By Maria Frank and Adam Harrell

Evolving Global Trends

Over a decade into the 21st Century, the global workforce is at a crossroads: in the midst of the most damaging financial crisis since the Great Depression and a deepening Euro Crisis, workers are more restless than ever. Rapidly advancing technology and shifting demographics are blurring traditional borders and changing the way business is done on a fundamental level. In response to these evolving global trends, multinational corporations are focusing their attention on global talent management to combat low employee engagement, human capital challenges, and the prospect of ushering an entirely new generation into the workforce.

EMPLOYEE ENGAGEMENT

Employees all over the world are showing fatigue in response to the lengthy period of stress, uncertainty, and confusion brought on by the 2008 financial crisis, lowering overall engagement levels. Engagement is an underlying psychological state in which employees feel a vested interest in their organization’s success. Engaged employees are more productive, seldom absent from work, and typically stay with an organization longer. Disengaged employees, on the other hand, cost the US economy alone as much as 350 billion dollars per year in lost productivity and turnover. For organizations, the difference between an engaged and disengaged workforce can ultimately mean success or failure.¹ Apropos, companies with above average engagement levels enjoy 6 percent higher net profit margins on average.² According to Aon Hewitt, the overall global employee engagement score has been steadily declining since 2009, and dropped to 56 percent in 2010, hitting a 15-year low.³ Based on research conducted in late 2011, Mercer estimates that 32 percent of employees are “planning on leaving” their employers, versus only 19 percent two years ago.⁴ Survey data also indicates that employees have declining faith in leadership effectiveness, along with a lack of confidence in leaders’ ability to retain top talent.⁵ Because of these disconcerting trends in employee engagement, acquiring, keeping, and developing talent has become the dominant focus in the global marketplace for the foreseeable future.⁶

GROWTH MARKETS

Predictably, America and Europe’s economic woes have created opportunities in other countries. China, for example, increased its share in the advanced manufacturing market by 1,200 percent between 1997 and 2010, dispelling the widespread belief that their economic successes are concentrated in low value, labor intensive products.⁷ Similarly, Brazil’s GDP hit 7.5 percent in 2010, the highest level of production seen there in 25 years.⁸ Meanwhile, India’s large pool of skilled workers along with strong domestic demand has made it surprisingly resilient to the economic doldrums of the last decade.⁹ Russia, uniquely positioned as the world’s number one exporter of natural gas, second largest exporter of oil, and third largest exporter of steel,¹⁰ has always shrugged off the ups and downs of the world economy. Growth markets such as Brazil, Russia, India, and China (also known as the BRIC countries) offer an amount of financial stability in uncertain times, and as a result are filling the economic vacuum left by the financial crisis of 2008.

HUMAN CAPITAL

Despite the prospect of financial stability, there are human capital factors in the BRIC countries that may hinder growth if left unchecked. In Russia, citizens are seeing opportunities across the country narrow for even those with good jobs. High cost of living expenses, poor medical services, and widespread government corruption have spurred an entire generation of young, talented workers to seek employment outside its borders.¹¹ In China, fertility rates are at historic lows due to the country’s controversial “one-child” policy.¹² It is estimated that by 2030 China’s workforce will not be able to operate at the level it does today – a majority of the current workforce will be at retirement age, and there will be a critical shortage of skilled young workers to replace them.¹³ Brazil and India face no such labor shortages in the future, but rampant inflation and sagging infrastructures are already beginning to have negative effects on their labor pool.

GENERATION Y

The challenges of keeping employee engagement up and responding to human capital trends in a timely manner will be exacerbated by shifting demographics within the workforce itself. Currently, a full 50 percent of the world’s population is under thirty years old, and 47 percent of all employees were born after 1977.¹⁴ By 2025, Generation Y (ages 18-29) is expected to comprise 75 percent of the global workforce, and they are already proving to be a difficult group to attract and manage. Retention rates for Gen Y are exceptionally low compared to other generations, as they are defined by an aggressive entrepreneurial spirit. Only 7% of Gen Y works for a Fortune 500 company. Gen Y-ers prefer startups and smaller companies instead, where they can have more of an immediate impact. They are a career-minded generation, and are more apt to leave a job if they feel under-stimulated. On average, they only spend 2 years at their first job, and will change jobs multiple times in their careers.¹⁵ Gen-Y has also fundamentally changed the way we communicate with each other in the workplace by embracing social media as a lifestyle. Today, 80 percent of all corporations use social media sites like Facebook and LinkedIn to assist in recruiting.¹⁶ While it is yet to be seen exactly what kind of impact social media will have on the workforces of the future, it is clear that Gen Y is actively shaping corporate culture and expectations, and will soon be the dominant generation in the workforce.

EMPLOYEE RECOGNITION

Historically low employee engagement levels, fluctuating global markets, and a growing generation gap make keeping up with global trends a daunting task for HR representatives. Employers are increasing focus on human capital by identifying and actively engaging the most critical employees, rapidly aligning their workforces around change, and getting the most out of every HR dollar spent.¹⁷ 86 percent of multinational organizations mitigate low employee engagement with a formal reward and recognition
strategy – mostly traditional programs that honor years of service. Additionally, a growing number of organizations are leveraging newer, nontraditional programs that can have a more direct impact on retention and attract Gen Yers, such as peer-to-peer recognition, onboarding programs, social media-inspired features, and custom initiatives that motivate specific workplace behaviors.¹⁸ As the global workforce becomes more sophisticated, the technology behind recognition programs is rapidly advancing as well,
and can provide sustainable human capital strategies.

PREPARING FOR THE FUTURE

Preparing a global workforce for the future begins with focusing on the key drivers of employee engagement. Employees want to be treated with respect, have a sense of ownership in their company’s success, feel personal accomplishment in their work, and have confidence that their organization is headed in the right direction.¹⁹ A modern recognition program can engage your employees through a variety of methods, and lay down a clear strategy for future human capital challenges. Engagement is crucial to
productivity, better financial performance, better employee performance, and restoring the world economy. Now more than ever, business leaders should be measuring and fostering engagement inside their own organizations.

CITATIONS

1 – Towers Watson 2012 Global Workforce Study
2 – Towers Watson 2012 Global Workforce Study
3 – Aon Hewitt – Trends in Global Employee
Engagement
4 – Mercer – What’s WorkingTM Around the
World 2012
5 – Aon Hewitt 2011 Talent Survey
6 – Aon Hewitt – Trends in Global Employee
Engagement
7 – US Business and Industry Council
8 – CIA World Factbook 2012
9 – CIA World Factbook 2012
10 – CIA World Factbook 2012
11 – Wall Street Daily – http://www.wallstreetdaily.com/2011/11/28/russias-new-brain-drain/
12 – Science Mag – http://news.sciencemag.org/scienceinsider/2011/04/declining-chinesebirth-rate.html
13 – Aon Hewitt – Shaping the Workforce of the Future
14 – Bersin & Associates – Predictions for 2012
15 – Millennial Branding Study - http://millennialbranding.com/2012/01/millennial-brandinggen-y-facebook-study/
16 – Jobvite Survey - http://www.earthtimes.org/articles/show/jobvite-social-recruitmentsurvey-companies,831809.shtml
17 – Aon Hewitt 2011 Talent Survey
18 – WorldatWork – Trends in Employee Recognition
19 – ModernSurvey Spring 2012 National Norms Study