Keeping up with multigenerational employees

‘Quiet majority’ of generation X feeling the pinch at financial institutions
By Philip Hunter and Karen Forward
|Canadian HR Reporter|Last Updated: 05/06/2012

Despite a number of global issues affecting financial institutions, including the European sovereign debt crisis and a weak outlook for international growth, Canadian banks continue to leverage their well-managed, well-regulated and well-capitalized standing to actively pursue growth strategies.

At the same time, banks need to remain cautious and mindful of the volatile international financial environment. This includes paying attention to and understanding their most important asset — their people.

From the C-suite to the front line, people have a significant impact on the sustainability and success of banking organizations. Banks need to continue to evolve people strategies to stay competitive, according to the 2012 banking industry PwC report Value Through Your People.

This includes reviewing recruitment strategies and looking at how they can better serve the different generations that make up the industry.

Key themes include the rise of the multigenerational workforce and career progression differences, all of which highlight worrying concerns associated with the “quiet majority” of gen-X employees (born between 1961 and 1981), according to the report.

Between 2006 and 2010, the ratio of baby boomers (born between 1943 and 1960) to gen-Y employees (born between 1982 and 2000) at Canadian banks shrunk from six-to-one to less than two-to-one, with gen Y poised to outnumber the boomer generation within three to five years.

With boomers making up less of the workforce than they used to, it is the gen Ys who may be benefiting more than generation X.

While gen X is by far the largest generational employee group at Canadian banks (representing between 55 per cent and 60 per cent of the workforce), this demographic group is being squeezed at both ends. Baby boomers are delaying retirement and staying on longer — many in senior positions — and younger, confident employees with keen eyes for advancement are aiming to climb up the corporate ladder at a faster rate.

This generation-X squeeze is manifesting itself in promotion rates, which actually fell from more than 11 per cent in 2008 to under 10 per cent in 2010 — an unexpected decline given this generation is in its prime career advancement years.

Promotion rates for generation Y, however, have enjoyed much higher rates. The last three reporting years saw the promotion rate holding stable at close to 20 per cent, with concerns this generation will leapfrog their older generation-X peers.

Other contributing factors relating to the decline of promotion rates may revolve around changes to operating models due to partnering and outsourcing functions (such as technology and customers servicing), leading to a requirement for more relationship skills than traditional management skills. Career paths could also be changing to reflect more stringent promotion criteria.

For example, banks may be redefining career advancement in a manner different than the formal promotion process by placing greater emphasis on secondments and lateral moves across lines of business such as wealth management and retail banking.

Banking on revising people strategies

The banks must not underestimate the challenges associated with sustaining a multigenerational workforce. Each generation comes with a different set of beliefs, values and expectations for the work environment. Seventy-five per cent of Canadian CEOs expect significant challenges recruiting and integrating younger employees, while 60 per cent have made changes to their people strategies in order to retain older workers, according to the 2012 PwC Global CEO Survey.

With Canadian banks in a more stable position than their global counterparts, now is the time to ensure recruitment and people management strategies are effectively aligned with both organizational strategies and the diversity in the workforce. The banks with the most success will comprehend the dynamics and contributions of each generation, and be adept at leveraging generational differences without causing additional stratification.

For example, as baby boomers retire, the banks will feel the loss of organizational knowledge. Providing this generation with opportunities to impart their wisdom and experience upon younger generations will be key to keeping them engaged.

Alternatively, opportunities for generation Y to contribute creative and innovative ideas for workplace redesign and smart use of technological tools will do much to keep them involved and contributing. And, in the middle, gen-X employees can serve as a critical linking mechanism between the other two generations while remaining focused on day-to-day management of the business.

The attraction and retention of top talent will always be a priority for banks. One way to do this is by placing more emphasis on roles that are seen as increasingly pivotal in the dynamic economic climate, including those focused on enterprise risk, compliance, customer management and offshore relationship management.

Future leaders will require a greater breadth of skills and experience, and a collaborative cross-functional orientation to work. Providing these types of opportunities early on may help lessen the emphasis on promotions while providing valuable experience to future leaders.

Canadian banks must realize every generation plays a part and should work towards understanding the unique needs of each generation. The implementation of specific plans to provide each group with the development challenges, recognition and rewards that engage them will be key to people strategies and truly deliver a competitive advantage.

Philip Hunter is Saratoga Canada leader at PwC and Karen Forward is a director in the financial services people and change practice at PwC in Toronto. For more information, visit www.pwc.com/ca/en/people-change/saratoga.jhtml.

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