Human Capital Intelligence - 3/5/2024
Changing preferences set stage for a succession crisis | Cultural insights | AI brings labor cost savings | Death of the yearly review | Skills-based hiring falls short
Welcome to the latest edition of Human Capital Intelligence. As always, we would love to hear from you at ken@stibler.me with news ideas, feedback and anything else you find interesting.
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By Ken Stibler; Powered by Reyvisum Analytics
What’s Working
Fewer employees aspire to C-Suite roles
Only 30% of American workers now aspire to C-Suite leadership roles, a marked decline compared to previous generations. The nature of ambition in the workplace appears to be shifting, with factors like work-life balance, flexibility, and personal fulfillment taking priority over career progression for many employees.
Millennials showed the highest C-Suite aspirations at 39%, but even among younger workers, the drive for executive titles seems to be waning. Today's employees are less motivated by recognition, status, and the challenge of leadership roles. For most workers, ‘fair’ compensation remains the biggest driver of job satisfaction and engagement.
As expectations change, some observers argue that Return-to-Office mandates may be a way for companies to reassert control and shift blame for poor performance onto remote employees. While the debate continues over finding the right remote-office balance, it's clear the pandemic has catalyzed a reevaluation of work priorities for both employers and employees. Traditional incentives like advancement and leadership status are becoming less important motivators.
Younger workers require reengagement after years of increasing disillusionment
Recent data reveals alarming declines in engagement among millennial and Gen Z employees over the past few years. Gallup found engagement rates fell 7 points for older millennials and 5 points for younger millennials/Gen Z since 2020. In contrast, baby boomers grew slightly more engaged.
Younger workers feel increasingly disconnected, with less sense of purpose, opportunities to develop, and caring relationships at work. This detachment makes them more likely to job hunt. Reengaging younger staff requires clearer vision/values, better manager coaching, more in-person time for development, and listening to their ideas.
The generational engagement gap poses retention risks as millennials enter management and become increasingly critical for organizational success. While the instinct can be to clash over different expectations and the sense of entitlement, engaging young employees is both a business and societal opportunity to strengthen workforces.
Fostering stronger mentorship connections, providing clear opportunities for growth, and having clear areas of flexibility is key to preventing a "lost generation"unable to thrive in the workforce.
AI experiments bring promised productivity
Recent data reveals that AI tools are starting to deliver on long-promised workplace productivity gains as adoption increases. Slack found guidance from employers boosts employee experimentation with AI sixfold. Accenture estimates banking tasks constituting 73% of employees' time could be transformed by AI.
Accenture says generative AI could boost bank productivity 30% in 3 years and is already automating over 90% of some manual jobs in finance. Klarna's AI customer service chatbot already handles 2.3 million conversations, achieving satisfaction ratings on par with human agents, and leading to large-scale labor cost reductions.
While AI's potential workforce impact raises concerns, initial corporate experiments demonstrate significant productivity improvements are achievable. But organizations, especially small-to-medium sized firms, must provide guidelines and training to maximize human-AI collaboration. With the right preparation, workers can focus less on repetitive tasks and more on value-added activities.
Reading List
Employee feedback evolves amid an increasing need for clarity
The annual performance review is giving way to more frequent, candid feedback as companies seek greater workforce efficiency and clarity, the WSJ reports. Younger leaders are driving more transparent cultures where peer-to-peer critiques during meetings and everyday conversations are the norm.
Read more about the benefits of more regular feedback.
Skills-based hiring more rhetoric than reality
Many companies are failing to make good on pledges to increase skills-based hiring and drop college degree requirements. About half of employers continued hiring the same proportion of degreed candidates after removing education prerequisites from job postings. Some even backslid after initial progress.
Read more about why employers are still failing to tap into the largest US labor pool.
Using cultural insights to support M&A integration
44 percent of M&A leaders cited lack of cultural fit and friction between acquirer and target as top reasons integrations fail according to a recent McKinsey survey. Cultural issues can delay value capture and prolong integration efforts, even when the impact is less severe. Still, many M&A executives admit they gave culture too little attention, too late in the process.
Read more about how ‘culture data’ can be critical for merger success and more.
Delegation requires process, not just trust
While trust between people is crucial, leaders must also build organizational processes for successful delegation, according to new research by MIT Sloan. Reliable employees may still fail at delegated tasks if the underlying process is unreliable.
Read more about how to support mid-level managers in delegation.
Stat of the Week
In Other News
Peter Thiel’s $100,000 Offer to Skip College Is More Popular Than Ever: More Americans are rethinking the value of a college education. (Wall Street Journal)
New Survey Reveals that Almost 80 per cent of Women Face Ageism in the Workplace. (Yahoo Finance)
An Unanticipated Retirement Wave Is Happening Right Now in the US. (SHRM)
Child care benefits at work: Employers are increasingly offering resources to parents with daycare needs. (CNN)
Millennial and Gen Z employees admit to being distracted at work because of financial worry. This could save them. (Fast Company)
What HR needs to know about lifestyle spending accounts. (HR Brew)
Congressman seeks to block new FLSA overtime rule in latest pushback against agency. (HR Dive)
How to save HR from itself. (Financial Times)
Here’s how some are using Apple Vision Pro for work. (WorkLife)
Ethics Ratings of Nearly All Professions Down in US. (Gallup)