How To Succeed With the 21st Century Work Force
University of Minnesota Carlson School of Management
First Tuesday Speech
Dean David Kidwell
Carlson School of Management
University of Minnesota
6 March 2001
An advertising executive in the Twin Cities likes to tell visitors and audiences that his major asset goes up and down the elevator every day. As dean of a major business school I have to agree - even the people who don’t take the elevator every day are major assets at our school.
The executive’s quip summarizes the recent employment environment in the Twin Cities, and to a lesser degree the country. It’s the same thing that could be said by any number of corporate executives in fields ranging from heavy industry to financial services. People matter, and good people are hard to find.
People have become so important because knowledge has become the primary engine of our current economy. Sure, we still make things in America, but even those jobs require knowledge of computers, of systems, of quality control and so forth. A recent issue of the Atlantic Monthly magazine had a graphic on the cover of a muscled worker in a t-shirt and a hardhat holding a laptop while doing his job, a precise image of the blending of the new and old economy. The image provides an underlying theme for this new century: Knowledge is the key to the kingdom.
But finding workers with the appropriate skills and knowledge is rarely easy. A recent poll in a Twin Cities business magazine showed 88 percent of executives report difficulty finding good employees, reflecting similar national attitudes. An anecdote overheard in Minneapolis last fall showcases the issue well. One companion walking in a skyway says to his friend: “It’s gotten to the point where if they show up for the interview we hire them.” The other replies that a company he knows of actually hired somebody who didn’t show up for the first interview!
Is it that bad?
For many companies it is, despite the current economic downturn. But strategies exist for attracting and retaining a quality workforce and that is what I want to focus on today. I will briefly touch upon general trends over the past 10 years which led to the environment we’re in now, and I’ll discuss what the future looks like for employers, and how they can create great places to work through better benefits, management and lifelong learning opportunities.
Now you’re probably thinking there’s something weird about hearing from a guy discussing the need to create great places when he is, in fact, leaving what he considers a great place to work! What’s wrong with this picture? Nothing, really, for I think we’ve created a good environment for academic achievement and I, for one, can only hope my next job will be as fulfilling as this one has been.
But let’s not talk right now about my departure and instead look at how we managed to arrive at this tight employment market. First, mergers and acquisitions have transformed the business landscape, forcing workers and managers to continually learn new sets of skills. Second, the pressures of globalization and of an economy that demands high productivity has led to employees having to do more with less. Third, as baby boomers begin retiring in record numbers and a smaller group of Americans enter the job market, many firms have had to make do with fewer employees despite skyrocketing workloads.
Despite a record level of immigration during the 1990s in the country, and in Minnesota, the immigrant population cannot fill the gap, although it does bode well for our future. The more diverse we are, the stronger we are. The more welcoming we are, the more likely we will be an economic success in this new century.
But immigrants don’t, as yet, solve our problem – although I should mention that one of our bordering states, Iowa, has considered encouraging immigrants to relocate there in an effort to rejuvenate its ailing small towns. We may have to do the same. In the 1970s the birth rate in Minnesota was 2.7 percent. In the next 10 years it will average .08 percent. We’re not even replacing people at a one to one rate. Where we will find workers to shore up the gaps is a discussion for a different speech, but those grim figures should remind everyone in this room that the problem will persist. As the years progress it only gets worse – from 2010 to 2020 the rate drops to .02!
The result? A tight job market. A seller’s market where employees can, and will, take a call from a headhunter at 3 p.m. if their bosses said something that same morning to tick them off. With an unemployment rate of around 3 percent, the state’s employers have had to scramble to fill positions. For workers, it’s been a good time, a time when real wages grew for the first time in nearly a decade. And it’s been a good time for minority and immigrant workers, who are experiencing the highest levels of employment in our nation’s history.
So what’s an employer to do to keep people happy? I believe we have arrived at a new paradigm for recruiting, retaining and managing an intergenerational, multi-cultural workforce. New managers, like those we train at the Carlson School, understand the 21st century American employee provides a sharp relief from the previous century. This generation cares more about flexibility than money, more about family life or personal time than allegiance to company, more about training than job security.
They understand life exists beyond their job and that their job could evaporate with a merger or an acquisition or an economic downturn. They know the only protection they have against unemployment and extinction is education. They realize labor relations means a closer working relationship with management and some shared risk and rewards. They understand unions, working closely with their employers, will better preserve their jobs by offering them training and educational opportunities.
Yet the good news is that these same employee population that once sought excitement in startups has begun to seek jobs with a longer-term future, according to a recent Drake Beam Morin study. Loyalty is making a comeback among all ages of workers. But the consultant’s study points out that “challenging work and ongoing learning opportunities” will be keys to attracting and retaining employees.
You may wonder if Minnesota is producing firms that are great places to work. I told you last year the state and the university needed to bolster investment in technology. This year I’m going to tell you we have some firms that are great employers - but do we have enough? By national standards we’re just okay.
Only two Minnesota companies made Fortune’s “Best Companies To Work For” list last year. Medtronic was one. Born, a computer firm was the other. ComputerWorld’s list of the best of information technology employees was no more encouraging - naming just three Minnesota companies: Best Buy, General Mills, and United Healthcare. And IT employees, as we know, are the hardest to find and keep.
Should we worry? Yes. We’re not running the equivalent of corporate labor camps in Minnesota but I believe our business community could focus a bit more on creating great places to work. You can argue we don’t make the lists because we are lucky. A William Mercer consultant told Corporate Report last year in that defunct magazine’s 10 Best Places To Work issue that Minnesota’s stable employment market has been spared the kind of lush benefits offered in Silicon Valley.
Still, whether we can maintain this relative stability remains a looming question. We have no mountains, no great ocean, and no great weather to attract people. We can defeat our liabilities by showcasing our assets, among them good schools, a sound infrastructure, a strong sense of community, a less expensive cost of living than both coasts, and a nice urban environment. We draw well from the region because of this reputation, but not so well from other areas of the country where job candidates are scared off by everything from the weather to a sense this is flyover land.
Consider the Carlson School’s own human resource and industrial relations program, ranked the second best in the country. More than 60 percent of the students leave the state upon graduation. Even 10 years ago this wasn’t the case - hardly anyone left. We find they leave to work at places where they’ll have revolving appointments, overseas opportunities and a chance to grow in their jobs.
Our Industrial Relations Center is also in the process of looking at retention in more than 1,000 companies around the nation and the researchers have found the greatest vehicle for retention is offering people jobs presenting variety and opportunities for advancement. Employees want a job that changes frequently and provides for career growth in companies where strategic thinking is not only welcome but required.
Create positions with opportunities for growth and you’ll have a satisfied job force. You can always improve benefits, which for many employees, particularly those in families, means more than just money.
The latest benefit in today’s market - or at least my favorite - is allowing employees to have pets at work. A consultant at Mercer’s Minneapolis office not so long ago said three percent of companies with IT workers have a “pets at work” policy encouraging John the goateed Web developer down the hall to bring in Fido for the day. Will we soon be hearing, “John what’s that on the rug…”
Humanely, cats are not welcome, by the way!
Let’s consider other benefits that cost next to nothing but go a long way toward creating a great place to work. Providing flexible working hours through PTO, or paid time off, has caught on at ADC, Wells Fargo and Lawson Software, among others. Under this agreement, the employee receives a certain number of paid hours they can be absent from work for any reason- tending a sick child, helping with elderly parents, or for shopping.
Another perk is telecommuting. I am a prime example of that - I work out of the house one day a week and I’m not alone. More than 11 million people telecommute in the United States, up 15 percent since 1995, and thousands of companies have a telecommute pilot program or ongoing programs.
Corporate Report’s research showed other benefits rising on the radar. Imation and Medtronic offer domestic partner benefits. Minnesota Power pays much of the cost of YMCA memberships for its Duluth staff. Imation gives people a minimum of three weeks vacation. And Imation, along with Wells Fargo, offers subsidized or free Internet access and personal computers for the home.
An interesting place to work plays more highly now in the mind of employees - the Orwellian cube city may not be a thing of the past, but most workers prefer something less staid. Lawson’s sharp new corporate headquarters in downtown St. Paul boasts a cool company café and an “egg room” for creative types to think big ideas. Medtronic and ADC are building huge state-of-the-art corporate campuses in part to attract employees. I hear the mere presence of an espresso machine, too, adds a caffeinated cache to any environment.
And then there’s a greater commitment to family life. The St. Paul Cos. adoption benefit offers employees $3,000 per child, money they can use to arrange an adoption and to pay for the travel sometimes required. Onsite day care, elder care, and other benefits focusing on family life have also blossomed.
Workers have begun to seek more out of life than just work. Some companies are providing time for employees to volunteer - on company time. As a result, employees often feel better about themselves and their employers. Larsen Interactive devotes 15 percent of annual revenues to pro bono work and allows employees to suggest projects for the firm. Several local law firms have free legal clients and do lots of pro bono work. The end result is better retention, and a more spiritually satisfied workforce.
Then, of course, there’s money. Stock options remain popular, with Xcel Energy being the most recent company to discount shares to employees at all levels. Options do two things. One, they give workers an added performance incentive since they own part of the company. Human nature says those with vested interests in something tend to work harder to see it succeed. And since stock options usually cannot be exercised for at least four years, an employee has a reason to stick around a while and contribute.
What future benefits will we see? Will some bold company sponsor a Survivor-style contest for employees? That certainly would be different. I’m not here to predict the future, only to say all these benefits contribute to creating a better and more desirable place to work.
The story of retaining and attracting employees, however, goes well beyond a long list of benefits. It goes beyond a solid management team, or a nice office. It goes to the heart of what will make this country economically healthy into the 21st century. The key to solid economic growth, stable employment, and rewarding jobs, for that matter, will come down to one thing - lifelong education.
The best firms to work at also have great training opportunities, with even smaller companies getting into the picture. Davanni’s, the pizza and sandwich chain, has a program called “Education First” that provides tuition loans. Plenty of other firms provide $500 to several thousands of dollars in educational benefits annually to employees. Other state companies have even set up programs to help their immigrant labor pool learn English and other life skills necessary to living in their new countries.
Some of that training money, in fact, ends up at the Carlson School, and we thank you for it. Our Industrial Relations Center, which is ranked second in the nation, has an employer education services division that serves several thousand students annually - mostly working adults looking to increase their skills in HR. Also, our Executive Education Center has thousands of graduates who used our courses to improve their skills.
Peter Drucker wrote a few years ago that there will be no “poor” countries in the future, only ignorant countries. Replace the word “countries” with “states” and you’ll see why I am so committed to encouraging lifelong learning at all levels in Minnesota. I have a special interest, too, because I am co-chair, along with John Sweeney, President of the AFC/CIO, of the Association of Joint Labor/Management Educational Programs. The organization brings me in contact with people around the country working to help labor create workplace and distance learning opportunities with their employers.
We have one of the best examples of a joint labor-management program in St. Paul. A few years ago the UAW and Ford spent $2.3 million and the state of Minnesota chipped in another $5 million to create a state-of-the-art training facility. The motivation to build the training facility was the union’s desire to keep the plant competitive within Ford’s system and with other automakers. The center offers free classes to employees on skills directly relating to their jobs, as well as in such areas as GED, advanced computers, math and communications.
Despite the UAW and Ford’s success with the state in creating the center, it’s a drop in the bucket in terms of what needs to be done. Companies have to understand that training will be the key to their future success in a knowledge base economy and will affect their ability to retain the best workers. Today’s workers are a generation of adults who understand their lifeline to continued employment will revolve around staying educated.
It’s not that companies don’t get the message. They do. More than 1,600 American companies have in-house universities. They call them universities or institutes, by the way, to avoid the word training. If you plan to set up an in-house educational outlet, stay away from the word “training” and you’ll find greater acceptance. And allow employees to take courses on your time, not their time. Fewer than 10 percent of all employees with tuition reimbursement use the benefit because they have a life after work - try working 10 hours and taking a class and you’ll see what I mean. It can be done, but not without pressures on family and personal life.
Are we we falling behind in the kind of benefit packages provided by employers in other cities? I would advise employers to stay abreast of national trends in benefits and retention efforts, to look for ideas not only being used by your competitors, but also by companies down the street. After all, for most of you, the majority of your new employees will likely be people who grew up in the state.
You must also remain competitive because we do not have enough native Minnesotans to fill the positions we have, at least for now. Should you pray for a baby boom? Well, probably yes! But, if that fails to materialize, we know our companies will have to attract workers from other states – as well as new immigrants to our country – with good benefits and salaries. We’re only competing nationally any more, we’re competing globally.
Together we can create a stronger environment for companies and for workers. After all, this state led the nation in corporate citizenship by creating Minnesota Keystone, a group of local businesses contributing from two to five percent of their pretax profits. And this state created a model for good corporate citizenship through the Minnesota Center for Corporate Responsibility, now called the Center For Ethical Business Cultures, to promote the value of sharing the wealth.
We could do the same for creating great places to work. We can share with one another what has worked and was has not to attract and retain employees. By focusing our efforts on producing companies where employees want to work and by creating our own set of best practices in this area, we can again prove to be a model for the nation.
We’ve tried at the Carlson School to do our part to create a great place to work. We raised money and built a beautiful new school that has worked wonders in attracting new faculty and students. We have broken down the silos of academic research and produced cross-functional teams of scholars to study various business issues. That will sound familiar to many of you in this room who have done the same in corporations. We knew the walls had to come down. We encouraged people to talk to one another, from human resources to marketing, from accounting to strategic management.
We raised the bar in terms of the quality and quantity of our research, which has led to our ranking as the seventh best business school in the country in terms of research. Our overall ranking as improved dramatically as well. I’m proud of these achievements. I believe I leave the Carlson School in a stronger position than when I came. But I could not have done it without the support of faculty and staff and the administration. Change is enormously difficult to create and without allies it is impossible. A case in point is Washington, D.C., where my wife and I will soon move and where we’ll see if the olive branch of bi-partisanship is real.
I would like to believe that during my 10 year tenure at the Carlson school, we’ve brought together a faculty to pursue a shared purpose of producing a great business school. Did we always love one another. No. But we shared a passion for making this a better place for learning, and working. I’ll miss this place, this staff, and my colleagues. We had, and have, a great team which combined their skills to create a great place to work. The only thing that might make it even better is to allow dogs, and maybe even cats, to occasionally roam the corridors and classrooms of the Carlson School.