First, the numbers. My books all describe a world in which the availability of talent will be one of the major factors limiting business growth — one in which individuals with the appropriate skills and abilities will be able to choose among a wide range of work options. I understand that reconciling the short-term realities of today's recession-driven labor market with the idea of talent shortages can seem difficult.
But the reality is that talent shortages are already here — even in this economy. Today, there are roughly 3 million unfilled jobs in the United States — largely ones requiring specific skills and training — in areas such as health care. Essentially our economy is becoming more "sticky." As a higher percentage of jobs require specialized skill or experience, it is more difficult for individuals laid off from one organization to move seamlessly to another. Even with millions unemployed, many jobs remain unfilled.
As the economy rebounds, the shortages will become more pronounced. A very high percentage of the new jobs created today (some estimates run as high as 75% of all new jobs in the U.S.) require some level of post-high school education or experience. Yet our education patterns have not shifted to keep pace (in the U.S., less than 30% of Gen Y's graduate from college and over 20% do not even graduate from high school!).
On top of the skills mismatch, is the irrefutable fact that birth rates — in almost every part of the world — are falling. In the United States, birth rates have been declining for several decades; these "no growth" cohorts of young people are now the ones entering the workforce. We are accustomed to fueling growth in our businesses with a steady stream of young talent, with numbers that increase at pace with our growing demand for labor. No more. Growth cannot be fueled by the young.
From a raw numbers perspective, predictions made before the recession pointed to a shortage of 3-4 million total workers in the U.S. by 2010 and 6 million college graduates by 2012. Currently, total job losses in this recession number about 5 million, the vast majority in fields that do not require college degrees. From this, I'd conclude that closing the gap between available workers and jobs in sectors that require minimal education will lag the recovery by several years, but tightness in other sectors will be broadly and quickly apparent as the economy begins to rebound.
Assuming that immigration will fill any void is a risky assumption. As I mentioned, birth rates are falling around the globe. More importantly, opportunities are increasing in other countries, making immigration for careers less necessary. Today the U.S. has a net emigration of workers who hold advanced degrees (masters and PhDs), as many who came here for education are returning to their home countries for work.
All of this means that the supply/demand balance will continue to shift in favor of the person seeking work — particularly if that individual is skilled, educated and/or experienced. The most significant implication of this shift is that individuals will be able to bargain for whatever unique work arrangements they prefer — companies will need to offer greater choice. Work arrangements will become more varied, reflecting the needs and preferences of people in different generations and stages of life.
A number of forces evident in today's workplace provide clues as to the types of choice and variety that organizations will offer. The characteristics of knowledge work are such that having workers physically present in one place and time becomes far less important than it was for production jobs. Technology enables new ways of working — asynchronous and virtual. The values of younger generations — more interested in self-reliance or immediate challenge — loosen the bond between a single organization and those who perform work.
These themes — shortages of skilled talent, a growing number of broadly flexible working arrangements — will characterize the emerging relationships between organizations and those who work. And the new strategies outlined in the books, for both corporations and individuals, remain critically important.
But, in the books, I missed a major point: that a recession would actually hasten the movement to these new types of relationships. I thought the new relationships would come about as pressure mounted from individuals who were requesting different types of work arrangements. In fact, as I argued in my last post, companies are inadvertently and ironically conditioning individuals to new ways of working, by breaking the dependency on one all-encompassing work relationship. The use of furloughs and other approaches that erode the concept of one "job" fulfilling all our needs is encouraging individuals to create portfolios of work options.
The trends are still there, but the way we're getting there has definitely surprised me.
Your thoughts?
]]>Recessions are times when we make changes in the way we do things — consciously or not. Although it would be smart to do it consciously, probably some of the most significant changes have just, well, happened.
The shift underway today, embedded in companies' responses to this recession, will have major unintended consequences for the relationship between organizations and the individuals who perform work (I hesitate to even use the word "employees"). As msnbc reported recently, there's been a "furlough frenzy" in corporate America lately.
We're on a slippery slope.
Recent history illustrates how significant shifts in the nature of the relationship between organizations and workers have resulted from practices put in place during a recession. For example, it was during the recession of 1981 that the idea of a "layoff," meaning a permanent separation with no prospects for recall, came into widespread use. Prior to that recession, the idea that an employer would dismiss workers permanently was so rare that the Bureau of Labor Statistics did not even keep track of such cuts! Furloughs, with the clear commitment of a return when business picked up, were used instead. The reality that jobs were no longer "for life" sunk in.
The recession of 1991 saw another substantial change: many individuals became contractors out of necessity — and a significant proportion chose to continue to work as contractors even after "permanent" jobs became available. We accepted the idea that some people may never be full-time employees again and began our evolution to a "free agent nation."
This recession is ushering in a return to furloughs. Hewitt Associates recently surveyed 518 U.S. firms and found that 70 percent had implemented or were considering implementing furloughs. Major companies such as Dell, American Airlines, and DuPont already have announced plans to send workers home for a few days or a few weeks without pay as a way to cut costs.
Much of the attention paid to this trend has focused on the cost-savings opportunities for employers and worried about the economic hardships and potential rights violations to employees. Employers who use temporary hiatuses rather than layoffs save on severance costs, as well as future rehiring and retraining expenses when an economic turnaround eventually comes. Employees, in theory, suffer through some hardship, but not as much as would have occurred with a layoff. Yes, but . . .
This practice is further changing — in irrevocable ways — the relationship between employers and employees. This practice is reframing, perhaps even severing, the idea of "full-time" as many of us have understood it for years.
When I took my first job out of graduate school, my employer had me sign an agreement that whatever I did — whatever I created, invented, wrote — whether or not it occurred during some official forty hour period, was the property of the company. Since then, I and most of us in professional or managerial roles have viewed the work we do as only loosely related to any particular hours. We work nights and weekends. We grumble about work-life balance. We accept that the deal we have had with our employers was all encompassing.
But the idea of furloughs, particularly for managers and professionals, is planting the seed of a new way of looking at work in our minds. Suddenly companies have asked us to work, say, 32 hours a week rather than 40. Hmmm. What does that really mean? Most of us were never working 40 hours — we might have been working 50 or maybe even 60. We were answering emails at odd hours, writing in the early hours, calling Singapore at night. Does this mean that we should now work 20% less than we were before . . . or does it mean we should work literally 32 hours?
For many, I believe the conclusion will be that we should work the hours specified by the company and perhaps do other things — start new businesses on the side perhaps, sell stuff on eBay, take another job, go back to school, whatever — with the other time.
In this shift, companies will lose far more than the number of hours they think they've cut back. Companies will lose that sense of total dedication — the sense that what I produce on my own time is theirs, that I have a responsibility to answer emails whenever they arrive or participate in odd-hour phone calls.
This shift sits well with many in Gen X who have already tended to bind their involvement more carefully than have the all-out Boomers. But for both generations, it will be a new way to look at work — another step on the slippery slope of recessionary lessons moving us from (1) you don't have a job for life, to (2) you may never find full-time work with one employer, to now (3) even a full-time job is really only a contractor job in disguise.
From a talent management perspective, it's essential to recognize that decisions you're making this year are likely to set the tone for the relationship with employers for decades to come.
I hope you'll share your thoughts and experiences.
]]>Discretionary effort is the life blood of today's economy.
As we move to business models that depend on people working together, on innovation, on individual expertise and craft, on crowds contributing to the whole, we must also move sharply away from our traditional concepts regarding the key responsibilities of senior executives.
I've had the opportunity to conduct a lot of research over many years on how and why people collaborate and innovative; through it all, one conclusion stands clear: you can't make anyone do these things. There is no correlation between traditional "push" management approaches — directives, power-based approaches, or even compensation and performance management, and people's willingness to be a little more creative, more enthusiastic or service oriented with customers, to ponder the challenges they face with greater focus and energy, to be more emotionally contagious and proud.
Today, encouraging a greater number of people to go just a little bit further is the essential job of leaders. Long gone is the time when our primary management challenge was to ensure that workers performed tasks consistently and reliably, using standardized best practices. Now we need "pull" approaches, geared to encourage individuals to share their ideas more widely and constructively, to push the boundaries of what's possible further — or to be more collaborative and innovative.
Statistics tell a striking story. The number of total goods-producing jobs — manufacturing, construction, extraction — has declined sharply in the U.S. economy, from 36% of all jobs fifty years ago to 15% today. In the service sector, the most rapid job growth has occurred in those areas demanding high levels of expertise or knowledge. Education and health-related jobs have gone from 5% of the U.S. economy in 1959 to 14% today. Professional and business services, from 7% to 13%.
While any work can benefit from the extra push of discretionary effort, consider the contrasting characteristics that add to the shifting management challenge: most manufacturing jobs need everyone to be in the same place at the same time; in-process activities can be easily inspected by a supervisor. Knowledge-based work can often be done virtually and asynchronously, making it difficult to judge an individual's performance based on observation of the approach. Quality is often assessed only after completion, based on the product produced. While the work is in process, we count on the individual to give it their very best.
Consider your leadership approach against this changing template. Is your style likely to engage the "kindness of strangers?" What would you imagine a leader who was able to entice others to contribute greater levels of discretionary effort would do or be like?
Here are three characteristics that I'd put at the top of my list:
What would you add? What characteristics of a leader have prompted you to go that extra mile?
]]>First, I suspect most of these stories are written by Boomers (parents of Y's) who, based on my interviews, are far more distressed by the current events than are most of the Y's.
Second, let me assure both students and parents that this year's tight job market is likely to be a small blip on Gen Y's otherwise positive life trajectory. From a long-term, generational perspective, the recession of 2008-09 will have the least impact on the rosy Y's than on any other contemporary generation, largely because they had virtually nothing to lose (few had bought homes or begun to invest in 401ks prior to the recession) and will have everything to gain as they begin their asset accumulation period at the bottom of what is likely to be an historic low. Up they'll go.
Beyond 2009, the reality of the past 20 years of falling birth rates, coupled with the inexorable shift to a higher percentage of knowledge-based jobs, means that there will be good jobs coming available over the next 2-4 years, particularly for the college classes of 2009. Already today, there are over 3 million openings in the U.S. workforce that employers are struggling to fill — most requiring college degrees. The talent gap will only widen as the anticipated rebound in the economy coincides with a substantial slowdown in the availability of new entrants.
Third, from a career perspective, although reporters seem to relish writing stories about the dismal prospects graduates face in 2009, these sad renditions generally omit one important fact — most Y's were not planning to launch their "careers" right away anyway. As David Brooks wrote in the his New York Times column in 2007, many Y's look at their 20's as a time for exploration and experimentation — a time to try out multiple jobs, learn as much as possible, live in new locations for awhile — laying the groundwork for making some more focused choices in their thirties. Brooks called this stage their Odyssey Years.
The implication for employers who can offer interesting work options is that Gen Y's should remain key hiring and retention targets. Many are willing to trade substantial monetary compensation for significant "experience" — learning, challenge. Make sure you're offering interesting work accompanied by lots of on-the-job coaching from older colleagues, and you should be able to tap into the best of the best of 2009, even at modest levels of compensation.
The implication for graduates and parents of graduates is, to the extent you can afford to, look at the next year or two as a "gap year" — a time to explore, learn, travel, and test yourself. For many graduates, burned out from four (or more) years of intense study, taking a year to do something less pressured can be a hugely positive experience with great pay-off longer-term. Don't view your immediate options negatively, as settling for a low paying job because the glamour jobs are not available. Look at your options as a time to get grounded. Find out more about who you really are and what you care about — a gap year to get your groove back.
Looking at the next year or two as a gap year doesn't necessarily preclude earning some money along the way, but the criteria for your search should, if possible, be weighted toward options that will give you the most exposure and challenge — and perhaps scratch an itch that you've wanted to scratch someday — now, while the real career options are more limited.
Our daughter took a year off, a gap year, between high school and college. She spent most of the year doing physically difficult, menial labor on horse farms in South Carolina, as well as riding, competing, and just generally learning how live on her own — dealing with irrational bosses, negotiating with landlords and truck repairmen, and finding how many ways she could stretch a box of pasta into a week's meals. She also backpacked solo around Europe for a month, leveraging her Euro-rail pass into visits to as many art museums as time would allow, and spent another month on a NOLs program, kayaking in Alaska. Although the choice of activities was uniquely hers, the experience itself is one that I highly recommend to any graduate. Just living in the world, doing manual labor, figuring how to make ends meet, gave her a calm confidence that is palpably different from many of her current college cohorts who raced from high pressured high school classes into the intense college setting. From her perspective, it was such a good experience that she's looking forward to doing it again, perhaps after college graduation.
Gen Y's stand to benefit from many fortuitous trends — not the least of which is an extraordinarily long life expectancy. This year may feel like a blow but keep it in perspective — you will have lots of time once the economy picks up. Keep a positive perspective and use this time to your benefit.
What do you think? Gen Y's, what's your strategy for the next year? Those of you in corporations, what's your hiring strategy for Gen Y's?
As you evaluate your options for this year, I'd like to extend two invitations.
First, I'll be talking about ways that organizations can use the economic downturn as a golden opportunity to transform talent management approaches in a complimentary webinar, "Preparing for Prosperity: Strategies to Accelerate Growth through Talent." You can register for this session by clicking on this link.
Second, I'm always happy to offer my perspective on any specific questions about your career or about your corporate practices. You can "Ask Tammy" by clicking on this link.
]]>As part of the conversation, Jim reflected on the lessons he's drawn from his three major research programs, including the two earlier investigations that lead to Good to Great and Built to Last. Of several dozen key characteristics and actions he's identified, some stand out as being perhaps the most important — the foundational core of sustainable greatness. One of those primal lessons is from the first study: get the "right people on the bus."
Jim has found that great companies have clarity around both the definition of key positions — that is, which roles are essential for success — and a focus first and foremost on making sure the right people are in those seats. This is necessary if you're trying to make a good company great — and doubly so if you're trying to excel in turbulent times. Jim emphasizes that this needs to be your highest priority — unless you're surrounded by the right people, little else will matter.
I have no doubt that Jim's conclusion is correct — and will only increase as a point of differentiation between the great and not-so-great as talent shortages make finding the right people more difficult. But . . . who are the "right" people for your organization?
I have a straightforward answer: the right people are the ones who are predisposed to like what you realistically and consistently offer.
Let's look at these three key ideas — predisposed, realistically, and consistently — and the implications for your talent practices.
My work convinces me that none of the attributes are inherently good or bad, better or worse in terms of creating successful companies. There are examples of very successful companies that excel in every dimension.
The key is the fit between what your work environment is like, and will be like in the foreseeable future, and what the people who are on your bus care about. People who find working in your firm satisfying and emotionally rewarding are those who are most likely to be committed and engaged — those who are most likely to invest discretionary effort in assuring the success of the business.
What does this mean for your talent management practices?
Don't go through good times or bad without a fully engaged and committed team at your side. Hire for fit and attitude — you can always train for skill. Get the right people on your bus.
I'd love to hear your views on employee experience. Why did you join the company you're at today? What attracted you? Does the company realistically offer the experience you thought it would? Has the employee experience changed over time? How has this affected you and other employees? What would you recommend?
]]>Let me ask you to suspend what I suspect may be an instant "no" for a moment, and consider three questions:
Let's start with the first question. President Obama signed the Lilly Ledbetter Fair Pay Act into law on January 28 of this year. Ledbetter, now 70, spent years working as a plant supervisor at a tire factory in Alabama. When near retirement, she learned that her male colleagues were making much more money than she was — and had been for some thirty years. A jury found her employer guilty of pay discrimination. But the Supreme Court threw out Ledbetter's case, ruling that she should have filed her suit within 180 days of the first time her employer paid her less than her peers.
The Fair Pay Act amends the Civil Rights Act of 1964 by stating that the 180-day statute of limitations for filing an equal-pay lawsuit regarding pay discrimination resets with each new discriminatory paycheck, making it possible for employees to file suits at any time during their employment if they discover a discriminatory inequity. It clearly raises the bar for employers in terms of setting compensation levels in ways that will withstand scrutiny; you're wise to behave as though any inequities will eventually come to light. Defensively, you should follow the old rule that if you wouldn't be comfortable having your decisions — in this case about what you pay specific people in your organization — on the front page of the newspaper, you may not have them right.
Penelope Trunk, author of the blog Brazen Careerist, suggests that greater compensation transparency has a positive impact on employees' motivation and productivity. She argues that since salaries should be pegged to the employee's contributions, there's no more accurate way for an employee to understand his or her value to a company. Making salaries public creates confidence that management is accurately and fairly appreciating what people do — and serves as a powerful inducement to work harder, confident that your efforts will be recognized. She advises: "You should always try to get to a company that has out-in-the-open salaries, because that means you have more out-in-the-open managers — managers that have so much self-confidence in their ability to value accurately a business contribution that they can set airtight salaries and stand by them."
Trunk's argument misses another beneficiary of secret salaries — the individuals who manage to negotiate higher levels of compensation than others doing similar work. But this very real phenomenon reinforces her point — those who are paid above the value of their contribution are often leveraging political skills or other factors not directly related to the value of the work they do. Being part of a work environment in which this closed-door activity is the norm is not engaging and can lead to a feeling of "why bother" when it comes to working harder.
I worked for many years in a company that essentially had salary transparency. Arthur D. Little, a renowned think tank, set everyone's billing rate as a straight multiple of salary. As a result, it didn't take more than simple math to figure out what most people were making (it tapered off at the top of the scale.) But at the bottom, where we eager young professionals were jostling for success, we were acutely aware when a peer was billing out at $500 a day more. The net result, as I remember it, was actually a pretty healthy obsession with increasing the quality and quantity of our work so we could justify a higher billing rate and hence, of course, a higher salary.
So let's think a step further. If salary data were transparent, would it then make sense to let employees set their own pay?
Ricardo Semler, CEO of Semco and author of The Seven-Day Weekend: Changing the Way Work Works, argues that well-informed employees are in the best position to determine their own compensation. Semco has a program called "Up 'n' Down Pay" in which employees manage their own pay, flexibly. The company has found that individuals almost always do so fairly based on the information they are provided regarding compensation levels for comparable jobs in the company or industry — in part because their choices will need to withstand the scrutiny of colleagues. In Semler's mind, this approach not only produces a fair outcome, but allows managers to focus on work that really counts. Semler points out, "Thirty percent of all issues in organizations are what I call boarding school issues: rewards, punishments, how to dress, what time to show up, how to address superiors, how to behave properly." He advocates turning these decisions over to the individual adults who work in the organization.
I strongly believe in the shift toward what I call "adult arrangements." As I've argued before, the nature of work itself is pushing us to stop monitoring where and for how long work is performed, in favor of measuring results — a focus on "task, not time." Many of the arrangements used today, for example, telecommuting and flexible hours, in essence, trust the adult employee with task accomplishment. Is trusting employees with setting their own salary the next step?
And finally, as work becomes more task-based, compensation — at least at the task level — will inevitably become more open. It's easy, for example, to find out what I charge to make a speech or conduct a workshop and what others in my field do, as well. As more work is done on a freelance or contractor basis, scrutiny of compensation on a per-task basis will become widespread. Even within an organization, associating compensation with tasks or roles and making that information known will become more common. You may not know what an individual makes on a cumulative basis over the course of a year, but the per-task earnings will be clear.
What do you think? How transparent are compensation levels in your organization? How would you feel about knowing what everyone else makes? Would you want to set your own compensation? I'd love to hear your views.
]]>Hmmm. I probably was assuming that before he mentioned it. Is this something I really want to have brought to my attention? Is this something I need to hear?
I started to imagine all the other situations in which I really would not appreciate an announcement. How about a nurse who assured you that the syringe she's about to stick in your arm has never been used before? Or a waitress who mentioned that she washed her hands before she made your sandwich? Again, really something I prefer you not call to my attention.
A boyfriend who says that he is not going to break up with you today? A boss who is not going to fire you? (Okay, in today's climate, I grant you that one might be nice reassurance to have.)
But we often say too much.
Here are five situations in which saying less would have been more.
1. Describing one more product feature, after the customer's facial expression indicates that she has already decided to buy. By describing an additional feature, the only thing you can possibly do is trigger an objection the customer had never considered.
2. Beginning any meeting or speech by letting your audience know that you are poorly prepared or prepared at the last minute. At a minimum, this demonstrates a lack of respect for the importance of the event or other participants. In most cases, you also decrease the authority of your conclusions.
3. Asking a question that shows you have absolutely no idea about something you really should understand. I know, people often say there's no such thing as a dumb question. But, frankly, that's just . . . well, dumb. Sometimes it's much wiser to do some research (or ask a friend) to get grounded, and then go back with "smart" questions.
4. Trying for a second laugh after your first spontaneous comment proves amusing. (Think of this as the George Costanza rule for any of you who are Seinfeld fans.) It almost never works. Quit while you're ahead.
5. Assuring people things won't happen that people never imaged would. An airplane with enough fuel should be a given.
Shhhhh . . .
What would you add to the list?
]]>They began by making a presentation to me, outlining their excellent, best-practice approaches to compensation, benefits, and so on. Soon, to be honest, I was bored out of my mind.
I interrupted. "Why do you work here?"
Instantly the mood and energy in the room changed. One person described her passion for helping older individuals live better lives. Everyone nodded and chimed in with enthusiasm.
"How often do you feel that way? How frequently are you reminded that that's what you do here?"
One person described a time she had been invited to go to Capitol Hill to watch while a piece of legislation that AARP had worked to support was signed into law. Remembering the day, she added, "It gave me goose bumps!"
"Fantastic! How many of your colleagues have that type of experience?"
Hmm. Not many, it turned out.
"And how often do you get to do things like that — have experiences that make you feel that way?"
Not often, it turned out.
"Okay. That's what we should be talking about."
I strongly believe that the essence of a great employee experience — one that deepens our commitment and heightens our engagement — are those moments that give us goose bumps — the moments that remind us why we chose to work for this particular organization in the first place.
One trick is that we don't all value the same thing. Some of us live for the adrenaline rush of the next big sale — or the intellectual satisfaction of discovering something new. Others of us cherish the camaraderie of friends and sense of belonging within a warm and family-oriented organization. Some love the steady and predictable rhythm of weekly checks and regular promotions — or perhaps the sense of freedom that comes from having control over the hours and places in which we work. Happily, as I've discussed in past posts, successful companies tend to attract people who value similar things because prospective employees all perceive (hopefully correctly) that the employee experience will include things they care about. In other words, the company's image, reputation and legends lead intelligent people to surmise that the employee experience will be congruent with their personal preferences and values.
For many who chose to join a mission-driven organization like AARP, being reminded of the mission — having an opportunity to see the benefits of the organization's work — is important. AARP has created a unique "Signature Process," one perfectly suited to their employees' values, the company's fundamental purpose, and their location. Once a year, they invite any and all employees who want to participate to don a special tee shirt and march en mass up to Capitol Hill to show support for a legislative initiative that is important that year. This program undoubtedly furthers the organization's work, but, perhaps more importantly, it reminds every employee — including those who spend most of the year working far away from the constituents the AARP serves — of why they chose to work there. It gives them goose bumps.
Johnson & Johnson is another example of an organization that is good at goose bumps. The first time I spoke at one of their internal meetings, I was scheduled second on the agenda. The meeting was a large gathering of the company's IT staff. I was set to deliver what I hoped would be a highly engaging, provocative and entertaining look at the changing workforce. I needed an audience in an upbeat mood!
But as I waited back stage, I realized the gentleman on before me was a physician who was telling some extremely sad stories of nearly-dying babies, along with the role that J&J's products had played in saving lives. He had my audience in tears. Oh, great.
I learned later that most large meetings at J&J start this way — with someone from the company's key constituencies, a doctor, nurse, or parent, talking about the impact of the work done at J&J on an important human health issue. This practice, while not perhaps ideal for the speakers who follow, is a wonderful and highly effective way to give everyone goose bumps — to remind people who probably never come in direct contact with patients what it means to work at J&J.
In this difficult year, it's important to understand why people joined your organization and reinforce those values. In most cases, these steps don't cost a lot of money, but they can have a huge impact on employee engagement and commitment.
Find the authentic core of work at your organization and create ways to amplify and extend the experience to all employees. Give 'em goose bumps.
How are you reminding employees what it means to work in your organization?
]]>Individuals born from about 1928 to 1945 (Traditionalists)
In the 1940's and 1950's, while teens in India were living through the advent of the independent Indian state and those in the U.S. were experiencing the birth of the consumer economy, teens in China were also living through a major transition. The second Sino-Japanese War, the largest Asian war in the twentieth century, ended, ending the 14-year-long Japanese invasion. In its wake, civil war raged between the Nationalist and Communist parties. In 1949, Chiang Kai-shek and the Nationalist Party fled to Taiwan and, on October 1, the Communists established the People's Republic of China (PRC) on the mainland.
Communist leader Mao Zedong initiated major economic reforms — a socialist "Big Push" to industrialize China, replacing landlord ownership and peasant workers with the development of heavy industry and the construction of new factories. Throughout the 1950's, Mao's campaigns to suppress former landlords and capitalists intensified; foreign investment in the country essentially ended. In 1958, Mao launched a new initiative, the "Great Leap Forward" — an unprecedented process of collectivization in rural areas: the formation of communes, the abolition of private plots, and the creation of a massive auxiliary network of small-scale industries, such as backyard iron smelters to produce steel — all designed to shift the nation from an agrarian to industrial economy. Agricultural output plunged, resulting in widespread malnutrition. By 1960, the country was in the throes of an economic and humanitarian disaster; 30 million people perished.
For teens coming of age during these years, it was a time of conflict and confusion as traditional ways of life were uprooted in pursuit of modernization. Hard physical work and poverty was a fact of life for most. This generation learned that affiliating with the "right" people was essential for survival, advice they undoubtedly offered to their children.
Individuals born from about 1946 to 1960/1964 (Boomers)
The 1960's and 1970's were the years of the Great Proletariat Cultural Revolution. Under Mao's socialist orthodoxy, both traditional Chinese and Western culture were repressed, social institutions collapsed, schools were abolished, public transportation came to a nearly complete halt, temples and churches were vandalized, and "liberal bourgeoisie" and intellectuals purged. Sino-Soviet relations deteriorated, ending Soviet technical assistance and further isolating the country. Living conditions remained extremely difficult.
Unlike teens in the United States and in India who formed cynical views of authority based on the corruption they saw in their leaders, teens in China were a major force within the Cult of Mao. With no schools to attend, they joined the Red Guards and gained whatever knowledge they had from the Chairman's Little Red Book. Many demonstrated in support of Mao and joined in terrorizing ordinary citizens. Members of this generation in China grew up with the belief that loyalty to the state and institutions would be rewarded, questioning authority was unacceptable, education was unnecessary, and anything "foreign" or "old fashioned" was unwanted. They were dedicated to a single way — "the" way of doing things.
After Mao's death in 1976, the Cult of Mao rapidly devolved, leaving many in this generation — now young adults — disillusioned, uneducated, and angry at their sudden oust from power. Today this generation is known in China as the "Lost Generation," since, without any formal education, many of its members are ill prepared to participate in the modern world.
Generation X - Individuals born from about 1961/1965 to 1979
Growing up in the post-Mao 70's and 80's, years, teen X'ers in China grew up during the period of Economic Reforms and Openness, similar to the reforms underway in India at the same time: de-collectivization of the countryside, decentralization of government, and legalization of private ownership. Special Economic Zones were created to encourage capitalist investment. Reforms included the development of a diversified banking system and stock markets. The consumer and export sectors developed rapidly. By the mid-1980s, living standards, life expectancies, literacy rates, and total grain output were up and an urban middle class was growing. X'ers became the first generation in China to come of age in a consumer society.
This generation of teens in China also grew up with more personal rights and freedoms than the previous two generations. By 1980, Deng Xiaoping had maneuvered to the top of China's leadership. There was a renaissance of traditional Chinese culture; local religions including Buddhism, Taoism and Confucianism flourished. Beginning in the late 1980s, mainland China was exposed to many Western elements: pop culture, American cinema, nightlife, American brands, and Western teen slang. China developed a strong cell phone culture, and soon had the most mobile users in the world.
Despite the economic and cultural progress, the country remained a totalitarian state. Liberals protested Deng's unrelenting stance on the political front. In 1989, the Tiananmen Square protests resulted in China's government being condemned internationally.
For this generation, the flood of new information, academic opportunities, and world knowledge was highly appealing and shaped a life-long inclination toward learning from multiple sources. Economic opportunity, including a growing consumer market, was available for those who studied and worked hard. Members balanced between the reinvigoration of China's cultural heritage and exploration of opportunities in the West. Not naturally Western-savvy, X'ers developed with a mental model that was highly pragmatic and facts-based.
Generation Y - Individuals born from 1980 to 1995
Around the world, Generation Y teens shared many common experiences. As in India and the U.S., teens in China were swept up in a booming economy. Although foreign trade embargoes from Tiananmen were in place, economic growth in China continued at a fast pace during the 1990's and early 2000's. Reforms continued, including the sale of equity in China's largest state banks to foreign investors and refinements in foreign exchange and bond markets. In 2004, the National People's Congress provided protection for private property rights and placed new emphasis on reducing some of the disadvantage of industrial growth, including regional unemployment, unequal income distribution between urban and rural regions, and environmental pollution. The country made significant investments made in science, technology and space exploration. Thousands moved from rural villages to cities, farms to factories, leaving behind family, class and history. By 2007, most of China's growth was coming from the private sector. Throughout this period, China has gradually become more open and less repressive - not a democracy, but also no longer a totalitarian state.
Nicknamed the "Litter Emperors," Gen Y's in China occupy a special role in the burgeoning society. China's one child policy, introduced in 1979, means that most members of this generation are only children, in many instances reared as the sole focus of two parents and four doting grandparents. They tend to have high self esteem and a level of confidence that positions them for leadership roles in China and globally.
Like many Y's around the world, this generation has strong advanced technological skills and an urge to be connected globally. Even as teens, they confidently communicate directly with outside world leadership and influence the future of their country. During the 2008 Tibetan unrest which marked the 49th anniversary of the failed 1959 Tibetan uprising against Beijing's rule, young patriotic Chinese waged Internet campaigns against Western media coverage of the protests. Also in 2008, when a massive earthquake killed 70,000, many young people participated in the rescue as volunteers.
Teen Y's in China have experienced a wave of national pride. Two foreign colonies were returned to China during their teen years: Hong Kong from Britain in 1997 and Macau from Portugal in 1999. In 2001, China was admitted into the World Trade Organization. Most significantly, in 2008, China successfully hosted the 2008 Summer Olympics.
As in India, Y's in China share this generation's global sense of immediacy, coupled with the excitement of being part of the country's first wave of broad economic opportunity and growing national pride. Y's in China are confident and competitive. For many, a desire for economic success is closely coupled with a desire for status. They are looking forward, toward increasing China's role and influence in the world.
As we look ahead to future generations, the one child policy was re-evaluated in 2008 and extended for at least another decade, insuring that the next generation will also be comprised largely of single children.
China, like other countries I'll discuss over the upcoming weeks, illustrates the dramatically different experiences and formative events that influenced those growing up in the 1940's – 1970's (the generations that I call Traditionalists and Boomers in the United States), and the growing similarity of experiences in the 1980's onward. Generations X and Y are the beginnings of global generations.
Now I'd love to hear from you — particularly if you grew up in China. What events were most memorable and influential during your teen years? What characteristics influence the way you view the world today?
If you'd like to understand more about generational traits and the implications for you as a leader, I hope you'll explore Harvard Corporate Learning's new online program based on my work: "Leading Across the Ages." In this difficult economy, it's a great way to share insights broadly within your organization — to reduce intergenerational tensions, strengthen relationships among your colleagues, and increase productivity and the likelihood of innovation. I hope you'll check it out!
Robert Putnam pointed out in his bestselling book, Bowling Alone, that young people today tend not to attend church socials, join the League of Women Voters, or hang out at the Elks Club. Nor, as his title said, do they join bowling leagues. In Putnam's eyes, this disinclination to join community organizations translated a lack of civic or social responsibility. He concluded, "By virtually every conceivable measure, social capital has eroded steadily and sometimes dramatically over the past two generations . . . The quantitative evidence . . . is overwhelming."
Hmmm. Not really.
The young people in Putnam's sights were largely members of Generation X — those in their 30's and 40's today. I think most of you in this age group would agree that you are sustained by deep relationships with friends, particularly those formed through the high school years. San Francisco writer Ethan Watters coined the phrase "urban tribe" to describe Gen X-ers' tight relationships, and writes: "These may be the people you turn to discuss the absurdities of the day, share confidences, help each other define goals, fall in and out of love, and schlep couches and big-screen TVs from one apartment to the next." For many X-ers, friends become like family — they are your community and closest source of support.
Putnam correctly characterized Gen X's diminished interest in what we might call "institutional" social networks, but missed the role that friend-based "tribes" play in creating community.
Which brings me to the second question — one I've been asked more than once by parents who are feeling hurt by their child's vehemently negative reaction to the suggestion that the parent join them on Facebook. (If you haven't had this reaction from your offspring, be assured that the young person's reaction, in some cases, is delivered with a tone of revulsion topped only, I would suspect, by an offer to discuss the parents' conjugal relations.) Why?
Facebook clearly isn't just for kids anymore. Trust me, it's fine for you to join — and to "friend" your friends. According to research by iStrategyLabs, over the past six months, the largest growing demographic of Facebook users has been 35-54 year olds, with a 276.4% growth rate. Not far behind was the 55 and over demographic with a 194.3% growth rate.
But don't necessarily expect to be invited to join your son or daughter's Facebook group. Facebook is about tribes, too. Gen Y uses it to connect and share information with their circle. If they have a horrified reaction to your suggestion that you join the group, don't interpret it as a personal slight — and don't assume it's because something shady is happening on the site. For the vast majority of Y's, dropping into Facebook to touch base is analogous to staying after church for coffee hour or going to the club a couple hours before tee time. It's a way to catch up on the latest news within your social circle.
Having a tribe — a comfortable community — is important. The family-like tribes (epitomized in the 90's by television shows Friends and Seinfeld) fill the role of bowling leagues and church socials for Gen X. Electronic forums make nurturing social these groups easier for us all.
I'd love to have you join the Plugged In Facebook group . . . or my group of old college friends . . . or start your own group to reconnect with your tribe(s). Enjoy!
]]>By definition, a generation is a group a people who, based on their age, share not only a chronological location in history but also the experiences that accompany it. These common experiences, in turn, prompt the formation of shared beliefs and behaviors. Of course, the commonalities are far from the whole story. Even those of you who grew up in the same country also had unique teen experiences, based on your family's socioeconomic background, your parents' philosophies, and a host of other factors. But the prominent events you share - particularly during formative teen years - are what give your generation its defining characteristics.
Let me briefly compare some of the formative experiences - and resulting generational traits - of individuals growing up in the United States and India. I'm hoping you'll join the discussion to share your experiences.
Traditionalists - Born from 1928 to 1945
Traditionalists were teens in the 1940's and 1950's. In the United States, these teens experienced a booming post-War economy - rapid growth of suburbs, increased availability of consumer goods, and a boom in white collar jobs. It would be logical for any teen growing up in this atmosphere of budding opportunity to be excited about the possibilities of joining in. Traditionalists in the U.S. tend to be loyal to institutions and accepting of hierarchy and rules. For many, financial success is an important metric of achievement.
In India, the 1940's and 1950's saw the birth of India as an independent nation. Teens would have witnessed Mahatma Gandhi's non-violent, civil disobedient campaign for independence, the end of the British Raj, and Gandhi's assassination. Like the U.S., this was a time of patriotic pride, with the resurgence in Indian traditions and the establishment of a democratic republic with elections. But the living conditions in India at the time were difficult - a poor economy, short life expectancies, low rates of literacy, mass impoverishment, stalled industrial development, and destitute farmers. The Indo-Pakistani War of 1947 (also called the First Kashmir War) marked the beginning of a long border conflict.
For individuals in this generation in India, patriotic pride over newly established independent nation blended with loyalty to family and community. The concept of boundaries was an important element of an individual's mental model - boundaries of new states, local sects/groups, and the individual. Success was defined as obedience to traditional practices, while finding ways to participate in this new India.
Boomers - Born from 1946 to 1960/1964
Teens in the 1960's and 1970's, Boomers in the United States were heavily influenced by the Vietnam War, the Civil Rights movement, widespread protests, the assassinations of Kennedy, King, and other idealistic leaders, and, toward the end of their teen years, Watergate and Nixon's resignation. Most emerged from this era suspicious of authority and idealistic about their role in the world. In addition, Boomers grew up competing for the limited number of seats available to their rapidly expanded cohort. From this, they internalized the message that life would be a perpetual game of musical chairs - Boomers are fundamentally competitive because they grew up in a world in which zero sum rules apply.
India, during these same years, shifted to a socialist economic model under Indira Gandhi's leadership: nationalization of industries, public works, social reforms, and public investment in education. Political factions grew and the Indian national Congress split into two: Old and New Congress. India signed a 20-year treaty of friendship with the Soviet Union; its first break from non-alignment. Wars around borders continued: Sino-Indian War, Indo-Pakistani War of 1965 (Second Kashmir War), and the Indo-Pakistani War of 1971 (independence of Bangladesh). The rupee was liberalized and underwent severe devaluation. A "Green Revolution" improved agricultural productivity enabling India to feed its population self-sufficiently after two decades of food imports. Toward the end of the period, during the Indian Emergency of 1975-77, Gandhi is accused of corruption, rules by decree, suspends elections and civil liberties, and is removed from power by the opposition.
For teens in India at this time, economic options were limited by the sluggish economy; personal options are heavily influenced by the family, group, or caste into which one was born. For those who are able, success is linked with getting out of India to obtain higher education and work in the U.K. or U.S. Similar to U.S. teens' experience with Watergate, the Indian Emergency left this generation with skepticism of political leaders.
Generation X - Born from 1961/1965 to 1979
Generation X teens in the United States during the 1980's and 1990's lived through a period of extraordinary social change. The economy was poor and many saw important adults in their lives laid off from jobs where they had planned to spend their entire career. They were influenced by the Challenger disaster - the space shuttle that blew up shortly after takeoff, women entering the workforce, rising divorce rates, and the growth of electronic games and of the Internet. The first generation of "latch key kids," X'ers internalized the possibility that many of the institutions in their lives - whether marriage or corporate employment - could disappear. As a result, it is logical that self-reliance became an important life value - a desire to keep multiple options open if something bad were to happen. X'ers are generally mistrustful of institutions, loyal to their friends, and dedicated to being good parents.
Teens in India saw Indira Gandhi killed by her bodyguards and succeeded by her son Rajiv Gandhi, who instituted a number of important reforms: loosened business regulations, lower restrictions on foreign investment/imports, and reduced bureaucracy. Rajiv also led the country into a major expansion of the telecommunications industry, space program, software industry and information technology sector. Political conflict continued: Rajiv Gandhi's image as honest politician was shattered by the Bofors scandal and he was later killed by suicide bomber. P.V. Narasimha Rao became Prime Minister and initiated further economic liberalization and reform. Still, over 75% of 1980s Indian Institutes of Technology graduates emigrated to the United States.
Members of Gen X in India developed a mental model patterned on a rich, vibrant democracy - comfortable with many views, perspectives, and voices. The constraints of the caste system were giving way to the power of education, which was increasingly available for the best and brightest. Although success continues be associated with moving outside the country, economic opportunity is growing within India. Diaspora not only take care of and retain close ties with those in India, but are beginning to make investments in the country's economic future.
Generation Y - Born from 1980 to 1995
Globally, Generation Ys' immersion in personal technology enabled this generation to experience many of the same events and, as a result, develop as the most globally similar generation yet. Acts of terrorism and school violence were among this generation's most significant shared formative events. The random nature of terrorism - in which inexplicable things happen unexpectedly to anyone at any time - left many Y's with the view that it is logical to live life fully now. Around the world, this generation has a sense of immediacy that is often misinterpreted by older co-workers as impatience.
In the U.S., Y's teen years were marked by an unprecedented bull market and a strong pro-child culture. As a result, they are optimistic, goal-oriented, and very family-centric.
In India, the late 1990's and 2000's saw the development of a large middle-class and increased demand for and production of many consumer goods - in many ways, a situation reminiscent of the U.S. Traditionalists' experience with a rapidly expanding pie. The Indian economy grew under liberalization and reform policies, the country was stable and prosperous, and political power changed hands without incident. India became a prestigious educational powerhouse and respected source of IT talent. By 2008, 34 Indian companies were listed in Forbes Global 2000 ranking.
Y's in India share the generation's global sense of immediacy, coupled with the excitement of being part of the country's first wave of broad economic opportunity. As a result, young employees in India tend to share the rapid tempo of U.S. Y's ambitions, but with a greater emphasis on financial reward as a desired outcome. They have come of age in an exciting, dynamic country with significant economic opportunity. Most are entrepreneurial and business savvy, as well as technologically capable and connected. Their mental model is heavily influenced by India's rich, complex democracy - they easily accept diversity of opinion - as well as by the Western heritage of laws and customs left from the old days of British rule, making them strongly suited for global interaction.
So, bottom line: some common traits, particularly among Generation Y, and many differences, certainly in older generations. If you find this discussion helpful, I'll share my research on generations in other countries in future posts.
And I'd love to hear from you - particularly if you grew up in India. What events were most memorable and influential during your teen years?
* * *
Finally, I'm very excited to share with you that Harvard's Corporate Learning group has developed a terrific online program based on my work: "Leading Across the Ages." In this difficult economy, it's a great way to share insights broadly within your organization - to reduce intergenerational tensions, strengthen relationships among your colleagues, and increase productivity and the likelihood of innovation. I hope you'll check it out!
For many X'ers, living up to some internal standard of what constitutes a "good parent" is important. For most, this involves the amount of time spent with children. For many, it implies providing a structure that they feel was lacking in permissive Boomer parenting styles or during their own latch key kid childhoods.
From a business perspective, you get between X'ers and their children at your peril. Even in these difficult times, companies are finding X'ers unwilling to compromise their standards of parenting. Pushed too far or too hard, many will opt out - or turn off.
Where Boomers were willing to work extra hours to get ahead, X'ers often are not. For Boomers, the extra hours translated into increased earnings potential and greater opportunity to provide their families with the benefits that would pave a path to success. For X'ers, extra hours mean time away from the family and missed priorities.
President and Mrs. Obama and stars from Angelina Jolie and Brad Pitt on, symbolize the X'er devotion to parenting. Husband-and-wife rock stars Kori Gardner and Jason Hammel are so committed to active parenting that they take their two children with them on tour. Formed in 1997, their American indie rock group, Mates of State, has produced five universally praised albums. Their tour contract contains a rider requiring the dressing room be stocked with baby food for newborn June and a surprise for 4-year-old Magnolia. Kori breast feeds the baby and Jason takes Magnolia swimming in the hotel pool each morning.
But the determination to be a "good" parent is by no means limited to stars. Most of the X'er parents I've interviewed over the past several years have spoken of decisions made based on achieving their vision of what a good parent should do - working reduced hours, choosing jobs that involve less travel, saying no to extra assignments or promotions.
These choices can be hard for Boomers to understand. For most Boomers, anything that brought greater career success would ultimately translate into a bigger head start for their children. The game plan for helping their children succeed was different.
For companies and managers, the priority that X'ers place on active parenting requires consideration in your approaches toward retaining and engaging this key cohort.
If you're in Generation X, do you agree? Is parenting an important priority? Have you made career tradeoffs as a result? How have companies helped you balance competing demands?
Boomers, have you noticed the shift? How have you responded?
Y's, I know most of you don't yet have children, but how are you thinking of parenting priorities?
]]>While inter-generational misunderstandings can occur in a variety of situations, for teams, I find generational conflict unusually centers around four essential team activities:
Choosing where and when to work. Listen to the language: many older colleagues speak of "going to work." Members of older generations often view work as a place - a location you go to at a specified time, say from 8:30 am to 5 pm. This synchronicity stems from a time when the nature of most work required that workers to be present together, for example, to run a manufacturing assembly line. Over time, of course, the nature of work in most sectors of the economy has changed; today most tasks do not require synchronous activities, yet many in older generations -- including many senior executives -- continue to expect synchronous behavior.
Younger workers, in contrast, tend to view work as something you do -- anywhere, any time. They have grown up in an asynchronous world -- filled, for example, with digital TV recorders that allowed them to watch any show at any time. Many Gen Y's consider the rigidity of set work hours an anachronism from another era.
It's easy for team members to misinterpret each other's behaviors around time and place. Is someone who arrives at 9:30 necessarily working less hard than other team members who are there at 8:30? Is it okay for some members to work from alternate locations? Is adherence to time and place norms important for the team to accomplish its task? Is it viewed by some as an important sign of team commitment?
Communicating among team members. No surprise that many Gen Y's and X'ers are comfortable using electronic communication. They text (or Yammer or Twitter) or post to various social networking sites much more frequently than most older colleagues do.
The crux of most technology-based team misunderstandings is not the technology per se - it is how team members interpret each others' intentions based on communication approaches. Younger members are accustomed to rapid responses from peers; they are likely to feel frustrated and, at times, rejected if they don't hear from older colleagues for a day or so. Team members from older generations may not only be uncomfortable with digital communication, they may even feel offended by a lack of face-to-face or at least voice-to-voice interaction, or left out of the loop.
Getting together. Boomers and X'ers are planners and schedulers; Gen Y's are coordinators. When faced with a need to meet, Gen Y's are likely to ascertain each other's immediate coordinates, and then home in on each other. Older colleagues would almost certainly prefer to rely on pre-planned schedules -- and may be very annoyed by younger team members' seemingly seat-of-the-pants approach. To Y's, the extent of scheduling that goes on in most workplaces today seems stultifying and inefficient.
Finding information or learning new things. Boomers and Traditionalists are linear learners -- most are inclined to attend training classes, read manuals, and absorb the requisite information before beginning the task at hand. Gen Y's are largely "on demand" learners -- they figure things out as they go, reaching out to personal contacts with relevant expertise for information or referrals, as needed. Y's are likely to be bored and turned off by a project that begins with a lengthy training phase. X'ers and Boomers may be annoyed by Y's' frequent questions and requests for input.
As you work with colleagues from other generations, your first priority should be to avoid forming quick negative conclusions. Bring the team members' diverse perspectives out in the open -- help everyone on the team understand the multiple points of view -- and legitimize each person's view in the eyes of the team.
Decide together which norms will work best for your team -- for example, how flexible you are about time and place, how you'll communicate different types of information, how scheduled you need to be, and so on -- based on collective preferences and the work you need to accomplish.
And, so we all can learn more, I hope you'll share your multigenerational team experiences. What issues do you face in working together well? How have you addressed them?
]]>When we first moved to the country fifteen years ago, we knew next to nothing about horses. Happily, we found ourselves in the midst of a very horse-intense community, with lots of new neighbors who were more than willing to take the newcomers under wing and initiate us into the mysteries of equine care.
We soon realized that the views of these well-meaning folks varied widely. It turns out that there are vastly different opinions about how much and what to feed horses, how often and where to put them outdoors, and a myriad of other seemingly straightforward details. Not only are the views different, but they are passionately held. We found few horse people who would acknowledge that approaches other than their own were worthy of consideration, or even, in some cases, humane.
Tom and I decided to look at the wide spectrum of possibilities as a gift. Clearly there was no single right answer. The silver lining of this reality is that anything we did would certainly fall within the spectrum of "correct" under someone's definition. We took a deep breath, relaxed, and began a life with horses that considers other's opinions, but is governed by our own common sense and personal judgment. We focus on the animals themselves, trying to discern which approaches most successfully keep them healthy, happy and safe.
I thought of these early years with horses this week as I listed to the economists offering their passionate views of how President Obama should handle the current crisis. Despite their business attire, all I could see were intensely self-assured equestrians, clad in jeans or jodhpurs, waving their arms as they heatedly asserted that their way was the only way.
I hope President Obama views the divergent views of economists as a gift. Clearly there is no unassailable right answer. Very knowledgeable experts differ widely in their views.
Economics is a difficult field because it is impossible to run the same experiment twice, to isolate the factor that had the greatest impact, to have what scientists call a "control." As a result, it's understandable that very smart and well-intentioned people come to different conclusions. I'd like to hear more of them acknowledge that multiple rational possibilities exist. Most don't, but their confidence in one end of the spectrum should provide strange comfort to those who make the ultimate decisions.
Mr. President, you were elected because people have faith in your common sense and judgment. As long as you remain sincere in your focus on approaches that you believe will keep the most people healthy, happy and safe, I for one will be satisfied that you've given it your best shot. Take a deep breath and move ahead.
]]>Here's the sobering reality we all need to consider as we shape personal, business, and policy decisions this year: demographics support a view of a slower-growing rate of consumption, not just for this year, but for at least the next decade or so in the United States, Europe, and even parts of Eastern Asia.
The number of big spenders is decreasing.
Historically, consumers in their forties and early fifties spend the most money. This is when most people move up to bigger homes, furnish those homes, and support their growing children's economic needs for goods and services, including education. It's also when most people reach their peak earnings, thus reinforcing the propensity to spend.
The unshakable fact, impervious to any stimulus, is that the number of people in this "big spender" age group is declining in many parts of the world.
Harry S. Dent, an investment advisor, draws the line even more narrowly. Using data from the United Nations, he tracks the number of people from age 46 to 50 in countries around the world, as a proxy for growth in consumer spending in each economy. (See Changing Global Demographics, H.S. Dent Publishing, 2007.)
This narrower age range, 46-50 year olds, will decline in number in the United States for the next twenty five years, until about 2035, when members of Generation Y will begin to enter this age category - and will decline in Europe for the foreseeable future.
Clearly looking only at the 46-50 year old age group is a narrow cut at spending patterns - people typically begin to spend more throughout their thirties and early forties. However, an indisputable fact is that the big bulge of high-spending Boomers is moving out of peak spending years, replaced by members of the much smaller Generation X.
And, to add to the conservative picture going forward, members of Generation X have already proven to be cautious spenders. Between 2000 and 2004, the average U.S. household boosted its spending by 4 percent. But the vast majority of this growth came from Boomers; the spending of householders aged 25 to 34 did not increase at all and the spending of householders aged 35 to 44 increased only 1.8 percent, less than half the average rate.
As Boomers move out of peak spending years, Generation X's smaller number and more conservative spending habits will dampen economic conditions compared to the upbeat decades past when Boomers where fully engaged in the accumulation of worldly possessions.
What does this all mean for you, your business, and your country? Here are a few of my thoughts; please join in with yours.
Trying to stimulate consumer consumption, as was attempted last year, is unlikely to be effective or, at a minimum, focuses on a lever that is not sustainable long-term. The cards are stacked against this approach.A successful economic rebound will require developing goods and services that can be sold to economies that do have significant upside in consumer spending. (There is significant growth ahead in the number of 46-50 year olds in India, for example.) Given the demands these growing economies will place on global energy consumption, the newly-offered products must be green.
Most of us should settle in and plan to stay in our current homes for a decade or so. The housing market in the U.S. is unlikely to rebound fully until Gen Y's are ready for home ownership. For large, expensive homes, the uptick is several decades away.
Investment strategies should echo these patterns - housing should be viewed as a long-term investment; technology applicable in developing economies should provide the quickest upside.
Business strategies should reflect an assumption of low- or no-growth in major markets.
Demographic trends would indicate that the economy that emerges throughout 2009 will be substantially different that the economy of the past thirty years. What do you think will be most important for personal and professional success?
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