Multi-generational workforce performance: Canadian Banks
Release date: June 13, 2012
Host: Vanessa Iarocci
Guests: Philip Hunter, Karen Forward
Running time: 11:55 minutes
In this episode of Strategy Talks, guests Philip Hunter and Karen Forward discuss the challenges of dealing with a multi-generational workforce.
Welcome to Strategy Talks, the business podcast series from PwC Canada. This interview series featuring new topics and guest every episode is designed to give you valuable insight into some of today’s hottest issues affecting your business.
Vanessa: Welcome to Strategy Talks, this is Vanessa Iarocci, your host. Today’s podcast will be about a recently released PwC study of workforce composition and performance in the Canadian banking sector. Joining us today are Philip Hunter former leader of PwC’s Saratoga HR Measurements Services practice and Karen Forward a director in PwC’s People and Change practice.
Welcome Philip and Karen. I am happy to chat with you today about your report about workforce composition. The report itself has four key findings; perhaps Karen and yourself can share some of these with us.
Philip: Sure...so in the last five years, if we look back to 2006, the ratio of Baby Boomers to Generation Y in the workforce was over 6 to 1, so for every six Boomers there was only one Generation Y. Fast forward five years to 2010 and that ratio have shrunk to less than two to one and in a couple of the banks in fact, Generation Y now out numbers the older Boomer generation. But, certainly within the next two to three years you’re going to be looking at Generation Y being the second most populous generation in the workplace after Generation X.
So when you think about the needs and aspirations of Generation Y, how they are changing society and technology with social media and their desire for promotion and cross lateral opportunities and their desire to see a lot more innovation and fast pace in the workplace, that is going to have a major impact for Canadian banks; who really are recognized for their conservatism and playing it safe rather than taking risks. So that’s going to be an interesting dynamic to watch.
One of the other important finding in the study was, Generation X that middle generation that comprises between 55% and 60% of the workforce and really these folks are really in their prime productivity years and prime years for promotions, their promotion rates have actually stagnated from 2006 to 2010; form over 11% to around 9% and that was not expected. We would expect these promotion rates to remain robust, if not increase. Because, again, those folks the majority of the organization, are really moving up in their careers and wanting to take charge of the day-to-day management. Generation Y promotion rates conversely were almost 20% and Boomer promotion rates, as we expected, are quite low as folks in those generation have reached probably the highest level they’ll reach in the workforce and are soon to retire. So our second big finding in addition to the first one where the Boomer ratio to Generation Y is shrinking is that that Generation X in the middle, their promotion rates are not as strong as we would have expected.
Vanessa: Oh that’s really interesting. So we have a situation where we have a multi-generational workforce, but we are skipping a generation — kind of squeezing Generation X. That has some interesting implications for Canadian banks. Before we get into the specific implications, Karen maybe you can go through two of the other key findings in the report.
Karen: Sure....I think there were a couple of other findings; one that was surprising and then one that perhaps wasn’t so much. Just picking up on the generational side as well and then you put the lens of women in banking on top of that. What’s been really interesting to see is that while the progression of women within banks have been really good over recent years what’s interesting to note is that while women have sort of held steady at roughly at 67% of the workforce, at that executive level, it’s pretty much held steady at 25%. I would have expected that to be a bit higher given a lot of the investments that organizations have made in diversity programs. So it shows that there’s still probably a little bit of work to go in that area.
The other finding, probably not so much of a surprise given the economic uncertainty that existed within the financial services sector over the last few years, is the reduced turnover rate within banks. Particularly in the Generation Y group that normally we would expect some people to move around organizations a little bit more. What we’ve actually found, is that those figures have actually fallen where people have remained in their current organization.
Vanessa: How much of that finding do you attribute to the economic crisis in 2008/2009?
Karen: I think a big portion of it is that to be honest, particularly in this sector. Although what we are seeing though is that within that Generation Y grouping is a lot more...I would say... flexibility around the types of roles they are doing within banks as well. They could be staying as well, but also playing in different functional areas rather than choosing to leave the organization to go elsewhere.
Philip: Certainly there’s been a lot of emphasis that the banks have placed on Generation Y in making sure that that generation is listened to and catered to, to an extent, so I think the banks can take some credit for that reduction. But, we would caution that they not get too complacent and think that they’ve kind of solved that turnover issue for Generation Y. Back in 2006 their resignation rate was around 25% and now the banks have got it down to about 15 or 16%. While that’s good, the proof in the pudding will really be in the next two to three years as the economy continues to slowly strengthen and recover. Will those turnover rates stay where they are, around 15% or will they creep back up to the 25%?
Vanessa: That’s a really notable finding. One of the more interesting tidbits I noticed when I was reading the report, is about Gen Y not necessarily being motivated just by money but by they’re being motivated by career progression and certainly that statistics maybe speaks to that fact. What other implications are there for the banking sector?
Karen: I think when you actually take these four findings that we have here and you sort of overlay on top of that the fact that banks are really having to manage risk in their business, they have a lot of regulatory uncertainty that exists around all of this as well. Then you also put on top of that all this emerging technology and social media space that’s now sort of really growing rapidly, you put all of these together and it really does have an impact for the banks on their talent management strategies moving forward.
So for example, some areas that I think the banks can really take a closer look at; one is being really clear about what their value proposition is for their generation, so for their generation X, Y and the Baby Boomers; what is the proposition that they are actually providing for that group of people, not only from a benefits point of view but also from the way that they are being supported in their career progression through the business. The other piece is recognizing that every generation does have a role to play. So, for example, if you think of a banking organization as being made up like a large family, where what we have is, the Boomers for example, are like the parents in the relationship where they have deep experience to share; you have the Generation X which are the ones providing stability in the business and then you have Generation Y who are bring all the energy and new ideas into the business... and it’s really trying to find a way for the banks to have this family all work together as one cohesive unit. And that’s where talent management strategies really help as part of doing that.
The sort of other areas would be around.... I think ....taking a closer look as well at diversity programs and just seeing how affective they are. For example with the findings in this particular report, around women in banking and how they are being supported in their roles and trying to understand a little bit more around why the executive percentage has sort of held steady at 25% and not actually grown. So that would be an interesting area that banks to actually take a look at.
Then finally, the other thing I would say is really taking a closer look at some of those pivotal roles in banks moving forward. The reason why I say that is because the work is changing, over the years the work is actually changing in the way that it’s conducted in banks. An example of that would be this greater emergence of the risks and compliance functions. It’s always been important but it’s even more important now with the way regulation is. The other piece is around how outsourcing is impacting the business and the skills required are more relationship based than they are operational management based. So the way those roles are shaping up is different, so it’s really important for banks to take a look at what are those pivotal roles in those functions and how is a career path being supported for that.
Philip: One of the reasons we really stress these three generations and the need for banks to get it right in how they respond to those different dynamics, is that when we look at the nature of the work in the Canadian banks it’s very different from 30 years ago where it was more hierarchal focused and focus more done on an individual basis to where it is now all about cross functional teaming, project teams, collaboration and it’s even being reflected in the structure of the office that is more open concept environment, more project rooms, team-based rooms. So more and more you got people working together side by side who may be 20 to 30 years apart in age. So these different dynamics that may not have been as present in the more office-bound-with-the-door environment where work was more individual are really coming out now where you’ve got Generation X’s beside Boomers beside Generation Y and these rub points or pain points between these different generations can really manifest themselves. Banks that really get it right and I would say kind of have the secret sauce will be those banks that are able to not cater exclusively to each generation at the exclusion or determent of others, but are really able to respond to each generation’s needs in a way that helps meets the needs of the other generations to really pull, as Karen said, pull that family together and make it healthy and functional.
Vanessa: Thanks Philip and thank you Karen. For more information about workforce issues or to download a copy of the report Value Through Your People, Workforce Performance in Canadian Banking, please visit our web page at pwc.com/ca/saratoga. Thank you.
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