US, -- return of some onshoring, etc Technology—cloud, big data, analytics, social, mobility, etc In light of all this the challenges for modern businesses are magnified – how effective is a detailed annual budget when there is huge uncertainty about the next quarter never mind the next year? Aging Workforces Smaller Pipeline Capability Mismatch

Aging Workforces Worldwide Country % Growth Russia -8% Japan -5% Germany -4% Poland Italy -1% Greece 0% France 5% UK 7% China Brazil 13% USA 14% Mexico 15% Turkey 17% India 24% Nigeria 46% Slow growth, negative growth in developed world Faster growth in developing world In US and UK growth is fueled through immigration Less developed = more growth Population Growth 2010-2020 http://data.un.org/Data.aspx?d=PopDiv&f=variableID%3a12

Labor Force Participation Rates

But more of the them work more http://www.bls.gov/spotlight/2008/older_workers/images/home_image006.gif

More older workers = fewer younger Those older workers who stay in the workforce do so at the expense of the young. When grandma finally retires, we will have 30 year olds with no work experience or near useless work experience.

More older workers = fewer younger Those older workers who stay in the workforce do so at the expense of the young. When grandma finally retires, we will have 30 year olds with no work experience or near useless work experience.

Younger workers less trained And we train them less… Ugghh OECD study of work-based skills taught in schools in 29 countries U.S. ranks dead last Wharton School professor Peter Cappelli: In 1979, young U.S. workers: average of 2.5 weeks of training / year By 1995, average company offered just under 11 hours per year. By 2011, Accenture found that only 21% of all U.S. employees had received *any* employer-provided training in the past five years.

Capability mismatch “In 2011, when US unemployment exceeded 9 percent, a McKinsey Global Institute survey found that 30 percent of US companies had positions open for more than six months that they could not fill. Despite rising educational attainment across advanced economies, by 2020, the United States may have 1.5 million too few workers with college or graduate degrees and nearly 6 million too many who have not completed high school.”

Capability mismatch Up 4.6% McKinsey: Help Wanted Future of Work In 2011, 26 percent of employers in Europe reported having difficulty filling jobs for lack of qualified talent, particularly technicians and engineers—and 80 percent of Japanese companies reported the same problem.9 In another survey, two-thirds of European CEOs have said their key challenge in the next three years is the limited supply of candidates with the right skills.10

Capability mismatch Up 4.6% McKinsey: Help Wanted Future of Work

Nuances of The Great Recession During the Great Recession, what was the highest level of unemployment in the US? What was the highest level for people with a bachelors degree or higher? What was it for those with only a high school diploma? How many recruiters factored this into their strategies?

How recruiters see unemployment… Jobs I might be interested in… via LinkedIn Social Media Manager Requirements: 15+ years in senior roles in marketing 10+ years of digital marketing 5+ years of social media marketing Experience with transportation industry a must Strong preference given for multi-lingual candidates MBA candidates preferred Deep expertise in social media with strong personal brand and large follower networks

Geography mismatch McKinsey: Help Wanted Future of Work

Structural unemployment “Firms have jobs, but can’t find appropriate workers. The workers want to work, but can’t find appropriate jobs. … Whatever the source, though, it is hard to see how the Fed can do much to cure this problem. Monetary stimulus has provided conditions so that manufacturing plants want to hire new workers. But the Fed does not have a means to transform construction workers into manufacturing workers.”

Who costs more: internal or external? One final wrinkle: Who costs more: internal or external? Who performs better?

External Hiring Costs More Delivers Less External hires aren’t as productive as internal hires; new research suggests that it takes 2 years to get “up to speed” External hires average shorter tenures than internal hires External hires average lower performance reviews Hiring outside = risk to top performers and high potentials Why?

External Hiring Costs More Delivers Less External hires aren’t as productive as internal hires; new research suggests that it takes 2 years to get “up to speed” External hires average shorter tenures than internal hires External hires average lower performance reviews Hiring outside = risk to top performers and high potentials “Lack of career development” is #1 reason for dysfunctional turnover “Training and development opportunity” is #1 driver of employee engagement “More opportunities to do what I do best” is #1 driver of employee engagement

External Hiring Costs More Delivers Less External hires aren’t as productive as internal hires; new research suggests that it takes 2 years to get “up to speed” External hires average shorter tenures than internal hires External hires average lower performance reviews Hiring outside = risk to top performers and high potentials “Lack of career development” is #1 reason for dysfunctional turnover “Training and development opportunity” is #1 driver of employee engagement “More opportunities to do what I do best” is #1 driver of employee engagement Despite higher costs, external hires “get significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs.” “Why External Hires Get Paid More, and Perform Worse, than Internal Staff” Knowledge@Wharton

OK, so firms can’t find critical talent

But they spend crazy money searching

Only to pay more for less,

And this problem is likely to get worse…

What does this mean to you?

“Companies should forecast, on a job family basis, how their current workforce will develop over the next 5, 10, and 15 years – taking into account expected recruitment, retirement, and retention. Next, companies should simulate different strategic scenarios to determine the number and type of human resources that their business will demand on a job family level over the same period. Once companies calculate the difference between their expected demand for and supply of labor, they should take dedicated steps to address anticipated shortfalls and surpluses. These steps include redeploying surplus resources to critical functions that are being drained of human resources, boosting internal training so that the current workforce can adapt and shift as needed, or even attracting and retaining retired or semi retired workers in areas with identified future shortfalls.”

redeploying surplus resources to critical functions that are being drained of human resources or even attracting and retaining retired or semi retired workers in areas with identified future shortfalls How do you know who to move? And how will they get productive? And how do they get back up to speed? boosting internal training so that the current workforce can adapt and shift as needed How do you identify the best candidates? And how will do you develop new capabilities?

The new talent landscape Build? Buy? Rent? Virtualize? Move people around? The ability to deliver *capability* in response to strategic shock and market opportunities will be a key business differentiator. And how do they get back up to speed? boosting internal training so that the current workforce can adapt and shift as needed And how will do you develop new capabilities?

THE LEARNING CONNECTION

Addressing the problem Know the team you have Know the team you need Invest in long-term capability development Empower workers to do this themselves Switch your default to hiring from within

(1) Know Your Team Job history Work experience prior to current role Expertise developed outside of work Self-identified expertise & peer-identified expertise Career aspirations Top performers and high potentials Flight risk Retirement plans

Top performer data is ugly 80% of companies don’t know who is a flight risk. 78% of companies don’t know who is on a succession plan. 80% of companies don’t know who has a career path. 65% of companies don’t know much about who they’re retaining. 84% of companies don’t if their development plans are working. 65% of companies don’t know much about Hi-Po’s.

Know the people you have 48% feel that their work history & experiences are not leveraged by their employer 75% say that their skills go unnoticed Taleo Research, UK Social Talent Management Report - http://www.taleo.com/researchpaper/uk-social-talent-management-report-2012

(2) Here to There Understand the capability requirements for the business New strategic plans? Geographic expansion? Map the gaps: what are you missing in order to meet objectives Assess the best approach to fill-in gaps Hire, contract, outsource Skill, knowledge, capability development Talent transfer – talent mobility Virtualize

Workforce Data – What do we know Employee Engagement Competency Skill Gap Analysis Open \ Vacant Positions Total Turnover

(3) Long-term Roadmap What is the relationship between various roles? Which roles commonly lead to which other roles? What paths did top performers take? What skills, role assignments, knowledge are required? Which roles share similar requirements – job families? For critical and strategic roles, we need to think differently: Use paradigms of leadership development, cohorts and stages Use paradigms of pilot and surgeon training Scaffolding models, coupled with social models

Competencies are well-established 75% of companies use job / role competencies for selection & promotion Over half of organizations tie competencies to career planning 91% report training improvements when training is tied to competencies http://www.ddiworld.com/DDIWorld/media/trend-research/jobrolecompetencypractices_es_ddi.pdf?ext=.pdf The next step is to think about building capability. Capability is about business execution and implies not just competency, but experience, judgment, decision-making. You *develop* capability over time.

(4) Empower the Team Employees need to own their own career development Make sure it’s easier to move in your company than leave it Enable personal gap assessment between current skills and capabilities and desired career objectives Map capability requirements to training and learning interventions Formal content: WBT, classes, video, documents Social content: CoP, discussions, expert location, wikis Action learning: related roles, activities, stretch assignments Involve the team in defining needs and interventions

(5) Switch Your Default External hiring costs 18-20% more than internal hiring External hires perform worse on performance evals for 24 months High external hiring rates increase risk to existing team #1 reason for dysfunctional turnover in mature economies? Lack of career opportunities #1 contributor to job satisfaction? “more opportunities to do what I do best,” “career development opportunities and training” (tie) Hiring from within means lower cost to new hires, better performance, higher engagement, and reduced turnover Knowledge@Wharton

Strategic Implications for You

Your strategic role Senior leaders are thinking about talent; it’s a key concern Agility is also top of mind due to recent and current world events Demographic shifts will increase this focus in coming years Competitive global pressures will increase this focus Educational shortfalls will increase this focus Get ahead of this need by focusing of capabilities-driven learning programs Understand strategic direction for the future Map the gaps Develop a plan Earn your seat