The composition of the US workforce will undergo a major shift in the next decade, as baby boomers leave for the greener pastures of retirement and are replaced by Generation X and, of course, Generation Y. As the talent pool is transformed by younger generations, each different in size, culture, and attitudes, CFOs need to understand the challenges the shift presents for their organizations—particularly finding, training, and retaining qualified finance and accounting professionals.
The Risk of 'Brain Drain'
Before you consider what you're getting, however, consider what you're losing. A major consequence of the demographic shift to younger workers is the risk of losing an organization's human capital when baby boomers leave. Human capital, or institutional knowledge, represents employees' value to the organization. Baby boomers, who have spent years with their employers, understand the people, processes, culture, and environment, and they use that understanding to achieve their organizations' goals and objectives.
Aside from organizational understanding and an advanced skill set, baby boomers also take with them years of built-up business acumen and experience as strategic advisors for the executive and management teams. These are competencies many accounting professionals in Gen Y, and even Gen X, have not been taught in school. In fact, the Institute of Management Accountants, after decades of research examining the gap between what students learn and what businesses need, recently launched a community where accounting and finance employers, professionals, students, and academics can discuss solutions to this "competency crisis." Transferring years of wisdom, experience, and skills to the younger generations will take not only training programs and continuing education; it will also take a developed understanding of each generation's traits and needs.
So, What Are They Like?
Baby boomers are the largest generation and the largest group in the workforce. They capitalized on the post-war economic boom and the optimism of the period, rejected traditional norms during the '60s, and are loyal to their organizations.
Unlike the baby boomers, Gen X experienced economic disruptions as they entered the workforce. The economic crisis of the period may have caused their parents to lose their jobs, resulting in this generation's skepticism and decreased loyalty to employers. Members of Gen X are more comfortable with technology and favor working independently. According to Mecca Salahuddin, director of institutional research, planning, and effectiveness at Alamo Colleges - St. Philip's College, Gen X tends to be cynical, prefers an informal work environment, and lacks people skills. They favor outcomes over process.
Gen Y, which has been examined extensively in recent years, is the newest generation and the most tech-savvy. According to author and business consultant Marcus Buckingham, these "millennials" have been sheltered from failure and criticism, giving them an unrealistic sense of what it takes to succeed in an organization. Known as the "trophy generation" because they received trophies just for participating, Gen Y tends to reject competition and office politics. As Buckingham says",Members of Gen Y expect a promotion just for being on time to work for six weeks straight." Imagine the workplace tensions that could arise from baby boomers who were raised to earn rewards through hard work and professional contributions.
Many Gen Y students assume that showing up in my class is worthy of an A. My strategy is to frame assignments in a way that demonstrates their academic importance as well as their importance to career development. That perspective helps the students understand the classroom provides valuable life lessons and not just grades. I also encourage my students to become involved in professional organizations, to learn how to interact with the type of people who will be their future bosses. Similarly, organizations should partner with universities to interact with faculty and students and identify qualified talent. Speaking to a class or attending career day events are good ways to build a network. My acquaintances within business typically welcome invitations to visit my classes and offer career advice, including job leads.
What CFOs Can Do
How can CFOs bridge the gap between workers to leverage each generation's skills and abilities and collectively support the organization? To start, they need to understand each generation's core characteristics and competencies and develop strategies to facilitate healthy working relationships between them. The three generations should be educated about their differences so they can work together harmoniously without workplace conflicts. Members of each generation also should be reminded of their own capabilities and the skills and knowledge they can pass on to others, which will encourage employees to form the habit of helping their coworkers. Most importantly, thorough understanding of one's colleagues means learning about their individual strengths and weaknesses, rather than relying on generational stereotypes as a basis.
A more systematic way to achieve knowledge transfer is through mentoring relationships. It's often assumed that "mentoring" implies a senior employee coaching a junior one, but the relationship can be reversed with benefits for both newer and experienced employees. For example, take the issue of technology in the workplace and the benefits of pairing a tech-savvy Gen Y employee with a baby boomer.
Not only can critical technology knowledge update the skill set of senior staff; learning from an eager junior employee can also give the "mentee" renewed energy and drive. Enthusiasm is contagious.
CFOs must ensure their organizations don't suffer a brain drain when baby boomers retire. Even though talent can't be retained forever, by establishing mentoring relationships, CFOs can ensure that knowledge can be.
About the author:
Kristine Brands, CMA, is an assistant professor at Regis University in Colorado Springs, Colorado. She is also a member of the Institute of Management Accountants' Global Board of Directors.