IBM Alters 401(k) Policy to Match Employee Contributions Annually Rather Than Each Pay Period

Friday, December 28, 2012

On December 7, 2012 IBM announced that it will no longer match its employee’s 401(k) contributions each pay period, rather it will only match contributions of employees who remain employed through the end of the each Plan Year. This clearly represents an effort on IBM’s part to save money since two things will take place: 1. Employees who terminate prior to year end will forfeit contributions they would have received had they remained through December 15th and 2. IBM will have use of these funds to invest until they are required to match contributions for those who do remain through year end. The point to remember is that the only reason that IBM has a 401(k) plan, or any benefit plan for that matter, is to attract, retain, and motivate its workers.

To what degree with this move impact the “attractiveness” of IBM to potential employees? Top talent always has a choice of where they work and for whom. For those employees who merely want to work for IBM because it is IBM, a 401(k) has little incentive power for them. In an organization as large as IBM, the loss of a few applicants may be of little consequence, unless of course those applicants hold the keys to some new technology which now goes to Dell.

Most benefit plans are designed to “retain” employees by meeting some level of needs (health care) and by building affinity between the employer and the worker. Workers enrolled in multiple employer sponsored benefit plans are more likely to remain with that employer. Long term IBM employees have much to lose by jumping ship after 10, 15 or 20 years; however that attraction may not hold for younger IBM employees with less than 5 years. Once again, top talent has legs and it can walk.

What about the “motivational” factor in this action by IBM? Employee’s like to grouse, if not about their 401(k) match, it will be something else, like the food in the lunchroom, parking or their manager. That is true, but when complaints turn into unproductive and lost production time or workers are distracted from the task at hand, the bottom line will suffer. Who or what is going to be motivating those IBM employees to put out extra effort when it is needed?

One aspect is that some employees will work thru the end of the year, get their contributions, and exit immediately after the first of the year. So IBM may see a spike in turnover near the beginning of each year. This activity is best likened to a Fixed-interval of reinforcement schedule found in operant conditioning. The unintended consequence for IBM may be the same level of turnover but within the first few months of the year. In addition, employees, who hang on until year end just to get the match, may not be the productive employees IBM will want to have.

Organizational Leadership: A Crisis in Still Life

Friday, December 21, 2012

My fantasy is to teach a course on organizational leadership theory, starting with a display of the hundreds of scholarly and popular books that have been written on the subject, each purporting to be the ultimate authority on the subject. Nevertheless, organizational leadership is essential to both the success – and its lack – the failure of every organization: public, private, for profit, and not-for profit.

The 2012 Kelly Global Workforce Index (KGWI), conducted by Kelly Services, Inc. recently looked at a number of workplace issues including organizational leadership styles in a survey of some 168,000 workers in the Americas, EMEA, and APAC regions. The survey was conducted by the RDA Group at the request of Kelly Services.

The third installment of  the survey titled, “The Leadership Disconnect”, attempted to determine how satisfied global workers are with their organizational leadership. Not so surprisingly, most workers are not satisfied with the leadership style of their own leaders.

Several of the key global findings include:
● Workers not listening to the messages from leadership.

● Workers questioning core principles of their organization.

● Less than half are satisfied with their organizations’ leadership style.

● Significant gap in leadership style practiced vs. what is desired by workers.

● Less than half indicate they are NOT inspired by current leaders to do their best.

● A little more than 60% believe in what their organizations are trying to accomplish.

The study suggests a number of ways for both organizations and workers to address this management gap.

For employers:

1. How are you evaluating your leadership development efforts?  Are you considering how best to lead a multigenerational/cultural workforce?

2. Are you grooming leaders who are solely focused on growing the business from the bottom line?  It may be time to also teach them how to grow the business from the front line.

3. How are you revising your leadership development efforts to deal with the increase in the virtual workforce?

4. Are your leaders just too busy to lead?

5. Has the move to more matrix organizations contributed to the disconnect between workers and leaders

6. How can you encourage more group collaboration and more decision making authority?

For workers:

1. How do you cope when your manager doesn’t speak your language?

2. What are the ways of earning more responsibility on the job?

3. How can you improve your leadership skills?

4. How can you fuel your own individual inspiration?

What can be gleaned from The 2012 Kelly Global Workforce Index?

● Each generational cohort requires different managerial and communications skills.

● Acquiring the right talent is still the best way to improve the bottom line.

● Leading the digital worker is not the same as leading the physical worker.

● Leaders must lead, not do.

● Managers, there is no room for “us vs. them” thinking.

● Managers must incorporate workers into the leadership process.

● Workers must learn the language of their leaders.

● Worker must seek ways to grow their own responsibilities.

● Workers need to lead from the bottom.

● Workers must own their own inspiration.

Millennial Employees in the Workplace

Friday, December 14, 2012

In 2011 PricewaterhouseCoopers (PwC) reported on its survey of 4,364 university graduates in 75 countries releasing a study on Millennial employees at work in its analysis titled “Millennials at work: Reshaping the workplace 2011”. PwC perceives that Millennials are expected to be an influential cohort of employees. It is believed that Millennials who process the correct talents and skills will be in extraordinary demand for those talent and skill sets. Millennials are expected to command both significant remuneration and direct how, where, and when they will work. Lastly, PwC envisions Millennials may very well be a challenge to manage for many of their employers.

According to Pew Research, Millennial employees are those born between 1977 and 1992 and are now entering the workplace. So what is significant about this generation? For one thing, they have grown up in a digital domain online real-time world encompassing an explosion of PC’s, Internet, WiFi, Cell and Smart Phones, laptops, tablets, and a propensity for 24-7 connectivity.

Pew Research notes, the Millennial generation is:

     • The most ethnically/racially diverse group in the nation's history.

     • The most politically progressive group in modern history.

     • The first cohort to regard digital behaviors as commonplace.

     • The least religiously observant cohort.

     • They are inclined toward trust in institutions.

Why are Millennial employees important to employers? They are the second largest segment of the population after Baby Boomers, 30% vs. 34% respectively. Generation X comes in a distant third at 19%. So as Boomers reach age 65 at a rate of 10,000 per day, many vacated jobs will be filled with Millennial cohorts. And since we know that many Boomers are planning to work beyond their normal retirement age, this could be a source of conflict in the workplace employers will have to address.

Michael A. Olguin, writing for Inc 5000 on April 13, 2012, identified five motivational characteristics of the Millennial worker:

“1. Reinforce the positives

Millennials need constant affirmation and positive reinforcement in order to feel like they are doing a good job.

2. Recognize that each person is different ...

Like any group, not all millennials are the same. Therefore, it's important to not implement a "one size fits all" approach to managing them.

3. Be flexible

Millennials by nature don't really like rules. They grew up in an environment where parents asked their opinions, allowed them to make decisions, and rarely pushed something on them that they didn't like.

4. Allow as much ownership as possible

The best way to handle a Millennial's feelings of entitlement is to provide them with a lot of responsibility.

5. Don't be vague

Millennials are not good at interpreting what you meant and rarely succeed when put into a situation to "wing it" themselves. Though they want responsibility and authority, they are uncomfortable without having some sort of framework for the task at hand. “

Managing Multigenerational Workforces

Friday, December 07, 2012

Writing for the Tampa Bay Times on November 21, 2011, Marie Stempinski noted several attributes identified with Baby Boomers, Generation X, and Generation X (Millennial) which have a direct impact upon workforce dynamics. In her Times article, Stempinski focuses on the uniqueness of each generation as well as their interplay.

• Baby Boomers (1946 - 1964), many are remaining in the
   workforce due to financial reasons, because want to work,
   and they actually like what they are doing. Many may
   continue to work into their 70’s and possible beyond.
   Boomers are frequently the most loyal and knowledgeable
   employees in an organization’s labor force.

• Generation X, (1965 - 1976), they are often middle managers,
   hard workers, unique, want to learn new technology. Sometimes
   they can be distrustful and skeptical about the future. They are
   seeking a work-life balance.

• Generation Y (Millennials) (1977 - 1992), they challenge the
   status quo, they are team orientated, they want their input
   and their technology abilities to be recognized and compensated.
   They often distrust large organizations. They expect to make
   numerous job changes in their life in an effort to find a work-life
   balance.

The challenge for organizations is to integrate these three generations into a functioning, yet diverse labor force, making the optimum use of each groups’ skill sets.

In a 2007 publication by AARP, “Leading a Multigenerational Workforce”, prepared by Susan A. Murphy, PhD, of Claire Raines Associates, the author explores the impact of the developing multigenerational workforce. Murphy notes in the opening pages of the study that it is possible for 20 year olds to be working next to 70 year olds. Throughout her analysis, the differences, commonalities, assets, liabilities, myths, and realities of four generations are explored. The study identifies six guiding principles for managing a multigenerational workforce successfully:

1. Open a dialog around generational issues with the workforce.

2. Ask workers about their requirements and preferences.

3. Propose options, alternatives, and offer suggestions.

4. As a manager, style should be tailored to individual workers.

5. Build on the interplay of the strengths of each generation.

6. Practice a diverse set of viewpoints.

Why the concern ourselves with managing a multigenerational workforce? The simple answer is the ongoing demand for talent. Most organizations have a huge investment in its labor force. That investment is comprised of knowledge, skills, and abilities. Regardless of which generational segment is discussed, the demand and competition for top talent is not going to let up. While the workplace has seen astronomical advancements in technology, someone has to conceive, design, build, deploy, and maintain that technology. The current workforce has increasingly moved from an analog world into a digital domain and along the way acquired the talent to make today’s work environment the most productive in history. Attracting, retaining, and motivating an organization’s multigenerational talent may well make the difference between the success or failure of an establishment.