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The saying “demographics are destiny” is commonly encountered in news coverage, investing advice, and other contexts. It applies surprisingly well to financial services too.
Many talent professionals in financial services are very excited right now by the promise of new technology to change how the workforce learns. Many power new tools are entering the market, from learning boards to virtual reality.
But a focus on these new, shiny tools risks missing the bigger picture. Game-changing tech for talent professionals is available right now. The question is not what innovations are coming, but how to use currently available tech at a time of enormous demographic change.
Knowing what the market wants is an undeniable edge in business. There are few more efficient means of coming by such knowledge than having your workforce reflect the demographics of the market. The generational makeup of America is at a remarkable inflection point right now. Any financial services talent strategy must take this into account to succeed.
For years, Baby Boomers were the most economically influential generation—and the biggest in the workplace. That changed in 2016, when Millennials eclipsed them. Millennials are projected to make up 75 percent of the American workforce by 2025, according to research from the Brookings Institute. The American workforce currently comprises five different generations—an unprecedented social phenomenon.
These five generations are not neatly distributed across seniority levels in financial services, with the youngest workers at the bottom of the org chart and the oldest ones at the top. Many Millennials are now in leadership positions; many older workers are adjusting to part-time or freelance work as they work later in life than their predecessors. The result is a complex and shifting mosaic of generations in financial services workplaces.
Yet this growing demographic diversity is not only chronological. The American workforce, like the rest of America, is becoming more racially and ethnically diverse. The US Census Bureau projects that minority groups, together, will account for the majority of the population by 2042.
Further, the OECD predicts that in the next few decades, many developed countries will experience a rapid decline in their working-age populations. This trend already seems to be coming to bear in the United States, where the most recent data from the National Center for Health Statistics reveals that fertility rates are below replacement levels in every American state except for Utah and South Dakota.
These demographic shifts have major implications for talent professionals in financial services. Trying to make smart business choices without accounting for demographics is like trying to sail while ignoring the weather.
The American workforce, already diverse, is getting more diverse—and older. This has two high-level takeaways for talent leaders in FS.
Takeaway one: neglect older workers at your peril
Legacy financial services companies wanting to foster lifelong learning in the workforce might be tempted to focus their efforts on younger employees. Such organizations often worry that their oldest, most experienced workers will all retire around the same time and create a talent crisis.
Yet any workforce transformation strategy that ignores older workers will be hamstrung. The retirement of the Boomers could cause skills shortages, absolutely—but only the absence of robust training programs that help all workers keep their skills current.
And to reach peak organizational performance, equipping the most experienced workers with the skills they need to stay productive will be crucial. A recent survey of industry executives confirms that an adaptive, digital-first mindset matters much more than a worker’s age.
To help older workers become lifelong learners, Accenture research suggests making learning programs modular to better fit learners’ life commitments and providing new funding models, like grants, to encourage personal lifelong learning plans.
Takeaway two: learn to leverage the platform economy
The benefits of the platform economy (sometimes called the gig economy because of its emphasis on tasks over jobs) for talent management are undeniable. It offers on-demand access to a larger talent pool, faster execution of tasks, and lower costs for hiring, administration, and real estate.
The platform economy is a relatively small way of organizing how work is done right now. One recent study found that just 0.5 percent of all workers are currently employed by online intermediaries. But as demographics shift and technology continues to advance, the gig economy’s relevance for financial services is likely to become indisputable.
That means it’s important for financial services talent leaders to learn how to leverage the platform economy—and to be clear-eyed about the tradeoffs involved. These include losing in-house competencies, having poor control over work processes, and receiving inconsistent quality of work from assignees.
These are two important steps towards creating a culture of lifelong learning, but they are not the only ones—not by a long shot. If you’d like to continue the conversation about how financial services talent leaders can prepare for the future of work, reach out to me. My contact information can be found at the top of this page, and I’d love to hear from you.