Flex time and work-life balance are coming to mean less and less, as the workforce becomes more and more dominated by knowledge workers, who have a different set of goals and options. It’s no surprise then that the needs of knowledge workers and the workplace are fast becoming misaligned. One solution is Mass Career Customization, which enables employees’ to make the choices that are meaningful to them and still meet the needs of the particular workplace.
Sweeping changes in the way we work, live, and build careers are not just on the horizon––they are here and here to stay. These changes are impacting the increasing global demand for, and simultaneously decreasing global supply of, knowledge workers. In 2006, 40 percent of companies around the world reported difficulty filling jobs. In Canada, unemployment in 2007 was at a 33-year low and wages were up 4 percent.
We have identified six trends, each one powerful in its own right, that are converging to create the current labor landscape and require a comprehensive, structured response. We’ve also designed a framework, called mass career customization (MCC),* that reflects the reality of today’s workforce and provides a structured approach for organizations and their people to identify options, make choices, and agree on trade-offs to ensure that value is created for both the business and for the individual. As the working population shrinks, maintaining industry advantage will depend largely on keeping employees engaged and connected. MCC provides a framework for organizational adaptability that will do just that.
Business as usual is not an option
The convergence of six trends is creating a new traditional workforce, diverse in terms of its background, personal circumstances, expectations, and aspirations. As a result, the traditional, one-size-fits-all, continuously full-time model of career progression represented by the corporate ladder no longer fits the needs of the majority of workers today – and tomorrow.
What exactly is happening out there? The story begins with the fact that demand for global knowledge workers will continue to rise in the next decade, while the supply will decrease as Baby Boomers retire and the number of new entrants slows down due to relatively low birth rates over the last 20 years. This trend will vary by country. For example, there will zero growth in the working-age population (those 15 to 64 years of age) in Canada between 2010 and 2050.i Although the U.S. will have a positive growth rate in the same period, the Employment Policy Foundation estimates that by 2012, there will be a six-million person gap between the number of students graduating from college and the number of workers needed to cover job growth and replace retirees. This gap is expected to widen to 35 million people by 2025.
The growing scarcity of knowledge workers will amplify the challenges of recruiting and retaining workers at every stage of their careers, including those near retirement. According to a study by the U.S. Society for Human Resource Management., 65 percent of companies are not focused on retaining older workers. In fact, 80 percent do not offer various employment options to older workers, despite the fact that 80 percent of Baby Boomers would like to stay engaged in the workforce, provided there are more options for working differently.ii
Not only is the workforce shrinking, it’s changing. Fewer and fewer households meet economists’ definition of “traditional”; i.e., a husband who works outside of the home and a wife who does not. In fact, only 17 percent of U.S. households today can be defined as traditional compared to 63 percent of households in earlier generations.iii
Shifts in family structure are due in part to women entering the workforce in greater numbers. Women make up over 51 percent of Canada’s business and professional workforceiv and 51 percent of new entrants into the workforce in the U.S. Women in Canada also earned 61 percent of bachelor’s degrees and over half of all master’s degrees, making them the majority of the labor pool for the knowledge economy.v Yet, most women’s lives do not fit the traditional career trajectories of men; indeed, the majority of women have non-linear or discontinuous careers. The transaction costs of women moving in and out of the workforce are very high for both the individual and the enterprise. As a result, while women are a major source of talent for the foreseeable future, there is a clear mismatch between how careers are structured and how women’s lives unfold, especially for women with children.
Other changes, such as a declining marriage rate, reduced or delayed childbirth among married couples, and an increase in single-parent and dual-career families has resulted in a greater degree of variability in family structures and lifestyles. These profound shifts are putting pressure on existing workplace models of career progression originally structured to match the mainstream rhythms of the traditional two-parent, single-income household of the last century.
At the same time, men are changing in terms of their expectations and desires. More men of all ages are spending time with their children and in other ways contributing on the home front than in past decades. In fact, many have reached a point where preserving or increasing their personal time is more appealing than acquiring bigger jobs and more money. Research shows that control over their work schedules is a high priority for men today. A 2006 study by the Association of Executive Search Consultants in the U.S. found that 56 percent of senior executives surveyed would strongly consider refusing a promotion if it meant fewer hours available for their personal lives. Studies show, however, that very few men take advantage of paternity leaves or other “flex options” because they believe these benefits are intended exclusively for women and that doing so would harm their careers. As a result, “the workplace is not an environment that encourages men to confidently take advantage of any workplace strategies offered.”vi
Nowhere is the convergence of men’s and women’s desires and expectations regarding work more evident than in Generations X and Y, who make up the majority of the workforce in many knowledge-based companies. Defined as those between 18 and 43 years of age, these demographic groups have high expectations for both personal and work lives. Members of these generations view careers as personalized paths that meet an individual’s interests and development goals and include many diverse experiences. As Susan, a 35-year old executive at a global biotechnology company in Toronto states, “Unlike our grandparents generation, and even our parents, we have the opportunity to live our lives in an authentic way, based on our own choices.” These workers are technologically savvy, adaptable to change, and often eager to work in nontraditional methods and schedules.
Finally, new technologies continue to pave the way for employers and employees to create new options for when, how, and where works get done. The explosive growth of broadband has been a major factor in enabling the virtual workplace. In 2000, less than five percent of U.S. households had broadband connectivity, but by October 2006 the number had risen to over 76 percent. Other digital technologies which support new methods for how and when work gets done include virtual private networks (VPNs), email, instant and text messaging, cellular phones, and video-conferencing – all readily available almost anywhere. And new software applications in business intelligence, business process management, and other information management disciplines continue to create exciting new opportunities to accelerate innovation and productivity. The payoff can be substantial. Sun Microsystems reported cost savings of more than $387 million over four years from a global program involving more than 55 percent of its 35,000 employees. Technology is paving the way for employers – and employees – to offer creative workplace options.
Mass Career Customization: A new model for building careers
When you look closely at how people’s careers unfold over time, you see that increasingly the career path for knowledge workers is not a straight climb up the corporate ladder but rather an undulating journey of climbs, lateral moves, and planned descents. A poll of over 250 Human Resource professionals across industries conducted in 2007 found that close to 75 percent had either formally or informally dialed up or down their careers at some point.vii
|Looking back, have you ever formally or informally “dialed up or dialed down” your career?|
|Votes Received: 259|
|No, but I know someone who has||15.8%|
In other words, the corporate ladder is already morphing into what we term the corporate lattice™, a more fluid model that allows for multiple, more varied paths upward through an organization.
Susan, the Gen Xer from Toronto, has stayed in the pharmaceutical industry but has moved from one organization to another. Sometimes she left in search of experience that would round out her expertise, and at one point, because the company culture was too high burn – and she burned out. As she says, “There was a ton of travel, and I worked 10 to 12 hours a day, every day. There was no let up.”
Mass Career Customization (MCC) is a way to enable a corporate lattice organization that allows employees to both dial up and dial down. The MCC framework articulates a definite, not infinite, set of options along the four core dimensions of a career – Pace, Workload, Location/Schedule, and Role – as well as the trade-offs associated with choices across four, highly inter-related dimensions. In collaboration with their managers, employees periodically select options along each dimension based on their career objectives and life circumstances within the context of the needs of the business. These choices are then reflected on a MCC profile. The MCC “common” profile, shown below, depicts what most people’s profile would look like at any particular point in time.
MCC Common Profile
While most employees’ MCC profiles will display common attributes, over time each employee’s MCC profile will exhibit its own path, recording the series of choices made over the course of his or her career. For many, this path will look like a sine wave of sorts, with climbing and falling levels of contribution over time, as illustrated by the series of profiles, below. In this way, MCC provides a structure and a process for how careers are built, and one that better aligns the workplace with the realities of today’s workforce.
To date, the most common corporate response to the current misalignment between the workplace and the workforce has been flexible work arrangements (“FWAs”). Typical FWAs include reduced hours or part-time arrangements, telecommuting, job sharing, compressed work weeks and the like. Whatever the form, no doubt FWAs have helped some along the way. But they do not address the fundamental needs of the changing workforce. Instead, FWAs are, in effect, point solutions positioned as one-off accommodations or exceptions that do not scale nor address the structural issue of workforce/workplace misalignment. FWAs are often negotiated in a state of crisis. They focus almost exclusively on hours and work location at a specific point in time and are neither adequately integrated with the organization’s ongoing talent management processes nor do they address the larger question of career progression. In short, FWAs lack connection with the construct of careers.
In contrast, MCC is a new model for how careers are built that incorporates the dimension of time by acknowledging that an employee’s needs and priorities change over the course of a career. In this way, it is relevant to every career stage – from beginning to end. MCC also applies to everyone in the organization and is fully integrated into existing talent management processes. It eliminates the linear, binary characteristics of the corporate ladder and replaces them with an adaptive framework which encourages adaptability and longer-view thinking as core competencies. The ability to discuss and make adjustments that directly address the changing needs of both the individual and the business then becomes part of the fabric of the organization.
MCC: Benefits to the business
The business benefits of MCC stand to be just as great – if not greater – than those derived from mass product customization. By replacing the one-size-fits-all product with an array of customized product offerings, mass product customization has resulted in lower costs, higher profit margins, and strengthened brand loyalty.viii MCC has the same power to increase employee productivity, reduce the costs of turnover, and inspire greater loyalty, enabling the organization’s most valuable assets – its people – to accomplish the organization’s most important work and purpose.
From the employer’s perspective, employee loyalty helps create customer loyalty – in a virtuous cycle. As James Goodnight, CEO and founder of SAS, the world’s largest private software company with double digit growth, says, “Over the years, I have learned that employee loyalty leads to customer loyalty, increased innovation, and higher-quality software.”ix SAS averages a three percent turnover rate compared to the industry average of 20 percent and a customer retention rate of 98 percent.x MCC provides a platform for building loyalty by moving the relationship between employer and employee toward a more transparent, continuous collaboration.
Figure 2: Mass Customization Shared Benefits
Facing forward: First lessons in implementing MCC
In 2005, Deloitte LLP in the U.S. began piloting MCC – first with teams of client service professionals, then with an entire regional business unit. The objectives of the pilots were to:
- Ensure continued client value and satisfaction
- Quantify the impact of MCC on various talent models
- Support a cultural shift in acceptability of career customization
- Improve practitioner satisfaction and commitment
- Increase retention of high talent
- Create a sustainable, scalable model
The results of these pilots were very encouraging and were the basis of the U.S. firms’ decision to roll-out MCC to the entire organization, starting with close to 20 percent of the U.S-based employees in 2007 with the remaining 80 percent by the end of 2008. There has been no decline in client service, and in fact, clients have responded with great interest in MCC – since they too are facing many of the same issues that Deloitte faces. Participants report higher productivity and better career-life fit. The majority of roll-out participants say that MCC has had a positive impact on their intent to stay with Deloitte, as well as on their willingness to refer Deloitte to others as a great place to work.
From both the pilots and the initial roll-outs, we have learned that a successful transition to a corporate lattice mental model – and ultimately culture – starts with meeting managers where they are and pulling them towards adopting MCC – rather than trying to push them into the MCC model. We kick off each roll-out group with a four-hour executive alignment session where managers are given permission to express their concerns, and dialogue with each other regarding their challenges and how MCC may address them.
A key element of these sessions is recounting the career stories of leaders and other influencers within the sphere of influence of the managers in the room – to reinforce the message that many of us have dialed up or down at some point in our careers, and that no two stories are alike. This process has resulted in a remarkable level of consensus regarding both the need for and potential of MCC. In fact, many managers come forward in the sessions with ways that indeed they may be (or have previously) tailoring their own paths without consciously looking through the lens of customization.
The mindset shift that starts in the executive alignment session is reinforced and supported with training on MCC that is delivered to both managers in their roles as career counselors, as well as to employees in their role as counselees. MCC messages are communicated and reinforced through multiple channels, and integrated into every point along the performance management cycle.
There were also some key insights gleaned from the pilots and initial roll-outs, the most salient of which are:
- Consistency doesn’t necessarily mean the same. Although the MCC framework and process need to be consistent across the organization, each business unit should be given the opportunity to customize the MCC profile to a certain extent to its business.
- It goes both ways. While many partners expressed the concern that the “floodgates” would open once the option to dial down on the MCC Profile was available, this did not materialize. In fact, while the vast majority of people in the pilots and throughout the roll-outs to date have not requested to either dial up or down on any of the MCC dimensions, those who did were more interested in dialing up. We were caught off guard by the strength of the interest in dialing up, and now advise implementers to be prepared to have the MCC dimensions operate in both directions.
- Enablement not entitlement. Unless clearly communicated from the beginning, some employees will jump to the conclusion that MCC entitles them to make whatever choices they want while others ignore the trade-offs associated with certain choices. For, example, requesting a Workload reduction and an acceleration in Pace at the same time is not a realistic choice. In order to counter any entitlement mentality, it is important to reinforce the fact that developing each MCC profile is a shared responsibility, and must fit both the needs of the individual and the needs of the business.
- Learn a new language. We were aware from the start that there was a risk that MCC would be perceived as “FWAs on steroids” rather than as an evolved model for how careers are built. As a result, we have been very careful not to use language long associated with FWAs, such as terms like “flexibility” and even “work/life balance.” Instead, we have crafted a language based on words such as options, choices, career/life fit, and elasticity, rather than flexibility.
- Time and trust. MCC requires a certain level of trust between employee and employer to have conversations about life and work. We know trust takes time to build, but we have also found that MCC actually fosters an open environment by centering the conversation on the level of how business is done. MCC has produced richer, more honest career conversations. As Mike Pacetti, one of the roll-out site champions said, “The counseling sessions I held using the MCC framework were clearly more productive. The counselees came prepared to talk about how their profiles look today and what their profiles might look like in the future. They appreciated the transparency, and talked openly about career-life fit. There was a real acknowledgement of the need to be able to customize careers.”
- From the start—integrate with talent processes. In order for MCC to have the greatest impact, it should be integrated into your talent management cycles and systems, including performance and compensation, existing FWA programs and policies, your resource management and assignment systems, career development systems, and the like.
- Success is relative. It is particularly important to integrate MCC with your goal-setting process so that an employee’s goals and performance metrics are calibrated to his or her MCC Profile. Talented, ambitious people want to be recognized for their contributions, even if they are not dialed up across the board at any particular point in time. For many, it’s not a matter of money as much as it is a matter of recognition for commensurate contribution. MCC allows you to recognize contribution by evaluating performance on a relative scale, i.e., has this person performed exceptionally relative to his or her current goals (which should be aligned with his or her MCC profile). In this way, proportional contributions are better evaluated and recognized.
- The full measure. Although the full value of MCC will not be fully realized for several years, (as it takes time to fully embed this new process in a large organization’s operations and culture), we have developed a suite of metrics to measure the efficacy of the approach. Our metrics include:
- Retention metrics such as voluntary turnover of top performers and exit interview data
- Business financial metrics to ensure no negative impact on client satisfaction, for example.
- Employee commitment which includes employee attitudes about how satisfied they are and how long they think they will work with our organization.
- Quality and frequency of counseling conversations to monitor how effectively managers are in using the MCC process and framework with their employees.
- MCC profile statistics regarding what choice employees are selecting most often and how many employees are opting to dial-up, have a common profile or dial down at any point in time.
Solving the misalignment between the workplace and the new realities of today’s nontraditional workforce is an urgent priority for all C-level executives. The lattice organization, anchored by the MCC framework, fosters this alignment by continuously correlating employees’ talents, career aspirations, and evolving life circumstances with the enterprise’s evolving marketplace strategies and commensurate need for talent. In so doing, MCC recognizes, validates, and embraces the changing tempos of today’s knowledge workers, offering a scalable solution to the enervating dilemmas in their search for work-life integration, solving the “my life doesn’t fit into my work and my work doesn’t fit into my life” conundrum once and for all.
- It’s 2008: Do You Know Where Your Talent Is? (Deloitte Development LLC 2005)
- Kathleen Christensen and Marcie-Pitt Catsouphes, Accomodating Older Workers’ Needs for Flexible Work Options, Ivey Business Journal, July/August 2005.
- Cathleen Benko and Anne Weisberg, Mass Career Customization: Aligning the Workplace with Today’s Nontraditional Workforce (Harvard Business School Press, 2007) at 32.
- Catalyst, Quick Takes: Women in Management in Canada (Catalyst, Inc., February 27, 2007)
- Catalyst, Quick Takes: Canadian Women (Catalyst, Inc. August 1, 2006)
- Kerry Daly and Linda Hawkins, Fathers and the Work-family Politic, Ivey Business Journal, July/August 2005.
- Deloitte Consulting DeBrief on Mass Career Customization with Cathleen Benko and Anne Weisberg, conducted on September 28, 2007.
- T. Piller, Kathrin Moeslein, and Christof M. Stotko, “Does Mass Customization Pay? An Economic Approach to Evaluate Customer Integration,” Production Planning & Control 15, no. 4 (June 2004): 435–444.
- James Goodnight, “Ask James Goodnight: the Founder of SAS Explains How to Be Progressive on a Budget,” Inc., June 2006, http://www.inc.com/magazine/20060601/handson-ask-the-big-wig.html.
- Benko and Weisberg, Mass Career Customization at 111.