HOW TO COPE WITH AN AGEING WORKFORCE IN FRANCE, C PERRIN

Tags: generation, Baby Boomers, career management, France, Ernst & Young, literature review, job, companies, older workers, OECD, answer, 1964-1980, early retirement, coherent sense, employees, Finance department, technical skills, Lancaster, department managers, Human Resource, unemployment, Question, training days, Jeremy Hope, performance management, CFOs
Content: HOW TO COPE WITH AN AGEING WORKFORCE IN FRANCE WITH A FOCUS ON A PROFESSION: CHIEF FINANCE OFFICER DISSERTATION FOR THE MBA CATHERINE PERRIN SUPERVISOR: PROFESSOR GREG MATHERS 1
Abstract In France, people used to retire earlier and earlier. It was perceived as a social progress and a mean to make room for young people when unemployment rose. Very recently, the retirement age was postponed from sixty-years old to sixty-two years old. This measure was due to the population ageing and to the difficulties to finance retirement pensions. This measure highlighted an issue coming more and more demanding: the difficulties for people who are more than fifty years old to keep their job or to find a new job. The literature review on the general issue will show that there are four main reasons to the difficulties of the older workers. Firstly, employers believe that older workers are less productive than younger workers though there is no evidence of this statement. Secondly other stereotypes are common and are caused partly because the different generations have different cultures. A third reason is related to people's careers that may be not managed properly. Finally, people themselves believe that they are too old to work and then want to retire early. Further research focusing on a specific position, CFO (Chief Finance Officer), led to a better understanding of the third reason: poor career management. CFOs who are currently older workers started to work in the accounting department and they learned that they had to control the companies and help decision making; during the following decade CFOs had to realize that their role was changing. These changes were related with technology, but they were also 2
related to changes in the business environment. Career management became more and more complex, moving far away from the simplicity of the old covenant between employers and employees: employers will take care of their employees if employees are loyal to the company. A survey showed that the mindsets concerning career or success are not homogeneous by generation, and this will increase the complexity of career management. To help people to manage their career at best, companies have to understand that people must be employable inside the company, and outside the company. Therefore, companies must help their employees to manage their career at large: the employees must ensure that they have the skills to find a new job at any time. Further research to understand how companies could benefit from a career management at large might help implementation of new tools as presented in the Chapter 6. This new tools focus on segmentation of the employees and to establish a benchmarking between the employees inside the companies and people working in the same position outside the company. 3
TABLE CONTENTS 1 Introduction ........................................................................................................................ 9 2 A reversing trend .............................................................................................................. 11 2.1 Historical perspective ................................................................................................ 11 2.2 Demographic challenge ............................................................................................. 12 2.3 OECD recommendations ........................................................................................... 14 2.4 Who are the older workers?....................................................................................... 16 2.5 Older people and unemployment............................................................................... 17 2.5.1 It is difficult for older people to find a job ......................................................... 18 2.5.2 Employment environment has changed ............................................................. 20 3 Barriers to employment .................................................................................................... 22 3.1 Barriers due to age ..................................................................................................... 22 3.2 Barriers caused by different culture from different generations................................ 25 3.2.1 Different attitude to work ................................................................................... 26 3.2.2 Perceptions and stereotypes ............................................................................... 29 3.3 Causes due to career management............................................................................. 30 3.4 People themselves want to retire early ...................................................................... 31 4 CFO case .......................................................................................................................... 33 4.1 Changes in environment ............................................................................................ 33 4
4.1.1 Data to be considered have exploded over the years ......................................... 34 4.1.2 Change in regulations ......................................................................................... 35 4.1.3 Cost reduction of finance department led to new organizations ........................ 37 4.1.4 Even the budget process is currently disputed ................................................... 38 4.1.5 New performance systems are often provided ................................................... 39 4.2 A new vision of the CFO's role is emerging ............................................................. 40 4.2.1 The right control level ........................................................................................ 41 4.2.2 CFO as business partners ................................................................................... 42 4.2.3 Highly efficient team.......................................................................................... 42 4.2.4 Better communicate and better teaching ............................................................ 42 4.2.5 Better Business understanding ........................................................................... 43 4.2.6 Technology......................................................................................................... 43 4.3 Facing changes ......................................................................................................... 44 4.4 CFO career and experience........................................................................................ 45 5 The survey ........................................................................................................................ 48 5.1 THE SURVEY BACKGROUND ............................................................................. 48 5.2 GENERAL ISSUES .................................................................................................. 49 5.2.1 Job security and career security ......................................................................... 49 5.2.2 Change................................................................................................................ 50 5.2.3 Authority ............................................................................................................ 51 5.2.4 Feedback............................................................................................................. 52 5
5.2.5 Performance review............................................................................................ 54 5.2.6 Training .............................................................................................................. 55 5.2.7 General findings ................................................................................................. 55 5.3 FINANCE POSITION............................................................................................... 56 5.3.1 The formative years............................................................................................ 56 5.3.2 CFOs survey findings......................................................................................... 59 5.4 Main finding of the survey ........................................................................................ 59 6 A guide for companies and human resources consultants ............................................. 61 6.1 HOW TO REMOVE THE BARRIERS: PREVENTIVE SOLUTIONS ................. 61 6.1.1 Training .............................................................................................................. 61 6.1.2 Career management............................................................................................ 62 6.2 A tool for companies: segment the employees .......................................................... 63 6.2.1 Segment I ­ the strange position ........................................................................ 64 6.2.2 Segment II - High level people .......................................................................... 65 6.2.3 Segment III ­ The Expert position ..................................................................... 66 6.2.4 Segment IV ­ The dangerous position ............................................................... 67 6.2.5 Evaluation of a department ................................................................................ 67 6.2.6 Collect information ............................................................................................ 68 6.3 A tool for managers: Implement Key Indicators ....................................................... 69 6.4 Tools for every actor: survey and benchmarking ..................................................... 70 6.4.1 Benchmarking .................................................................................................... 70 6
6.4.2 Survey................................................................................................................. 70 6.5 Fighting against stereotypes ...................................................................................... 74 6.6 Evaluate the benefits of this process.......................................................................... 75 7 Conclusion........................................................................................................................ 76 7.1 Barriers to generation ................................................................................................ 76 7.2 Changes inside a position .......................................................................................... 76 7.3 who is in charge? ....................................................................................................... 77 7.4 Suggestions for future research ................................................................................. 78 8 APPENDIX ...................................................................................................................... 79 8.1 Appendix I Translation .............................................................................................. 79 8.2 Appendix II Segmentation of people having answered to the survey ....................... 93 8.3 Appendix III The questionnaire................................................................................. 95 9 Bibliography..................................................................................................................... 98 7
TABLE OF EXHIBITS Older age dependancy ratio................................................................... .........14 Labor participation rate........................................................................ .........15 Discrimination positive answers............................................................. .........20 Positive answers by position ............................................................. .........21 Survey: Job security and career security.................................................... .........51 Survey: change................................................................................. .........52 Survey: authority............................................................................... .........53 Survey: Feedback.............................................................................. .........54 Survey: Performance review.................................................................. .........55 Survey: Training................................................................................ .........56 Survey: finance position, the formative years.............................................. .........57 Segmentation ................................................................................... .........65 8
1 INTRODUCTION For years, it has been difficult for older people to find a new position. One approach to solve this issue was through early retirement: people were allowed to retire earlier and earlier. Early retirements are not suitable any longer because the ageing population is growing; as a result, it will be challenging to finance long-term pensions. In France, the situation is exceptionally demanding because employees are accustomed to retiring early and companies are accustomed not to hiring older people. They even made them redundant when they have to reduce their cost and their account. Though Research has already been done on this issue, Research has mainly been done on an economic point of view and not on a corporate point of view or even on workers' point of view. For instance, OECD published in 2005 a report which describes the current situation and offers solutions to encourage and improve older workers' employment. Nevertheless, this report never tries to understand the point of view of companies which are reluctant to keep their older workers, not to say to hire some of them. The financial crisis being considerable since 2008, this issue will be critical in France for the next few years. OECD (2011) statistics show that 39.7% of population aged 55-64 was still working in 2010 while 60.3% of older workers are still at work in the Unites States and 57.7% in Germany. Since the situation did not improve between 2005 and 2010, this paper will try to understand whether additional reasons could explain why companies do not hire older people. One issue is might be related to the differences that exist between the generations currently at work: these reasons might explain the difficulties for older workers to remain employable. The research will try to understand whether these differences could impact older worker 9
employment. At last, while the previous reasons might apply to any worker, this paper will seek to understand, through the CFO position, how the position has changed over the years and whether technical training is sufficient. The scope of this paper is to understand the barriers that might exist for companies or workers themselves. This paper will not cover the current economic consequences of this situation. This paper will first present the current situation, as stated by the OECD report (2005). Secondly, a review of literature will show that the generations currently at work have different behaviors, beliefs and expectations and how the environment has changed for workers during the next decades; the case for the position of CFO will be studied. These findings will be reviewed through a survey. Eventually, a practical tool will be built to help companies and the workers themselves to deal with this issue. 10
2 A REVERSING TREND The present chapter helps to understand the broad context in France and why early retirement belongs so deeply in the French culture. 2.1 HISTORICAL PERSPECTIVE The very beginnings of retirement date back to 1920 in USA when employees of the Federal Government were covered through the first retirement act; and then, when unemployment reached 25% during the Great Depression, retirement programs were initiated, in order to make room for the younger people (Dychtwald et al, 2006:51). In France retirement programs have been initiated much earlier: in the seventeenth century, the first programs were initiated under Louis XIV for the seamen. Since 1850, some private industries obtained retirement programs. In 1981, President Mitterrand was elected thanks to his promises of social progress. After his election, a law passed that allowed people to retire at sixty years and only in 2010, the retirement age was postponed to 62 years. It has been usual in France to add other tools to retirement to make room for younger people. These tools were mainly early retirement scheme and exemption from looking for work. Most of OECD countries (Keese,2006:54) implemented early retirement schemes, often for people over sixty but also for people over 55 (Ireland) or 57 (Italy). In the sixties, the French government implemented for the first time early retirement schemes to face a radical restructuring of manufacturing companies. A specific allowance financed the early retirement scheme. This allowance was funded both by the state and the unemployment insurance. Then, due to a high rate of unemployment, the early retirement 11
scheme was expanded to other unemployment situation: a special unemployed insurance scheme offered an attractive income for people to stop working when they are fifty-five years old or over. In addition to public funding, private companies also introduced early retirement programs and funded them (OECD, 2005). The French government stopped the early retirement scheme in 2001, but other early retirement schemes under more severe conditions still existed. In particular, workers who had strenuous jobs1 might retire earlier, under the condition that the employer hired younger workers (Ibid). In France, unemployed people must actively seek a job in order to keep their unemployment benefits; nevertheless elderly unemployed people (from 55 years old) could maintain their benefits even if they stopped to look for a job. This measure was implemented in 1984; nevertheless, it is disappearing gradually and will be totally stopped in 2012. It was an additional mean, for people to retire earlier. Some OECD countries have also decided to exempt their unemployed people from looking for a job when their age was close to the retirement age; at the end of 2005, older workers were still exempted in the following countries: Belgium, France, Finland and Germany. 2.2 DEMOGRAPHIC CHALLENGE Retirement had been seen so far as a mean to make room for younger people, but another issue is getting more and more serious. OECD countries will experience a demographic challenge that may prevent them from making on room for the younger by letting the elderly wage-earners retire. 1 In October 2010, thought the retirement age has been postponed until sixty-two, there is still an issue for workers who had a strenuous job. 12
According to Keese et al (2006: 9), the OECD countries have to face a particularly serious challenge: most countries will face a high rise in retiring people while the number of young people entering the labor market will decline. As a result, the proportion of older inactive people per active people will increase as much as one older person for every wageearner in Europe. The pressure on public finance will be significant. Moreover, this situation impacts the growth in living standards. In 2004, people aged 50-64 are less likely to work than people aged 25-49 (Ibid). France faces the same problem (OECD, 2005) and pressure will increase on public finances while the older age dependency ratio will increase. This ratio is calculated by dividing the population aged 65 and over, by the population aged 20-64.
Older age dependency ratio
70%
60%
50%
40%
30%
20%
10%
0% Ratio
2000 27%
2050 58%
The chart above shows an increase from 27% in 2000 up to 58% in 2050. The total percentage dependency: people under 20 years old are added to population aged 65 and over, will even reach 97% in 2050.
13
Moreover, the labor force participation rate (calculated by dividing the labor force by the working age population) is lower on the whole (56.8%) than the OECD average (60.3%) though this rate is higher for women (50.5% versus 46.6%).
Labor Participation rate
70
60
50
40
30
20
10
0 OECD
France
In France, people leave the labor force sooner than in other countries: men leave when they are 59.3 years old, compared to 65.3 in Denmark, for example. There is a culture of early retirement and even older workers themselves see early retirement as a right (Ibid). In France, the Dares report (2010) states that people aged more than fifty years were 16% in 1995, and they were 24% in 2009. People between fifty-five and fifty-nine years old often do not work any longer: thirty-five percent of male and 40 percent of female stopped working. 2.3 OECD RECOMMENDATIONS It will not be possible to finance pensions in the long term, due to demographic challenge. As a result, OECD countries must consider people working at an older age. 14
According to Keese (2006), promoting work at an older age in OECD countries will have three benefits. Such a move would increase the labor force growth and then solve the problem of having the ageing population impacting on the Economic Growth: less people at work will have an impact on economic growth in terms of per capita terms. Secondly, the public finances would be improved and eventually, the employers will not need to replace older workers too quickly. The OECD (2005) report recommends the following actions: decrease the opportunities for early retirement, terminate the exemption from looking for work and also link the retirement age with the demographics trends. However, the tasks aimed at burgeoning the workforce will be more difficult, due to a high unemployment rate: the unemployment rate has grown in the OECD countries from 5.8% in 2007 to 8.5% in September 2010. More specifically, the USA unemployment rate has grown from 4.6% to 9.6% while the rate grew from 8.3% to 10% in France. 2 Moreover, France massively used early exits in the past, and human resources managers, specifically younger managers, are not yet willing to encourage older wage-earners to work longer. In addition, trade unions see early retirement as "a right and a mark of social progress" (OECD, 2005:153). Consequently, there is no real mobilization in France on this issue. Still, the demographic challenge will ultimately force people in societies used to early retirement to work longer and the companies to deal with an unusual workforce: older workers. 2 OECD Harmonized Unemployment rates. News Release : September 2010 available at : http://www.oecd.org/document/56/0,3343,en_2649_34251_46361976_1_1_1_1,00.html accessed on 11 November 2010. 15
2.4 WHO ARE THE OLDER WORKERS? Elderly wage-earners face a difficult situation when they need to find another position. What is the definition for older people? What kind of cohort are they? Older workers may be defined by their age: different authors have different ways to describe workers. According to Dychtwald et al (2006:8), there are different cohorts: the young workers are between sixteen and thirty-four years old; the mid-career workers are between thirty-five to fifty four years old, and eventually the mature workers are older than fifty-five years old. Similarly, OECD (2005: 3) refers to age but shows tables and figures, depending on the following criteria. First, they define older workers as people aged 50 and over, because the decline in the employment rate that can be seen in many countries. Second, the workers are split into two parts: the working population aged 25-49 and the working population aged 5065. According this definition, workers experience different life stages that are described by Lancaster and Stillman (2002: "find work, create families, age, retire". Nevertheless different generations do not see these stages in the same way. Older workers may be defined by their generations: the other authors prefer classify the workers depending on their birth dates. Zemke et all (2000) describe the four generations at work in 2000: The veterans who were born prior to World war II, between 1922 and 1943, the Baby Boomers, the generation Xers, and the generation Nexters. (For the purpose of this report, the people belonging to the Veteran generation are not included in this report.) They define a generational cohort as people who share "values, experiences and world views". Each generational cohort experienced the same "defining moments", defining moments being events that occurred 16
during a decisive stage of their life, and that were able to shape their emotions. The authors quote an adage that states: "people resemble their times more than they resemble their parents". As a result, each person is both an individual and a member of its generation. Lancaster and Stillman(2006) view the generations in a slightly different way: BabyBoomers were born between 1946 and 1964 and were about 80 million in the US, much more than the forty-six million made of generation X who were born between 1965 and 1980. Eventually, there are the Millennials who were born between 1980 and 2000 and who represent seventy-six million people in the United States. In this same context, the OECD (2005) report states that older workers are not similar to their younger counterparts: they have different level of education, different skills and have obviously different work experiences: they had different training while they were working and some of them may have tough jobs. Understanding clearly the differences between the generations will have an impact on how the companies can deal with the older workers who are also currently belonging to a specific generation: the Baby Boomers. Like each generation, the Baby Boomers who are the older workers at work today, bring their set of values and beliefs at work (Ibid). It is crucial to keep wage-earners at work until they reach an older age. On the other hand, it is also crucial for the workforce to adapt, and consequently to be able to find another job when they have lost their previous job. 2.5 OLDER PEOPLE AND UNEMPLOYMENT Regarding the difficulties to keep older people at work, the definition given by OECD (2005) and being people over 50 years is shared by the DARES report (2010) and by the ADIA (2010) report; Consequently, in this paper, older workers are defined as people over 50 years older, unless otherwise stated. 17
Older people suffer less from unemployment: the DARES report states that the older people in France suffer less from unemployed than other people (three percent below the national rate on average). This lower rate is mainly due to the early retirement schemes: older people are not unemployed, instead they are retired. Nevertheless, when older people have lost their job, it is more difficult for them to find another job: in 2008, 13% of older workers had found other job by one year while 32% of people aged between 30 and 49 had found a job. In 2004, 40% of unemployed people over fifty-years old had been looking for a job for more than two years (OECD, 2005). 2.5.1 IT IS DIFFICULT FOR OLDER PEOPLE TO FIND A JOB In November 2006, ADIA published a survey that demonstrated clearly that age was the first employment discrimination criteria. They sent 6461 resumes of different people, applying for 1340 positions. The average rate of positive answers was 9.26%. The positive answer had been defined as the first step of the process: sorting the resumes and call the applicant for an interview. The other steps of the hiring process have not been tested. The survey intended to compare the results of the following people: men between 28 and 30 years old, with French first and last names, no picture on the resume, men between 48 and 50 years old, women with three children, people with Maghreb name, physical disabled people, and people with an ugly face. The results are given on a 100 basis, defined as following: each time the candidate who is a man, aged between 28 and 30 years old, with a French name, receive 100 positive answers. On a 100 basis, the man who was more than 48 years old got only 32 positive answers and that was the lowest score as showed in Exhibit 1.1 18
Exhibit 1.1
Positive answers 100
80
71
63
60
54
40
32
20
0 Over 48 years old
Ugly face
Physically disabled
Women
36 Maghreb person
The discrimination is even higher if the position is an executive position. It is less difficult for a worker to find a job than for an executive. On a 100 basis3, the executive will receive 14 positive answers while the worker4 will receive 50 positive answers. Exhibit 1.2
3 Same basis : each time the man with a French name receives 100 positive answers 4 A worker is operating in a workshop or a plant, in contrast, an employee works in an office, operating administrative tasks. 19
Positive answers by position 100
80
60
50
40
26
22
20
14
0 Executives
Middle management
Employees
Workers
2.5.2 EMPLOYMENT ENVIRONMENT HAS CHANGED When older people look for a job, they have real difficulties to convince employers to hire them: age discrimination is clearly an issue. In addition, older workers are more likely to look for a job than they were in the past. It is fairly new that older people have to look for a job: there were a time where a company like IBM was able to provide job for life. Other companies were not able to do so; however, adequate performance and loyalty generally led to job security. Many people and many companies do not believe any more to this old covenant because of restructuring, downsizing and layoffs (Waterman et al, 1994). A less safe covenant replaced the old covenant: no one can be assured to keep her job. Zemke et al (2000) describe the workplace as a "macabre game of musical chairs". Because companies act to cut their headcount as much as they can, wage­earners view themselves as survivors, and they are also aware that this situation is just for now. 20
The French social partners viewed early retirement as a mean to manage unemployment of young people: people retire early and young people can replace them. However, it will be less and less possible to fund early retirement in the future. To be sure that retirement will be financed; older workers need to work longer. In addition, they will have no job security any longer. As a result, they may be unemployed, and they may be forced to look for a new position. The next chapter will examine what the barriers to employment related to older workers could be. It will also examine what could be done for a better adaptation of the older workers. 21
3 BARRIERS TO EMPLOYMENT According to the OECD report (2005, 99), older workers suffer from negative perceptions related to adaptability and productivity. Employers prefer hire younger workers at a less expensive cost than older workers. This chapter will show what the barriers to employment for older workers are and why people themselves want to retire early. 3.1 BARRIERS DUE TO AGE In this section, older workers refer at people who are fifty years old or over. It is common that companies dismiss older people and give either their physical ability or the technological evolutions as a reason. The OECD report (2005) states companies are dismissing people because there is no more opportunity for people to retire .As a result, 24% of men aged fifty-years old and more were dismissed for personal reasons such as physical ability or technical evolutions. Employers believe that older workers are not able to adapt to new technologies easily. Young people are also perceived as more adaptable to change than older people. Older workers and young are able to things well but, they think differently. The older workers need time to make coherent sense of a situation (Ibid). As a result, they need more time to adapt. Older workers themselves think they lost their employability because of a difficulty to adapt (OECD, 2005). Another reason given by the employers in the OECD report (2005) is about productivity because wages increase in function of age, in countries, such as Austria, Belgium 22
or France. The social partners5 seem to assume that young workers deserve lower wages due to lower productivity. The social partners anticipate that the wages will someday exceed the productivity. They assume that productivity will increase with age and then people will deserve a better salary. Unfortunately, after having increased, the productivity will often lower with age while wages are still high. As a result, older workers often do not deserve their wages any longer. Regrettably, research does not bring any clear answer about the level of productivity corresponding to age. According to the OECD report (2005), research faces two difficulties: the first issue is to measure productivity. The second difficulty is due to the sample of older workers: the sample is reduced to high productive people, able to remain employed. According to Van Ours (2010), the assumption on a relationship between wage and productivity is so common yet there is a little supporting evidence. Moreover, productivity is not an individual phenomenon but a collective phenomenon that involves workers of different ages. In addition, even physical productivity in sport contests shows a speed drop not so significant: 0.6% per year for men and 0.4% for women. There is no evidence that there is a drop in cognitive ability drop and eventually, the author didn't manage to highlight a drop in productivity related to workers of a firm panel. Thought there is no evidence showing that productivity decreases with age, there is a strong belief that people over forty-five years do not deserve their wages any longer. There are two ways of increasing the wages depending on the age. First, they may receive the seniority bonus: people will have a bonus, calculated as a percentage of their 5 Social partners are the English translation used by the OECD report for the French term: "partenaires sociaux"; they are the trade unions and the employers' representative organizations. In France, they manage some organizations together such as unemployment insurance or retirement funds. Also, they can negotiate agreements that apply on all companies of an industry or even on all companies in France. If they do not achieve the negotiation, the French government may introduce a new law. 23
wages and in function of their seniority in the company. People may also have another opportunity: benefit from a promotion because of their seniority. Though companies often provide the high cost of older workers as a reason for not hiring them, it has been demonstrated that companies which employ older workers at higher wages than other companies, do not have less senior workers than other companies. Employers seem to be more affected by the relation between wages and productivity. Researchers demonstrated in the Unites States that the link between wages and productivity is in favor of people in the 35-49 bracket. Moreover, similar research gave a similar result in France (OECD,2005). Dychtwald et al (2006) demonstrate that the decrease in productivity is not so obvious for older workers: they may have difficulties to work in certain areas, specifically when the tasks are strenuous or when they have to achieved several tasks at the same time. Nevertheless, they do not suffer more from injures or illness than the young people, even if they need more time to recover. Because they can compensate these difficulties thanks to knowledge and experiences, these difficulties do not lead to a lower productivity. Moreover, the authors show that there is a strong link between work and health. Healthy people are often still employed and are efficient people. The final reason that may prevent companies to keep their older employee at work is bad perceptions toward their older workers. According to Anglaret and Massin (cited OECD, 2005), the perceptions depend on several factors. One factor is the job: whether it is strenuous or not. Another factor is the age of the interviewed manager. On average, 65% of the interviewed managers view people aged more than 55 as old. However, 75% of the interviewed managers think people over 55 are old when they are under thirty years old, or when the company is a construction company or the company significantly used early retirement schemes. 24
Eventually, companies often hire young people because they use the future potential as a criterion. 3.2 BARRIERS CAUSED BY DIFFERENT CULTURE FROM DIFFERENT GENERATIONS These barriers are different from the barriers depending on the age: these barriers will be specific to a generation and will change in function of the generations. In this section, we will examine Baby Boomers as older workers: Baby Boomers are born between 1944 and 1960, and they are more than fifty-years years old. This chapter will seek to understand whether there are barriers attached to their culture. According to Lancaster and Stillman (2002), each generation has its own culture, defined as a "sets of values, beliefs, life experience, and attitude to the workplace". Because people have shared the same experience at the same age, they are close to people of their age. For instance, Baby Boomers are described as idealist and as willing to change something in the world or skeptic people belong to the generation X (Ibid). The different culture of each generation may raise problems between them: it was not expected at all for Baby Boomers to think about a balance between private and professional life. As a result, Baby Boomers cannot understand people from the generation X when they ask for a balance in their life (Ibid). After the generation X, the generation Y starts to join the workplace and, there is another culture: people from generation Y grew with the Internet, cells phone and computers. They used to live in a more violent society than their parents did (Ibid). Change is accelerating more and more. Consequently, it is more and more difficult for different generations to find common ground. On the contrary, while it is easy to connect with 25
people from the same generation, it is more complicated to connect with other generations. (Lancaster and Stillman, 2000) Dychtwald et al (2006) state that, for the first time in the USA and it may be very similar across Europe and Australia, the workforce has the current features: the labor is more intellectual than manual; there is a larger diversity of age; and, a large component of the workforce, the Baby Boomers will retire at the same moment. The composition of the workforce is extremely diverse, age, already mentioned but also gender and ethnicity. While the United States face an older age mix in the workforce, they never knew before (Dychtwald et al (2006), France, also experiences a new situation because so far, "Only one generation works at a time" (Elbaum and Marchand cited OECD, 2005: 57). This pattern actually exists because there is a low employment rate for two categories of workers: people under twenty-five and people above fifty-five years old. 3.2.1 DIFFERENT ATTITUDE TO WORK There are many differences by generation that matters on the workplace: for instance, attitude to training, attitude to job changing, attitude to authority, and, attitude to feedback. Depending on the generations, people are concerned by "job security" or by "career security" (Lancaster and Stillman, 2002:53). Many Boomers followed the "job security" model: according to this model, it was possible to stay a long time in a job. Moreover, as long as they worked well, there was no reason for them to be dismissed. This model was paternalistic enough (Lancaster and Stillman, 2002). The following generation, the Generation Xers followed quite a different model: they have seen downsizing and restructuring; as a result, they realized that job security did not 26
exist anymore. Thus, they chose to follow the "career security" model: they like to change their job and they can develop enough skills to feel employable. As a result, employees have to understand that they have to create their own career paths and that this is not only the responsibility of the employers. In other words, they have to take charge of their career. Consequently, the different generations also have different believes and concerns about training. Because the Boomers enjoyed "job security", they were focused on climbing the ladder and training was an adequate tool (Zemke et al, 2000:243). They viewed training as a perk and an excellent means to ensure that they had an edge on the others because they were better (Lancaster and Stillman, 2002: 279). However, they think that people will leave if they receive too much training. Zemke et al (2000) also argue that training is a reward for Baby Boomers. On the contrary, generation Xers think that people will stay if they get training. It is a way to develop their skills in order to remain employable even if a crisis occurs. Regarding Millennials (or Generation Yers), they will never stop learning: training will just be their way of life (Lancaster and Stillman, 2002:280-281). Job changing is becoming more valuable than in the past, due to restructuring and downsizing. The different generations have different attitudes toward job changing. Baby Boomers are not opposed to changing as long as change does not make them lose something important for them; title or salary. Only, in case of a strategic move, they could accept to lose something. On the opposite, Xers see any change as a strategic move: they want to be employable. Consequently, they see job changing as a way to add new skills or additional experience to their resume. Regarding the Millenials or gen Y, they may hold several positions at the same time: working three days in marketing and two days in accounting will be usual for them. 27
According to Zemke et al (2000) the attitude to authority has changed over the years: the Veterans (born between 1922 and 1943) never discussed authority. On the opposite, Baby Boomers were "antiauthority"; nevertheless they appreciated leadership roles. The generation X (born between 1960 and 1980 according to Zemke et al) had another approach to authority: they are not interested in leadership roles. Dychtwald et al (2006) write that the mid-career workers (born between 1951 and 1970) tend to avoid authority and distrust government. The attitudes toward feedback are also remarkably different. When Baby Boomers joined the workforce, there were no feedbacks; the previous generation thought that everything was going well as soon as they had no feedback. Willing to understand how they performed, the Baby Boomers invented the "once-a-year performance appraisal, with lots of documentation in the file". The generation Xers started to ask for immediate feedback and the gen Y are now asking for several feedbacks per day (Lancaster and Stillman, 2002). Eventually, the different generations work differently: Dychtwald et al (2006) state that the older generation likes to observe, analyze, plan and then acts while the younger generations likes to experiment, try things and learn at work. Different attitudes may be part of the problem: Lancaster and Stillman (2002) wrote that each generation thinks that its behavior is the right behavior but, it is not the point: each generation is different, as demonstrated above. Zemke et al (2000) also think that different generations have different views and these views have to be confronted. Unfortunately, there is no place where these views can be confronted: the differences between generations are just seen as "immutable and irreparable". 28
3.2.2 PERCEPTIONS AND STEREOTYPES The differences between generations may cause difficulties for the younger and the older generation to find a job. Unfortunately, stereotypes may also be a part of the problem. Dychtwald et al (2006) quote Bill Allbright saying: "A lot of organizations believe if you're not in your twenties or thirties, you're a has been or a cost issue". According to Lancaster and Stillman (2002), the media are responsible for having stereotyped the generations: "precocious Gen Y kids, tattooed Xers or workaholic Boomers". This effect may be added to resentment that may be felt by the different generations: Boomers cannot understand why Xers are able to change their job so often and why they need a balance between work and life. Generation Y is not satisfied with the current situation of the planet that is supposedly caused by the lack of responsibility of the Baby Boomers. In addition, early retirement schemes have reinforced stereotypes concerning the productivity and adaptability of older workers. Also by setting the exemption from looking for a job, France showed clearly at which age, someone is not employable any more (OECD, 2005). Eventually, different attitudes may be misunderstood by a different generation. For example, according to Dychtwald et all (2006), older workers are accustomed to relation driven channels: as a result, they phone the help desk instead of going online and are seen as technology phobic. Even experts in generation diversity (Lancaster and Stillman, 2002) could not imagine that the accounting person they would hire and who had the required skills and attitudes might be a woman in her seventies. In addition to these barriers, inadequate career management might lead to real difficulties to find a job. 29
3.3 CAUSES DUE TO CAREER MANAGEMENT Dychtwald et al (2006) recognize that older workers have a different culture; for instance, they are less adept to new technologies than younger people. Nevertheless, they think that causes of the problem might be in the mid-career management. According to these authors, mid-career workers are often trapped in a place and, their managers do not want to lose them. As a result, they cannot try new experiences and, thereby, start to lose their employability. The authors recommend to "rekindle" their careers but the companies think they are not in charge of managing the careers of their employees (new covenant). Unfortunately, it is difficult for an employee to get a fresh assignment, due to subtle barriers: managers and department like to keep their experienced employee and usually, nobody is in charge of this task: matching tasks and assignment (Dychtwald 2006). In addition, there are fewer opportunities for older workers to receive training: in 2003, only 5% of people aged over fifty, either employed or not, had received recent training. There is a huge difference with people aged between twenty-five and forty-nine years old (OECD, 2005). As a result, skills are not updated and the gap is so significant that it will be difficult and costly to invest in training for people who will soon retire. 30
3.4 PEOPLE THEMSELVES WANT TO RETIRE EARLY Recent events in France6 showed that people themselves want to retire early. The reversing trend (to have people retired later rather than sooner) is difficult to understand for people: they feel as there was a returning back to the old days when social protection was low. In addition to this reversing trend, there is a specific situation in France regarding the relationships between work and people. According to Davoine and Meda (2008), French people do not want to work longer for mainly two reasons: the first reason is poor social relationships. Relationships between the wages-earners and the senior management of a company are strained, probably because there is no real consultation and decisions are often made only by senior managers. Wages earners feel they are not trusted by their managers. Eventually, people think that their relationships with their peers and colleagues are acceptable; nevertheless they are less good quality than in other countries. The second reason is about dissatisfaction with working and employment conditions. In France, the wages-earners, in general, suffer more from stress than in other countries in the European Union; also, they feel exhausted. They are also dissatisfied because, they are afraid to lose their job; in case they lose their job, they are particularly pessimistic about the opportunities they will have to find another job (Ibid). Regarding older people, the probability of men returning from unemployment to employment decreases with age and is practically at zero when people are fifty-seven years old and over (OECD, 2005). 6 In October 2010, a major modification on the age retirement faced a resistance coming from the unions and from the wages-earners. Eventually, the law was put in force but the trade unions highlight the situation of older and younger workers who have difficulties to find a job. 31
To summarize, the barriers to senior employment are: the belief that productivity drops with age, different culture by generation that may lead to other stereotypes, ineffectual career management and people's reluctance to work later. Beliefs and stereotypes are difficult to remove as showed by other diversity issues (related to gender or race for instance). Nevertheless, ineffectual career management creates actual barriers that can be removed. The next chapter will go through a specific case: the CFO case. At that point, it will help to understand more clearly the difficulties of older workers, related to career management. 32
4 CFO CASE In order to understand whether the reasons previously described are sufficient to explain the senior managers' difficulties to find a new job, the present chapter will discuss the changes and issues related to the function of Chief Financial Officers and the related positions. The CFO, Chief Financial officer, leads the Finance Department, is in charge of preparing the Finance Statements. He usually takes care of the right utilization of money and authorizes or not expenditure for a company. This chapter will consider how the environment of CFOs has changed. The previous chapter showed the difficulties and need to manage at best a career: to develop a coherent sense of changes, the need of training, the dissatisfaction with the current job, the different views according the generations and the necessity of fresh assignment. This chapter will also examine how the findings of the previous chapter can apply to the CFOs position. 4.1 CHANGES IN ENVIRONMENT Jeremy Hope (2006) states that their role has changed over the years because of technology, change in the environment, change in expectations, change in regulations (internal control) and ethical issues (Hope, 2006).In addition, Ernst & Young (2011) writes that the world has never been so complex also because volatile financial market and the rise of emerging markets. According to Hope (2006), CFOs have to be business generalists, risk manager experts and business intelligence source, and at the time CFOs started to work, such expectations did not exist. Instead, they started in the accounting department, and they were supposed to record transactions, manage budgets or to fill tax returns. 33
According Cedric Read (2006), CFOs had to deal with transactions and processes in the eighties and they started to support business decisions and then, there was a shift in the nineties: the CFOs could focus on performance management thanks to ERPs implementation. At the beginning of the century, CFOs had to learn to manage value inside the company. Today, they have to deal with risk and regulation, sustainability and reporting. (Kaplan and Norton, 1996:2) explain the changes by the end of the industrial age: companies must now exit from the industrial age and move to the information age. Companies developed control systems during the industrial age in order to manage the financial and material resources. At this time, companies could use simple indicators, such as the ROCE (Return On Capital Employed). Currently, the management of financial resources, even excellent, is far from sufficient to support companies with a competitive advantage. Companies need to learn to manage intangible or invisible assets. The following paragraphs will examine more deeply the changes related to the environments over the years. 4.1.1 DATA TO BE CONSIDERED HAVE EXPLODED OVER THE YEARS As a result, the CFO has to be able to meet different demands: for instance, the CFO must be able to assist managers to work in diverse markets, which may be in various stages, growing rapidly, mature or in decline (Ernst & Young, 2011). Hope (2006), writes that they are often overwhelmed by too many data, not always relevant, and technology has made things even more complicated by enabling data to be stored and transferred easily. For instance, an average Fortune 500 worker receives hundred and seventy eight messages in a day. Because of this information overload, it is difficult to think, to analyze, and to plan. Regarding CFOs, even if they have the ability to make sense of all these data, they do not have enough time to process it. Another issue is that all these data 34
are internal data because they are easier to produce than external data. Consequently, CFOs needs to find a mean to make a coherent sense of all these data. To be able to work with so many data, they need to add a new skill: the ability to extract only the relevant data from all these data and there are solutions for this specific issue. Companies tend to match everything with everything: actual is compared with budget or invoices are compared with orders. People may fail to realize there is a signal of something going wrong because there are so many data that they are perceived as "noise" (Ibid). Depending on the tasks that are to be done, various solutions might be used: for instance regarding the comparison between budget and actual, a mean to deal with so many data is to understand the causes of variations between budget and actual. They may come from errors, and then have to be eliminated, or they may come from various events. Instead of considering variations "in the month", or year-to-date", finance executives should consider trends, and this technique would eliminate "noise" (Ibid). Another example is related to expenses claim: there is no need to check all the expenses claims in an inclusive way because it, checking all the expenses claims is a very time consuming task. Instead of designing the process to ensure that people who cheat are caught, companies pay the expenses quickly and only check at random some claims. If they find someone cheating, they simply dismiss her (Ibid). All these tasks are performed by people in the finance team. In addition to training on new technology, the CFO has to understand the changes involved by the new technology (too many data). Consequently, CFOS must add a new skill: to find the right way to make sense of all these data. 4.1.2 CHANGE IN REGULATIONS 35
The well-known scandals that occurred in the past few years, Enron, WorldCom or Tyco in the USA, Vivendi in France, brought many changes in regulation. American CFO had to implement the Sarbanes-Oxley legislation. French CFO had to implement the "Loi de Sйcuritй Financiиre7" or even the Sarbanes Oxley legislation if they work for a French subsidiary of an American company. These new regulations added a significant workload to the finance teams (Hope, 2006). In addition, many companies had to introduce the International Financial Reporting Standard (IFRS) and even Basel II for the banks (Read 2006). As a result, CFOs have to learn how to leverage the regulation tools. First, the cost of implementation must be acceptable for the business; second it is essential for companies that regulation benefits the business. Many CFOs consider the implementation of regulations as non value added tasks, but successful companies take advantage of the regulation. (Read, 2006). The purpose of the Sarbanes Oxley law is to restore confidence in American companies; the law created new rules, additional disclosures and increased also penalties for violation. The CFO must improve the finance function efficiency while implementing the new rules, for instance in the data collection and billing area: ensure that every customer gets an invoice, ensure that the services or products are invoiced with the right price. In other words, companies have to suppress the gaps in their process that could lead to decrease in value (Read 2006). Moreover, European Union decided to apply the International Financial Reporting Standards. In some cases, this switch added new issues: how to explain that the result has changed, due to new accounting rules while the business itself was the same (Hope, 2006). 7 financial security Act 36
CFOs received a lot of training about "internal control", due to this change in legislation, (Ibid). The implementation of IFRS in Europe adds complexity to the CFO's role. CFOs have to change their view about accounting, and it is not that simple. For instance, Spanish CFOs are not used to the presentation of performance required by the International Standard: they think they are too aggressive. Also, many European CFOs are not comfortable with IAS 39 on derivatives8 because this accounting method lead to too much volatility. (Read, 2006). 4.1.3 COST REDUCTION OF FINANCE DEPARTMENT LED TO NEW ORGANIZATIONS Implementing both new regulations and the new accounting principles lead to an increase in workload, and it was sometimes difficult to achieve (Read, 2006). Moreover, costs have been largely reduced in the finance department while the workload did not decrease: it was the opposite. Companies decided to outsource transactions to reduce costs. Outsourcing is also a way to transfer the burden due to data management and legislation changes to an external service provider. Nevertheless, outsourcing must be carefully implemented because it may come to a "mess for less" (Hope, 2006). Companies may also create shared service. According to Bain & company (2010), companies can reduce cost by consolidating operations that were used by several divisions in one location for all the divisions: the shared service center. It can be done for finance, information technology, customer services and human resources. 8 IAS 39 states that derivatives must be recognized on the balance sheet at fair value 37
The traditional organization is to get accounting people all around the world, far away from the Head Office. By implementing shared services, companies can save a significant amount of money, and they can make improvements more easily. (Hope, 2006). To manage a shared service is currently a core competence but it does not enable finance executives to acquire the necessary skills to become a group CFO (Ernst & Young, 2006). 4.1.4 EVEN THE BUDGET PROCESS IS CURRENTLY DISPUTED In the industrial age, companies developed systems to ensure that they allocated their financial and physical capital in a way that was efficient. This should result in an increase in the return on capital employed (Kaplan and Norton, 1996). At that time, the world was stable; now, companies have to answer quickly to new threats and opportunities. Because the market is changing so fast, planning twelve or eighteen months in advance is now useless. There are several reasons why the budget process is currently perceived as useless: the first reason is that budget is time consuming: a survey found in 1998 that the average time for a budget was four months. Moreover, 66% of the CFOs declared that the budget was influenced by politics and not strategy. As a result, the reporting will compare actual versus a flawed budget. (Parmenter, 2011). In addition, more time is spending on gathering the data than on analyzing the numbers. Furthermore, justifications of the expenses are easy: it is not possible to run the business without these expenses. At that point, the budget process is seen as a low added value work (Hope, 2006). According Cedric Read (2006), the volatility of the market conditions is another reason: companies have to react in weeks or even in days. Consequently, quarterly reviews do 38
not make sense. "CFOs cannot predict the future". Consequently, to use the past to allocate resources at best is not useful any longer. Relevant information is coherent information that lead to a real competitive advantage. (Read, 2006). Consequently, CFOs have to rely on other method than the budget process. On the contrary, they have to provide relevant information for managers to drive the success of the company (Hope, 2006) The budgeting process is disputed as well because it is a time-consuming process. Some companies change their budget process or even gave the system totally up. For instance, companies such as Handelsbanken, Ahlsell or the Worldbank do not use budget processing at all. As a result, they cancelled the cost of a work, currently perceived as a lowvalue work. They replaced it by quarterly forecasts that are quickly consolidated. Then, the finance department can spend more time to more value-adding work (Hope, 2006). 4.1.5 NEW PERFORMANCE SYSTEMS ARE OFTEN PROVIDED The idea that performance has to be measured has been the basic of performance management since a long time. Over the years, different systems raised: measuring the variances against budget was one of them. Consequently, each time, there is a new performance management system, the CFO is on the list of the vendor. As a result, CFOs spent a lot of time implementing new systems, very often by imposing the system on people, rather than asking for opinions and advice. Unfortunately, they could see many systems abandoned. The balanced scorecard was one of these management performance systems. According to Hope (2006) the system is usually a good measurement system but it is poorly implemented. Moreover, while the balanced scorecard requires to "create open reporting, making the performance results available to everyone in the organization", (Kaplan and Norton, cited in Hope, 2006), the tools used to help implementation aimed at reinforcing top-down control. As 39
a result, to make coherent sense of the situation needs time, as stated in the OECD report. In addition, it is also quite complex. According to Kaplan and Norton (1996), CFOs repeatedly demonstrated their ability to manage a financial system but the BSC requires other skills that are more often those of a director strategic planning. The Ernst & Young report (2011) also includes design and execution of strategy in the skills required to be a CFO. Each change, as described above led to different skills; therefore, CFOs need valuable training, related to new technical skills. Considering that CFOs were able to adapt to these technical skills, is it sufficient to remain employable or do they need additional skills? 4.2 A NEW VISION OF THE CFO'S ROLE IS EMERGING To answer at best to these changes, there are now two visions. One vision is about reinforcing top-down control and accounting expertise. These CFOs increase targets, measures and controls. This is the vision A. The other vision is about empowering managers to make decisions. Depending on this vision, CFOs help them by eliminating costs without addedvalue, by improving processes and simplifying everything finance does. They reduce the quantity of targets, controls and measures. Hope (2006) named it vision B. Kaplan and Norton (1996) described a similar view of two different types of CFO. One type of CFO includes people who understand that financial measures are not sufficient to lead an organization in the current environment. Therefore, they often have the ability to implement the BSC. On the opposite, CFOs who belong to the other type, think that it is not their responsibility to work with subjective numbers. These executives often come from accounting or auditing position. 40
In addition, Read (2006) describes skills such as treating customers as an asset, measuring innovation or valuing intangibles that are far from accurate and controllable measures. Read ( 2006) recommends to focus on execution, not on valuation. According to Hope (2006), CFOs must add these different skills to their technical skills: to find the right level of control, to build an efficient team, to be able to communicate and to teach, to understand the business clearly they are working for and finally to know how to use technology. 4.2.1 THE RIGHT CONTROL LEVEL CFOs have to define the appropriate control level, due to the change in the CFO's role; control level may be different, depending on the company. Robert Castaigne, CFO at the French oil company Total, sees his role as a "cautionary counterweight"" to CEO Thierry Desmarest. He thinks that he has to be independent and objective. As a result, he does not want to be involved in decision making. In contrast, General Electric decided that the finance team had to work as a "decision support team". To this end, General Electric outsourced in India most of manual activities or transaction processing, and they created a finance and accounting center of excellence. It enabled the company to save about a billion dollars per year. Moreover, Gecis (GE Capital International Services) not only provides accounting services but also provides data analysis and reporting and employs seven hundred statisticians, MBAs or PhDs who work for their GE business client, creating models strategies and conducting due diligence (Hope, 2006). These two CFOs show that they see their roles in a different way, depending on their environment and not only on finance techniques. 41
4.2.2 CFO AS BUSINESS PARTNERS Ernst & Young (2011) write that CFOs must be business partners: they have not only to master volatile financial markets and regulation change. They have also to become accustomed to operating in markets that show different stages: from emerging markets growing quickly to markets in decline. According to Cedric Read (2006), a business partner has to balance the expertise of others partners of the company by bringing finance expertise. Consequently, they must be involved in leading initiatives. In addition, a CFO must have a vision, as a CEO does. A CFO must be a business leader, therefore, he must have the following abilities: to share the vision with others, to chose the right people to execute the vision, and they have to train their people to get the right culture and the right behavior. 4.2.3 HIGHLY EFFICIENT TEAM Because finance people have to become business partners, they need to connect with the culture of the company. Unfortunately, people are often selected depending on their technical expertise, and they do not actually know how to coach and how to teach. Finance people also need to adapt (Hope, 2006). 4.2.4 BETTER COMMUNICATE AND BETTER TEACHING They also need more and more to communicate with analysts and investors because to be perfectly honest is not enough for a CFO to convince (Anne Mulcahy cited Hope, 2006). In particular, it is difficult to communicate about changes in accounting standards: it requires being able to communicate on the impact of such changes. More and more, CFOs are recruited because they have exceptional Communication Skills. It also means that they have to 42
teach finance skills to their colleague and help them to understand how the performance was measured (Ibid). Ernst & Young (2011) also confirms that the ability to communicate and to build a strong relationship with stakeholders will be highly beneficial in the future, even if the traditional skills (cost management, cash flow and controls) will remain fundamental skills. 4.2.5 BETTER BUSINESS UNDERSTANDING In order to be a business partner, CFOs must have a better understanding of the business. Some companies, Intel, for example, developed a program to develop finance staff's skills: they learn to build leadership abilities and to think strategically. Other companies decided to locate finance people within the operational teams. Another way is encouraging people to work in others areas than finance (Hope, 2006). In the same way, Ernst & Young (2006) writes that CFOs who have only worked in finance departments will get a disadvantage. More and more CEOs will look after CFOs who have a background as a business leader. Experience in pure commercial position will even be appreciated. General Electric (Read, 2006) trains the finance executives their career long. The training includes advanced finance skills (Mergers and acquisitions, risk for instance) but also other disciplines, for instance Human Resources and Commercial. 4.2.6 TECHNOLOGY Finance people have to use technology at best because technology is critical to provide fast and relevant reports, using all the available data. Finance people need to be involved in making decisions about IT system and ERP. They also need to defend a vision about empowering people and not a vision of control. If not, the IT systems will correspond to the vendor vision, and that is too often reinforcing control (Hope, 2006). 43
Though technology is a key issue for CFOs, they also need to rely on their own judgment on complex issues, such as mergers and acquisitions. Too often, technology offers a wrong air of truth, but the results are calculated on dubious assumptions (Hope, 2006). According to Read (2006:108), CFOs have also to understand that technology is not the only answer. They had to face implementation of Enterprise Resource Planning that was followed by Customer relationship Management, e- business and other technologies. Nevertheless, they need also to understand process redesign and people change. Clearly, the CFOs face a massive need of training to be able to cope with technical changes in their professions as well as with changes in their role. There are no statistics available about CFOs' training. Nevertheless, the OECD report (2005) notes that it is more difficult to access to training in France, compared to other countries. 4.3 FACING CHANGES Not surprisingly, many CFOs are resistant to changes. Mark Hunter (cited Read, 2006) states even that CFOs do not want change at all; too often their behavior means: "no change here". For instance, they are reluctant to give up annual plans and budgets. According to Hope (2006), they have been trained to see a company ruled by " a centralized notion of cause and effect". As a result, when there is a malfunction in the company, these malfunctions can be repaired and fixing every malfunction will improve the performance of the company. Several researchers highlighted that this approach is far away from reality. According to Professor Ghoshal (cited Hope, 2006), a company must be analyzed in term of human choices, rather than with a pseudoscientific approach. Professor Ghoshal states that human behaviors are too complicated to be modeled. Consequently, they are ignored, and only figures are considered. Actually, the assumption that one dollar saved will cause one dollar more in the profit is flawed (Ibid). 44
According to the Professor Mitchell Resnick, the traditional view of company management, based on prediction and control is not closed to the reality and companies should adapt more adaptive and devolved approach. The traditional approach was based on the fact that companies could decide what they were going to sell. Companies have to realize that the power has been transferred to the buying customers. Finance people have to understand that forecasts are not linked with predictions and control but with information allowing people to make decisions. In the same way, financial controllers who are used to check that the past is correctly recorded have to understand that they have a role in shaping the future. (Hunter cited Read, 2006). It also means to assess targets given to the managers in a different way. Fixed targets were seen as a mean to control the managements of a company. People were spending a lot of time, understanding what the impact on their performance evaluation was. In place, they should have spent more time considering a way to achieve high performance, without feeling the targets as a threat or an opportunity. Fixed targets are the best way to get people doing what managers want them to do, but it is not the right way to get people do what they should. It became a game: senior managers tried to set high targets while middle managers tried to protect their results. Consequently, the result that was eventually forecasted was a compromise which did not ensure that the shareholder was winning. 4.4 CFO CAREER AND EXPERIENCE According to Hope (2006), many CFOs are still using mental models that are currently obsolete. They started their career in accounting department: they learn to record transactions, to manage budgets and to prepare tax returns. At this time, nobody looked for their advice. 45
Cedric Read (2006:20) states that the CFO's role changed between the end of the last century and the present day: CFOs used to ensure transaction processing, specialist finance services and supported decision. They still support decisions, but they are in charge of risk and regulation as well as sustainability and reporting. If CFOs have been trapped in a place (as described by Dychtwald et al, 2006) where the old vision of the role was predominant, it must be difficult for them to understand that another role is emerging. CFOs work with CEOs who are under pressure and the work hours increased by four hours a week between 2002 and 2004. Consequently, CFOs or even finance executives are so dissatisfied with their job that almost half of the Fortune 500 had to experience a new CFO between 2001 and 2004 because the previous CFO had left (Hope, 2006). Though Read (2006) recognizes that the change in regulations might have been an intolerable burden for small companies and their CFO, he highlights the greater satisfaction of CFOs who succeed to implement such rules. As a result, they are more influent than before. Ernst & Young (2011) writes the profession is more broad and complex that it had been before. Nevertheless, the profession remains a "career destination" and not simply a step before a position as a CEO. To summarize this chapter, CFOs, in the past have been significantly trained on internal control. They had few opportunities to learn more about the businesses they worked on beyond the finance department. However, new skills are required, and these skills are not technical skills. These skills are linked with the culture of the business, defined as a set of beliefs and values about their roles. Finance people have to understand how they can fit with the entire business they are working for. 46
Compared with the findings related to the aged workers in general, the emphasis is massive on training at new skills and ability to changes; there are few hints that dissatisfaction to work play a role even if the different authors recognize that the position is more and more difficult. In the next chapter, we are going to check whether the answers to the survey are compliant with the findings of the literature review. 47
5 THE SURVEY This survey was conducted in France at the end of the year 2010. This survey has been conducted in French and a translation in English is available in Appendix II. It will show how the perceptions are in France related to the issues that have been seen in the literature review and we will see how the findings can apply in France. The answers of the survey can be accessed on the Web: http://www.surveymonkey.com/sr.aspx?sm=Ga1AI_2bL_2fsnSI2tVIEg_2blXY0MUdNjIu_2 b_2blnwCnz2V6Ro_3d 5.1 THE SURVEY BACKGROUND The survey was conducted on line through the website SurveyMonkey9. About one hundred people were asked to answer the survey: to be selected, they needed to work in private sectors since the public sector has different rules (for instance, they do not make people redundant). On the total of people, fifty-six people started to answer the questionnaire and fifty-one people answered completely. The questionnaire was anonymous, but people had the ability to provide the email address in order to receive a summary of the results. The chart below shows how people are split by generation 9 http://fr.surveymonkey.com/Default.aspx 48
Survey 8 19 24
1946 - 1964 1964-1980 1980 and after
It was more difficult to find younger people since some of them are still studying. Some questions were specific to finance people. Twenty-six people (56 %) worked in Finance function, and twenty-five people (25%) worked in other functions. 5.2 GENERAL ISSUES This section show how people react to different questions, without differentiating the positions. 5.2.1 JOB SECURITY AND CAREER SECURITY The survey shows that each generation (Baby Boomers, born between 1946 and 1964, generation X, born between 1964 and 1980 and generation Y, born after 1980) has currently understood that there was no job security any longer and that they are in charge of their career. 49
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
You are in charge of your career Strongly disagree Disagree Nor disagree or agree Agree Strongly agree 1946 - 1964 1964-1980 1980 and after
Even if the three generations totally agree or disagree, it is noteworthy that the result related to "Strongly agree" increases with age: older people who were not used to this statement when they joined the workforce. 5.2.2 CHANGE It has been demonstrated through the literature review that different generations have different attitudes to change. As verified by the survey, the younger people are, the more familiar they are with changes. All young people have an opinion about change while the older do not know exactly what to answer. It does not mean that young people are more comfortable with change than older people. At that point, answers are split between a positive answer and a negative answer, whatever the generation is.
50
To be successful, be ready to change, whatever the direction is.
120,00% 100,00% 80,00% 60,00% 40,00% 20,00% 0,00%
1946 - 1964
1964-1980
1980 and after
Disagree or strongly disagree Nor disagree or agree A gree or Strongly agree
5.2.3 AUTHORITY The survey shows that Baby Boomers (born between 1946 and 1964) are still more antiauthority than the following generation while there is a clear contrast with people born after 1980:
51
A good manager:
120
100
80
Ensure that she delegated
to the right person and
60
then let her do.
40
Controls and supervises
the work
20
0 1946 - 1964 1964-1980 1980 and after
Surprisingly, the X generations (born between 1964 and 1980) have more authoritarian view of the management. It may come from the fact that Baby Boomers (born between 1946 and 1964) were antiauthoritarian for themselves but not for others.
5.2.4 FEEDBACK According to the survey, it seems that people who were born after 1980 do not know the "once-a-year performance appraisal: either they see their subordinates several times a month, either they do not see them at all. Regarding Baby Boomers and Generation X, the results are close enough.
52
How many times do you conduct a performance review with your subordinates?
120 100 80 60 40 20 0 1946 - 1964
1964-1980
1980 and after
Not applicable (no subordinate) I don't know Never Only an annual review Several times per year Several times per month
For a reason or another, older people receive slightly less feedback than the other generations:
How many times do you attend a review with your manager?
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
1946 - 1964
53
1964-1980
1980 and after
I don't know Never Only an annual review Several times per year Several times per month
5.2.5 PERFORMANCE REVIEW Moreover, we have already seen that older people receive feedback less frequently than the other generations and not surprisingly, they feel that they receive feedback too infrequently: What do you think about of the frequency of your review with your manager?
120 100 80 60 40 20 0 1946 - 1964
1964-1980
1980 and after
I don't know Too infrequently Infrequently Fine Too often Much too often
54
5.2.6 TRAINING
When did you attend your most recet training ?
120,00% 100,00% 80,00% 60,00% 40,00% 20,00% 0,00%
1946 - 1964 1964-1980
1980 and after
More than 10 years Between 5 and 10 years Between 2 and 5 years Less than two years
The older people are, the most ancient the training may be. Consequently, the Baby Boomers who are currently the workers aged fifty years and over, joined the workforce when there was a model of job security, thought they could keep their job as long as they performed well and discovered late in their career that their skills might be obsolete. On the opposite, the Xers who are now between 30 years old and 46 years old are better prepared to work later because they update their skills. 5.2.7 GENERAL FINDINGS The survey shows that the answers are not homogeneous: though there are trends, not all Baby Boomers chose the expected answers while some Generation Y answer like Boomers would do. Another issue is clearly a lack of training for the Baby Boomers compared with the other generations. Therefore, the survey confirms that the older workers do not receive enough training, as we have already seen in the literature review. 55
5.3 FINANCE POSITION 5.3.1 THE FORMATIVE YEARS Twenty-six people who answered the survey work in Finance department. Most of them (80.8%) started in Finance, accounting or cost accounting. It is not surprising that younger people (born after 1980) started in Finance Department because they did not have much time to change. Nevertheless, there are fewer people from Generation X who started in another area than Generation Baby Boomers.
Your first job: which department did you work for?
100%
80%
60%
Other
40% Finance, accountability,
20%
cost accounting
0% 1946 - 1964 1964-1980 1980 and after
Moreover, all the Baby Boomers (people who were born between 1946 and 1964) who started to work in another department, started to work in a commercial department. One person from the following generation started as an engineer, and the other person started in an engineering department. As a result, Finance people had few opportunities to learn about other department of a company. The Baby Boomers started massively to work in general accounting while the other generations had more opportunities to work than Baby Boomers ever had. People of the survey who were born after 1980 never started their professional career by working with the general ledger. 56
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
What did you do? 1946 - 1964 1964-1980 1980 and after
Consolidation Reporting Cost accounting Account Receivables General ledger
Though it is difficult to evaluate the answers given by the Generation Y on the time spent on their first job, Baby Boomers (born between 1946 and 1964) spent more time on their first job than Generation X (born between 1964 and 1980).
How long have you been working at this role?
100%
80% 60% 40% 20% 0% 1946 - 1964 1964-1980 1980 and after
More than 10 years Between 5 and 10 years Between 2 and 5 years Between 1 and 2 years Less than one year
57
From these results, the generations may have different views of their role, depending on what they did during their formative age and, the older generation had fewer opportunities to learn more about their role. However (Hope, 2006), many CFOs would like to be not only accounting specialists but also business partners. This change requires time and ability. Though other CFOs still believe that their role is to record transactions, there is a definitive trend toward a change of the CFO role. The new CFO has to add skills to its accounting expertise. Because a CFO has to be involved in "strategic planning, forecasting, resources management, project management, process improvement, decision support, operational effectiveness and risk management", he needs to be able to find the right control level, to build a highly efficient team, use technology and eventually provide decision support (Ibid). The survey among finance people shows that, depending on their generation, people have different views on ERP:
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Controls will be easier
1946 - 1964
1964-1980 1980 and after
Not Important Not so important Neutral Important Very important
Older people are, more important, easier controls are. 58
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
Decentralize decision making
1946 - 1964
1964-1980 1980 and after
Do not know Not Important Not so important Neutral Important Very important
The criterion is largely neutral for Generation Y (younger people of the sample). It is not so critical for Generation X (born between 1964 and 1980) and even less for Baby Boomers (older people of the sample). 5.3.2 CFOS SURVEY FINDINGS Like the previous part of the survey, the answers are not homogeneous. Nevertheless, there is common grounds with the literature review: controls are more valuable for Baby Boomers, probably because many Baby Boomers started their career in general accounting. 5.4 MAIN FINDING OF THE SURVEY The survey shows trends that are consistent with the literature review regarding some areas: for instance: a large majority of people belonging to the Generation Y (87,5 %) thinks that a talented manager has to ensure that she delegates to the right person and then, let her do. Nevertheless, some Baby Boomers (38.9 %) perceive the role of the manager in the same way. As a result, some Baby Boomers may suffer of a general view of their skills that does not apply to them.
59
On other areas, it appears that people belonging to the Baby Boomers generation understood that the work mindsets have changed. For instance, all Baby Boomers agreed that there are in charge of their career. 60
6 A GUIDE FOR COMPANIES AND HUMAN RESOURCES CONSULTANTS The purpose of this chapter is to evaluate solutions in function of the different barriers that was described above. There are five barriers to employment for seniors: stereotypes, lack of training, lack of understanding the business (culture), ineffectual career management, and finally dissatisfaction at work. These are some practices, aimed at removing these barriers. Dissatisfaction at work is not a specific barrier to the older workers, and will not be covered in this chapter. Stereotypes are a barrier that will prevent older people to find a new position or even a new assignment in the same company. Two factors: lack of training (lack of business culture included) and poor career management are specifically related to the barriers to employment of older workers, but they occurred before workers are perceived as old. As a result, this issue needs both curative solutions and preventive solutions. Then, this chapter will examine some solutions to remove these barriers. 6.1 HOW TO REMOVE THE BARRIERS: PREVENTIVE SOLUTIONS 6.1.1 TRAINING People faced two trends that went in the opposite direction: first, a more and more changing professional environment and hence more and more training should be required. Unfortunately, when people get older they are not trained any longer. Human resources manager should consider reversing the situation: to provide more training to older people might be an effective solution. An issue might be to understand the gap between the workers' skills and the required skills of a position. In order to do that, 61
benchmarking between divisions in a same company or benchmarking inside a professional organization might bring some answers. Nevertheless, offer more training is not sufficient. If people are not aware that their roles change (as demonstrated by the CFO case), they will not benefit from the training. They will look after reinforcing existing skills or methods (such as control for instance) instead of trying to understand what the company expects from them and how they can achieve these targets. Before reinforcing training for mature or older workers, their managers have to discuss their role with them. Another way to get training more efficient would be to train people on tools such as 7S (McKinsey) that enable people to evaluate their companies and then to think about their role. The Balanced Scorecard might be used as well, even if the company does not intend to use it. 6.1.2 CAREER MANAGEMENT Because it is not possible any longer to spend a whole career in the same company, people have to manage their career. There are three stakeholders who may have different benefits of career management: the company, the employee and the manager. As demonstrated by the CFO case, companies expect their CFO to be business generalist, risk manager experts and business intelligence source. In general, the companies expect that their employee fill the expected role for each function or position in the company. Employees are willing to fill this role, but they are not always aware that their role may have changed. 62
Eventually, managers may be reluctant to release an efficient employee for a promotion or a new assignment because he will lose skills in his department. As a result, a company has to deal with tools for these three stakeholders. 6.2 A TOOL FOR COMPANIES: SEGMENT THE EMPLOYEES Companies need to ensure that they will have the right set of people and skills at the present moment and for the future. Therefore, the Human resources managers might segment all the employees in function of two factors: training and adequate career management. To apply different strategies to the segment would help the human resources managers to manage people. The purpose is to ensure that people who have the skills and behavior currently compliant with the company are not stuck in a department. For that reason, they will be a valuable resource for the future for the company. Given the high redundancy and hiring costs, companies will realize significant savings, by giving them a tool that will help them to manage training and new assignments. 63
6.2.1 SEGMENT I ­ THE STRANGE POSITION The segment I is made of people with a successful career management but a low level of training. People having enjoyed a successful career management received frequently new assignments; they may have also enjoyed promotions. Taking the Finance department as an example, this situation, successful career management, without training is questionable. In general, people working in a Finance Department are skilled people. Moreover, the chapter four describes some changes in CFO environment that required training, for instance change in regulations, technology, data explosion. 64
There are three reasons that may lead to this situation: training has been received outside the habits of the company, and people have been effectively trained; consequently they are not allocated to the right segment. On the contrary, new assignments did not require new skills and the employee should also be allocated to another segment. Eventually, this situation may reveal a management issue for the department, specifically if the performance of the department is low. The segment I will require additional investigations to see how a career can be adequately managed without training. A benchmark with the job market would be useful: would it be possible to find someone who would fill the position with a lower salary? A positive answer would question the right allocation of the segment because the career management might not be appropriate. 6.2.2 SEGMENT II - HIGH LEVEL PEOPLE People belonging to the segment II receive adequate training and fair career management. As a result, their performance must be outstanding. Then, the Human Resources managers should consider the performance: if the performance is not satisfactory, data on the employee need to be reviewed. On the opposite, if the performance is superior, the Human Resource managers must carefully check that the situation is ongoing. The situation of this employee also must be compared with the situation of the employees working in the same department. If the situation is the same, then the department must have a superior performance. For instance, in Finance department, people are working to record transactions and to control the company through plans and budgets; also they are efficient to help managers to make decisions. 65
The issue related to this segment is about the evaluation of the performance of the department: how can the Human Resource department evaluate the performance of the Finance Department (it must be the same issue for other departments: marketing department, research and development department)? The solution might be to compare the performance of a department inside the company and outside the company. The senior management has to be involved and has to review the results and confront them with the strategy of the company. 6.2.3 SEGMENT III ­ THE EXPERT POSITION People in this segment received adequate training, but they did not receive any new assignment. It may be an expert position. Therefore, training is critical for their career. Nevertheless, they may be stuck in a position, and they may be threatened if the need of expertise decreases or disappears. Regarding Finance positions, expert positions might be found in tax departments or accounting department, because of the introduction of international accounting norms. Though, these positions are not likely to disappear, the organization may change. This expertise might be outsourced. A benchmarking with other people in similar companies might be useful both for the company and the employee. The company could check that its resources are well managed, and the expert could check that she is still employable. Consequently, further investigations are required to understand the expectations of the position. Benchmarking with other expert needs to be considered to ensure that training is offered in adequate direction. 66
6.2.4 SEGMENT IV ­ THE DANGEROUS POSITION People having received a low level of training and being poorly managed are in the worth situation. Regarding older workers, it will be difficult for them to adapt, and if they are laid off, it will be even more difficult for them to find another position. It will also highlight that the skills of their managers need to be improved. To train the managers and to change the position of the employee need to be considered. Facing this situation, the Human Resource Department should check whether it is an isolated case of if the whole department is showing the same status. An isolated person might have declined all the opportunities of training and new assignment; therefore, this is a case for change management. A non skilled person, for instance, someone who is only recording transaction in a Finance Department might be in this status. Nevertheless, this kind of position is more and more automated, and there is a risk that the position disappears in the future. This is the case for skills management inside the companies. If the whole department presents the same status, then, the status of the manager has to be considered, assuming that the manager is not new to this department. If the manager himself belongs to the segments IV, there is a risk that the department does not present the best performance. At that point, the problem of the manager has to be solved: the purpose should be to transfer the manager in the section III. He needs to understand what the new requirements are for her department. 6.2.5 EVALUATION OF A DEPARTMENT An employee might be stuck in a department that does not change. 67
Who can evaluate the performance of a Finance department on the whole, CFO included? This segmentation might give some hints of failure or future failure for a whole department, a department with too many people lacking of training or new assignments might be a department who is not moving. The HR department has not the skills to evaluate the performance of a Finance department and the senior managers have to rely on the managers. The situation described to CFO or finance people could be similar for other department: marketing, R&D, probably for all the department of a company. Consequently, to give benchmarking tool to their managers would help a company to ensure that all their departments are aware of the changes in their area of expertise and that they are moving in the right direction. Eventually, some tools that are used in Human Resources Department to evaluate employees' performance could be added: for instance the 360° tool which would give information on the perception of the finance team by their internal customers. See Appendix III: the segmentation of people having answered the survey. 6.2.6 COLLECT INFORMATION In order to segment the employees, the Human Resource department should collect and file this information: history of training and career proposal. The Human Resource department must also collect every change in the job description. They must also know how long an employee has been working with the same manager. The Human Resource department should also conduct a benchmark with the job market. The Human Resource department will seek to understand whether it would be possible to find people with the same level of skills of their employees. It would try to find people who would be willing to join the company with a lower level of wages. 68
6.3 A TOOL FOR MANAGERS: IMPLEMENT KEY INDICATORS The Human resource managers have to find adequate indicators, which will help them to understand the current situation of an employee and also help the managers to evaluate their management. These indicators might be one of this indicated in this chart. Training Number of days during the past five years Numbers of training days compared to the average of the company Numbers of training days by age Number of training days by function Number of training days by department, compared to the other department Number of training days related to technical skills comparer to number of training days related to other skills Career management Number of formal reviews with their manager Number of formal reviews with their manager, compared with the average of the company Tenure Time spent with the same manager Therefore, managers will be able to realize if they spend enough time and energy to managers their subordinates. 69
In addition, the Human Resource department will give the managers the result of the benchmark for their department. They will have to report how they manage their people and how they compare with the job market. 6.4 TOOLS FOR EVERY ACTOR: SURVEY AND BENCHMARKING 6.4.1 BENCHMARKING As demonstrated above, evaluating the current status of an employee needs to be linked with the performance of a department. As a result, managers need to evaluate their people, but a company needs also to evaluate how well their department performs compared with other departments because it will help them to understand if they move forward or not. Consequently, Human Resources need to consider giving benchmarking tools to their employees and managers. It might be the subscription to professional organizations for instance. 6.4.2 SURVEY To ensure that the right information is collected, the Human Resource Department should conduct an anonymous survey. The survey objectives The survey will have two purposes: the first purpose will be to help people to assess their own career management. The second purpose will be to give information to the Human Resource about the generation mindset. In function of the result, the Human Resource department might take actions in order to let people understand better how they can manage their own career. 70
A high response rate will be required. Moreover, confidentiality must be guaranteed because department managers and Human Resource managers might be questioned. Survey type An external company will conduct the survey in order to guarantee anonymity and confidentiality. This company will give an analysis of the results to the Human Resources department; they will also give feedback to people who answered the questionnaire. People will be free to answer or not no answer. Nevertheless, if people answer, they will receive a summary of the answers. In addition, they will receive their own position in the segmentation. Consequently, they will be able to compare their answers with the average answer of the company. This will enable the company to give an incentive to foster the answers. This will also provide people a tool to manage their career at best. Assumptions People will be more and more in charge of their career. It is the responsibility of a firm to manage the career of employee inside the company, but it is not the responsibility of a firm to keep an employee all her working life or to train her for another job in another company. A company also must ensure that the employee's skills are compliant with the its targets and objectives. As a result, companies should give some tools to their employee to determine how employable they are and how they can manage their career: it will help companies to manage people and to ensure that they have the right set of skills. Choice of the type of questions Questions related to the segmentation are about facts, and questions related to mindsets are about opinions. Therefore, the questions about opinions will offer a scale of rating. The issue 71
is to discover whether people are aware that they need to manage their career and how they feel about this issue. The questionnaire The first three questions are about training and career management. The questionnaire seek to understand when people where trained for the last time and how long they spent with their current manager. The question three will seek to understand how people feel with their current job: are there many changes and how people deal with them? Question four will list five different opinions about career management; the purpose will be to compare the answers by generation. The last question will ask how old people are. Appendix III disclosed the questionnaire on page Analyze of results The question one and two will be use to segment people. In function of the answers, people will be able to evaluate their own situation. 72
Question 1
Currently Technical skills 5 training Non technical 5 skills training
Less than two years
Between two and five years
More than 5 years
3
1
0
3
1
0
Question 2
People who have been working with their current manager for less than two years will collect ten points, while people having working with their current managers between two and five years will receive 5 points and the other will receive no point at all.
People will be able to place the evaluation of their career in this chart.
Question 2
9
8
7 Segment I
Segment II
6
5
4
3
2 Segment III
Segment IV
1
0
0123456789
Question 1 73
The same document will explain what areas for improvement must be considered. The question 3 will have two purposes: compare the answer by generation because it will give information of the feelings by generation. It will also enable people to compare their answer with the segmentation, and to reinforce or not their areas of improvement. This question must help people to think about their career. People having answered A (I am doing the same job since years, and I enjoy it) need to consider benchmarking to ensure that their position is still seen as a valuable one by their company. People having answered B (I am doing the same job since years, and it is boring) need to ask for a new assignment. People having answered C (My job is changing, and it is pleasant to do it) need to check that their performance is satisfactory. Eventually, people having answered D (My job is changing, and it is an issue for me) need to consider training. The question four will be used to compare the answers by generation. The results by generation will be disclosed. As a result, people will be able to compare their answer by generations. Further actions might be taken; for instance people might discuss and explain their opinions and mindsets. 6.5 FIGHTING AGAINST STEREOTYPES To fight against stereotypes could help companies to save money by avoiding expensive redundancies and hiring by keeping people employable through training and career management. The survey described above demonstrates that not every people from a generation answers in the same way. For instance, there are more Baby Boomers who think that a skilled 74
manager controls than people from generation X and even more than people from Generation Y. But they are many people who think outside the generation stereotypes. Consequently, some issues have to be openly discussed in a company or a department. The issues that have to be discussed must be related to the business strategy and the culture of the company. This discussion may occur by department. Regarding the finance department, for instance, the role of the department might be discussed openly. As a result, the employees could have a better understanding of the value they need to bring to the company. To ensure that this discussion happened, the company should integrate this process in their management system. If a company understands how to keep their senior employable, this company will be able to hire older workers if they offer the right set of skills, value and behavior. 6.6 EVALUATE THE BENEFITS OF THIS PROCESS This process will show benefits only on the long run. To ensure that the company will benefit from this process, the firm has to measure the Return on Investment. By avoiding redundancies and hiring, the company should realize significant savings. Consequently, the company should track these costs, and might use this table:
Age Headcount Redundacy at 01/01/.. 20-30 30-40 40-50 50-60 60-67
Hiring
Headcount Wages and Cost of Cost of at 12/01.. salaries redundancy hiring
Total costs Total costs / Wages and salaries %
Total
0
0
0
0
0
0
0
0
0
75
7 CONCLUSION The OECD (2005) report is considering the barriers in general: little information is available regarding specific positions. The report offers some practical recommendations to prevent older people being driven away from the job market: to remove barriers coming from the employers through regulations in favor of work for older people and to strengthen employability. There is also no information on the fact that three generations are currently still at work. After studying the different generation mindsets, this document made clear that the three generations at work have different behavior, beliefs and expectations. In addition, changes in environment, studied specifically for one position, show that the role of the position itself has changed. 7.1 BARRIERS TO GENERATION Because the three generations currently at work have such different mindsets, this paper showed that it might even lead to stereotypes. In addition, it could be difficult for them to work together. 7.2 CHANGES INSIDE A POSITION Looking at the CFO position, we have realized that there was at least a change in mindsets by decade. In addition, each company has its own mindset or its own culture. As a result, the situation is not homogeneous, and each company may face different issues. Nevertheless, we can detect trends that are going in opposite directions: 76
One direction is caused by the increasing rate of changes. These changes require more and more training of people, because they must be prepared to keep their employability. Moreover, change in roles and working with other generations also requires additional training. Another direction is caused by the fact that people receive less training as they get older. Companies prefer to replace older people by younger people: it is simpler and more efficient for them. 7.3 WHO IS IN CHARGE? Because companies must face changes in their market extremely fast, it may be difficult to adapt their employee fast enough. A new covenant should replace the old covenant. The old covenant was: loyalty leads to job security. The new covenant is based employees awareness that they must keep adding value to a company, and they have to learn how to do it. The awareness for the company should be: as long as people are willing to bring value to the company, the company will provide a wide range of tools for the workers to learn how they can add-value for a company, whatever the company is. These tools may be assessment tools and benchmarking tools. This new covenant will bring benefits both to the companies and workers. The companies will retain skilled and experienced workers in state-of-the-art techniques. As a result, companies will get more abilities to react to the changes of the market. The workers will be fully aware what they have to do to stay employable, and they will increase their career security. 77
7.4 SUGGESTIONS FOR FUTURE RESEARCH It is clear that being in charge of their career is in the best interest for the workers themselves: they can gain in career security. However, it is more difficult to see what the interest will be for companies to enable their workers to keep their employability outside the scope of the company. As a result, a research might focus on these costs; and then, the research might compare these costs with the costs of redundancy. In addition, the research might compare the performance of companies, depending on their employability politics. Another research would focus on reactions to market changes and try to understand what the best Human Resources Policy might be. 78
8 APPENDIX 8.1 APPENDIX I TRANSLATION The survey is in French and is available at: http://www.surveymonkey.com/s/VJ27Z5R This is a translation of the survey. Page 1 Introduction My name is Catherine Perrin, and I am writing a dissertation which will be the final of the MBA attended at Robert Kennedy College (Zurich), rewarded by the University of Wales. The purpose of this survey is to check whether the answers are similar or different in function of the generations. If the answers are very different, the complexity at work will be higher, and it is an additional barrier to older worker employment. If you are currently working for a company, whatever your age or your job, your answers will help me. If you would like to receive the results of the survey, please let us know your email address. Your email address will not be kept, once the information disclosed. Questions with an asterisk are mandatory. 79
Page 2 Training Question 1 When did you attend your most recent training? I am currently attended a training Less than two years Between 2 and 5 years Between 5 and 10 years More than 10 years Questions 2 Who made the decision about this training? You Your boss Other (specify) Questions 3 Why did you attend this training? The need raised during the annual review Technical mandatory update Following a promotion You identified a specific need Other (specify) 80
Page 3 Management Question 4 How many times do you conduct a performance review with your subordinates? Several times per month Several times per year Only an annual review Never I don't know Not applicable (no subordinate) Would you like to add a comment? Question 5 How many times do you attend a review with your manager? Several times per month Several times per year Only an annual review Never I don't know Would you like to add a comment? Question 6 What do you think about of the frequency of your review with your manager? 81
Much too often Too often Fine Infrequently Too infrequently I don't know Would you like to add a comment? Question 7 A good manager: Controls and supervises the work Ensure that she delegated to the right person and then let her do. 82
Page 4 Career Question 8 What do you think about these sentences? To be successful...
Strongly Agree Nor
Disagree Strongly
agree
disagree
disagree
or agree
Work hard and success will come
Choose a company which offers a planned carrier
You are in charge of your career
You must be remarkable: there are few opportunities and so many people
Build a portfolio of skills
Be ready to change, whatever the direction is
Other (specify)
83
Page 5 Motivation Question 9 You think these features are attractive and will cause you to take a job
Strongly Agree Nor
Disagree Strongly
agree
disagree
disagree
Nor agree
Your work makes the difference
You are autonomous
You can control your agenda
You can have time for you
Your wages are convenient for you
You will learn
Your work is challenging
Flexible schedule
Your work will be useful for your community
You'll get a mentor
You'll get an unlimited access to training
84
You'll get accompany car You'll get a pleasant office You'll get a last generation computer and technical devices Other (specify) 85
Page 6: You hire Question 10 How important are these criteria?
Very
Important Neutral Not so Not
important
important important
Technical skills
Professional experience in the same role
Communication skills
Adaptability
Ability to develop a team
Commitment to the company
Ability to use new technology
Other (specify)
86
Page 7: About you Question 11 What is your birth year? Before 1946 Between 1946 and 1964 Between 1964 and 1980 After 1980 Question 12 * Which department are you working for? Finance, accountability, cost accounting Other (specify) 87
Page 8: Questions for Finance people Question 13 *Your first job: which department did you work for? Finance, accountability, cost accounting Other (specify) 88
Page 9: First job10 Question 14 What did you do? General ledger Account Receivables Credit control Cost accounting Treasury Capital expenditure, expense claims Reporting Consolidation Administrative tasks Other (specify) Question 15 How long have you been working at this role? Less than one year Between 1 and 2 years Between 2 and 5 years 10 For people whose first job was in finance department 89
Between 5 and 10 years More than 10 years 90
Page 10: ERP (Enterprise Resource Planning) Question 16 You are going to implement an ERP. Please rate these criteria
Very
Important Neutral Not so Not
important
important important
Controls will be easier?
More data will be processed
No need to re key and reformat the same data
Decrease maintenance costs
Decentralize decision making
Other (specify)
91
Page 11: end of the survey This survey is now ended. Thank you for answering the survey. If you would like to receive the results, please let us know your email address. Your email address will not be kept once the information is disclosed. Question 17 Your email address 92
8.2 APPENDIX II SEGMENTATION OF PEOPLE HAVING ANSWERED TO THE SURVEY The indicators are the following: Training: Less than 5 years More than 5 years Good career management: Review with managers several times a year Review with managers once a year or even less 93
SEGMENTATION
SEGMENT I
·Good career
4
management
·Low training
LOW
·Bad career management
7
·Low training
SEGMENT III
HIGH
LOW
SEGMENT II ·Good career 27 management ·Adequate training HIGH ·Bad career management 14 ·Adequate training SEGMENT IV
94
8.3 APPENDIX III THE QUESTIONNAIRE MANAGE YOUR CAREER This questionnaire will take you only a few minutes. Please feel free to add any comment you like. The purpose is to assess the management of your careers. Your answers will be kept confidential, and only a Summary Report of all the answers will be disclosed. Please keep you answer filed in your computer. You will receive a method to evaluate your answer and a summary of the whole results. Question 1 Could you please mark the right answer with a "Y" When was your last training?
Currently
Less than two years
Between two and five years
More than 5 years
Technical skills training
Non technical skills training
Question 2 How long have you been working with your current manager? 95
A. Less than two years B. Between two and five years C. More than 5 years Question 3 What do you think about your current position? A. I am doing the same job since years and I enjoy it. B. I am doing the same job since years and it is boring C. My job is changing and it is pleasant to do it D. My job is changing and it is an issue for me Question 4 Could you please rank the following sentences. - To enjoy a job in the future: - I need to be effective and trustworthy in my current position - I have to acquire new competences - I have to consider several occupations - I have to adapt my skills to the company - I have to manage my career Question 5 96
Could you please let us know how old you are. Less than 25 years old Between 25 and 35 years old Between 35 and 45 years old Between 45 and 55 years old More than 55 years old 97
9 BIBLIOGRAPHY Dychtwald, K, Erickson, T, Morison,R, (2006) ­ Workforce crisis How to beat the coming shortage of skills and talent ­ Harvard Business School Press ­ Boston Hope,J, (2006) - Reinventing the CFO - Harvard Business School Press ­ Boston Kaplan, R, Norton, P (1996) ­ Balanced Scorecard ­ Harvard Business School Press Boston Keese, M, Hirsch, D, Bednarzik, R, (2006) - Live longer, work longer ­ OECD ­ Paris Lancaster, L, Stillman, D (2002) ­ When generations collide ­ HarperCollins ­ New York 0ECD ( 2005) - Ageing and Employment policies France ­ Paris. OECD Publications Parmenter,D, (2011), Winning CFOs ­ John Wiley & sons, Hoboken Read,C (2006) ­ Creating Value in a regulated world, CFO perspectives ­ John Wiley & Son, Chichester. Waterman, R, Waterman, J, Collard, B (1994)- Toward a career resilient workforce ­ Harvard Business Review - July Zemke, R, Raines, C, Filipczak, B, (2000) - Managing the Clash of Veterans, Boomers, Xers and Nexters in your workplace ­ AMACOM ­ New York Internet resources Amadieu,JF, (2006), Baromиre ADIA, Observatoire des Discriminations, available at : http://www.halde.fr/spip.php?page=article&id_article=12091 [accessed on 11 July 2010] 98
Bain & Company (2010), Shared Service Center, available at : http://www.bain.com/publications/articles/management-tools-2011-shared-servicecenters.aspx [accessed on 29 August 2011] Davoine,L, Meda,D ,(2008), Place et sens du travail en Europe une singularitй franзaise ? available at : http://www.cee-recherche.fr/fr/doctrav/travail_europe_96_vf.pdf [accessed on 11 July 2010] Direction de l'Animation, de la Recherche, des Etudes et des Statistiques,2010, Emplois et Chфmage des 50-54 ans en 2009, Juin, available at : http://www.travailsolidarite.gouv.fr/IMG/pdf/2010-039-3.pdf [accessed on 11 July 2010] Ernst & Young,( 2011) ­ Finance forte, the future of finance leadership ­ available at: http://www.ey.com/GL/en/Services/Assurance/Finance-forte--the-future-of-financeleadership [accessed on 15 March 2011] OECD (2011) ­ Employment rate of older workers ­ available at : http://www.oecdilibrary.org/docserver/download/fulltext/190600061e1t003.pdf?expires=1320850546&id=id& accname=freeContent&checksum=685C66FE179FA823A4AD65C29ED2ECC0 [accessed on 9 November 2011] 99

C PERRIN

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Author: C PERRIN
Author: Catherine Perrin
Published: Sun Jan 8 15:40:50 2012
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