Managerial Implications of Changing Workforce

Managerial Implications of Changing Workforce Demographics

The aim of this paper presentation is to identify and analyze how this phenomenon is going to impact workforce management in the new age. We have tried to take into account all the relevant trends in workforce management practices from over the world. We have also tried to extend the scope of this report to identify the various employment relation challenges in the Indian context owing to the sectoral shifts in employment to the service sector.

Recruitment related implications: The Contrasting Tale of Two Neighbors

India’s young workforce will form the major portion of the total workforce. However, in China the proportion of the young workforce is reducing consistently due to the population control measures of the Chinese government. Naturally the corporations of these two countries will have very different approaches in tackling Sourcing and Recruitment related issues. This is because in the future the countries like China will face workforce shortage as the existing employees retire and they will not have the appropriate number of people to replace them. Moreover, an experienced workforce also comes with a substantial cost implication towards the companies.

Social media emerged as a major source to find potential candidates in India because of this very reason. The employable workforce has biases for companies that provide them challenges and opportunities to grow. The organizations willing to lure the best talent should project the quality work they can offer and the opportunities of growth available with them. Therefore it is very important for the companies to communicate their values and work-ethics to the prospective employees. For example Pepsico through initiatives like “Be Indra’s Advisor” and its summer internship programs have tried to connect to its target audience with much success.

China’s corporate houses on the other hand are automating some of their processes. These firms are thinking on these lines because of aging population coupled with annual wage hikes of 20% for nearly a decade.  Companies like Lever Style are of the view that operating in Southern China is a break-even proposition at best. In 2013 Crocs reduced its share of colorful shoes to be made in China to 65% down from 80% last year. Lever Style is in the process of shifting its production to Vietnam. Outsourcing is therefore one of the results of this disparity of Labor force demographics.

One way to offset the challenge is to develop new ways and methods to source potential candidates from countries where there is surplus workforce available. It requires changes in the visa related policies.

Recruiting people from different countries would a bit of a challenge for the managers because it would involve some more formalities related with visa and citizenship of their country.

Economic Cycles also have a major impact on recruitment patterns. In countries like the United Kingdom where the total workforce is relatively stable but with number of jobs reducing the practice of testing first and then interviewing has started making inroads. In 2012 in England 7 million applied for 260000 Call center jobs.

Processing such a large number of resumes where most of them are embellished is a very time consuming task. So some companies are conducting online psychometric tests even before considering the resumes.

The Quest of the “Employable Skill”: The Cost of a Young Work-Force?

The reality of what the industry refers to as employable skill in India is very bleak. According to the Planning Commission’s report, just a tenth of those looking to join the work-force receive proper training. A report by the Federation of Indian Chambers of Commerce (FICCI) states India has the capacity to train about 13 lakh candidates through its vocational training institutes which is less than 10,000 in number. Contrasting these numbers with the fact that 60%-90% of the workers in developed nations receive some form of skill training. Establishments like Raviraj Foils in Sanand, Gujrat which has a requirement of 250 trained employees to cater to the needs of the pharmaceutical and consumer goods industries are forced to employ untrained local populace. In this process such firms have to incur heavy losses by way of wastages since one untrained employee requires up to three years in becoming proficient with the processes as the work demands high levels of precision.

Pallam Raju, India’s former Minister for Human Resources has gone on record

“I think the problem has been particularly acute in India, both in terms of the education and skilling. And this is where I think we need to get our act together”. The Government has set an ambitious target to impart skills training to 50 crore people by 2022 and hopes to get the industry involved in some way.

The crux of this observation being that there is a huge skill shortage in the blue collared class of employees. Contrasting to this phenomenon the economic slowdown of recent years has resulted in the drying up of the traditionally higher paying white collar opportunities. Industry leaders and recent independent reports like the “National Employability Report on Engineering Graduates” by Aspiring Minds have gone to suggest that less than 20% of a total sample size of 55000 respondents are actually employable. To understand this phenomenon we have to look at the issue from two perspectives.

The first being that the economic slowdown has indeed taken its toll. As the Business cycle shifts the unemployment will effectively correct itself. However, there is another localized issue particular to India is the mismatch in expectations between the academics and the industry.

Prof. S. Ganapathy,  Dean (Placement), SRM University says –

“As academicians, it is our job to produce good clay and not beautiful dolls for the industry. It is for the respective industry to shape the right dolls suiting its need and preferences.”

The Industry on the other hand has an expectation that the graduates will contribute in some meaningful way from the commencement of employment. Another issue that aggravates this matter is perception.

Traditionally the Indian Corporate toiled to secure the best candidates for their positions as evidenced by the fact that most of the recruitment at entry levels of white collared in the Government Sectors happen by way of a competitive examination which can be a test of skills and knowledge of subjects which have no implications on the actual employment that is offered to the successful candidates.

Owing to the surplus of applicants for highly desirable jobs many companies have tried to reduce its recruitment costs by restricting its applicant pool to limited sources which they classify as premier. In case of India these sources can very well be the premier institutes. Ideally the companies would have looked at Quadrant 1 and Quadrant 3 of the Exhibit 2 for candidates that have high employability. However due to the artificial restriction they now have access to only Quadrant 1 and Quadrant 2 as their applicant pool. Thereby giving rise to a perception of lack of quality talent pool. A shift in trying to hire the best fit for a role should be able to alleviate at least some of the issues with regards to this perceptual bias.

Gender Related implications

The participation of Women in workforce particularly in the Indian context has been on the rise only recently. It is therefore only now a structured effort has been seen to bridge the gender divide. However this is not a problem that is particular in India. Gender issue have been felt in many major economies including the United States of America as women participation started on a significant level in the work-force. For instance a renowned corporation like IBM till 1951 required its female employees to resign after marriage and did not consider employing a married woman.

The cost implication of ignoring Sexual Harassment regulations can be wide spread and absolute. The first ever class action law suit on Sexual Harassment at Workplace in USA Lois E. Jenson v. Eveleth Taconite Co resulted in a settlement of $ 3.5 Million in favor of the fifteen women.

It can be seen that historically the legislation and the judiciary has had close involvement with the process that dealt with such issues across most countries. Indian Legislations like the Industrial Disputes Act 1947 has provisions of setting up of Grievance Settlement Authorities (Section 9C) for industrial establishment with 50 or more workmen are there for addressing individual grievances. The act further states that as far as practicable one woman member if there are two members in the committee and a proportionate representation if more. A breakthrough in achieving gender diversity at workplace was achieved with the new Companies Act. The new law passed in 2013 requires a certain class of companies to have at least one Woman member on board. The act demonstrated the need of this timely inclusion by the vacuum for Indian women leaders it has exposed. Ex:- In this past year a former partner at McKinsey Irena Vittal has joined the boards of Axis Bank, Godrej Consumer Products, GlaxoSmithKline Consumer Healthcare , Tata Global Beverages, Wipro and Titan. Several companies now have extended the pipe-line to train and prepare Women leaders to assume positions at the board.

In Conclusion: The Trans-Nationality and Cultural Integration

Shifts in the workforce demographics have brought about considerable impacts on strategies of work-force management. What it has actually done is that it has exposed the lacuna in personnel management that was already present for everyone to see. India’s job market throughout the past century has been dominated by the employers. So much so that in those situations one could get away with a lot of deficiencies in terms of employment conditions. However with the opening up of the economy and the empowerment of the employee it is only natural that such practices would change. Since this workforce is not afraid of changes and taking chances. India has around 9 companies with asset base greater than 500 million and 3 companies with asset base less than 500 million that can be called truly trans-national i.e they have more than 50% of their assets invested abroad. One of the indicators of this index number of Foreign Employees as compared to its total employees is significantly low as well.

The observation is consistent with our findings that India by and large is going to be the talent pool of the Global Corporations. The Young Indian Workforce which values Growth above everything else therefore requires a concerted effort from the Government and the Industry to be able to carry out its responsibilities.

References

• HBR, November 2013, When Hiring, First test, Then Interview
• BBC November 28, 2013 , Training India: Is the skills gap holding the economy back?
• Wall Street Journal May 1,2013 China Manufacturers Survive by Moving to Asian Neighbors
• Business world, December 2013, Paying the China Price
• Economic Times- Cos Rush to Buy cover against sexual Harassment Liabilities
• Economic Times-Social Networks, Referrals are India Inc’s Hiring Hotspots
• HBR, September 2013, From the Editor, Where are the Leaders
• Stanford Center on Longevity 2010, “Population Age Shifts will reshape the GlobalWorkforce”
• The Hindu, August 11,2013, A question of employability
• Hay Group 2013, Preparing for Take-Of,
• The Economic Times 2013, New company law gives a big push to gender diversity atworkplace
• National Women’s History Museum, “Real Women of North Country”