Global Workforce Gender Diversity: It’s Not Happening

Data Point Tuesday

Focusing on diversity in the workplace is an essential step in building a great culture. Advancing gender diversity is a key focus area that organizations should look to, armed with the knowledge that there is still significant progress to make before most workplaces achieve true gender equality. Women are still significantly underrepresented at all levels in the workforce worldwide. Mercer’s 2013 Human Capital Report found that only 60%-70% of the eligible female population participates in the global workforce, while male participation is in the high 80’s. In a recent diversity study by Mercer based on 178 submissions from 164 companies in 28 countries covering 1.7 million employees, Mercer explores this issue and proposes solutions. Three key facts emerged from Mercer’s data:

  • Women continue to trail men in overall workforce participation and in representation at the professional through executive levels
  • Current female hiring, promotion, and retention rates are insufficient to create gender equality over the next decade
  • Current talent flows will move more women into top roles over the next decade but not in North America

Labor Force ParticipationHow can organizations change their approach to diversity in a way that effectively combats these gaps? Mercer’s study highlights the current key drivers of gender diversity, aiming to help organizations understand what drives diversity the most and help focus their approach.

The data show that organizations who have broad and holistic approaches to support female talent have more comparable talent flows for women and men than those who do not. Additionally Mercer finds that formal accountability has little significance on increasing gender diversity when removed from real leadership engagement. At organizations where leaders are active and engaged in diversity programs, more women are present throughout the organization, in top leadership roles, and there is more equality in talent flows between men and women. Another key driver of gender diversity is that active management of talent creates more favorable results than traditional diversity programs that are put in place to support women’s needs. Organizations that actively manage pay equity vs. making passive commitments ensure that women and men have equal access to profit and loss responsibilities, and proactively support flexible work arrangements driving gender equality at a greater rate than those with traditional diversity programs. Nontraditional solutions and innovative programs impact organizations long- term ability to retain female talent. Specifically, customized retirement solutions and health related programs have been successful in helping organizations to better attract, develop and retain female talent.

Mercer points out a disappointing statistic from the World Bank, which reports that global labor force participation rates for women ages 15-64 have actually declined over the last two decades. The discrepancy between female and male representation is even higher in top roles. Women make up less than 5% of CEOs at Fortune 500 companies, hold less than 25% of management roles, and just less than 19% of board roles globally. Since the 1980’s leap in pay equality for women things have since stagnated. Clearly new strategies are required. Making sure that women are equal participants in the workforce has broader implications than just fostering great culture. Economists have predicted that eliminating the gap between male and female employment rates could boost GDP in the U.S by 5%, in Japan by 9%, in the UAE by 12%, and in Egypt by 34%.

Organizations can take reports such as Mercer’s and use them as a roadmap. The key drivers of gender diversity listed there can easily be leveraged as a reference when identifying you own diversity strategies and areas of focus. For a more expanded list of ways organizations can create greater diversity, take a look at Mercer’s full report.

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Flexible Work Arrangements Fever

Data Point TuesdayHow would you describe flexible scheduling? Does a standard definition come to mind? In a new SHRM survey on FWAs (flexible work arrangements), which surveyed 525 HR professionals from a randomly selected sample of SHRM’s membership, “FWAs,” “flextime,” “workplace flexibility,” “flexible scheduling,” etc. are defined under the following definition: “… a dynamic partnership between employers and employees that defines how, when and where work gets done in ways that work for everyone involved (including families, clients and other stakeholders).” This seems a definition with an interesting amount of ambiguity to describe a practice that ultimately, is extremely different from company to company.

For organizations that responded as offering FWAs, 54% offered sabbaticals, 51% offered paid time-off for volunteer work, and 46% offered part-time/reduced hour schedules on a formal basis. Other FWAs were more likely to be offered informally.

FWA Options Graph

Additionally, among organizations that reported offering FWA’s, more than 50% responded that the following FWAs were available to “all or most employees”: paid time-off for volunteer work (82%), unpaid time off for volunteer work (72%), break arrangements (61%) a part-time transition after a major life event (58%) and flex time with “core hours” (54%). Fourth-fifths of responding organizations reported that 13 out of 17 FWAs were somewhat or very successful (80%-90%). The four FWAs that responding organizations reported finding less successful were unpaid time off for volunteer work (78%), phased retirement (74%), shift arrangements (73%), and sabbaticals (66%). Despite the availability of FWAs at responding organizations (both successful and less successful FWAs), the majority of organizations were likely to report that only 1%-25% of their eligible workforce used each of the FWAs offered.Success of FWAs

If an organization does offer flexible work arrangements, how are their employees finding out about these programs? According to SHRM’s survey, responding organizations that offered at least one type of FWA indicated employees most often learned about their organization’s FWA options from:

  • HR staff (15%)
  • Employee handbook or policy and procedures manuals (18%),
  • During orientation/onboarding (19%)
  • Line manager/supervisors (27%)
  • During the recruitment or interview process (30%)
  • While on the job (50%)

SHRM’s data highlights not only the rise of FWAs within organizations but that they are an increasingly desired organizational practice amongst employees. 32% of responding organizations indicated that requests for FWAs at their organization had increased in the past 12 months, while only 3% indicated those requests had decreased.

SHRM’s data also indicates that telecommuting as an FWA option offers potential increases in employee productivity. Of the 39% of responding organizations that indicated they offered employees the option to telecommute, one-quarter indicated the productivity of employees who were previously 100% onsite increased, and one-third indicated absenteeism rates had decreased. When SHRM asked organizations about changes in FWAs and telecommuting over the next five years, the overwhelming majority of organizations stated it was somewhat or very likely that FWAs (89%) and telecommuting (83%) would be more commonplace in five years. Nearly half (48%) of these organizations stated it was somewhat or very likely that FWAs would be available to a larger proportion of their organization’s workforce in five years, while 39% indicated it was somewhat or very likely that a larger proportion of their organization’s workforce would be telecommuting.

SHRM’s FWA survey points to a number of important take-aways for organizations’ flexible scheduling policies, such as the reported positive impact of FWAs on productivity, job satisfaction, retention and employee health. This indicates that more organizations could benefit from offering FWAs, and those that already offer these options may find themselves with a competitive advantage. Despite the positive outcomes of flexible work arrangements, SHRM’s survey also highlights the low level of utilization by many employees. Organizations should make sure the decision to not partake in FWAs does not stem from job security fears, or culture perceptions that may make using FWAs seem like career limiting moves. Managers must remember that as employees are most likely to learn about FWAs on the job, their role is vital to the success of FWA programs. HR needs to ensure that managers are aware of all available FWA options, have proper training on how to inform employees about FWAs, and that they “practice what they preach” by utilizing such programs themselves.Next 5 Years Graph

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Supply Chain Management: Closing the Skills Gap

Data Point TuesdayIt’s an issue that organizations seem consistently faced with today: a lack of skilled workers that can further their growth, success, and ability to compete with competitors. This “skills gap” is explained by the U.S Chamber of Commerce Foundation | Center for Education and Workforce’s new report, as a result of education and workforce systems in the U.S that are failing to keep pace with the changing needs of the economy. So how do we remedy this talent shortage and close the skills gap? This is a hot topic among organization leaders and management, and USCCF’s report offers an interesting strategy that, while different, may be an actionable way for organizations and institutions to start remedying this challenge. The strategy proposes to apply a supply chain management approach to talent, leveraging lessons learned from innovations in supply chain management and engaging employers to expand leadership roles, acting as “end-use customers” of education and workforce systems. USCCF’s approach, dubbed talent pipeline management, is expected to provide more effective transitions for students into the workforce and improved career advancement for current workers. Talent pipeline management foresees a demand-drive approach to closing the skills gap. This approach is intended to create and share value among all partners in the talent supply chain.

USCCF’s report states that 92% of executives believe there is a serious gap in workforce skills, and nearly 50% are struggling to fill jobs. If left unaddressed, they hypothesize that the skills gap could cause more than 5 million positions to go unfilled by 2020, an issue likely to be exacerbated by increasing retirements and a shrinking workforce. Employers, however, have substantial resources they can leverage to engage this demand driven system. Employers invest upwards of $486 billion each year on training that is almost exclusively focused on upgrading the skills of their current employees.Investment in Workforce Education and Training

USCCF points to a supply chain management approach to talent recruitment and development to help organizations stay competitive in today’s economy, explaining that, “The conditions driving that perspective—such as growing business uncertainty and longer lead times to fill positions—are similar to the challenges that led to innovations in supply chain management”.

Three key foundational principles are identified as forming the basis of a demand-driven system, and provide the framework for the “talent management pipeline”:

  1. Employers Drive Value Creation—Employers play a new leadership role as the end-customer in closing the skills gap for those jobs most critical to their competitiveness.
  1. Employers Organize and Manage Scalable Network Partnerships—Employers organize and manage flexible and responsive talent pipelines in partnership with their preferred education and workforce providers.
  1. Employer Measures and Incentives Drive Performance—Employers work collaboratively with their partners to develop measures and incentives designed to reinforce and improve performance across all partners.

For employers to be successful in this strategy for talent acquisition and development, they must link their talent strategy to their business strategy:Identifying Core Capabilities

Each capability may require a different sourcing method, and USCCF’s report urges organizations to move away from talent acquisition strategies of the past like “spot marketing” through job posting and screening:Talent Pipeline Strategies

Once organizations have developed talent pipeline strategies, they should decide what can be done in-house and what should be done through external partners:Simple vs. Extended Value Chains

Once a talent pipeline network and demand planning system is in place, organizations must measure performance the of this system based on whether they are meeting the needs of the end-customer and creating value across the full network of partners, looking at factors such as time, cost, and quality across all internal units as well as education and workforce partners. Organizations can additionally support their leading providers through incentives (such as work-based learning opportunities, performance-based funding, and equipment) as well as through continuous improvement strategies.

For more detailed information on the implications of the talent management pipeline on key stakeholders such as education and workforce providers, students and workers, and policymakers, make sure to check out the U.S Chamber of Commerce Foundation’s full report.

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CHRO to CEO: Stairway to Heaven

Data Point TuesdayThe Korn Ferry Institute recently released a report that looks at the leadership traits of “best-in-class” executives, and the important relationship between Chief Executive Officers and Chief Human Resources Officers. The report “CEOs and CHROs: Crucial Allies and Potential Successors” confirms that for C-suite roles technical skills are just a fraction of what makes for successful leadership, and that executives in the top 10% of pay for their function tend to have leadership styles that motivate employees, develop future leaders, and create appropriate cultures. The workplace today is shifting to place greater value and more intently evaluate leaders on such areas as how they treat people, foster the right work environment, and encourage future leaders. As Korn Ferry’s report asserts, this type of evaluation is warranted because “well-managed talent, leadership, and culture are what enable sustainable customer, operational, and financial results.”

After analysis, Korn Ferry found that across functions, best-in-class leaders have greater levels of emotional awareness and competence in six key areas:

  • Tolerance of ambiguity
  • Empathy
  • Confidence
  • Composure
  • Energy
  • Adaptability

These best-in-class leaders are “change champions” who are comfortable not having all the answers as well as being around a diverse group of people, enabling them to see from perspectives different than their own. They are empathetic towards others and quick to read a room, have the confidence to take risks and make decisions, remain composed in high-pressure situations, are energetic and enthusiastic, and are adaptable and easily able to accommodate others methods.

Korn Ferry emphasizes the importance of CEOs having allies that will tell them more than “what they already know” and allow them to leverage deep insights on culture, leadership, and talent. CHROs are uniquely positioned to fill this ally role because in many organizations, a great deal of expertise on the importance of leadership, culture, and integration is concentrated in HR. CEOs are increasingly seeking broader insight from their CHROs. This touches on the expanding or redefined role of HR in today’s workplace. In recent years, HR has moved away from being solely an administrative function that defined terms and conditions of work. HR practices now often help to implement strategy at the organization level, and as organizations seek to match their brands with their organizational culture, CHROs find themselves in an expanded role uniquely suited to support their top executives.

After looking at research from the University of Michigan’s Ross School of Business and the RBL Group, Korn Ferry determined that high performing CHROs master six competency domains that are also essential to CEO success:

  • Strategic positioner
  • Credible activist
  • Capability Builder
  • Change Champion
  • HR innovator and integrator
  • Technology (information) proponent

These HR professionals “go beyond knowing the business to helping CEOs focus strategic direction and align choices that create value for investors and customers and respond to changing external conditions.” They are able to build trusting relationships with key stakeholders like customers and investors, initiate and sustain change, recognize the importance of culture and foster theirs, innovate and integrate HR and people practices, and use workforce analytics and technology to enhance HR practices and make informed decisions.

Over the last several decades, Korn Ferry has profiled leadership styles of thousands of senior executives, including CEOs, CHROs, CFOs, CMOs, and CIOs. Their assessments gauge how much importance an individual places on 14 attributes that have been sorted into three categories: leadership style, thinking style, and emotional competencies. While the graphs below show that most best-in-class executives have a similar leadership profile, it’s clear that CEOs and CHROs are very much “cut from the same cloth”.
thinking styles chartleadership styles chartemotional competencies chartWhen Korn Ferry calculated the Euclidean Distance from the profile of the best-in-class

CEO (in which a lower number indicates more similarity), they found that overall, best-in-class CHROs (distance .735) are closer to CEOs across 14 traits than are CFOs (.82), CMOs (1.039), and CIOs (1.031).

The similarity in profiles between CEOs and CHROs helps to support the earlier explanations as to why CEOs may turn to CHROs as a main strategy ally and leadership/talent coach. Korn Ferry proposes, too, that as we continue to see these more rounded and fluid HR roles, CEO successors may come from HR in addition to more traditional areas like finance, marketing, operations and IT. As CEOs increasingly manage organizational challenges as well as customers, products, and financial concerns, CHROs may offer unique skills as a successor that others do not. Already we see that CHROs match CEOs’ leadership profiles as well or more than any other executive:Score Difference by Executive chart

Korn Ferry points out that of course, CHROs will not be considered for succession without experience in business operations. With this foundation though, top CHROs could excel as CEOs, bringing specific desired attributes such as: deep insights about their organization, high self-awareness, excellent people managing skills, and the knowledge of how to serve external stakeholders through internal actions. In short, don’t be surprised if savvy, best-in-class Gen X CHROs start replacing the aging Baby Boomer CEOs.

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Peer Recognition, Culture and Going the Extra Mile

Data Point TuesdayWhat motivates employees? It is money? Feeling valued at work? Connecting with a company’s social mission? All these are good answers, but a new study from TINYpulse that analyzed over 200,000 employee responses relating to organizational culture found that peers and camaraderie are the #1 reason employees go the extra mile. While peer recognition and camaraderie might seem like two aspects of company culture that happen (or need to happen) organically, there are ways organizations can promote a culture that fosters peer recognition and camaraderie. As a potentially overlooked area of focus for organizations, peer recognition is a valuable way to foster a positive culture and create one where employees regularly “go the extra mile.” 44% of employees surveyed report that when they are provided a simple tool to do so, they will provide peer recognition on an ongoing basis. The happier the employee, the bigger the praise: 58% of “happy” employees report giving regular peer recognition, compared to 18% of the least happy employees. As TINYpulse states, “Professional happiness encourages 3X more recognition!”Nov 18 2014 HappinessThinking that money motivates employees seems an antiquated line of thought when looking at TINYpulse’s data. In fact, money isn’t even among the top 5 factors that motivate employees to go the extra mile. Out of 10, “money and benefits” ranks #8. The top 3 motivators for employees to go the extra mile are:

  • Camaraderie/peer motivation
  • Intrinsic desire to do a good job, and
  • Feeling encouraged and recognized

Motivation ChartFeeling encouraged and recognized at work can stem from a number of different sources, but regardless of where recognition most often occurs, TINYpulse’s data show that employees feel significantly undervalued overall. On a 1-10 scale, just 21% of all employees gave a score of nine or ten for feeling valued at work, meaning that 79% of employees feel undervalued, or not valued at all.

Value ChartCamaraderie and recognition have broader implications than just creating a more motivated workforce. Workplace cultures that embrace these are no longer expected to be just the few and far between: job seekers expect this of organizations, and they are ways to not only attract talent, but to retain it. Millennials especially (as I’ve discussed in past posts) place a high value on camaraderie and actively seek out such work environments. TINYpulse sites a recent report by Bersin and Associates, which found that employee engagement, productivity, and customer service, are about 14% better in organizations where recognition occurs.

Consider how your organization recognizes its employees – how do you recognize peers? Do employees at your organization feel valued – do you? Maybe it’s time to institute some formal recognition programs, which we here at Great Place to Work consistently see as best practices at organizations on the FORTUNE 100 Best Companies to Work For list. “Ramping up” recognition programs doesn’t need to mean excessive time or investment either. It could be as simple as instituting a gold star program, installing a white board in the break room for “biggest save of the week” comments, or having an employee mentor another for an hour on a specific skill. Our advice is to start small, and build on positive outcomes.

But by all means, provide formal and informal ways for your employees to recognize the contributions of their peers – that is, if you’d like more of your employees to go the extra mile for your customers!

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Using Your PTO: It’s the Patriotic Thing To Do

Data Point TuesdayU.S Employees are taking less vacation time today than at any point in the last four decades. In fact, in 2013 employees with available Paid Time Off (PTO) took an average of 16 days of vacation, compared to an average of 20 days in 2000. This is data from a recent report by the U.S Travel Association, conducted by Oxford Economics, which analyzes the impact of forfeited time off. The report’s analysis is based on the Monthly Current Population Survey results reported by the U.S. Bureau of Labor Statistics and a June 2014 survey of 1,303 American workers conducted by GfK Public Affairs and Corporate Communications in conjunction with Oxford Economics. Why are Americans increasingly taking less vacation time, and what’s the impact? Let’s explore…
Annual Vacation DaysWhile missing a few paid vacation days in a year may seem insignificant, Oxford Economics’ report puts such choices into a different perspective. In 2013, Americans used a total of 77% of their PTO, and among employees with PTO an average of five days went unused. With 1.6 of those days being permanently lost, across the workforce, employees ultimately volunteered 169 million days of work. “Volunteered,” sounds even more pleasant that the alternative description, that these employees worked for free. 169 days of forfeited work equates to roughly $52.4 billion in lost benefits. Oxford Economics also points out that taking offered PTO can have significant economic impact. If U.S employees returned to average vacation patterns experienced from 1976-2000 (20.3 days of vacation) annual vacation days taken would increase by 27% and would equate to 768 million additional days of vacation. Using those 768 million days of vacation would result in $284 billion of economic impact (including $118 billion in direct travel spending).

While full-week vacations have declined over the last 35 years, the impact of such a decline has been offset by an increase in the amount of partial-week vacations taken through the mid 1990’s. However, since then, the amount of partial-vacations has steadied out while the amount of full-week vacations taken has continued to decline.
Decline of Full-Week Vacations GraphPTO offered to employees in the U.S. is typically between 11-25 days. Just under 60% of employees earn between 11-25 days of PTO per year, and nearly 25% earn between 11-15 days of PTO annually.

PTO Taken GraphOf employees who have PTO, at least 56% can bank or rollover unused PTO days for later use. But almost a quarter of employees (23.4%) report losing unused PTO days at the end of the year. Employees who can bank or rollover PTO are often faced with caps or expiration dates. For example, 29.7% report that they can only bank or rollover 5 days of PTO or less.

Typically, the higher the income earned, the greater the number of PTO days, but higher income earners also report leaving more PTO days unused. Oxford Economics’ report found that on average in 2013, U.S. employees lost more than 1/3 of their unused PTO and high-income earners lost more than ½ of unused PTO days. Based on total annual income and an assumed 260 workdays, the value of a forgone PTO day was estimated by income group, with this result:

Estimated Value of a Forgone PTO Day GraphOn average, U.S employees give $504 in paid time off to their employers via free work and, overall, give 1.1% of their salary back to their employer each year in the form of free work.

While all this data provides some serious food for thought, and a valuable perspective towards the implications of unused PTO, the most compelling piece of data Oxford Economics report may be this: employees who give up PTO days do not receive bonuses or raises at any faster rate than those employees who choose to utilize all of their PTO. Employees who used most of their earned PTO were just as likely to find themselves with a raise or promotion as those who left PTO unused and they reported being significantly less stressed.

Stressed at Work GraphThe bottom line is that taking earned PTO is important. Not only can doing so reduce stress and help employees create better work/life integration, but taking earned PTO has broader economic implications and holds significant influence on the perception of the U.S workforce’s culture. Check in at your organization, and make sure the culture there is one that encourages employees to take PTO, and, moreover, expects it of them!

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A New Voice Demanding Flexibility: Dads!

Data Point TuesdayThe Working Mother Research Institute (WMRI), in partnership with Ernst & Young, recently released a report aimed at better understanding “how men are navigating the flexible work and home terrain.” Data from How Men Flex, The Working Mother Report is the result of survey responses from 2,000 men and women (evenly split) with questions aimed at understanding the impact of flexible work arrangements on their lives. While the impression may be that flexible work arrangements are greater utilized by female employees, WMRI’s data indicates that flexibility in the work environment is both used and desired by men and women equally. 77% of men report having flexible schedules and 79% state that they feel comfortable using such flexibility. Additionally, 62% of men state that their employers can and do support flexible scheduling. What’s also clear from WMRI’s data is that working mothers aren’t the only people struggling to with balancing work and family. 26% of men report that their employers could encourage flexible scheduling but don’t. WMRI notes that in recent studies both working mothers and working fathers, have almost equally agreed that they feel stressed about meeting their responsibilities in both their work and home environments. Studies have also shown that men are increasingly involved in the balancing act of family and work, something that’s often seen exclusively as a working mother’s issue. WMRI highlights a 2011 report, which showed that fathers spent 7 hours a week on childcare and 10 hours a week on housework, a significant increase from a 1965 study that reported fathers spent 2.5 hours a week on childcare and 4 hours on house work. Breadwinning Mom Graph

The above graph highlights changing perceptions when it comes to work and family; 88% of men report that mothers and fathers should share equally in caring for their children and 83% report that household work should be shared equally as well. Organizations should make sure there is an inclusive focus on flexible scheduling not only because family management is a shared responsibility but also because flexible scheduling benefits employers in several ways. The data show that men with access to flexible scheduling are more likely to say they are happy, productive, have high have morale, good relationships with co-workers, and are overall more satisfied with their job than men without access to flexible scheduling. Satisfaction Graph

Employers who do not provide flexible scheduling lose a valuable tool for attracting talent and could be increasing their risk of losing valuable talent they do have. Right out the door, 54% of working fathers and 47% of men without kids state that they would reject a job with frequent travel due to obligations at home.

What flex options should employers provide? While that depends largely on each organization’s professional needs (and their employees’ personal needs) men surveyed for WMRI’s report state that two days of telecommuting each week work best for them. These respondents report higher levels of satisfaction on almost all fronts compared to those who never work from home. Men who commute two days a week also report higher levels of satisfaction than those who work from home three to five days a week. Working From Home Graph

WMRI’s report also finds that 6 in 10 working dads would work part-time if they could still enjoy a satisfying career; however, 36% of working dads say part-time work is looked down upon at their organizations. Working fathers, like working mothers, also report difficulty in managing boundaries around work, with 46% reporting that their job bleeds into their personal time, compared to 32% of men without children.

The data here suggest that flexible scheduling options are just as valuable for men as they are for women, and, moreover, are an area that many organizations are unintentionally neglecting to make as accessible to male employees. Organizations should make sure to engage all employees in conversations around flex time, and to publicize that flex programs are available and their use is encouraged by all.Downsides Graph

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