Week 7 essay

See attached

Leaders and their use of
motivating

language

James C. Sarros and Elvira Luca
Management Monash University, Caulfield, East Australia

Iain Densten
School of Business, Monash University Malaysia,

Jalan Lagoon Selatan, Malaysia, and

Joseph C. Santora
International School of Management, Paris, France

Abstract

Purpose – The purpose of this paper is to use Motivating Language Theory (MLT) as a framework
in determining leader use of different language styles during times of dynamic change.
Design/methodology/approach – This exploratory study of executive members of the Australian
Institute of Management examined how MLT may provide a mechanism for analyzing what leaders
say in the context of a work setting. Written transcripts of interview data were analyzed to determine
leaders’ use of three language styles: meaning-making (locutionary), direction giving (perlocutionary),
and empathetic (illocutionary) language. The software program NVivo was used to help aggregate
themes emerging from written and interview data into discrete modules to enable more robust and
comprehensive analysis of the data.
Findings – A range of issues pertinent to the way executives lead and manage their businesses,
both in private and not-for-profit organizations, was identified in this study. Direction giving language
was most prominent in management activities and leadership that was strategic or people related,
followed by meaning-making and empathetic language. The findings suggest that business leaders
could develop a repertoire of language approaches in order to achieve organizational outcomes.
Research limitations/implications – More research of the language of leadership and its implications
for organizational outcomes is warranted. For instance, the strategic integration of motivating language
with a compatible set of leader behaviors, organizational objectives, and cultures may reveal mechanisms
as yet unknown for achieving outcomes. Research is needed to determine the content and construct of these
behaviors, objectives, and cultures. Some questions also remain regarding the appropriateness of using the
Motivating Language Scale to examine the types of language used by managers and leaders in the work
place. The authors recommend further application of MLT through the Motivating Language Scale in order
to help clarify these queries.
Originality/value – This paper used MLT as a framework for identifying leader use of different
language styles during times of dynamic change. MLT has been used to identify the speech patterns of
leaders during verbal communication exchanges with staff and work colleagues, but this study is the
first example of the use of MLT when examining leader responses to interviews and in their written
responses to survey questions.

Keywords Leadership, Communication, Motivating language, Interviews, Qualitative data

Paper type Research paper

Leadership and language
Leader communication
Leaders communicate verbally as well as through their actions and behaviors. In this
paper, our focus is the type of language leaders use as they deal with workplace issues.
King (2003, p. 1205) states that “managing is about talk,” where the power of language
through “its ontological capacity [structures] our actions in the context of perceived
realities” (for further evidence see Astley, 1985; Gergen, 1992; Sandelands and Drazin,

The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0143-7739.htm

Received 18 June 2012
Revised 24 August 2012
20 January 2013
11 March 2013
Accepted 12 March 2013

Leadership & Organization
Development Journal
Vol. 35 No. 3, 2014
pp. 226-

240

r Emerald Group Publishing Limited
0143-7739
DOI 10.1108/LODJ-06-2012-0073

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1989; Westwood and Linstead, 2001). Without the capacity to involve others in their
strategic vision for the company, leaders lose their impact (Farkas and Wetlaufer, 1996;
Ireland and Hitt, 1999). Conger (1991, p. 31) states that “effective leaders [are] skillful
craftsmen of their organization’s mission [and] communicate their missions in ways
that maximize their significance.” In his study of powerful international leaders and
statesmen such as Margaret Mead, Martin Luther King, Margaret Thatcher, and
Pope John XX111, Gardner (1995, p. 22) writes of the cognitive and cultural elements of
leadership that reside in the minds of leaders and in their work cultures. This approach
deals with the stories and struggles that constitute a leader’s mission in life. Gardner
(1995, p. 55) illustrates and evaluates the stories of leaders by listening to their words
and reading their thoughts, thereby establishing a sense of value and meaning in the
words and actions of these leaders: “introspection and discussion are additional
sources of value systems.”

Yukl (2002) claims that the verbal behavior of leaders comprises up to 82 percent of
their work time when communicating goals to followers, clarifying standards, or
giving feedback. This perspective of managerial behavior has not fundamentally
changed since Mintzberg (1973) first identified the variety, brevity, and fragmentation
of managers’ work, which frequently was interspersed with verbal interactions.
An update on Mintzberg’s (1973) study by Gentry et al. (2008) confirms that managers
still maintain communication (verbal and written) as a key facet of their role. And
this communication has impact. For instance, Mohr and Wolfram’s (2008) study of
140 leaders and 455 direct reports in Germany found that verbal consideration was
associated with lower levels of follower irritation, and higher levels of job satisfaction
and affective commitment.

Another study illustrates the power of language, spoken, and written. Emrich et al.
(2001) examined US presidents’ speeches from Washington (first year in office 1789)
to Reagan (first year in office 1981) and found that when image-based rhetoric such
as “sweat” instead of “work,” “frontier” instead of “limit,” or “dream” instead of “idea”
were used, the higher the president’s charisma level, and the more favorable historians’
assessments of his greatness. This finding is consistent with Bass’s (1985, p. 28)
assertion that top managers possess “the ability to create, articulate, and communicate
a compelling vision that induces commitment to it, clarity about it, and support for it.”

Leaders today are increasingly subject to public scrutiny through the electronic
media, so what they say not only has greater immediate impact, but also demands that
the message is understood as intended. From that perspective, this paper reports on
our study of interviews with leaders from various industry groupings, and is delimited
to the spoken word interpreted through interview transcripts. The interview data
helped answer the first research objective of this study:

(1) To identify the type of leadership enacted in times of dynamic global economic change.
Tierney (1996, p. 374) comments on the need to examine more closely language as

“a key area of investigation” in leadership research. Tierney (1996) believes that the words
of leaders help explain the social and historical dimensions in which an organization
exists. Similarly, Bryman et al. (1996, pp. 353-354) identify “a growing interest in the
use of qualitative research” in the examination of organizational leadership, and cite
examples of interview studies of executives to illustrate this qualitative approach.
Biggart and Hamilton (1987, p. 439) claim that qualitative studies of leadership provide a
comprehensive understanding of leadership as “a relationship among persons embedded
in a social setting at a given historical moment.” Our present study is conducted within
these parameters of qualitative interview studies of organizational leadership.

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Leader sense-making
What leaders say and do inform us of the state of thinking in organizations and
society. For instance, Conger (1991, p. 44) identifies leaders as “meaning makers [who]
construct pictures of great possibilities.” When leaders translate ideas into actions, they
participate in “the discursive process of constructing and interpreting their social world”
(Gephart, 1993, p. 1485). Recent interview studies show that the language of leadership
and management is the language of meaning and context. Francis’ (2002) interview study
of individuals at all organizational levels in a large UK manufacturing firm confirmed
that qualitative data gathered through interviews is akin to Alvesson and Deetz (2000)
concept of “drilling” for greater detail and understanding. Further, in their interviews with
62 executives in 27 companies in the UK, Ezzamel et al. (1996, p. 158) observed the
importance of interview data to better contextualize and interpret survey responses.
And in an interview study of 40 managers and scientists in a science-based research and
development company, Alvesson and Sveningsson (2003, pp. 378, 380) claimed that:

Language use (discourse) matters as much as what actually goes on [in leadership] in terms of
how we understand increasingly ambiguous phenomena [y] We suggest that the possible
existence of leadership – as behavior, meanings, identity, and discourse – should be critically
studied, not be taken for granted.

One of the key skills required by leaders is the ability to motivate others which, as Zorn
and Ruccio (1998, p. 468) noted, is based “almost entirely [on] communication skills.” Conger
(1991, p. 32) described the language of leadership as “the process of defining the purpose of
the organization and using symbolic language to give emotional power to the message.”
Making sense of the words of the leaders interviewed for this study helps establish their
state of thinking about important business issues such as strategy, organizational culture,
leadership approaches, and professional development. We applied Motivating Language
Theory (MLT) (Sullivan, 1988) as the theoretical framework to assist us in this analysis.

MLT
MLT (Sullivan, 1988) provides a model for understanding how leadership language
works and evaluating its impact on workers. Using a psycholinguistic framework,
Sullivan (1988) conceptualized three types of supervisor-subordinate communications:

(1) perlocutionary language refers to uncertainty-reducing language and tends to
be direction-giving or task oriented such as clarifying the job to be done;

(2) locutionary language is concerned with meaning making and uses stories
to explain the culture, structure, and values of the organization; and

(3) illocutionary or empathetic language refers to relational communication which
facilitates human bonding and interpersonal relationships, such as praise for
work well done or consideration for work or personal problems.

According to Sullivan (1988), most motivational theories tend to address only
uncertainty-reducing language and assume that this is the main form of organizational
communication used to motivate workers. In comparison, MLT addresses other
functions of motivational language that previously have been ignored, namely
language as a meaning-making tool, and language as a means of human bonding and
forming relationships. In particular, locutionary language is a relatively new field of
study in the management literature (Mayfield et al., 1998; Sullivan, 1988). Locutionary
or meaning-making language refers to communication that helps workers make sense

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of their workplace and assists in aligning employee behaviour to organizational goals.
Sullivan (1988, p. 106) views work as “what one does as part of the ongoing process of
constructing a specific sense of one’s place in the world,” and suggests communication
that facilitates different meaning making is most appropriate. Meaning-making
language helps workers construct schemas and scripts which then guide work behaviour
in ways which benefit the organization (Sullivan, 1988, p. 107). This notion is supported
by Barker and Camarata (1998) who maintained that the link between an individual’s
mental models and the organization’s mission is managed through communication.
Additionally, meaning making is one of the key tools of strategic leadership, and is
particularly important during times of dynamic change as is the case today (Boal and
Hooijberg, 2001; Crossan et al., 2008; Elenkov et al., 2005).

Illocutionary or relational language refers to informal communication that develops
interpersonal relationships. As Sullivan (1988, p. 109) notes, “it is an end in itself, an act
of sharing unique to human beings.” Through a manager’s empathy and consideration,
employees develop a sense of self-worth and trust, which in turn creates a bond between
manager and worker, which translates to work motivation. Sullivan (1988) suggested that
effective managers will use all three types of motivating language to achieve their goals.

MLT has been criticized by Zorn and Ruccio (1998) because of its perceived focus on
discrete language types with single functions, and noted that messages always tend to
be multifunctional. For example, a relational message (praise) may reduce uncertainty
and modify meaning (Zorn and Ruccio, 1998). However, Sullivan (1988, p. 113) clearly
stated that “all functions of language must be combined in a coherent discourse in
order to have the greatest impact,” and mutually supportive speech acts will lead to
improved worker motivation. Sullivan’s assumption was acknowledged by Mayfield
et al. (1998, p. 237) who noted that “motivating language use cannot be piecemeal [y]
[and] managers need to be adept in all three speech types.” Accordingly, this
observation guides the second objective of our study:

(2) To examine the extent to which each type of motivating language was used by
leaders in times of change.

Our premise is that with an ever increasing need by leaders to develop strategies for
dealing with change, and the need to align workers to these new imperatives, that
both perlocutionary (direction giving) and locutionary (meaning-making) language use
by leaders will be prominent.

Based on Sullivan’s theory, Mayfield et al. (1995, 1998) developed a motivating
language scale to test the veracity or otherwise of different communication styles
intended for different organizational and worker outcomes and responses, such as
performance and job satisfaction (Mayfield et al., 1998, p. 237). Their (Mayfield et al.,
1998, p. 240) study of 164 nursing staff in a government health care facility in the
southeastern USA found that a leader’s use of motivating language was strongly
related to a worker’s job satisfaction (path coefficient of 0.67) and performance (0.22).

In an exploratory case study by Zorn and Ruccio (1998) involving interviews with
24 sales managers and sales representatives from a publishing firm in North Carolina
in the USA, MLT was interpreted to emphasize the multifunctional nature of
communication. The research considered the intentions of the manager, the message
itself, the contextual situation, and the employee’s interpretation. The study found that
managers tended to use motivational language styles in a variety of combinations,
and the context or situation was also an important factor. In keeping with Sullivan
(1988), Zorn and Ruccio (1998, p. 495) found that “MLT seemed to capture the flavor of
many of the kinds of motivational speech acts [the sales] managers perform.” and

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concluded that managers should not focus on uncertainty-reduction solely but
“develop and use a repertoire of motivational speech acts” (Zorn and Ruccio, 1998,
p. 497). As these studies show, the environmental context is a key element in the types
of language leaders use to achieve organizational outcomes.

Methodology
Research framework
To reiterate, the two objectives of this study were to:

(1) identify the type of leadership enacted in times of dynamic global economic
change; and

(2) examine the extent to which each type of motivating language was used by
leaders in times of change.

This research used MLT (Sullivan, 1988) as the theoretical framework, and Mayfield
et al.’s (1998) Motivating Language Scale to operationalize the language styles
identified by Sullivan (1988). Mayfield et al. (1998, p. 239) reported robust reliability
coefficients for meaning-making (locutionary) (0.93), direction giving (perlocutionary)
(0.95), and empathetic (illocutionary) (0.97) language. Examples of meaning-making
language are the items “[My boss] tells me stories about key events in the organization’s
past,” and “[My boss] offers me advice about how to behave at the organization’s
social gatherings.” Examples of direction giving language are “[My boss] gives me clear
instructions about solving job-related problems,” and “[My boss] gives me useful
explanations of what needs to be done in my work.” Examples of empathetic language
are “[My boss] shows trust in me,” and “[My boss] gives me praise for my good work.”

Sample
We surveyed 1,918 members of the Australian Institute of Management in relation
to leadership style, organizational culture, and job outcomes, of whom 511 provided written
comments on leadership and culture. From these 511 managers, we purposefully selected
another group of managers across industry sectors to interview on the nature of leadership
in a dynamic and competitive market place. In purposeful sampling, the size of the sample
is determined by informational considerations, and generally the sampling is terminated
when no new information is forthcoming. Often referred to as saturation, Lincoln and Guba
(1985, p. 202) noted that redundancy is the primary criterion when determining sample size.
We terminated interviews when we believed saturation of information was reached (n¼129
interviewees). For the entire sample (n¼1,918), 76 percent of respondents were male,
61 percent of respondents were 49 years of age or younger, and companies ranged in size
from fewer than 500 employees (62 percent) to more than 1,000 employees (31 percent).
Most respondents (50 percent) were at CEO, COO, or executive (Vice-president, Director)
levels of seniority. Around a quarter of the sample (24 percent) had five or fewer years
experience as an executive, and 33 percent reported more than 20 years experience.
The sample was relatively well educated, with 59 percent holding a bachelor or masters
degree. Industry groups or positions most represented were administration (42 percent),
advertising, manufacturing, R&D (26 percent in aggregate), MIS (8 percent), human
resource management (6 percent), and accounting/finance (5 percent).

Data analysis techniques
In order to address research objective one, “to identify the type of leadership enacted in
times of dynamic global economic change,” we first content analyzed the written

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responses of the 511 respondents identified previously. A total of eight themes and
sub-themes were generated as a result of this analysis. These themes were Management
and Leadership, Leadership and Culture, Trust and Commitment, External and Internal
Issues, Challenge and Change, Leadership Development, Innovation of Australian
Companies, and Entrepreneurship of Australian Companies, and helped guide the
preparation of questions for the interview stage of this study. The 129 executives who
were interviewed by phone helped address research objective two, “to examine the extent
to which each type of motivating language was used by leaders in times of change.”

As researchers, we were concerned with uncovering the patterns that emerged from
the interviews, and grouping these patterns into meaningful themes as they related to
each of the eight themes outlined above. The software program NVivo was used to help
aggregate the themes into discrete modules to enable more robust and comprehensive
analysis of the data (Richards, 1999). Themes were also double coded to check for
inter-rater reliability (Goodwin and Goodwin, 1985, p. 7), which was 0.88 for this
study. The greater the inter-rater reliability coefficient, the more likely it is that coders
have identified similar themes independently of each other. Results that exceed 0.70 for
inter-rater reliability are considered adequate (Miles and Huberman, 1984). We have
selected comments most representative of the ideas and perspectives of the
interviewees for question one only, that is, leadership and management, and associated
sub-sections, as this theme best represents the two research objectives of this study.

Results
The selected comments are presented in terms of their representation of one or more of
the three motivating language schema, namely direction-giving, meaning-making, and
empathetic language. Where appropriate, each comment is followed by the language type
most applicable to that comment, where DG, direction giving; MM, meaning making;
and EL, empathetic language. For all comments we provide selected demographic
information that shows gender of respondent, level of seniority (CEO, COO), or Executive
(Vice President, Director), or Upper Middle (Department Executive, Plant Manager),
size of organization (number of employees), and type of organization or industry.

As shown in Table I and in response to research objective one, respondents
identified that the day-to-day operations of management rely on direct communication
to achieve results (n¼25, 100 percent). On the other hand, leadership was both

Motivating language type
a

DG MM EL Totals
Category f(%)b f(%)b f(%)b f(%)

Management
Management – day-to-day operations 25(100) 25(100)
Leadership
Leadership – strategy 12(60) 5(25) 3(15) 20(100)
Leadership – people related 12(60) 4(20) 4(20) 20(100)
Combined
Similar 4(36) 4(36) 3(28) 11(100)
Totals 53(70) 13(17) 10(13) 76(100)

Notes:
aDG, direction giving; MM, meaning-making; EL, Empathetic Language. bAs a percentage of

total number of examples of motivating language in this category

Table I.
Frequency and

percentage frequency
distributions of responses

classified by differences
between leadership and

management and
motivating language type

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strategic and people related, and used a mixture of language types to achieve
outcomes. In each case, that is for both management and leadership, direction giving
language was most prominent.

Type of leadership needed today
Management is – day-to-day operations
In terms of MLT, the everyday operational functions of management represent
the direction-giving and uncertainty reducing use of language intended to clarify the
nature of the work and what needs to get done. The activities associated with this use
of language include maintaining efficient and effective operations, financial
management, and ongoing monitoring of the workplace. Examples follow:

So my management approach is about being open and communicating to people what my
expectations are, letting them understand what’s required, and putting to them that if they’ve
got any questions or need to seek advice, then I’m always here for them. But ultimately, given
their level of training, skill and expertise, my expectation is that they will be given a problem
and will solve it (male, upper middle, fewer than 500 employees, public sector).

I use very much what I call management by walking around, being confidently aware at least
twice a day, walking through the factory, making a point of talking to people, listening
to their comments as such, as I can refer it straight back to any queries by the Board (male,
executive, fewer than 100, horticulture).

Leadership is – strategic
In terms of MLT, leaders as strategic planners and communicators rely on all types of
motivational language to do the job (Table I). The activities associated with direction
giving are explanations of what work needs to get done, and providing a vision of
where the organization is going. Direction giving also holds out the promise of reward
for achieving projected outcomes. Meaning-making activities focus on explaining how
workers fit into the company, and how they are part of a team working to a common
goal. Meaning-making language and activities are grounded in the established culture
and norms of the company. Empathetic language focusses on supporting the
professional development of workers and encouraging their work efforts in a personal
fashion. In this section, 12 comments (60 percent – as a percentage of total number of
examples of motivating language) focus on direction giving language and activities,
five (25 percent) on meaning-making language and activities, and three (15 percent) on
empathetic language. Some selected comments are provided for illustrative purposes:

[When in] a leadership role you have to follow things such as policy or strategy, give
direction. You have to be able to delegate from that role. But within a leadership role you need
to be able to lead by example in regard to the business that you’re in (male, upper middle,
medical/healthcare) (DG).

Leadership is setting the vision and the ideology behind the company. In other words,
what we do and what our standards are comes from leadership, whereas the day-to-day
running and the operations of it is more the management (male, CEO, fewer than 100,
consulting) (MM).

My leadership is more in terms of ensuring the people who work for or with me – and I see
those as being very similar – my way of dealing with those people is to get them to achieve
their potential, that is to get them to be able to do the best they can do. And, if that means
ultimately developing to a position that’s above and beyond mine, well, then, that’s fine. So, in

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simple terms – I’m going a long way around this question – and if it’s about the day-to-day
running of things, leadership is about the development of the people and the longer term
future of it (male, executive, building/construction) (EL).

Leadership is – people related
In terms of MLT, leadership as a people-related activity in this study uses direction
giving language in 12 (60 percent) cases, and both meaning-making and empathetic
language in four (20 percent) cases, respectively:

I guess my leadership [works] through the way I relate to people by way of example, I guess
[as] a role model to others [y] in the way I dealwith parents, students and other staff.
That’s the real leadership focus (female, CEO, fewer than 500, education) (MM).

The way to leadership is to motivate people, provide direction, get people enthusiastic,
a sense of confidence so it’s working with staff on that sort of thing. Also being able
to identify peoples’ skills and actually help them to develop (male, CEO, fewer than 500,
education) (DG, EL).

Leadership is all about creating visions and getting people to understand what that vision is,
accept it and feel as though they have it as a common sense of purpose, and getting a group to
try and achieve that as an objective (male, CEO, fewer than 100, consulting) (MM).

Leadership and management are similar
One-fifth of all interviewees (26 from 129 participants) believed that leadership and
management are one and the same thing. In the majority of cases, these two functions
dealt with meaning-making language which involved staff in decision making by
grounding strategies and activities in the company’s cultural heritage, and direction
giving language by providing clear directions for getting the work completed. In this
section, four of the selected comments focus on meaning-making and direction giving
language (36 percent, respectively), and three (28 percent) on empathetic language:

It’s very difficult, because I see me being a leader as being a good manager as well, and as a
good manager, I am also a leader. So it’s all entwined in my opinion. You do some things one
way, you make the hard decisions, then you guide people, you let them [y] all of them learn
by their mistakes without criticising them too much. But if you do criticise, it should be
constructive (male, CEO, fewer than 100, medical/healthcare) (DG, EL).

For most organisations as I said, from an internal point of view I regard leadership as part of
good management because clearly strategy, as indeed leadership, is not confined to the top
of the organisation (male, CEO, public sector) (DG).

I don’t see the difference between leadership and management, so I suppose that’s the answer
to the question. It’s all linked back to vision and culture, so if you create a vision and develop a
culture then you’ve really got to address and maintain the strength of the culture by your
leadership and that’s intrinsic with your management style. The whole thing rolls together. So
if you have an open approach to your leadership style, your management is also like that as
well. A lot of trust, openness and so forth, so to me they go hand in hand, there is no variation
to my leadership approach (male, CEO, retail) (MM, EL).

Motivating language use by leaders
Table II illustrates the key leadership categories examined in this study and
aggregated on the basis of the three motivating language types of direction giving,

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meaning-making, and empathetic language, and in response to research objective two.
In relation to all interview categories, business executives were more likely to use
direction giving or uncertainty reducing language in the majority of cases (53 percent),
followed by meaning-making language (32 percent), and empathetic language in the
least number of cases (15 percent).

Direction giving was the most used type of motivating language in this study
(53 percent of cases, Table II), and was an essential element of strategic and people-
related leadership (70 percent of all cases, Table I). Direction giving includes the
components of strategic forward-looking behavior in its construct. To elaborate,
direction giving language is characterized by the following activities: explaining what
needs to be done in the workplace; offering directions on how to do the job; offering
advice on how to improve the work; what is expected in order to be rewarded; how to
solve work problems; and information on past and future changes to work. From this
perspective, direction-giving leadership is strategic and informative. It involves
workers in their work careers and promises future rewards for present day efforts.
Our findings support the research by Mayfield et al. (1998) who also found direction
giving was the most prominent form of motivating language among the sample of
healthcare workers they surveyed.

Meaning-making language was the second type of motivating language most
used by managers in this study (32 percent of cases, Table II). Meaning-making
language is characterized by the following activities: explaining the culture of the
company through stories of past key events; informal communication channels;
identification of workers who are admired and have worked hard in the company; and
advice on how to be a part of the company culture and norms. One of our leaders said
that “if you create a vision and develop a culture [y] you have [to have] an open
approach to your leadership style [y] a lot of trust, openness and so forth” (retail).

Managers also found time to use empathetic language, primarily as a means for
praising workers and developing a sense of communal trust between workers and
management. Empathetic language was the third type of motivating language most
used by managers in this study, and is characterized by the following activities:
praising and encouraging workers for good work; showing trust in workers; and
promoting the professional development and job satisfaction of workers.

Motivating language typea

DG MM EL
Category f(%)b f(%)b f(%)b f(%)c

1. Management and leadership 53(70) 13(17) 10(13) 76(10)
2. Leadership and culture 55(46) 43(36) 22(18) 120(17)
3. Trust and commitment 24(31) 46(59) 8(10) 78(11)
4. External and internal issues 91(59) 45(29) 18(12) 154(21)
5. Challenge and change 46(58) 16(20) 17(22) 79(11)
6. Leadership development 90(60) 36(24) 23(15) 149(20)
7. Innovation of Australian companies 12(29) 17(42) 12(29) 41(6)
8. Entrepreneurship of Australian companies 15(50) 14(47) 1(3) 30(4)
Totals 386(53) 230(32) 111(15) 727(100)

Notes:
aDG, direction giving; MM, meaning making; EL, empathetic language. bAs a percentage of

total number of examples of motivating language in this category.
c
As a percentage of total responses

(n¼727)

Table II.
Frequency and percentage
frequency distributions
of responses classified
by categories of leadership
and motivating
language type

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As indicated in Table II, the greatest number of comments and those with more
detail were offered by respondents when describing the external and internal issues
impacting on them as a leader in today’s fluid business environment (n¼154, 21
percent of all comments recorded and documented using the MLT framework).
The least amount of comments was in relation to the entrepreneurial and innovative
nature of Australian enterprises (4 and 6 percent, respectively, of comments).

Discussion
This analysis of interview comments identified a range of issues relevant to leaders of
private and not-for-profit organizations. MLT was used as a framework for exploring
three language styles used by leaders when dealing with these specific issues (Mayfield
et al., 1995, 1998; Sullivan, 1988), namely: first, perloctionary or direction-giving,
uncertainty reducing language which clarifies the work to be done; second, locutionary
or meaning-making language which uses stories to explain the culture, structure, and
values of the organization; and third, illocutionary or empathetic language which
shares emotions with the workers through praise for a job well done (Mayfield et al.,
1998, p. 237).

Our findings reveal, and are consistent with our research proposition, that with an
ever-increasing need by leaders to develop strategies for dealing with change, both
direction giving (perlocutionary) and meaning-making (locutionary) language use by
leaders will be prominent. In particular, direction-giving language was most used by
leaders due to dynamic international and domestic market conditions that demand
precise articulation of a company’s mission and objectives. Kouzes and Posner (1990,
1995) found through their studies of over 20,000 executives in the USA that forward-
looking behavior is a critical dimension in credible leadership. These findings suggest
that in times of unrelenting and ubiquitous change, direction-giving language is
always in demand, and its use should be both encouraged and developed.

Next in order of priority were meaning-making (17 percent) and empathetic
language (13 percent) (Table I). Providing direction, solving problems, and together
with meaning-making language, envisioning the future state and direction of the
company, are crucial leadership functions (Bigley and Wiersema, 2002; Greiner et al.,
2003, p. 1). Porter et al. (2004, p. 72) claim that CEOs are always sending messages
through their behaviours and by “setting and communicating strategy, [and] putting
sound processes in place.” Meaning-making language engages workers in the
organization’s cultural heritage by articulating to employees the structure and values
of the company, the importance of achieving performance outcomes, and how these
outcomes rely on the best fit between worker and organization needs and expectations
(Cable and Judge, 1997; Cable and Parsons, 2001; Vandenberghe, 1999; Van Vianen,
2000). Good person-job fit appears to underlie many of the observations associated
with meaning-making language.

Of some interest is the capacity of meaning making, as the second most used type of
motivating language, to build trust, commitment, and loyalty in workers (category 3,
Table II). Rousseau et al. (1998, p. 395) define trust as “a psychological state comprising
the intention to accept vulnerability based upon positive expectations of the intentions
or behavior of another.” Trust and respect in workers are directly associated with faith
in the leader’s capacity to get the job done and in their conviction that their mission and
goals are achievable and representative of everyone’s needs (Conger and Kanungo,
1998, pp. 59-60). Thus, when executives role model appropriate leader behavior,
employee trust, and commitment follow (Agle and Sonnenfeld, 1994; Podsakoff

235

Leaders and their
use of motivating
language

et al., 1990). From this perspective, it is imperative that those in leadership positions
recognize the moral imperatives associated with their actions if they wish to build
worker trust. This finding reiterates the studies of Kouzes and Posner (1990) and Sims
and Lorenzi (1992) who found that commitment is recognized as a key outcome of
leader credibility or respect, and is most recently alluded to in the work by Luthans
et al. (2007) on psychological capital. In addition, trust and loyalty to the leader have
been used interchangeably in the research (Gottlieb and Sanzgiri, 1996; Mayer et al.,
1995) and are related to effective organizational outcomes (Doney et al., 1998) and
greater meaning and commitment among followers (Shamir et al., 1993, 1994).

Empathetic language was the third most used style in this study, and it allows
managers to show their affective side when dealing with their employees, to the extent
that levels of trust and job satisfaction are a major focus of their attention. Studies
indicate that trust provides the building blocks for sustainable and competitive work
environments (Costigan et al., 1998; Leana and Van Buren, 1999; McAllister, 1995;
Simons, 2002). Other research indicates that job satisfaction is an outcome of trust
(e.g. Driscoll, 1978; Flaherty and Pappas, 2000; Podsakoff et al., 1996; Shockley-Zabalak
et al., 2000). Consequently, on the basis of these observations, managers are advised to:
first, promote trusting workplaces that encourage workers to achieve to the best of
their abilities; second, show concern for workers’ levels of job satisfaction; and third,
promote the professional development of their staff and employees. In particular,
the professional development of managers and employees has been often overlooked in
management research as well as in companies generally.

Overall, our findings indicate that business leaders today could develop a repertoire
of language approaches in order to achieve and promote differential outcomes and
agenda. Whether one type of language approach works better in different industry
settings was not examined in this study, and promises avenues for future research.
For instance, if the use of language by leaders in a service industry is fundamentally
different to that used by leaders in corporate finance, education, health, or law, are the
outcomes also different? Are outcomes more effective as a result of one type of
language use over another? Logically, it is likely that less direction-giving language
is needed for high-end knowledge workers, while more meaning-making language is
needed in more personnel-related workplaces such as education or healthcare systems.
Similarly, what, if any, are the differences in language use and outcomes when
categorized by other demographics, such as gender, organization size, location,
domestic, and international events, and years of tenure as CEO? In particular, Mohr
and Wolfram (2008, p. 13) suggest that national culture may influence gender-specific
perceptions of leader verbal behavior patterns. Further, top management team
heterogeneity in terms of length of tenure in the job has implications for leadership
behavior (Elenkov et al., 2005; Finkelstein and Hambrick, 1996). Elenkov et al. (2005,
p. 679) assert that when senior leadership teams are heterogeneous in their length of
tenure, the more likely it is that transformational, visionary leadership will be used in
the execution of company strategy. Our study has shown that this type of strategic
leadership is associated primarily with meaning-making and direction giving language
(Table I). Further research is needed to test this finding, as its validation has important
ramifications not only for how long leaders remain on boards of directors or as senior
executives of their companies, but also for the types of language approaches leaders
need to use to achieve strategic outcomes.

To summarize, the outcomes leaders want to achieve may be associated with
specific forms of motivating language. In order to explore this contention more

236

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35,3

comprehensively, the multi-faceted nature of leadership that draws on transformational or
role modeling behaviors should be addressed in future research. For example, research
could examine the extent to which motivating language approaches are associated with
transformational, charismatic, and more direct and transactional leadership behaviors.
Mayfield et al. (1998, p. 243) assert that “[Motivating language] will be most beneficial
when it is strategically integrated with a compatible set of leader behaviors, organizational
objectives, and culture.” More research is needed to determine the content and construct of
these behaviors, objectives, and cultures.

Some questions also remain in terms of the appropriateness of using the Motivating
Language Scale to examine the types of language used by managers and leaders when
responding to interview questions. As Mayfield et al. (1995, 1998) have shown, MLT
has been used to identify the speech patterns of leaders during verbal communication
exchanges with staff and work colleagues. Responses to interview questions may not
tap into the immediate needs of workers or help articulate the everyday workplace
transactions that MLT is claimed to represent. We recommend further application of
MLT through the Motivating Language Scale in order to help clarify these issues.

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Corresponding author
Professor James C. Sarros can be contacted at: james.sarros@monash.edu

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DOI: 10.1177/1548051814529825
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Article

Today’s multigenerational workforce presents a number of
opportunities and challenges for managers. With some
employees choosing to work into their late 60s and 70s, four
generational cohorts are currently working simultaneously.
Three of these generations (i.e., Baby Boomers, Generation
X, and Generation Y) have the opportunity to work with
each other for another decade or more. Although this diver-
sity of perspectives can assist companies in producing well
thought-out decisions and increased responsiveness to cus-
tomers, the diversity also presents complexities in the man-
agement of human resource policies and systems to meet
employee needs if generations desire different things from
their workplace environment

.

In the past decade there has been much conjecture and
some empirical work on generational differences, however,
there is much left to learn (Parry & Urwin, 2011; Twenge,
2010). The current study seeks to replicate and expand upon
research on generational differences by addressing two
questions in particular: “Are the three prevalent generations
in today’s workforce actually more similar than different in
what they desire in their workplace?” and “How do the
similarities/differences in values influence the effects of
employee perceptions of these organizational characteris-
tics on attitudinal outcomes by generation?”

Researchers have expressed concern that little empirical
research supports generational stereotypes associated with
each cohort (e.g., Meriac, Woehr, & Banister, 2010; Macky,

Gardner, & Forsyth, 2008). Several studies have examined
proposed generational differences for which findings sup-
port generational similarities. For example, Hansen and
Leuty (2012) investigated various workplace values among
Generation X, the Baby Boomers, and the Silent Generation
(also known as Traditionalists), finding only three statisti-
cally significant differences out of a possible 20 between
two or more generations. Similarly, Cennamo and Gardner
(2008) found only two differences between generations for
workplace values of the six values that were measured.
Other research has compared actual generational differ-
ences with perceived generational differences and found
that the number of actual generational differences was far
fewer than the number of perceived differences (Lester,
Standifer, Schultz, & Windsor, 2012). Given these findings,
the first objective of the current study is to replicate and
extend previous research findings that show similarities
for the three youngest generations in the workforce

—

Generation Y, Generation X, and the Baby Boomers. The

529825 JLOXXX10.1177/1548051814529825Journal of Leadership & Organizational StudiesMencl and Lester
research-article2014

1University of Minnesota Duluth, Duluth, MN, USA
2University of Wisconsin–Eau Claire, Eau Claire, WI, USA

Corresponding Author:
Jennifer Mencl, Department of Management Studies, Labovitz School of
Business and Economics, University of Minnesota Duluth, 1318 Kirby
Drive, 365 LSBE, Duluth, MN 55812, USA.
Email: jmencl@d.umn.edu

More Alike Than Different: What
Generations Value and How the Values
Affect Employee Workplace Perceptions

Jennifer Mencl1 and Scott W. Lester2

Abstract
The purpose of this study was to extend generations research by investigating similarities and differences regarding the
importance generations place on the presence of various workplace characteristics. We hypothesized (1) that similarities
in the importance of workplace factors between generations would be more prevalent than differences and (2) that the
importance of the workplace factors would have consistently similar or different moderating effects among generations on
the relationships between employee perceptions of the factors at their organizations and employee attitudes. As expected,
results showed the generations were similar on 7 of the 10 work values examined. Findings also revealed similarities
and differences between the generations for the factors as moderators, although more differences than similarities were
present from these analyses. Implications of these findings as well as directions for future research are discussed.

Keywords
generations, work values, employee attitudes

http://crossmark.crossref.org/dialog/?doi=10.1177%2F1548051814529825&domain=pdf&date_stamp=2014-04-16

258 Journal of Leadership & Organizational Studies 21(3)

current study also extends previous work by examining
workplace characteristics associated with companies
appearing on lists of “best places to work” rather than items
that may be stereotypical by generation.

The second objective of the current study is to provide a
better understanding of what these actual generational dif-
ferences mean for employee outcomes. Previous research
examining the effects of generation on employee attitudes,
such as job satisfaction, organizational commitment, and
turnover intention has shown few differences (Benson &
Brown, 2011; Cennamo & Gardner, 2008; Costanza,
Badger, Fraser, Severt, & Gade, 2012; Deal, Stawiski,
Graves, Gentry, Weber, & Ruderman, 2013). We extend the
exploration of the ways in which generation influences atti-
tudinal outcomes through a person–organization (P-O) fit
perspective and principles of value–percept theory that
includes the moderating effect of each workplace value on
the relationship between perceptions of the characteristic
within the organization and each attitude. By examining the
role of generations in this manner, the study provides a
more complete perspective of managing employee attitudes
beyond the existing literature.

We begin our discussion with a brief review of the
generally accepted time periods associated with the three
prominent generations in today’s workforce. We then
provide rationale for which “best places to work” criteria
we would expect to see differences and which criteria we
would expect to see similarities across generations. After
testing whether generations had an influence on employee
attitudinal outcomes, we discuss the practical implica-
tions of the findings as well as directions for future
research.

Literature Review and Hypotheses

Although some discrepancy exists among researchers with
respect to generation cut-offs, Baby Boomers are generally
viewed as individuals who were born between the years of
1946 and 1964. Generation X was born between the years
of 1965 and 1978, and Generation Y was born between the
years of 1979 and 2000 (Smola & Sutton, 2002). The belief
is that the individuals who grow up during the same time
period are influenced by social and historic events and con-
texts (e.g., the Korean War, The Vietnam War, the end of
the Cold War, economic recessions) that shape their values
and attitudes in a way that differentiates one generational
cohort from another (Jurkiewicz & Brown, 1998; Parry &
Urwin, 2011; Sessa, Kabacoff, Deal, & Brown, 2007).
However, academic evidence regarding generational differ-
ences is mixed (Parry & Urwin, 2011), with much research
showing more similarities between generations than differ-
ences as previously described. As noted above, such gen-
erational differences are more likely to be perceived than
actual (Lester et al., 2012).

Characteristics of Interest (“Best Places to
Work”)

Previous studies investigating generational differences
have included a broad range of work-related items, such as
perceptions of workplace factors and work values. A study
by Benson and Brown (2011) examined nine organizational
and work variables including job security, pay-level satis-
faction, satisfaction with benefits, promotional opportuni-
ties, resource inadequacy, role ambiguity, role conflict,
coworker support, and supervisor support. The Work
Values Questionnaire and Work Values Scale were used by
Cennamo and Gardner (2008) to measure extrinsic, intrin-
sic, altruistic, status, freedom, and social factors in the
workplace. Hansen and Leuty (2012) used the Minnesota
Importance Questionnaire in their research that measured
20 value facets categorized into the overarching values of
achievement, comfort, status, altruism, safety, and auton-
omy. Smola and Sutton (2002) examined three work values
that included desirability of work outcomes, pride in crafts-
manship, and moral importance of work.

This study was designed with the intent of examining
similarities and differences between generations using char-
acteristics associated with “best places to work” lists (e.g.,
Fortune’s top 100 companies, HR Magazine’s 50 Best
Small and Medium Companies). These specific characteris-
tics were chosen for a data collection project being used to
identify organizations in a community that were considered
good places to work for “young professionals.” Although
the practitioners involved in the project expected to see dif-
ferences between generations for most factors, the project
provided an avenue to extend previous academic research
by showing actual differences versus similarities using
“best places to work” characteristics across generations.

The 10 workplace factors selected from the “best places
to work” lists included: teamwork and collaboration, flexi-
ble work arrangements, a challenging job, involvement in
decision making, a financially rewarding job, work–life
balance, a climate of diversity, continuous learning, career
advancement, and immediate feedback and recognition.
While the assumption is made that all of these characteris-
tics are desirable regardless of employee age, we propose
that the premium placed on a few of these characteristics
will vary by generation. Next, we discuss the four items
where we expect to see actual differences.

Actual Differences and Similarities Expected

Diversity Climate. Baby Boomers grew up in a time when the
male was often the sole or main breadwinner for the family
and when the workplace was more heavily weighted toward
a single race (Caucasians). In recent decades, we have seen
significant shifts in the demographic makeup of the work-
force. For example, with respect to women and minorities

Mencl and Lester 259

in the workplace 50% of women aged 25 to 54 years were
in the U.S. workforce in 1970 compared with 75% in 2005,
and in 2005, 77% of African American women, 70% of
Asian women, and 65% of Hispanic women were in the
workforce in the United States (Mosisa & Hipple, 2006). In
addition to increased gender and racial/ethnic diversity,
globalization has affected the diversity of nationalities in
the workforce. Younger employees have also grown up dur-
ing a time in which gay, lesbian, and transgender issues
have received a great deal of attention with respect to work-
place diversity and gay marriage has been legalized. Fur-
thermore, the passage of the Americans with Disabilities
Act in 1990 is credited to have positively affected the num-
ber of individuals with disabilities in the workplace (Smola
& Sutton, 2002). These shifts over time that have led to a
greater diversification of the workforce have enabled Gen-
eration X and, even more so, Generation Y to interact and
collaborate with a more diverse workplace than their prede-
cessors. Research findings have shown Generation Y to be
considerably more comfortable with diversity (78% of sur-
vey respondents) compared with the Baby Boomers (27%
of respondents; Hewlett, Sherbin, & Sumberg, 2009). Thus,
we expect Generation Y to place a higher importance on a
diverse climate compared with other generations and the
Baby Boomer generation to report the lowest rating.

Continuous Learning. By being in an environment that sup-
ports and fosters ongoing learning, individuals are able to
pursue opportunities that ensure their continued employabil-
ity. Younger generations have grown up in a context where
job security was far from assured and downsizing became an
accepted management practice (Gowing, Kraft, & Quick,
1998). Therefore, to maintain marketability, younger
employees are more likely than older employees to partici-
pate in training programs to develop new skills. In addition,
a recent review presents research that suggests younger
employees are more motivated and willing to engage in con-
tinuous learning compared with older employees (Jain &
Martindale, 2012). One explanation is that training is less
important for the careers of Baby Boomers who have already
received promotions to levels in the organizational hierarchy
that have satisfied their need for growth. In contrast, mem-
bers of Generations X and Y are more likely to be seeking
promotions and value skill development, especially Genera-
tion Y (Wong, Gardiner, Lang, & Coulon, 2008). Another
reason that older employees are less motivated to learn is
that levels of cognitive processing naturally decline over
time and cause learning to occur more slowly. As learning
becomes more difficult, individuals are less likely to partici-
pate in training activities (Jain & Martindale, 2012). These
circumstances taken collectively suggest younger genera-
tions will place greater value on a workplace that allows
continuous learning compared with older generations, with
the greatest importance identified by Generation Y.

Career Advancement. Previous research findings have
shown that the number of promotions, as well as the speed
of promotions, contribute to career satisfaction for all gen-
erations, yet the statistical effect size for career advance-
ment was significantly greater for Generation Y compared
with the other generations studied (Dries, Pepermans, & De
Kerpel, 2008). Although perceptions of career success are
driven by promotions, the importance of promotions
becomes less important for employees as they near retire-
ment. For example, members of the Baby Boomer genera-
tion who are near retirement age are less likely to be seeking
career advancement opportunities compared to employees
with decades of working years ahead of them. In addition, a
stronger desire for growth arises in part from the perceived
expectation associated with Generation Y of finding a per-
fect job early in their careers as opposed to norms associ-
ated with older generations in which individuals should pay
their dues prior to any type of advancement (Arnett, 2004).
Therefore, we expect career advancement to differ across
generations, being valued most by Generation Y and least
by the Baby Boomer generation.

Immediate Feedback and Recognition. Generation Y is some-
times referred to as the “me-generation” based on their desire
for instant gratification and growing up in a culture in which
everyone received a trophy. In addition, Generation Y grew
up in a technologically driven environment that has made
them accustomed to immediate access to information and
instant communication with online connections (e.g., texting,
social media outlets; Steele & Gordon, 2006). At work, this
translates to a desire to receive detailed feedback from their
supervisors on a frequent basis (Crumpacker & Crumpacker,
2007; Herman & Eckel, 2002; Westerman & Yamamura,
2007). Generation X has also been noted to want immediate
feedback (Wong et al., 2008), although not as frequently as
Generation Y (Glass, 2007; Martin, 2005). In contrast to
younger generations, Baby Boomers do not generally share
the same need for constant feedback (Glass, 2007). Thus, we
expect Generation Y to value immediate feedback and recog-
nition the most among the three generations, followed by
Generation X, and then the Baby Boomers.

To summarize the four “best places to work” character-
istics for which differences across generations are expected,
we hypothesize the following:

Hypothesis 1a: The extent to which employees value
diversity, continuous learning, career advancement, and
immediate feedback and recognition will vary by gener-
ation, with the greatest importance noted by Generation
Y and the least importance noted by Baby Boomers.

While we expect generational differences to exist on the
aforementioned characteristics, we anticipate a greater
number of similarities across the generations in terms of the

260 Journal of Leadership & Organizational Studies 21(3)

value placed on other work factors. In the subsequent para-
graphs, we discuss the expectation of no differences exist-
ing between generations on the remaining six workplace
characteristics that are summarized into four categories.

Work–Life Balance and Flexible Work Arrangements. As orga-
nizations require employees to work more hours and main-
tain schedules that fall outside the traditional “9 to 5” realm,
flexible work arrangements have been a typical practice
associated with work–life balance initiatives (Eikhof, War-
hurst, & Haunschild, 2007). Generation X and Generation
Y have been noted to place a high value on work–life bal-
ance (Cennamo & Gardner, 2008; Glass, 2007). And,
although Baby Boomers are often known for their strong
work ethic and placing a priority on work (Fogg, 2009),
they also face nonwork demands such as elder-care respon-
sibilities that make work–life balance a desirable workplace
characteristic (Hill, Hawkins, Ferris, & Weitzman, 2001).
Recent research comparing Baby Boomers with Generation
Y shows similar results for the generations with respect to
the importance of work–life balance and flexible work
arrangements (Hewlett et al., 2009). Therefore, we expect
all three generations to place a similar level of importance
on the balance between work and nonwork aspects of their
lives regardless of what constitutes one’s need for “bal-
ance” (e.g., time for hobbies, time to attend children’s activ-
ities, time with grandchildren, time to take care of aging
parents). We also anticipate that the three generations will
place a similar level of importance on having flexible work
arrangements as a related aspect of achieving a good work–
life balance.

Involvement in Decision Making and a Challenging Job. Decen-
tralized decision-making practices in organizations are
associated with employee involvement practices that are
tied to high-performance work systems (Evans & Davis,
2005). Employee involvement programs, including man-
agement-driven initiatives, open-door policies, employee
surveys, participative management, employee task forces,
and self-managed work teams, all contribute to healthy
organizations that realize positive levels of job satisfaction
and low levels of turnover (Grawitch, Ledford, Ballard,
Barber, 2009; Grawitch, Trares, & Kohler, 2007). When
employees become increasingly involved in making deci-
sions that affect the work they do, employees are more
empowered (Butts, Vandenberg, DeJoy, Schaffer, & Wil-
son, 2009) and their jobs become more challenging and
more enriched (Luna-Arocas & Camps, 2008).

Job enrichment through autonomy is a well-known pre-
dictor in Hackman and Oldham’s (1976) job characteristics
model that has been empirically tested across generations
for several decades. Meta-analyses published in the 1980s
examining autonomy and participative decision-making,
which involved Baby Boomers as study participants,

showed autonomy was the characteristic most strongly cor-
related to job satisfaction (Loher, Noe, Moeller, &
Fitzgerald, 1985) and was significantly correlated to satis-
faction, commitment, and job involvement (Spector, 1986).
In recent research that includes Baby Boomers and
Generation X as participants (mean age 34 years), the pres-
ence of the job characteristics, including autonomy, was
positively related to intrinsic motivation and goal commit-
ment (Piccolo & Colquitt, 2006). A study specific to
Generation Y employees also showed autonomy contribut-
ing to the measure of job characteristics that significantly
predicted job satisfaction (Kim, Knight, & Crutsinger,
2009). Based on existing literature, we propose that
employees from all generations are likely to desire
employee involvement in decision making and, as such,
more challenging jobs.

Teamwork and Collaboration. Individuals, regardless of gen-
eration, hope to have colleagues who they can get along
with and who will support them. Cennamo and Gardner
(2008) found supporting evidence for this expectation as
their “social” category of work values, which related to
interactions with others at work, was the most strongly
endorsed by Baby Boomers, Generation X, and Generation
Y. Although the nature of experiences with teams may vary,
all generations are aware that team-based organizations are
a part of today’s work environment. Researchers attribute
teamwork as a core value of Baby Boomers (e.g., Zemke,
2001). They also recognize that Generation X experienced
the advent of widespread downsizing practices in their early
careers, and along with that, the realization that in order to
do more with less it would be important to function collab-
oratively. Generation Y employees have gone through
school completing projects that were often organized
around teams and knowing the value of being supported by
those around them as their careers advance (e.g., Tulgan,
2011).

Recent research that examined perceived and actual gen-
erational differences provides additional support for similar
ratings across generations for the importance of teamwork
and collaboration. Lester et al. (2012) found that while there
were significant perceived differences in the value each
generation placed on teamwork (i.e., generations tended to
underestimate the value that members of different genera-
tions placed on a workplace characterized by teamwork and
collaboration) there were no actual differences in the desire
for teamwork. We expect to replicate the finding in this pre-
vious study regarding the actual preferences for teamwork
that were similar across generations.

A Financially Rewarding Job. The final characteristic included
from the “best places to work” lists is the value placed on a
financially rewarding job. Generation-specific research that
examined the contribution of salary perceptions to career

Mencl and Lester 261

success showed nearly identical effect sizes for Generation
Y ( ηp

2 74= . ), Generation X ( ηp
2 71= . ), and the Baby

Boomers ( ηp
2 71= . ; Dries et al., 2008). Although employ-

ees may have different expectations regarding their abso-
lute compensation, employees in general want to feel as
though they are adequately rewarded by the organization
(Pfeffer & Veiga, 1999). As such, we expect that the impor-
tance placed on having a financially rewarding job will be
rated similarly across generations.

Collectively, we expect the workplace characteristics
examined in this study to demonstrate more similarities
than differences across the three generations with respect to
the perceived degree of importance. We offer the following
hypothesis regarding the proposed similarities:

Hypothesis 1b: The extent to which employees value
work–life balance, flexible work arrangements,
involvement in decision making, a challenging job,
teamwork, and a financially rewarding job will not vary
by generation.

The Role of Generational Differences on
Attitudinal Outcomes

P-O fit scholars would contend that employee perceptions
regarding the extent to which their workplace values are
met are more important than solely examining the impor-
tance placed on these various work factors. P-O fit refers to
the extent to which what a person values in the workplace is
consistent with the person’s perceptions of how well that
aspect is provided by the employer (Kristof, 1996). Research
shows that the level of congruency between what is valued
and what is provided is positively related to various
employee attitudes, including job satisfaction, organiza-
tional commitment, and turnover intention (Kristof-Brown,
Zimmerman, & Johnson, 2005).

Although published findings regarding generations and
P-O fit are scarce, a study of organizations in New Zealand
showed similarities for the effects of values–supplies dis-
crepancies between generations on four work aspects:
intrinsic fit, altruism fit, social fit, and freedom fit (Cennamo
& Gardner, 2008). The same study revealed two differences
in the discrepancy scores between generations: one differ-
ence existed between Generation X and the Baby Boomers
for extrinsic fit, and the other difference was present
between Generation Y and Baby Boomers for status fit.
Drawing on these findings, the second purpose of this arti-
cle was to further explore values across generations by
investigating the effects of those values on employee per-
ceptions and attitudes. In doing so, we examine employee
attitudes that are common to both the P-O fit and genera-
tions literatures, which include job satisfaction, organiza-
tional commitment, and turnover intention.

To more fully understand the combined effects of values
and perceptions of workplace characteristics present in
employees’ organizations, we apply value–percept theory
(Locke, 1976). According to value–percept theory, the dis-
crepancy between what a person wants and what a person
receives influences job satisfaction, and this relationship is
moderated by the importance the person places on the par-
ticular item. Therefore, we propose that perceptions of
workplace factors will influence employee attitudes, and
the relationships will be moderated by the importance of the
related items. In addition, based on the generation research
summarized above and the previous hypotheses, we expect
the moderation effects to vary by generation for the impor-
tance items in which a statistically significant difference is
found. For all other items, the moderating effect of impor-
tance should be similar across generations:

Hypothesis 2: The relationship between the level of
work factor fulfillment from an organization and the
employee’s attitudinal responses will be greater when
the importance of that factor is high versus low. These
moderating effects will be consistent with the genera-
tional similarities and differences in the importance
items as specified in Hypotheses 1a and 1b.

Method

Procedure

A Midwestern community’s local Chamber of Commerce
members were contacted with a request to allow their
employees to participate in a data collection project for the
Chamber. The intent of the project was to identify organiza-
tions in the community that were considered good places to
work for “young professionals.” The project included an
employee survey involving a variety of questions regarding
work-related items that all the organizations’ employees
received. The eight Chamber members that agreed to the
request represented government, health care, manufactur-
ing, technology, real estate, and nonprofit organizations.

The current study’s lead author, who was referred to
throughout the project as the “data collection coordinator,”
designed the survey and managed the data collection pro-
cess. The organizational representatives responsible for the
survey communications distributed the participation request
to their respective employees. The project was designed to
draw inferences about young professionals in the commu-
nity, but all employees were encouraged to complete the
survey in order to provide complete comparative data for
organizational leaders.

Messages were sent internally so that the organizations
maintained control of employee contact information. The
initial message included a link to an online version of the
survey as well as information that a hard-copy version was

262 Journal of Leadership & Organizational Studies 21(3)

available on request. In places where employees did not
have regular access to e-mail, messages with the hard-copy
survey version were distributed.

To ensure that employee responses were anonymous, the
data collection coordinator hosted the online survey, and all
completed hard copies of the survey were sent directly to
the coordinator in self-addressed postage-paid envelopes.
Employees were also informed that their responses would
be combined with responses of other employees in reports
so that no one would be singled out or identified.

In addition to the items asking subjects to assess the
importance they placed on each work-related factor, the
survey included a series of related questions about the
employees’ perceptions of the work factors in their organi-
zations. These questions were used to determine how well
the organizations provided study participants with each
work-related factor that was rated for its importance, which
is consistent with previous research (Cennamo & Gardner,
2008). Scales were selected from published organizational
research based on alignment with one or more importance
items and reliability statistics. The scales included diversity
climate (Pugh, Dietz, Brief, & Wiley, 2008), employee
involvement climate (Riordan, Vandenberg, & Richardson,
2005), work design (Morgeson & Humphrey, 2006), work–
life balance (Hill et al., 2001; Virick, Lilly, & Casper,
2007), and pay and benefits satisfaction (Heneman &
Schwab, 1985). Finally, in order to establish the extent to
which the importance items and perceptions of the work-
related factors were related to employee attitudes, the sur-
vey included measures of job satisfaction (Mitchell,
Holtom, Lee, Sablynski, & Erez, 2001), organizational
commitment (Allen & Meyer, 1990), and turnover intention
(Dupre & Day, 2007).

Sample

In total, 653 employees aged 18 years or older responded to
the survey. Age was associated with the year born to clas-
sify respondents into generations using Smola and Sutton’s
(2002) categories. Of the total respondents, 135 were
deleted from the data set due to missing data for the “age”

demographic variable. An additional 13 cases representing
the Silent Generation (born in 1945 or before) were omitted
from the data set due to the small group sample size, result-
ing in a final sample size of 505 for data analysis. The
remaining three generations included Generation Y (born
1979-1994; n = 88, 17% of the sample), Generation X (born
1965-1978; n = 144, 29% of the sample), and Baby Boomers
(born 1946-1964; n = 273, 54% of the sample). Demographic
information by generation is provided in Table

1.

Measures

Importance of Work-Related Factors (Values). Respondents
were given a list of various work-related factors noted to be
important to Generations X and Y (Cennamo & Gardner,
2008; Smola & Sutton, 2002) as well as factors related to
best places to work (Fulmer, Gerhart, & Scott, 2003; Joo &
Mclean, 2006). The list included 10 items: (1) an organiza-
tion that values diversity, (2) teamwork in the workplace,
(3) flexible work arrangements, (4) getting immediate feed-
back and recognition from my supervisor, (5) work–life
balance, (6) having a job that challenges me, (7) a company
that provides continual training and development opportu-
nities, (8) that I am involved in decision-making processes
that affect my work, (9) being financially rewarded for the
work I do, and (10) career advancement opportunities
within the company. Participants were instructed to indicate
the degree to which each item was important on a scale
from 1 (not important at all) to 7 (a must have), regardless
of what the person’s organization currently offered.

Perceptions of Work Factors in the Organization. Eight mea-
sures were used as variables for participants’ perceptions
of various work factors in their current organizations:
diversity climate, social support, feedback and recogni-
tion, work–life balance, training and development, deci-
sion-making involvement, pay and raise satisfaction, and
promotion opportunity (perception measures for flexible
work arrangements and having a job that challenges me
were not included on the survey since these items were
closely related to work–life balance and decision-making

Table 1. Descriptive Statistics by Generation.

Generation Y Generation X Baby Boomers

N 88 144 273
Gender (%)
Male 24 35 32
Female 76 65 69
Mean age in years (SD) 26.99 (3.03) 38.50 (3.88) 53.75 (4.53)
Mean tenure in years in the organization (SD) 3.01 (2.44) 7.68 (5.77) 15.94 (5.77)
Employment status (%)
Full-time 81 84 82
Part-time 19 16 18

Mencl and Lester 263

involvement measures, respectively). Survey items were
selected based on face validity to create scales for the vari-
ables, and then the set of items for each variable was
entered into exploratory factor analyses to ensure that the
items loaded on a single factor. For example, five items of
diversity climate were selected for the workplace percep-
tion measure (related importance item: an organization
that values diversity); all five survey items loaded on one
factor. The complete listing of scales and items are pro-
vided in the appendix. Items were measured on 5-point
scales, and reliabilities ranged from α = .84 to .94.

Job Satisfaction. Three items from Mitchell et al. (2001)
were used to measure job satisfaction: “all in all, I am satis-
fied with my job,” “in general, I don’t like my job” (reverse
coded), and “in general, I like working here.” Responses
ranged from 1 (strongly disagree) to 5 (strongly agree).
Reliability of the measure was α = .90.

Organizational Commitment. Affective, normative, and
continuance dimensions of organizational commitment
were measured using Allen and Meyer’s (1990) scales,
which consisted of eight items per variable measured on a
5-point Likert-type scale (1 = strongly disagree to 5 =
strongly agree). Sample items include “I would be very
happy to spend the rest of my career with this organiza-
tion” (affective), “if I got another offer for a better job
elsewhere I would not feel it was right to leave my organi-
zation” (normative), and “I am not afraid of what might
happen if I quit my job without having a another one lined
up” (continuance; reverse scored). Reliabilities of the
scales were affective α = .89, normative α = .80, and con-
tinuance α = .76.

Turnover Intention. Three items were used to measure turn-
over intention (Dupre & Day, 2007): “I will stay with this
company for as long as I can” (reverse scored), “I will leave
this company if I receive another job offer,” and “I plan to
leave this organization within the next year.” The items
were measured using a 5-point Likert-type scale (1 =
strongly disagree to 5 = strongly agree), and high scores
indicate a greater likelihood to leave the organization com-
pared with low scores. Scale reliability was α = .79.

Results

The means and standard deviations for each of the impor-
tance items by generation are provided in Table 2. Table 3
shows the means, standard deviations, and correlations for
all variables measured.

A descriptive discriminant analysis (DDA) was con-
ducted to determine whether generational differences
among the importance items were present and to identify
the items where differences were present. Using DDA to
analyze the perceived importance items collectively mini-
mizes the risk for Type I error (Sherry, 2006). Since the
number of DDA functions is equivalent to the number of
groups minus one, the analysis resulted in two discriminant
functions. Function 1 explained 7.4% of the variance in the
data, which was statistically significant, Wilks’s λ = .926;
χ2(20) = 37.79; p < .01. Function 2 explained 3.2% of the variance in the data, which was statistically significant at a marginal level, Wilks’s λ = .968; χ2(9) = 16.08; p = .07. The effect sizes showed that the importance items contributed to group differences more strongly for Function 1 than Function 2. Both functions were deemed sufficient for fur- ther interpretation.

Table 2. Means and Standard Deviations for the Importance Items by Generation.

Variable

Generation Y
(n = 86)

Generation X
(n = 142)

Baby Boomers
(n = 270)

M SD M SD M SD

An organization that values diversity 5.69 1.17 5.04 1.51 5.43 1.27
Teamwork in the workplace 6.34 0.90 6.17 1.01 6.27 0.82
Flexible work arrangements (e.g., flextime, job

sharing, compressed work week)
6.00 1.27 5.88 1.06 5.82 1.04

Getting immediate feedback and recognition
from my supervisor

5.73 1.05 5.43 1.11 5.48 1.00

Work–life balance 6.30 1.03 6.17 0.93 6.14 0.88
Having a job that challenges me 6.08 0.83 5.95 0.91 5.97 0.92
A company that provides continual training and

development opportunities
6.18 0.97 5.95 1.02 5.95 0.95

That I am involved in decision-making processes
that affect my work

6.15 0.93 6.03 1.03 6.16 0.94

Being financially rewarded for the work I do 6.14 0.95 6.12 0.99 6.09 0.87
Career advancement opportunities within the

company
6.19 1.06 5.98 0.98 5.83 0.93

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Mencl and Lester 265

The eigenvalues for each function indicate the extent to
which the function discriminated between groups. In the
current sample, the eigenvalues are relatively low (λ

1
=

.045, λ
2
= .033), indicating that neither function discrimi-

nated well between groups. However, further evaluation of
the results, including structure coefficients, standardized
function coefficients, and the group centroids, provides spe-
cific information regarding where differences exist. A
structure coefficient represents the bivariate correlation
between the item and the function. The squared structure
coefficient is the percent of variance the item accounts for
in the discriminant function score. The standardized func-
tion coefficients are akin to beta coefficients in regression,
providing the relative contribution of each item to the dis-
criminant variables created in DDA.

Examination of these values, which are summarized in
Table 4, reveals that career advancement opportunities was
the only item to considerably contribute to Function 1. The
standardized function coefficient of that I am involved in
decision-making processes that affect my work is high
whereas its structure coefficient is low. This inconsistency
indicates that the item is likely a suppressor variable that is

influencing the discriminant variable through another item.
Since the standardized function coefficient of career
advancement opportunities within the company is greater
than 1.0, these two items are closely related. The relation-
ship between the two items is not surprising given that indi-
viduals who want to be involved in decision making are
likely to desire career advancement opportunities as well.
However, in terms of the results, the overinflated contribu-
tion of the decision-making item to the variable indicates
that the only item for Function 1 in which group differences
exist is the importance of career advancement.

The items contributing to Function 2, listed in order of
importance, included an organization that values diversity,
getting immediate feedback and recognition from my super-
visor, and teamwork in the workplace. Function 2 statistics
show the standardized function coefficient for teamwork in
the workplace is close to zero, which indicates that the item
does not contribute sufficiently to the discriminant variable.
Therefore, although the item contributes somewhat to group
differences as determined by the variance explained by the
item, the effect of the item on the group centroids is
minimal.

Table 4. Standardized Discriminant Function and Structure Coefficients.

Scale Function coefficient Structure coefficient (r
s
) Variance (rs

2, %)

Function 1
An organization that values diversity –.227 –.131 1.72
Teamwork in the workplace –.208 –.042 .18
Flexible work arrangements (e.g., flextime, job sharing,

compressed work week)
.332 .247 .10

Getting immediate feedback and recognition from my supervisor .162 .212 4.49
Work–life balance .366 .243 5.90
Having a job that challenges me –.057 .113 1.28
A company that provides continual training and development

opportunities
.045 .203 4.12

That I am involved in decision-making processes that affect my
work

–.779 –.191 3.65

Being financially rewarded for the work I do –.511 .102 1.04
Career advancement opportunities within the company 1.099 .598 35.76
Function 2
An organization that values diversity .978 .920 84.64
Teamwork in the workplace –.092 .353 12.46
Flexible work arrangements (e.g., flextime, job sharing,

compressed work week)
–.177 .153 2.34

Getting immediate feedback and recognition from my supervisor .279 .492 24.21
Work–life balance .009 .217 4.71
Having a job that challenges me –.112 .244 5.95
A company that provides continual training and development

opportunities
–.105 .295 8.70

That I am involved in decision-making processes that affect my
work

.026 .283 8.01

Being financially rewarded for the work I do –.252 .020 .04
Career advancement opportunities within the company .285 .276 7.62

266 Journal of Leadership & Organizational Studies 21(3)

The group centroids are the means of the discriminant
variables for each generation, which tell us the extent to
which the groups possess the characteristics that comprise
the functions. For Function 1, Generation Y had the highest
group centroid (M = .293), which is followed by Generation
X (M = .188) and the Baby Boomers (M = −.192). These
results indicate that career advancement is more important
for Generation Y than for Generation X, and there is an
even greater difference between Generation Y and the Baby
Boomers. On Function 2, Generation Y had the highest
group centroid (M = .309) whereas the Baby Boomers was
the next highest (M = .027) and Generation X had the low-
est (M = −.239). This finding suggests that Generation Y
values diversity and immediate feedback and recognition
the most, and Generation X values these work-related fac-
tors the least.

Taken together, the DDA results revealed significant
generational differences for the importance of career
advancement that contributed to Function 1 and marginally
significant generational differences for diversity and imme-
diate feedback and recognition that contributed to Function
2. Although Hypothesis 1a was supported for three of the
four criteria for which differences were expected, career
advancement was the only item that resulted in the expected
pattern of differences with Generation Y as the highest and
the Baby Boomers as the lowest. Therefore, Hypothesis 1a
received partial support. Hypothesis 1b was strongly sup-
ported in terms of the characteristics where there were no
generational differences.

Given the results of Hypothesis 1, we would expect to
see similar variations in the moderation effect of impor-
tance on the relationships between perceptions of work fac-
tors and attitudinal outcomes specified by Hypothesis 2.
Specifically, differences in the moderation effects by gen-
eration should be present for the career advancement, diver-
sity, and feedback and recognition importance items.
Moderation was investigated using stepwise hierarchical
regression analyses in which the continuous predictor vari-
ables were centered prior to creating the interaction terms
(Baron & Kenny, 1986), and gender was used as a control
in the first step of the model. The data set was also split by
group to make comparisons between the generations for
each moderating effect. The results from the third step of
the analyses in which the interaction term is entered into the
model are summarized in Table 5.

The results reveal different patterns between the genera-
tions regarding the ways in which perceptions of work fac-
tors in one’s workplace may influence attitudinal outcomes
regardless of generational differences of the importance
placed on the work-related items. First, for the items for
which we would expect to see generational differences,
only the importance of career advancement opportunities
within the company displayed meaningful differences
among moderating effects across generations. The impor-
tance item did not moderate the relationship between

promotion opportunity and the attitudinal outcomes for
Generation Y, two relationships were significantly moder-
ated for the Baby Boomers, and four relationships were sig-
nificantly moderated for Generation X. The diversity
importance item moderated one relationship between diver-
sity climate and an outcome variable for Generation Y (con-
tinuance organizational commitment) and one relationship
for the Baby Boomers (normative organizational commit-
ment, at a marginal level). No differences in the moderating
effects for the generations were found for the getting imme-
diate feedback and recognition from my supervisor impor-
tance item.

In contrast, we did not expect generational differences to
be present among moderating effects for the other impor-
tance items. However, different trends in the moderation
effects emerged for the importance item related to training
and development opportunities across the three generations
and being involved in decision-making processes that dif-
ferentiated the Baby Boomers from the other two genera-
tions. Findings also showed a different moderating effect
for the importance of work–life balance item. For Generation
Y, the item moderated the relationship between perceived
work–life balance within the organization and continuance
organizational commitment, and for the Baby Boomers the
item marginally moderated the effect on affective organiza-
tional commitment; no moderating effect was found for
Generation X. Given the results, we conclude Hypothesis 2
is somewhat supported, but we find as much meaningful-
ness in the nonsignificant findings as the statistically sig-
nificant findings. Our interpretations of the results are
discussed in greater detail in the next section.

Discussion

The current study contributes to organizational literature by
replicating and extending previous research concerning
generational values. Consistent with extant research, the
present study’s findings demonstrated that generations
share more similarities than differences regarding the extent
to which work factors are important (e.g., Cennamo &
Gardner, 2008; Hansen & Leuty, 2012; Lester et al., 2012).
The only three value differences found included career
advancement opportunities, diversity climate, and immedi-
ate recognition and feedback.

In addition, generational differences were found with
respect to the ways that values affected the relationships
between perceived fulfillment of work factors and attitudi-
nal outcomes. These differences were most evident with
respect to career advancement opportunities within the
company, training and development opportunities, and
being involved in decision-making processes affecting
one’s work. By examining relationships between the vari-
ables using value–percept theory and a P-O fit perspective,
the research provides a novel lens in which to extend orga-
nizational research on generations.

Mencl and Lester 267

Overall, the findings suggest that the most significant
generational difference lies with career advancement oppor-
tunities that are more strongly valued by Generation Y com-
pared with Generation X and the Baby Boomer generation.

Career advancement was not only valued to a greater extent
by Generation Y, but the moderating effects of the career
advancement value item were different as well. Interestingly,
however, importance was not a moderator of the relationship

Table 5. Moderation Results from Hierarchical Regression Analyses for the Interaction of Perceived Work Factors and Importance
Items on Attitudinal Outcomes by Generation.

Workplace perception × Importance item Dependent variable Generation Y Generation X Baby Boomers

Diversity climate × JS –.01 .00 –.03
An organization that values diversity AOC .03 .02 –.03
NOC .07 –.11 .10†

COC .33** –.02 –.03
T/O I –.16 .02 –.07
Social support × JS .16 –.08 .02
Teamwork in the workplace AOC .03 .00 .03
NOC –.22† .04 –.11†

COC –.01 –.06 –.03
T/O I –.16 .09 –.05
Feedback and recognition × JS .08 .04 .08
Getting immediate feedback and recognition

from my supervisor
AOC .05 –.02 .04

NOC .02 .05 –.06
COC –.07 –.05 .07
T/O I –.13 –.05 –.04
Work–life balance × JS .13 –.02 .05
Work–life balance AOC –.02 .06 .11†

NOC .03 .12 –.05
COC .30* –.04 .03
T/O I –.05 .07 .06
Training and development × JS –.09 .16* .16**
A company that provides continual training

and development opportunities
AOC –.18† .18* .15**

NOC –.07 .02 .10
COC .25† .18* –.03
T/O I –.05 –.20* –.16**
Decision-making involvement × JS .03 .11 .16**
That I am involved in decision-making

processes that affect my work
AOC –.06 –.01 .14**

NOC –.09 .06 .09
COC .13 –.09 –.05
T/O I .02 –.06 –.18**
Pay and raise satisfaction × JS .01 –.05 –.01
Being financially rewarded for the work I do AOC –.02 .04 –.01
NOC –.22† .13 –.02
COC –.13 –.01 –.06
T/O I .09 –.04 –.04
Promotion opportunity × JS .08 .22** .14*
Career advancement opportunities within

the company
AOC –.01 .14† .13*

NOC .00 .10 .05
COC .13 .22* .00
T/O I –.03 –.26** –.06

Note. Values are beta coefficients for Step 3 of each regression model (moderation effect). JS = job satisfaction; AOC = affective organizational
commitment; NOC = normative organizational commitment; COC = continuance organizational commitment; T/O I = turnover intention.
†p ≤ .10. *p ≤ .05. **p ≤ .01.

268 Journal of Leadership & Organizational Studies 21(3)

between employee perceptions of promotion opportunities
and any of the attitudinal outcomes for Generation Y.
Instead, statistically significant moderating effects were
found for the career advancement value for Generation X
and the Baby Boomer generation.

Furthermore, the training and development value and the
decision-making value were statistically significant moder-
ators of the respective measures of the employee percep-
tions and their attitudes for Generation X (training and
development item) and Baby Boomers (both value items)
whereas no moderating effect was found for Generation Y
for these values. These findings suggest that even when no
differences are found with respect to the degree of impor-
tance placed on work factors, employee perceptions of the
factors present in the workplace may still affect how
employees think and feel about their jobs and organizations.
Importantly, the differences remain less apparent than the
similarities between the generations across the items, which
further confirms the basic premise of the research.

In addition to supporting the notion that generational
similarities may outnumber generational differences, this
investigation extended the generational literature in two
important ways. First, although similarities did outnumber
differences, this study provided additional insight on where
generational differences do exist. Specifically, this study
builds on Lester et al. (2012) by examining additional and
sometimes more narrowly defined characteristics associ-
ated with “best places to work.” Extensions from the cur-
rent study include the finding of generational differences on
two characteristics not previously examined (i.e., diversity
climate and career advancement) and using a narrowly
defined characteristic of immediate feedback and recogni-
tion rather than recognition more broadly. Previously,
Lester et al. (2012) found no actual generational differences
on the value attributed to recognition, whereas immediate
feedback and recognition did prove to be different across
generations and most valued by Generation Y in the current
investigation. Furthermore, although Generation Y and the
Baby Boomers differed in the value they placed on continu-
ous learning in Lester et al.’s (2012) sample, our sample did
not demonstrate significant differences in the value placed
on continuous learning. These mixed results on continuous
learning highlight the need to further examine contextual
variables that may enhance or diminish the presence of
actual generational differences.

The second important extension of the generations lit-
erature provided by this study is the examination of how
the importance placed on workplace characteristics by gen-
erations moderates the relationship between perceived ful-
fillment of these desired characteristics (by the organization)
and the employee’s attitudinal outcomes. Previous research
has examined generational differences on work values
(e.g., Smola & Sutton, 2002), on perceptions of workplace
factors (e.g., Lester et al., 2012), and on employee attitudes

(e.g., Benson & Brown, 2011), but combining these items
using value–percept theory had not yet been explored. The
moderation results suggest that generational differences
and similarities may be complex and may warrant the
investigation of interactions between predictor variables.

Strengths and Limitations

Several strengths are present in the research. First, the
hypotheses were examined using a large sample size (N =
505), which increased the statistical power to detect the
present effects. Second, because participants worked in
various types of organizations the results are generalizable
across organizations. Third, all scale measures had high
levels of reliabilities, which increases the accuracy of the
results. Fourth, we controlled for gender in the regression
analyses, to be consistent with previous research and
remove any effects of gender on the outcomes (Cennamo &
Gardner, 2008). Although controls are not options in DDA,
we conducted multivariate analysis of variance tests with
and without gender as a covariate to check for any potential
effects of gender on values; the results were not affected by
the inclusion of gender as a covariate. Finally, participants
were informed that the survey measured perceptions of
their organizations and did not know that classifications
would be made based on generation. Therefore, the poten-
tial for bias with respect to generational differences was
minimized.

The limitations of the research include unequal group
sizes and organizational climate/perception measures that
may not have aligned perfectly with an importance item
(e.g., perceived social support was related to the teamwork
value). Because unequal sample sizes may affect the results
of the DDA, we reviewed the normality of the distribution
of the discriminant functions by group (Sherry, 2006).
Normality was determined by values within the range of −2
to 2. Function 1 displayed slight nonnormality because of a
relatively high-kurtotic distribution (4.14) for Generation
Y, and Function 2 displayed nonnormality because of
slightly high-kurtotic distributions for Generation Y (2.29)
and Generation X (2.64). Therefore, findings should be
interpreted with caution, and we recommend that future
research use group sample sizes that are more equal and
considerably large. Researchers examining the role of gen-
erational differences on workplace outcomes are also
encouraged to include measures that directly relate to
importance items.

Implications for Management and Directions for
Future Research

One important implication of the current findings is that
managers need be educated about and inform their direct
reports about actual generational differences as well as

Mencl and Lester 269

generational similarities rather than making assumptions
about differences. Our research results showed differences
in career advancement, diversity, and immediate feedback
and recognition importance items. Notably, although we
had expected a generational difference in continuous learn-
ing, we found no difference. This result may be due in part
to the recent recession that has caused employees to post-
pone retirement. In addition, Hewlett et al. (2009) reported
that 47% of Baby Boomers they surveyed felt they were in
mid-career stages, presumably seeking additional advance-
ment opportunities. Therefore, managers should be careful
not to discount the importance of training and development
as a work characteristic for Baby Boomers because con-
tinuous learning is similarly important to the Baby Boomer
generation as it is for Generations Y and X.

In addition, managers should seek to gain insight into
what constitutes the importance of similarly rated “best
places to work” factors in order to design effective related
workplace practices to meet employee needs. For example,
preferences for training and development methods will
likely vary across the generations, as younger employees
grew up using fast-paced technology and older employees
are accustomed to face-to-face learning settings.

Furthermore, the findings suggest that managers should
also seek to understand how well the organization provides
important work-related factors from the employees’ per-
spectives. We strongly recommend to organizational leaders
and managers that they use tools such as employee surveys
to collect information from their employees on a regular and
ongoing basis in order to tailor their human resource man-
agement practices more specifically to their existing employ-
ees. Gaining this type of insight will allow organizations to
provide resources to managers and other employees to sup-
port employees on the factors noted to be important to them
(e.g., training on how to provide immediate feedback or to
mentor younger employees). Organizations can also bench-
mark other organizations’ practices that may have demon-
strated success such as Ernst & Young’s “Feedback Zone,”
an online system that allows employees to submit and
request feedback at any time, which is tailored to the desire
of their Generation Y employees to receive immediate feed-
back (Hite, 2008).

Taking proactive steps to communicate academic
research findings to managers and employees can help
eliminate unfounded generational stereotypes and can assist
a multigenerational workforce in its efforts to collaborate
and build synergies. In the case of the current research, each
organization that participated in the research project
received tailored report showing the similarities and differ-
ences between generations within the organization for the
importance items measured. The research findings were
also presented in the community in which the data were
collected; the study’s data collection coordinator gave
presentations to two practitioner-oriented professional

organizations, and an academic colleague referenced the
study in a Chamber of Commerce panel discussion.

Another suggestion for managers is to make sure that
they do not assume all employees within a generational
cohort value the same things. Managers still need to pay
attention to individual difference variables such as gender,
personality, and motivational needs when determining the
best way to respond in interpersonal situations.

The current research findings support previous research
suggesting that the importance placed on a variety of work-
place characteristics may be more similar across genera-
tions than different, although generations may differ on
their workplace attitudes. The findings provide additional
support for researchers to further examine the ways that
generations are similar in order to facilitate connections
between members of generations that have traditionally
been perceived as quite different (e.g., Hewlett et al., 2009).

Future research on generations needs to further investi-
gate the “So What?” question in order to determine if and to
what extent values and related variables affect workplace
outcomes of interest. This study looked at attitudinal out-
comes, and future research could better provide additional
insights by investigating behavioral outcomes. Other work-
place values or more specific aspects of the workplace char-
acteristics should also be examined. For example, future
research could explore specific aspects of diversity that are
important to reveal more discrete differences and similari-
ties across generations. Finally, although the three genera-
tions examined in this study are most prominently
represented in today’s workplace, it is important to recog-
nize that a new generation will soon be joining the work-
force. This next generation, initially labeled as “Generation
Z” may bring new intricacies to managing a multigenera-
tional workforce and should be included in future research
samples. Our hope is that the findings of this study will spark
continued study of an ever-changing work population.

Appendix

Variables Measuring Perceptions of Work
Factors in the Organizations

Diversity Climate: α = .84

1. My organization makes it easy for people from
diverse backgrounds to fit in and be accepted.

2. Where I work, employees are developed and
advanced without regard to the gender or the racial,
religious, or cultural background of the individuals.

3. Managers demonstrate through their actions that
they want to hire and retain and diverse workforce.

4. I feel that my immediate manager does a good job of
managing people with diverse backgrounds (in
terms of age, sex, race, religion, or culture).

270 Journal of Leadership & Organizational Studies 21(3)

Social Support: α = .87
Items from the work design measure.

1. I have the opportunity to develop close friendships in
my job.

2. I have the chance in my job to get to know other
people.

3. I have the opportunity to meet with others in my
work.

4. My supervisor is concerned about the welfare of the
people that work for him/her.

5. People I work with take a personal interest in me.
6. People I work with are friendly.

Feedback and Recognition: α = .90
Items 1 to 3 from work design measure, and items 4 to 6
from employee involvement climate measure.

1. I receive a great deal of information from my man-
ager and coworkers about my job performance.

2. Other people in the organization, such as managers and
coworkers, provide information about the effectiveness
(e.g., quality and quantity) of my job performance.

3. I receive feedback on my performance from other
people in my organization (such as my manager or
coworkers).

4. I am satisfied with the amount of recognition I receive
when I do a good job.

5. Generally, I feel this company rewards employees
who make an extra effort.

6. There is a strong link between how well I perform my
job and the likelihood of receiving high-performance
appraisal ratings.

Work–Life Balance: α = .86

1. I am easily able to balance the demands of my work
and personal/family life.

2. I have sufficient time away from my job to maintain
adequate work and personal/family life balance.

3. When I take a vacation, I am able to separate myself
from my work and enjoy myself.

4. All in all, I am successful in balancing my work and
personal/family life.

5. I often feel drained when I go home from work because
of work pressures and problems. (reverse scored).

Training and Development: α = .88
Items from the employee involvement climate measure.

1. I receive sufficient training to do my job.
2. Education and training are integral parts of this com-

pany’s culture.
3. I have had sufficient/adequate job-related training.

4. If I felt that I needed more job-related training, the
company would provide it.

Decision-Making Involvement: α = .94
Items 1 to 3 from the employee involvement climate mea-
sure, and items 4 to 9 from the work design measure.

1. I have sufficient authority to fulfill my job
responsibilities.

2. I have enough input in deciding how to accomplish
my work.

3. I have enough freedom over how I do my job.
4. My job gives me a chance to use my personal initia-

tive or judgment in carrying out the work.
5. My job allows me to make a lot of decisions on my

own.
6. My job provides me with significant autonomy in

making decisions.
7. My job allows me to make decisions about what

methods I use to complete my work.
8. My job gives me considerable opportunity for inde-

pendence and freedom in how I do the work.
9. My job allows me to decide on my own how to go

about doing my work.

Pay and Raise Satisfaction: α = .94
Items from the pay and benefits satisfaction measure.

1. My take-home pay
2. My most recent raise
3. My current salary
4. The raises I have typically received in the past
5. My overall level of pay
6. The size of my current salary

Promotion Opportunities
Item from the employee involvement climate measure.

1. If I perform well, I am more likely to be promoted.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with
respect to the research, authorship, and/or publication of this
article.

Funding

The author(s) received no financial support for the research,
authorship, and/or publication of this article.

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Author Biographies

Jennifer Mencl is an Associate Professor of Organizational
Behavior at the University of Minnesota Duluth. Her research
interests include learning and development, empathy, and ethical
decision-making. She has published in journals such as the
International Journal of Selection and Assessment, Journal of
Human Resources Education, and Journal of Business Ethics.

Scott W. Lester is a Professor of Management at University of
Wisconsin – Eau Claire. His research interests include dyadic
trust, the multi-generational workforce, and work-life balance.
Scott has published in journals such as the Academy of Management
Journal, Journal of Applied Psychology, Journal of Management,
and Journal of Organizational Behavior.

http://www.nacada.ksu.edu/Resources/Clearinghouse/View-Articles/Generationalissues-in-the-workplace.aspx

http://www.nacada.ksu.edu/Resources/Clearinghouse/View-Articles/Generationalissues-in-the-workplace.aspx

http://www.nacada.ksu.edu/Resources/Clearinghouse/View-Articles/Generationalissues-in-the-workplace.aspx

Week 7 –

Assignment

: Research Employee Commitment, Motivation, and Cultural Intelligence

Assignment

Top of Form

Bottom of Form

Begin by researching each framework listed in the Books and Resources section and the subsequent seminal author and one measurement instrument that creators of knowledge use in their research projects. Use only the three frameworks that are presented in the readings this week.

Then, prepare a paper addressing the following:

· Follow the steps that you completed for the Warm-Up Exercise to find information on the three frameworks listed below.  For each item, provide the name of the framework, the seminal author, and the instrument that may be used for data collection. Instruments are typically surveys (for quantitative methods) and interview protocols based on previous survey instruments, or created with information form survey instruments (for qualitative methods). Each of the frameworks below has at least one instrument that researchers use to collect data. You must identify the name of one instrument, but you may identify more than one if you wish.

1. Employee Commitment (also known as Organizational Commitment)

2. Cultural Intelligence or Cultural Dimensions

3. Employee Motivation

· Provide a high-level analysis of your current or past workplace. Discuss the advantages and challenges of multiple generations and cultural differences in the workplace while utilizing at least two of the conceptual/theoretical frameworks that you previously discussed in your paper, such as cultural intelligence or employee commitment.

· Ideas for a topic of study. Consider your ideas for a topic of study, and then determine if one or more of the conceptual/theoretical frameworks that you have discussed in this paper can be used in your research. Did you find another concept or concepts that interested you? If so, identify the concept(s) and explain how it (they) could fit within your research ideas.

· Reflect on this week’s readings and assignment. Remember to cite and reference this week’s required resources (six articles and one website).

Below are the main headings that you should use – all Level 1 Headings (centered, bolded, uppercase and lowercase lettering):

The introduction should clearly state what will be in the paper, and guide the reader by introducing the topics of each section through topic sentences.

The topic sentences would then become the headings of each section throughout the response so the reader can clearly follow along and so the response stays on track. Note: Use the bullets in the assignment criteria above for topic section ideas.

The conclusion should summarize what was in the paper (linking it to the introduction).

The References page should list all resources that were cited in the paper. Be sure to use the resources listed in the Books and Resources section of the assignment, as well as external resources that you cited.

Introduction

Provide the purpose of the paper, and tell the reader what to expect – identify the topics of each section. The word Introduction should be a Level 1 heading. Then, provide the topic sections. The topic sections would have Level 1 section headings of:

Employee Commitment (also known as Organizational Commitment)

The write-up should include: The name of the model (hint – it is the same as the section heading), the seminal author, and one instrument used for data collection. Provide information about the Employee Commitment or Organizational Commitment model and what is measured.

Cultural Intelligence or Cultural Dimensions

The write-up should include: The name of the model (hint – it is the same as the section heading), the seminal author, and one instrument used for data collection. Provide information about the Cultural Intelligence or Cultural Dimensions model and what is measured.

Employee Motivation

The writeup should include: The name of the model (hint – it is the same as the section heading), the seminal author, and one instrument used for data collection. Provide information about the Employee Motivation model and what is measured.

High-level Analysis of Current or Past Workplace

Discuss the advantages and challenges of multiple generations and cultural differences in the workplace.

Ideas for a Topic of Study

Consider your ideas for a topic of study, and then determine if one or more of these frameworks can be used in your research. Did you find another concept that interested you? If so, identify the concept(s) and explain how it (they) could fit within your research ideas.

Reflection

Reflect on this week’s readings and assignment. Remember to cite and reference this week’s required resources.

Conclusion

Tell the reader what was in the paper-summarize, linking back to the Introduction. The word Conclusion should be a Level 1 heading.

References

Always create a page break prior to creating the references page. NCU references must be single spaced with a double space between. The hanging indent is to be used. Remember to cite and reference the resources in this week’s Books and Resources section, in addition to any other external resources you have used.

Additional Link:

https://www.12manage.com/

S U M M E R 2 0 1 5

V. Kumar
Anita Pansari

Measuring the
Benefits of
Employee
Engagement
It’s well known that employees’ attitudes toward the
organization have a significant effect on how they approach
their jobs and how they treat customers. But recent research
also suggests that high levels of employee engagement are
associated with higher rates of profitability growth.

Vol. 56, No. 4 Reprint #56404 http://mitsmr.com/1R4Unsb

http://mitsmr.com/1R4Unsb

COURTESY OF WHOLE FOODS MARKET

Measuring the Benefits of
Employee Engagement
It’s well known that employees’ attitudes toward the organization
have a significant effect on how they approach their jobs and how
they treat customers. But recent research also suggests that high
levels of employee engagement are associated with higher rates
of profitability growth.
BY V. KUMAR AND ANITA PANSARI

OVER THE YEARS, the media and academia have paid close attention to various customer-driven
strategies — aimed at improving measures such as customer satisfaction, customer loyalty and com-

pany profits. However, in recent years, the focus has changed. Although the ability to deliver a good

product or service to customers who want it and are willing to pay for it is still seen as the key ingredient

to success, there is a growing interest in understanding the impact of employees on the bottom line.

That some companies are choosing to invest in better-trained and more service-oriented work-

forces should be no surprise. With increasing competition, technological advances and globalization,

THE LEADING
QUESTION
Why should
companies
care about
employee
engagement?

FINDINGS
�Measuring em-
ployee engagement
can reveal areas of
employee develop-
ment that need
attention.

�Employees person-
ify the company’s
service philosophy.

�Having highly en-
gaged employees
is associated with
higher profit
growth.

SUMMER 2015 MIT SLOAN MANAGEMENT REVIEW 67

Service-focused
companies such as
Whole Foods Market
have long invested
in making both
customers and
employees happy.

T A L E N T M A N A G E M E N T

68 MIT SLOAN MANAGEMENT REVIEW SUMMER 2015 SLOANREVIEW.MIT.EDU

T A L E N T M A N A G E M E N T

many companies, especially those selling services,

have come to realize that employee expenditures

are more than a cost: Employees are the face of the

business and sources of innovation and organiza-

tional knowledge. They interact with customers at

every touch point and create lasting brand impres-

sions. They personify the company’s ser v ice

philosophy and are expected to live by its culture

and values. While the products and services many

companies offer can appear quite similar on the

surface, exceptional service can be a competitive

advantage. Competing through service is only pos-

sible when the organization treats its employees as

a valuable resource.

Well-known service-focused companies, includ-

ing Whole Foods Market, Starbucks, Marriott

International and Southwest Airlines, have long

invested in initiatives focused on maintaining a ho-

listic framework of making both their customers

and their employees happy. Herb Kelleher, the

founder and chairman emeritus of Southwest,

summarized this philosophy well when he said,

“You put your employees first, and if you take care

of them, then they will take good care of you, and

then your customers will come back, and your

shareholders will like that, so it’s really a unity.”1

Howard Schultz, the CEO of Starbucks, echoed this

view: “[Employees] are the true ambassadors of

our brand, the real merchants of romance and the-

ater, and as such the primary catalysts for delighting

customers.”2

Defining Employee Engagement
For the past two decades, employee engagement

has been a topic of interest both in the academic

literature and among managers. Initially, it was

thought of as personal engagement with the orga-

nization and indicated that an employee’s focus

was on the performance of assigned tasks.3 Over

the years, several definitions have emerged. Some

researchers focused on worker burnout, the idea

being that employees who are not experiencing

burnout are engaged.4 Others went beyond burn-

out and fatigue to focus on the basic needs at a

workplace, noting that if employees are engaged,

then they “are positive about their work being

meaningful, their workplace being safe and the

availability of sufficient resources for completing

tasks.”5 Still others explored the emotional side of

work and provided a comprehensive definition

that focused on the cognitive, emotional and

behavioral components associated with an individ-

ual’s performance.6

Recognizing that there were various meanings

attributed to employee engagement and no overall

consensus about what it involved, we set out to ex-

amine how employee engagement was practiced in

the business world. We conducted qualitative re-

search in North America, South America, Asia,

Africa and Europe, interviewing more than 200 HR

and marketing managers from 52 companies in the

hotel, telecommunications, airline, retail and bank-

ing industries. (See “About the Research.”)

An HR manager from a leading banking organi-

zation admitted that the employee attrition rate at

his company was high, with most of the employees

leaving within two years of joining the organiza-

tion. Given that the company invested a lot of

money in employee training and development, he

said this was a serious problem. Across the board,

the marketing managers we interviewed expressed

deep concern about employees who quit and even-

tually ended up poaching valuable clients. In

organizations where attrition was lower, managers

faced other challenges involving senior employees

who had become less productive. In many cases, the

issue was not retaining employees or building loy-

alty but ensuring that employees performed at their

highest levels of productivity. Many managers

complained of the absence of any sense of owner-

ship among the employees.

We wanted to use our discussions with managers

and a review of the literature to understand how em-

ployee attitudes and behaviors affected company

performance. This led us to define employee en-

gagement as “a multidimensional construct that

comprises all of the different facets of the attitudes

and behaviors of employees towards the organiza-

tion.”7 The five dimensions of employee engagement

are: employee satisfaction, employee identification,

e mployee commit me nt, e mployee loyalt y and

employee performance.

Employee satisfaction is the positive reaction

employees have to their overall job circumstances,

including their supervisors, pay and coworkers.

When employees are satisfied, they tend to be more

SLOANREVIEW.MIT.EDU SUMMER 2015 MIT SLOAN MANAGEMENT REVIEW 69

committed to their work and have less absenteeism,

which positively influences the quality of the goods

they produce and services they deliver. Satisfied

employees also connect with the organization’s val-

ues and goals and perceive themselves to be a part

of the organization.

Employee identification refers to the emotional

state in which employees identify as part of the or-

ganization. Employees who identify with the

organization see themselves as intertwined with the

success or failure of the company’s brand. When

people say good things about the brand, employees

with a close identification to the brand consider it

as a personal compliment. Such identification can

be strengthened through an emphasis on brand

distinctiveness, competition, charismatic leader-

ship, individual mentorships and a strong culture

with its own distinctive rituals and symbols.

Employee commitment is much higher for the

employees who identify with the organization than

for the employees who don’t. Commitment is an im-

portant facet of employee engagement, as it induces

employees to do more than what’s in their job de-

scriptions. It develops over time and is an outcome

of shared experiences. It is often an antecedent of

loyalty.8 Earlier research found that employees with

the highest levels of commitment perform 20% bet-

ter and are 87% less likely to leave the organization.9

A committed employee guards the organization’s

secrets and works for its best interests.

Employee loyalty to an organization creates a

positive attitude about the organization, which can

motivate employees to do more than expected and

which can trickle down to have positive effects on

the employees’ work and, ultimately, on customer

satisfaction.10

Employee performance can be seen in the qual-

ity of goods and services the company produces

and in customer interactions and feedback.

The investments companies make in training,

orientation and branding activities provide the un-

derpinnings of stronger employee engagement.

Effective training and orientation, for example, can

help employees align their behavior with the orga-

nization’s values and goals. Organizations can

strengthen bonds with their employees by making

employees a priority in day-to-day operations. The

most employee-centric organizations are the ones

that provide employees with regular training pro-

grams to enhance their knowledge and skill sets,

and with career advancement opportunities to help

them reach their potential. They can assist employ-

ees in achieving a better work/life balance and

empower them to make decisions that benefit the

company and its customers. When employees

receive high levels of attention and good training,

they feel obliged to respond with greater levels of

engagement, which is reflected in the quality of

their work and their interactions with customers.

One company that experienced this payoff is

American Express, which began an internal pro-

gram in 2006 focused on training and incentivizing

staff to engage more actively around purchases (for

example, airline tickets) and customer care (for in-

stance, discussions about billing questions). The

company scrapped its rigid outbound calling pol-

icy geared toward keeping interactions short and

invited service representatives to decide for them-

selves how long they wanted to spend on each call.

The results were impressive: Customers increased

their spending on Amex products by 8% to 10%,

and the overall profits on services widened.11

ABOUT THE RESEARCH
Although employee engagement is widely seen as an important construct, there
has been no consensus on its definition or the components of employee engage-
ment either in business or in the academic literature. In this article we define the
concept of employee engagement, describe a scale for measuring it and present
strategies for maximizing it. Based on the findings from an extensive review of
marketing literature and open-ended interviews with managers about their exist-
ing employee strategies, we have developed a comprehensive scorecard to
measure employee engagement in organizations. We categorize companies
along a continuum of being “disengaged” to “highly engaged.”

To execute our research, we collected data from 208 managers at 52 compa-
nies in order to test the scorecard’s validity and reliability. We then implemented
our employee engagement scorecard framework in 75 companies on three con-
tinents (North America, Europe and Asia). The results of our analysis indicate that
an organization’s overall employee engagement level is directly influenced by
the components of employee engagement (employee satisfaction, employee
identification, employee commitment, employee loyalty and employee perfor-
mance) and are therefore the result of the aggregation of these components.
To illustrate the benefits of measuring employee engagement and working on
strategies to improve employee engagement, we did a follow-up study with
30 of the 75 companies a year later. In general, we found that companies with
higher levels of employee engagement showed higher levels of profits. Eight
companies that moved from a low level of employee engagement (disengaged)
in the first year to the next level (somewhat engaged) the following year
showed a 19% average increase in earnings per share; furthermore, two
companies that moved from a moderate level of employee engagement in
the first year to the highest level of engagement the following year showed a
132% average increase in earnings per share.

70 MIT SLOAN MANAGEMENT REVIEW SUMMER 2015 SLOANREVIEW.MIT.EDU

T A L E N T M A N A G E M E N T

Measuring Employee Engagement
For companies to get the most out of employee

engagement, it is imperative that they develop a

thorough understanding of their current employee

engagement strategies and the effects those strate-

g ies are hav ing on employees. To assess an

organization’s current status, we developed a mea-

surement system that includes a scale for examining

the various components of employee engagement

and a comprehensive scorecard that pulls everything

together. The scorecard is composed of a number of

items used to measure the individual employee en-

gagement components (based on a 1 to 5 scale, with

1 being lowest and 5 being highest). This approach

allows managers to identify the areas in need of de-

velopment. (See “The Employee Engagement

Scorecard.”) We developed the scorecard through an

extensive research process of academic literature and

managerial interviews across the world. After pre-

testing the scorecard and conducting additional

interviews with managers, we modified the items to

ensure more accuracy and to capture the essence of

the variables being measured. An organization’s

overall employee engagement level is directly influ-

enced by the components of employee engagement

(employee satisfaction, employee identification, em-

ployee commitment, employee loyalty and employee

performance) and are therefore the result of the ag-

gregation of these components.

Implementing the Employee
Engagement Scorecard
We implemented the employee engagement score-

card at 75 companies in India, China, Germany,

Belgium, the Netherlands, Austria and the United

States. We sorted the scores into four groups. Scores

of 20 to 39 indicated that the company’s engagement

level was low and suggested that the company

needed to focus on enhancing the various compo-

nents of employee engagement at an individual level

(such as ensuring their employees were more satis-

fied, identified with the organization and showed

higher levels of commitment to the company). A

score of 40 to 59 indicated that employees were

somewhat more engaged with the company but im-

plied that some employee engagement factors

required immediate attention. A score of 60 to 79

pointed to a still higher level of employee engage-

ment, suggesting that while the overall level might

allow the company to function smoothly and per-

form fairly well, there was room for improvement.

Scores of 80 to 100 were evidence that the company

had adhered to employee engagement best practices

and that employee engagement was high.

How is employee engagement connected to prof-

itability? To understand this, we did a follow-up

study a year after the original study with 30 compa-

nies (a subset of the original 75 companies) in the

airline, telecommunication and hotel industries.

Many people have assumed that there is a close rela-

tionship between employee engagement and growth

in profits, and our study with the 30 companies con-

firmed this link. After controlling for other relevant

factors including GDP level, marketing costs, the na-

ture of the business and the type of goods, we found

that the highest level of growth in profits (10% to

15%) occurred in the group of companies whose

employees were highly engaged; the lowest level of

growth in profits (0% to 1%) occurred in the group

of companies whose employees were disengaged.

Regionally, U.S. companies in our sample had

the highest employee engagement scores, with

scores ranging from 40 to 80, followed by European

companies. Asian companies had lower scores as a

group, with scores ranging from 22 to 50. There

were also variations among different types of busi-

nesses: Business-to-business companies tended to

score higher than business-to-consumer compa-

nies, and service-based companies scored higher

than manufacturers.

While the products and services many companies offer can
appear quite similar on the surface, exceptional service can
be a competitive advantage.

SLOANREVIEW.MIT.EDU SUMMER 2015 MIT SLOAN MANAGEMENT REVIEW 71

Enhancing Employee Engagement
Since the employee engagement scorecard is made

up of the individual scores for the employee engage-

ment components, managers have the ability to

identify the areas of employee development that re-

quire their immediate attention. By analyzing and

using this scorecard, organizations can allocate their

resources to the specific things employees need.

Enhancing employee satisfaction If employees are
dissatisfied, their enthusiasm for the company’s day-to-

day activities and operations is apt to be low, increasing

the likelihood of absenteeism and poor work quality,

which can drain the organization of valuable time and

money. Once managers link a company’s low employee

engagement score to low levels of satisfaction, they can

tap a variety of measures to boost employee satisfac-

tion. For example, they can rearrange work duties and

responsibilities to correspond better with employee

skill sets and interests, or begin to mentor their employ-

ees more actively. They can also develop new incentives

for performance or offer flexible work hours.

Promoting employee identification with the
organization If employees are satisfied but don’t
score high on employee identification, then they

will not be able to represent the organizational cul-

ture and values as well as employees who identify

closely with the organization. This may hinder

team-building activities and impede the generation

of new ideas for employee development. In such a

scenario, the organization might offer mentorship

programs or idea-development platforms, in addi-

tion to reinforcing the organizational culture and

values, to connect the employees with the organiza-

tional culture and nurture growth.

Enhancing employee commitment levels Em-
ployees who are satisfied and connect with the

organization may still not be emotionally committed

to the organization. Without this commitment, they

will resist taking on additional duties or responsibili-

ties. Some will look for new opportunities outside the

company, possibly with a competitor, which could be

a real loss. To build commitment, companies should

THE EMPLOYEE ENGAGEMENT SCORECARD
For companies to get the most out of employee engagement, they need to understand their current HR strategies
and the effects of those strategies on employees. Each of the items in the five bulleted lists represents an area in
which employees can rate their experience with the organization on a scale of 1 to 5; the minimum possible score
on the scorecard is 20, and the maximum is 100.

EMPLOYEE
SATISFACTION

EMPLOYEE
IDENTIFICATION

EMPLOYEE
COMMITMENT

EMPLOYEE
LOYALTY

EMPLOYEE
PERFORMANCE

Number of items: 5 7 3 3 2

Items used to
measure the
concept

• Receives
recognition
for a job

• Feels close to
people at work

• Feels good about
working at this
company

• Feels secure
about job

• Believes that the
management is
concerned about
employees

• Proud to tell
others about
employment

• Feels a sense
of ownership

• Feels a sense
of pride

• Views the suc-
cess of the brand
as his own

• Treats organiza-
tion like family

• Says “we” rather
than “they”

• Feels like it’s a
personal compli-
ment when the
brand is praised

• Commitment to
deliver the brand
promise increases
along with knowl-
edge of the brand

• Very committed to
delivering the
brand promise

• Feels like the
organization has
a great deal of
personal meaning

• Content to spend
the rest of his/her
career in this
organization

• Does not have
intention to
change to another
organization

• Intention to stay is
driven by compe-
tency in delivering
the brand promise

• Performance in
the last appraisal
exceeded
expectations

• Believes there
is increased
opportunity for
improved perfor-
mance in this
organization

TOTAL

Minimum score: 5 7 3 3 2 20

Maximum score: 25 35 15 15 10 100

72 MIT SLOAN MANAGEMENT REVIEW SUMMER 2015 SLOANREVIEW.MIT.EDU

T A L E N T M A N A G E M E N T

review their work environment, performance incen-

tives and reward and benefit structures, and should

reassure employees that the company values their

contributions. At the same time, companies should

undertake initiatives that underline the organiza-

tional goal and vision. This may help employees

develop a sense of commitment to the organization’s

cause and purpose.

Ensuring employee loyalty A loyal employee
base is a valuable asset to any organization. Disloyal

employees might give away trade secrets and may

not treat customers fairly. Organizations that

identify lack of employee loyalty as a barrier to

optimizing employee engagement may try to im-

plement employee development programs that

empower employees to update their knowledge

and skills or provide new avenues for individual

growth. They could also try to extend and deepen

their relationships with employees by developing

initiatives and extracurricular activities (for exam-

ple, programs for families).

Managing employee performance The most
tangible aspect of employee engagement is em-

ployee performance. Low employee morale and

productivity have a negative impact not just on em-

ployee behavior toward customers but also on the

company’s bottom line. An organization with low-

performing employees should explore whether the

performance gap reflects an underlying knowledge

gap or fundamental failures in recruiting and

hiring that put people in positions for which they

are not suited or qualified. Whatever the reasons,

companies can determine whether training and

orientation programs, regular feedback/mentor-

ship programs or performance incentives have the

ability to enhance employee performance. If the

company identifies its recruitment policy as a

weakness, it can revisit its candidate sourcing and

interviewing strategy.

We have seen the relevance and impact of em-

ployee engagement, along with the tools and

strategies to measure and optimize it. Although we

recognize that the ultimate focus of most organiza-

tions is on customers, companies can benefit from

adding employee engagement to their list of priori-

ties. Keeping employees engaged can have a major

impact on an organization’s success, whether the

organization is for-profit or not-for-profit. En-

gaged employees will pass on their enthusiasm to

customers, and they will develop and deliver better

products and services — thereby positively impact-

ing sales and profit.

V. Kumar is the Regents Professor, Richard and
Susan Lenny Distinguished Chair and Professor of
Marketing at the J. Mack Robinson College of Busi-
ness at Georgia State University in Atlanta, Georgia,
as well as executive director of the Center for Excel-
lence in Brand and Customer Management. Anita
Pansari is a doctoral student in marketing at the
Robinson College of Business. Comment on this
article at http://sloanreview.mit.edu/x/56404, or
contact the authors at smrfeedback@mit.edu.

REFERENCES

1. “Something Special About Southwest Airlines,”
August 30, 2007, www.cbsnews.com.

2. S. Kessler, “Inside Starbucks’s $35 Million Mission
to Make Brand Evangelists of Its Front-Line Workers,”
October 22, 2012, www.fastcompany.com.

3. W.A. Kahn, “Psychological Conditions of Personal
Engagement and Disengagement at Work,” Academy of
Management Journal 33, no. 4 (December 1990): 692-724.

4. C. Maslach, W.B. Schaufeli and M.P. Leiter,
“Job Burnout,” Annual Review of Psychology 52,
no. 1 (February 2001): 397-422.

5. Kahn, “Psychological Conditions of Personal Engage-
ment and Disengagement At Work.”

6. A.M. Saks, “Antecedents and Consequences of
Employee Engagement,” Journal of Managerial Psychol-
ogy 21, no.7 (2006): 600-619.

7. V. Kumar and A. Pansari, “The Construct, Measure-
ment, and Impact of Employee Engagement: A Marketing
Perspective,” Customer Needs and Solutions 1, no. 1
(2014): 52-67.

8. R.D. Pritchard, “Organizational Productivity,” in “Hand-
book of Industrial and Organizational Psychology,” vol. 3,
eds. M.D. Dunnette and L.M. Hough (Palo Alto, California:
Consulting Psychologists Press, 1992), 443-471.

9. N.R. Lockwood, “Leveraging Employee Engagement
for Competitive Advantage,” Society for Human Re-
source Management Research Quarterly 1 (2007): 1-12.

10. N.J. Allen and D.B. Grisaffe, “Employee Commitment
to the Organization and Customer Reactions: Mapping
the Linkages,” Human Resource Management Review
11, no. 3 (autumn 2001): 209-236.

11. “Want to Improve Customer Service? Treat Your
Employees Better,” May 14, 2012, http://knowledge.
wharton.upenn.edu.

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• 56404Wx

Summer 2015
Measuring the Benefits of Employee Engagement
Measuring the Benefits of Employee Engagement
Defining Employee Engagement
About the Research
Measuring Employee Engagement
Implementing the Employee Engagement Scorecard
Enhancing Employee Engagement
Enhancing employee satisfaction
Promoting employee identification with the organization
Enhancing employee commitment levels
Ensuring employee loyalty
Managing employee performance
About the Authors
References

WHITE PAPER

Future Trends in Leadership Development

By: Nick Petrie

Contents

About the Author

3

Experts Consulted During 3
This Study

About This Project

5

Executive Summary 5

Section 1–The Challenge of Our 7
Current Situation

Section 2–Future Trends for 1o
Leadership Development

Types of Development 11

Why Vertical Development 12
Matters for Leadership

What the Stages of 13
Development Look Lik

e

Example of a Vertical Development 15
Process: The Immunity to Chan

ge

Growth Fuels Growth 19

Final Thoughts 27

Bibliography 28

References 29

Appendix 31

3 ©2014 Center for Creative Leadership. All rights reserved.

Nick Petrie is a Senior Faculty
member with the Center for Creative
Leadership’s, Colorado Springs,
Colorado campus. He is a member
of the faculty for the Leadership
Development Program (LDP)® and the
legal sector. Nick is from New Zealand
and has significant international
experience having spent ten years
living and working in Japan, Spain,
Scotland, Ireland, Norway, and Dubai.
Before joining CCL, he ran his own
consulting company and spent the
last several years developing and
implementing customized leadership
programs for senior leaders around
the world. Nick holds a master’s
degree from Harvard University and
undergraduate degrees in business
administration and physical education
from Otago University in New Zealand.
Before beginning his business career,
he was a professional rugby player and
coach for seven years.

Experts Consulted During This Study
I wish to thank the following experts who contributed
their time and thinking to this report in order to make
it stronger. I also relieve them of any liability for its
weaknesses, for which I am fully responsible. Thanks all.

Bill Torbert, Professor Emeritus of Leadership
at the Carroll School of Management
at Boston College

Chelsea Pollen, Recruiting Specialist, Google

Chuck Palus, Manager of the Connected
Leadership Project, Center for Creative Leadership

Craig Van Dugteren, Senior Project Manager, Learning
& Development, Victoria Police, Australia

David Altman, Executive Vice President, Research,
Innovation & Product Development, Center for
Creative Leadership

David Carder, Vice President and Executive
Consultant, Forum Corporation

Jeff Barnes, Head of Global Leadership, General Electric

Jeffrey Yip, PhD Candidate, Boston University School
of Management; Visiting Researcher, Center for
Creative Leadership

John Connell, Harvard School of Public Health

John McGuire, Senior Faculty Member, Center for
Creative Leadership

Josh Alwitt, Vice President at Sapient Corporation

Lisa Lahey, Cofounder and Principal of
MINDS AT WORK™; Associate Director of the Change
Leadership Group at the Harvard University Graduate
School of Education

Lucy Dinwiddie, Global Learning & Executive
Development Leader, General Electric

Lyndon Rego, Director, Leadership Beyond Boundaries,
Center for Creative Leadership

Maggie Walsh, Vice President of the Leadership Practice,
Forum Corporation

Marc Effron, President, The Talent Strategy Group;
Author, One Page Talent Management

About the Author

©2014 Center for Creative Leadership. All rights reserved. 4

Michael Kenney, Assistant Professor of Public
Policy at the School of Public Affairs, Pennsylvania
State University

Robert Burnside, Partner, Chief Learning
Officer, Ketchum

Roland Smith, Senior Faculty Member and Lead
Researcher at the Center for Creative Leadership

Simon Fowler, Methodology Associate Consultant,
Forum Corporation

Stan Gryskiewicz, Senior Fellow at the Center for
Creative Leadership; President & Founder of
Association for Managers of Innovation

Steve Barry, Senior Manager, Strategic Marketing,
Forum Corporation

Steve Kerr, Former Chief Learning Officer and
Managing Director and now Senior Advisor to
Goldman Sachs; former Vice President of Corporate
Leadership Development and Chief Learning Officer
at General Electric

Harvard University Faculty
Thanks to the following professors and mentors whose
ideas, questions, and refusals to answer my questions
directly . . . kept me searching.

Ashish Nanda, Robert Braucher Professor of
Practice at Harvard Law School, Faculty Director
of Executive Education at Harvard Law School

Daniel Wilson, Principal Investigator at Project Zero
and Learning Innovation Laboratory (LILA), Harvard
Graduate School of Education

Dean Williams, Lecturer in Public Policy, teacher and
researcher on Adaptive Leadership and Change; Faculty
Chair of the Executive Education Program: Leadership
for the 21st Century: Global Change Agents, Harvard
Kennedy School of Government

J. Richard Hackman, Edgar Pierce Professor of Social
and Organizational Psychology, Department of
Psychology, Harvard University

Monica Higgins, Professor at the Harvard Graduate
School of Education, focused on the areas of
leadership development and organizational change

Robert Kegan, William and Miriam Meehan Professor
in Adult Learning and Professional Development,
Harvard Graduate School of Education

5 ©2014 Center for Creative Leadership. All rights reserved.

About This Project

The origin of this report stems largely from my own
doubts about the methods my colleagues and I had used
in the past to develop leaders in organizations. Though the
feedback from managers was that they were happy wit

h

the programs, my sense was that somehow, what we were
delivering was not what they really needed.

It seemed that the nature of the challenges that managers
were facing was rapidly changing; however, the methods
that we were using to develop them were staying the
same. The incremental improvements that we were
making in programs were what Chris Argyris would
call “single loop” learning (adjustments to the existing
techniques), rather than “double loop” learning (changes
to the assumptions and thinking upon which the
programs were built).

These continual, nagging doubts led me to take a
one-year sabbatical at Harvard University with the
goal of answering one question–what will the future
of leadership development look like? With the aim
of getting as many different perspectives as possible,
I studied across the schools of the university (Education,
Business, Law, Government, Psychology) to learn their
approaches to developing leaders and conducted a
literature review of the field of leadership development.
In addition, I interviewed 30 experts in the field to gather
diverse perspectives and asked each of them the
following questions:

1. What are the current approaches being
used that you think are the most effective?

2. What do you think we should be doing more
of in terms of developing leaders?

3. What should we be doing less of/stop
doing/phase out?

4. Where do you see the future of leadership
development headed?

“In the agricultural era,
schools mirrored a garden.
In the industrial era, classes
mirrored the factory, with
an assembly line of learners.
In the digital-information era,
how will learning look?”
Lucy Dinwiddie
Global Learning & Executive
Development Leader, General Electric

Executive Summary

The Current Situation
• The environment has changed—it is more
complex, volatile, and unpredictable.

• The skills needed for leadership have also
changed—more complex and adaptive thinking
abilities are needed.

• The methods being used to develop leaders have
not changed (much).

• The majority of managers are developed from
on-the-job experiences, training, and coaching/
mentoring; while these are all still important,
leaders are no longer developing fast enough or
in the right ways to match the new environment.

The Challenge Ahead
• This is no longer just a leadership challenge
(what good leadership looks like); it is a
development challenge (the process of how to
grow “bigger” minds).

• Managers have become experts on the
“what” of leadership, but novices in the “how”
of their own development.

The following report is divided into two sections.
The first (shorter) section focuses on the current environment
and the challenge of developing leaders in an increasingly
complex and uncertain world. The second looks in depth
at four leadership development trends identified by
interviewees and the emerging practices that could form
the basis of future leadership development programs.

©2014 Center for Creative Leadership. All rights reserved. 6

1. More focus on vertical development
There are two different types of development–horizontal
and vertical. A great deal of time has been spent on
“horizontal” development (competencies), but very little
time on “vertical” development (developmental stages).
The methods for horizontal and vertical development
are very different. Horizontal development can be
“transmitted” (from an expert), but vertical development
must be earned (for oneself).

2. Transfer of greater developmental
ownership to the individual
People develop fastest when they feel responsible
for their own progress. The current model encourages
people to believe that someone else is responsible for
their development–human resources, their manager,
or trainers. We will need to help people out of the
passenger seat and into the driver’s seat of their
own development.

Four Transitions for Leadership Development

3. Greater focus on collective rather than
individual leadership
Leadership development has come to a point of being
too individually focused and elitist. There is a transition
occurring from the old paradigm in which leadership
resided in a person or role, to a new one in which
leadership is a collective process that is spread
throughout networks of people. The question will
change from, “Who are the leaders?” to “What conditions
do we need for leadership to flourish in the network?”
How do we spread leadership capacity throughout the
organization and democratize leadership?

4. Much greater focus on innovation in
leadership development methods
There are no simple, existing models or programs
that will be sufficient to develop the levels of
collective leadership required to meet an increasingly
complex future. Instead, an era of rapid innovation will
be needed in which organizations experiment with new
approaches that combine diverse ideas in new ways and
share these with others. Technology and the web will
both provide the infrastructure and drive the change.
Organizations that embrace the changes will do better
than those who resist it.

Four Trends for the Future of Leadership Development

Current Focus Future Focus

The “what” of leadership The “what” and “how” of development

Horizontal development Horizontal and vertical development

HR/training companies, own development Each person owns development

Leadership resides in individual managers
Collective leadership is

spread throughout the network

7 ©2014 Center for Creative Leadership. All rights reserved.

Section 1–The Challenge
of Our Current Situation

The Environment Has Changed—It Is
Becoming More Complex and Challenging
If there were two consistent themes that emerged from
interviewees as the greatest challenges for current
and future leaders, it was the pace of change and the
complexity of the challenges faced.

The last decade has seen many industries enter a
period of increasingly rapid change. The most recent
global recession, which began in December 2007,
has contributed to an environment that many
interviewees believe is fundamentally different
from that of 10 years ago.

Roland Smith, senior faculty at the Center for Creative
Leadership (CCL®) described the new environment as
one of perpetual white water. His notion of increased
turbulence is backed up by an IBM study of over 1,500
CEOs.1 These CEOs identified their number one concern as
the growing complexity of their environments, with the
majority of those CEOs saying that their organizations are
not equipped to cope with this complexity.

This theme was consistent among many of the interviewees
in this study, some of whom used the army phrase VUCA to
describe the new environment in which leaders must work:

“There are no boundaries anymore.”
Jeff Barnes
Head of Global Leadership, General Electric

Volatile: Change happens rapidly and
on a large scale.

Uncertain: The future cannot be predicted
with any precision.

Complex: Challenges are complicated
by many factors and there are few single
causes or solutions.

Ambiguous: There is little clarity on what
events mean and what effect they may have.

Researchers have identified several criteria that make
complex environments especially difficult to manage. 2

• They contain a large number of interacting elements.
• Information in the system is highly ambiguous,
incomplete, or indecipherable. Interactions among
system elements are nonlinear and tightlycoupled
such that small changes can produce
disproportionately large effects.

• Solutions emerge from the dynamics within the
system and cannot be imposed from outside with
predictable results.

• Hindsight does not lead to foresight since the
elements and conditions of the system can be in
continual flux.

In addition to the above, the most common
factors cited by interviewees as challenges for
future leaders were:

• information overload
• the interconnectedness of systems
and business communities

• the dissolving of traditional
organizational boundaries

• new technologies that disrupt old work practices
• the different values and expectations of new
generations entering the workplace

• increased globalization leading to the need to
lead across cultures

In summary, the new environment is typified by an
increased level of complexity and interconnectedness.
One example, given by an interviewee, was the difficulty
her managers were facing when leading teams spread
across the globe. Because the global economy has
become interconnected, her managers felt they could
no longer afford to focus solely on events in their local
economies; instead they were constantly forced to adjust
their strategies and tactics to events that were happening
in different parts of the world. This challenge was
compounded by the fact that these managers were leading
team members of different nationalities, with different
cultural values, who all operated in vastly different time
zones–all of this before addressing the complexity of
the task itself.

©2014 Center for Creative Leadership. All rights reserved. 8

9 ©2014 Center for Creative Leadership. All rights reserved.

The Skills Sets Required Have Changed
–More Complex Thinkers Are Needed
Reflecting the changes in the environment, the
competencies that will be most valuable to the future
leader appear to be changing. The most common skills,
abilities, and attributes cited by interviewees were:

• adaptability
• self-awareness
• boundary spanning
• collaboration
• network thinking
A literature review on the skills needed for future leaders
also revealed the following attributes:

• The CEOs in IBM’s 2009 study named the most
important skill for the future leader as creativity.

• The 2009/2010 Trends in Executive Development
study found many CEOs were concerned that their
organizations’ up-and-comers were lacking in areas
such as the ability to think strategically and manage
change effectively.3

• Jeffrey Immelt, General Electric CEO and chairman,
states that 21st century leaders will need to be
systems thinkers who are comfortable with ambiguity.4

It appears that the new VUCA environment is
seeing the demand move away from isolated behavioral
competencies toward complex “thinking” abilities.
These manifest as adaptive competencies such as
learning agility, self-awareness, comfort with ambiguity,
and strategic thinking. With such changes in the mental
demands on future leaders, the question will be:
how will we produce these capacities of thinking?

The Methods We Are Using to Develop
Leaders Have Not Changed (Much)
Organizations are increasingly reliant on HR departments
to build a leadership pipeline of managers capable of
leading “creatively” through turbulent times. However,
there appears to be a growing belief among managers and
senior executives that the leadership programs that they
are attending are often insufficient to help them develop
their capacities to face the demands of their current role.

Based on the interviews, the most common current
reported development methods were:

• training
• job assignments
• action learning
• executive coaching
• mentoring
• 360-degree feedback
While the above methods will remain important, many
interviewees questioned whether the application of
these methods in their current formats will be sufficient
to develop leaders to the levels needed to meet the
challenges of the coming decades. The challenge
becomes, if not the methods above, then what?

Section 1–The Challenge
of Our Current Situation
(continued)

“The overriding theme of what I’ve been
hearing from clients recently is that they’re
a bit stunned–shocked, actually–at how
the leadership-development programs they’d
had in place were not able to meet the needs
of their business as we’ve gone through
these tremendously disruptive economic
changes over the past few years.”

5

Bill Pelster
Principal, Deloitte Consulting

©2014 Center for Creative Leadership. All rights reserved. 10

Section 2–Future Trends
for Leadership Development

This Is No Longer Just a
Leadership Challenge–It Is a
Development Challenge
A large number of interview respondents felt
that many methods–such as content-heavy
training–that are being used to develop leaders for
the 21st century have become dated and redundant.
While these were relatively effective for the needs
and challenges of the last century, they are becoming
increasingly mismatched against the challenges
leaders currently face.

Marshall Goldsmith has commented, “Many of
our leadership programs are based on the faulty
assumption that if we show people what to do,
they can automatically do it.”6 However, there is a
difference between knowing what “good” leadership
looks like and being able to do it. We may be arriving
at a point where we face diminishing returns from
teaching managers more about leadership, when they
still have little understanding about what is required
for real development to occur.

“Some people want to put
Christ back into Christmas; I
want to put development back
into leadership development.”
Robert Kegan
Professor of Adult Learning
and Professional Development,
Harvard Graduate School of Education

Trend 1: Increased Focus on Vertical
Development (Developmental Stages)
Research interview question: What do you think needs to be
stopped or phased out from the way leadership development is
currently done?

• “Competencies: they become either overwhelming in
number or incredibly generic. If you have nothing
in place they are okay, but their use nearly always
comes to a bad end.”

• “Competencies–they don’t add value.”
• “Competency models as the sole method for
developing people. It is only one aspect and their
application has been done to death.”

• “Competencies, especially for developing
senior leaders. They are probably still okay for
newer managers.”

• “Static individual competencies. We are better to
think about meta-competencies such as learning
agility and self-awareness.”

For a long time we have thought about leadership
development as working out what competencies a leader
should possess and then helping individual managers to
develop them–much as a bodybuilder tries to develop
different muscle groups. Research over the last 20 years
on how adults develop clarifies one reason why many
interviewees have grown weary of the competency
model as the sole means for developing leaders. We have
failed to distinguish between two very different types of
development–vertical and horizontal.

11 ©2014 Center for Creative Leadership. All rights reserved.

Types of Development

“Organizations have grown skilled
at developing individual leader
competencies, but have mostly
ignored the challenge
of transforming their leader’s
mind-set from one level to
the next. Today’s horizontal
development within a mind-set
must give way to the vertical
development of bigger minds.”
John McGuire and Gary Rhodes
Transforming Your Leadership Culture,
Center for Creative Leadership

Horizontal development is the development of new
skills, abilities, and behaviors. It is technical learning.
Horizontal development is most useful when a problem
is clearly defined and there are known techniques for
solving it. Surgery training is an example of horizontal
development. Students learn to become surgeons through
a process known as “pimping,” in which experienced
surgeons continually question students until the point
when the student cannot answer and is forced to go back
to the books to learn more information.7 While the process
of learning is not easy, there are clear answers that can
be codified and transmitted from expert sources,
allowing the students to broaden and deepen their
surgical competency.

Vertical development, in contrast, refers to the “stages”
that people progress through in regard to how they “make
sense” of their world. We find it easy to notice children
progressing through stages of development as they
grow, but conventional wisdom assumes that adults stop
developing at around 20 years old–hence the term “grown
up” (you have finished growing). However, developmental
researchers have shown that adults do in fact continue to
progress (at varying rates) through predictable stages of
mental development. At each higher level of development,
adults “make sense” of the world in more complex and
inclusive ways–their minds grow “bigger.”

In metaphorical terms, horizontal development is like
pouring water into an empty glass.8 The vessel fills up with
new content (you learn more leadership techniques). In
contrast, vertical development aims to expand the glass
itself. Not only does the glass have increased capacity
to take in more content, the structure of the vessel
itself has been transformed (the manager’s mind grows
bigger). From a technology perspective, it is the difference
between adding new software (horizontal development)
or upgrading to a new computer (vertical development).
Most people are aware that continuing to add new
software to an out-dated operating system starts to have
diminishing returns.

While horizontal development (and competency models)

will remain important as one method for helping
leaders develop, in the future it cannot be relied on
as the only means. As one interviewee suggested,
it is time to “transcend and include” the leadership
competency mentality so that in the future we are
able to grow our leaders simultaneously in both
horizontal AND vertical directions.

©2014 Center for Creative Leadership. All rights reserved. 12

Why Vertical Development
Matters for Leadership

The next question may be: “Why should someone’s
level of cognitive development matter for leadership
and organizations?” One answer is that from a leadership
perspective, researchers have shown that people at higher
levels of development perform better in more complex
environments. A study by Keith Eigel looked at 21 CEOs
and 21 promising middle managers from various
companies, each with annual revenues of over $5 billion.9
The study showed that across a range of leadership
measures, there was a clear correlation between higher
levels of vertical development and higher levels of
effectiveness. This finding has since been replicated in
a number of fine-grained studies on leaders assessing
particular competencies.10

The reason that managers at higher levels of cognitive
development are able to perform more effectively is that
they can think in more complex ways.

According to McGuire and Rhodes (2009) of the Center
for Creative Leadership: “Each successive level (or stair)
holds greater ability for learning, complex problem-
solving, and the ability to set new direction and lead
change. People who gain another step can learn more,
adapt faster, and generate more complex solutions than
they could before. Those at higher levels can learn and
react faster because they have bigger minds; people at
later stages are better at seeing and connecting more
dots in more scenarios (which means they are better at
strategy). That’s all. But that’s a lot.”

There is nothing inherently “better” about
being at a higher level of development, just as an
adolescent is not “better” than a toddler. However,
the fact remains that an adolescent is able to do more,
because he or she can think in more sophisticated ways
than a toddler. Any level of development is okay; the
question is whether that level of development is a
good fit for the task at hand. In terms of leadership,
if you believe that the future will present leaders
with an environment that is more complex, volatile,
and unpredictable, you might also believe that those
organizations who have more leaders at higher levels
of development will have an important advantage
over those that don’t.

“A new leadership paradigm
seems to be emerging with an
inexorable shift away from one-
way, hierarchical, organization-
centric communication toward
two-way, network-centric,
participatory, and collaborative
leadership styles. Most of all a
new mind-set seems necessary,
apart from new skills and
knowledge. All the tools in the
world will not change anything
if the mind-set does not allow
and support change.”
Grady McGonagill and Tina Doerffer
The Leadership Implications of the Evolving Web,
Bertelsmann Stiftung Leadership Series

13 ©2014 Center for Creative Leadership. All rights reserved.

What the Stages of Development Look Like
There are various frameworks which researchers use to measure and describe levels of cognitive development. Below is
a short description of Robert Kegan’s levels of development and how they map against other researchers in the field.

Kegan’s

Adult Levels of Development

• 3–Socialized mind: At this level we are shaped by the expectations of those around us. What we think and say is
strongly influenced by what we think others want to hear.

• 4–Self-authoring mind: We have developed our own ideology or internal compass to guide us. Our sense of
self is aligned with our own belief system, personal code, and values. We can take stands, set limits on behalf of
our own internal “voice.”

• 5–Self-transforming mind: We have our own ideology, but can now step back from that ideology and see it as
limited or partial. We can hold more contradiction and oppositeness in our thinking and no longer feel the need to
gravitate towards polarized thinking.

Adult Levels of Development

Level Kegan Levels CCL Action Logics Torbert & Rookes Action Logics11

5 Self-transforming Interdependent-Collaborator
Ironist (>1%)*

Alchemist (2%)
Strategist (5%)

4 Self-authoring Independent-

Achiever

Individualist (11%)

Achiever (30%)
Expert (37%)

3 Socialized Dependent-Conformer
Diplomat (11%)

Opportunist (4%)

* Study of 4,510 managers. The percentages denote the number of managers
measured at each stage of development using the sentence completion test.

According to interviewees, the coming decades will
increasingly see managers take on challenges that require
them to engage in: strategic thinking, collaboration,
systems thinking, leading change, and having “comfort
with ambiguity.” These are all abilities, which become
more pronounced at level 5. Yet according to studies by

Torbert and Fisher
12
less than 8% have reached that level

of thinking. This may in part explain why so many people
are currently feeling stressed, confused, and overwhelmed
in their jobs. A large number of the workforce are
performing jobs that cause them to feel they are “in over
their heads” (Kegan, 2009).

©2014 Center for Creative Leadership. All rights reserved. 14

“A major part of our job is helping people develop how they think.
How they get to an answer matters more than ever.”
Jeff Barnes
Head of Global Leadership,
General Electric

What Causes Vertical Development
The methods for horizontal development are very
different from those for vertical development.
Horizontal development can be learned (from an
expert), but vertical development must be earned
(for yourself). We can take what researchers have
learned in the last 75 years about what causes vertical
development and summarize it by the following four
conditions (Kegan, 2009):

• People feel consistently frustrated by situations,
dilemmas, or challenges in their lives.

• It causes them to feel the limits of their current
way of thinking.

• It is in an area of their life that they care
about deeply.

• There is sufficient support that enables them to
persist in the face of the anxiety and conflict.

Developmental movement from one stage to the next
is usually driven by limitations in the current stage.
When you are confronted with increased complexity
and challenge that can’t be reconciled with what you
know and can do at your current level, you are pulled
to take the next step (McGuire & Rhodes, 2009). In
addition, development accelerates when people are
able to identify the assumptions that are holding
them at their current level of development and
test their validity.

Torbert and others have found that cognitive development
can be measured and elevated not only on the individual
level, but also on the team and organizational level.
McGuire and Rhodes (2009) have pointed out that if
organizations want to create lasting change, they must
develop the leadership culture at the same time they
are developing individual leaders. Their method uses a
six-phase process, which begins by elevating the senior
leadership culture before targeting those managers at
the middle of the organization.13 While personal vertical
development impacts individuals, vertical cultural
development impacts organizations.

The challenge for organizations that wish to accelerate
the vertical development of their leaders and cultures
will be the creation of processes and experiences that
embed these developmental principles into the workplace.

McGuire and Rhodes describe vertical
development as a three-stage process:
1. Awaken: The person becomes aware that there is
a different way of making sense of the world and
that doing things in a new way is possible.

2. Unlearn and discern: The old assumptions are
analyzed and challenged. New assumptions are
tested out and experimented with as being new
possibilities for one’s day-to-day work and life.

3. Advance: Occurs after some practice and effort,
when new ideas get stronger and start to dominate
the previous ones. The new level of development
(leadership logic) starts to make more sense than
the old one.

15 ©2014 Center for Creative Leadership. All rights reserved.

Example of a Vertical Development
Process: The Immunity to Change14

The “Immunity to Change” process was developed over a 20-year period by
Harvard professors and researchers Robert Kegan and Lisa Lahey. It uses behavior
change, and the discovery of what stops people from making the changes they
want, to help people develop themselves.

How it works: Leaders choose behaviors they are highly motivated to change.
They then use a mapping process to identify the anxieties and assumptions they
have about what would happen if they were to actually make those changes. This
uncovers his or her’s hidden “immunity to change,” i.e., what has held his or her
back from making the change already. The participant then designs and runs a
series of small experiments in the workplace to test out the validity of the
assumptions. As people realize that the assumptions they have been operating
under are false or at least partial, the resistance to change diminishes and the
desired behavior change happens more naturally.

Why it accelerates development: The method accelerates people’s growth
because it focuses directly on the four conditions of vertical development (an
area of frustration, limits of current thinking, an area of importance, and support
available). Many leadership programs operate on the assumption that if you show
people how to lead, they can then do that. However, the most difficult challenges
that people face in their work lives are often associated with the limitations of the
way they “make meaning” at their current level of development. When a person
surfaces the assumptions they have about the way the world works, they get
the chance to question those assumptions and allow themselves the opportunity
to start to make meaning from a more advanced level. For example, a manager
may have difficulty making decisions without his boss’s direction, not because he
lacks decision-making techniques, but because of the anxiety that taking a stand
produces from his current level of meaning-making (the Socialized Mind).

How this is being used: The method is currently being used in the leadership
development programs of a number of leading banks, financial services firms,
and strategy consulting firms. It is best suited for leaders who already have the
technical skills they need to succeed, but need to grow the capacity of their
thinking in order to lead more effectively.

©2014 Center for Creative Leadership. All rights reserved. 16

Trend 2: Transfer of Greater
Developmental Ownership to
the Individual
Interview question: What should be stopped or phased out
in leadership development?

Response: “Stop sending people to courses they don’t want
to go to.”

According to social psychologists, people’s motivation to
grow is highest when they feel a sense of autonomy over
their own development.15 However, some interviewees
believe that the training model common within
organizations for much of the last 50 years has bred
dependency, inadvertently convincing people that they
are passengers in their own development journey. The
language of being “sent” to a training program, or having
a 360-degree assessment “done on me,” denotes the fact
that many managers still see their development
as being owned by someone else, namely HR, training
companies, or their own manager.

Even as methods have evolved, such as performance
feedback, action learning, and mentoring, the sense for
many still remains that it is someone else’s job to “tell
me what I need to get better at and how to do it.” Many
workers unknowingly outsourced their own development
to well-intentioned strangers who didn’t know them,
didn’t understand their specific needs, and didn’t care
as much about their development as they themselves
should. This model has resulted in many people feeling like
passengers. The challenge will be to help people back into
the driver’s seat for their own development.

Several interviewees point out that the above issue has
been compounded in the last 10 years by the demand
placed on managers to take on the role of coaches and
talent developers. Many staff, however, express skepticism
at being developmentally coached by managers, whom
they believe are not working on any development areas
themselves. To paraphrase Rob Goffee’s 2006 book,
“Why should anyone be developed by him?”16 In an
organization where everyone is trying to develop someone
else, but no one is developing themselves, we might
wonder whether we are really approaching development
from the right starting point.

Despite staff’s doubts about the current top-down
development methods, we can see clues to the future
of development in the growing demand for
executive coaching.

What principles can be learned from this demand
for coaching that can be expanded to all
development practices?

Some modifying factors for coaching:
• The manager chooses what to focus on, not the coach.
• The process is customized for each person.
• The coach owns her development; the coach
guides the process (through questions).

• The coach is a thinking partner, not an
authority/expert.

• There is no “content” to cover.
• It is a developmental process over time, not an event.
Despite this demand for coaching, the barrier has always
been that it is difficult to “scale” the process, because
of the cost and time needed for the coach. However, if
greater ownership of development is transferred back to
the individual, with HR, external experts, and managers
seen as resources and support, there is no reason that
these same principles could not be applied on a larger
scale throughout an organization.

17 ©2014 Center for Creative Leadership. All rights reserved.

While many organizations say that
they need leaders at all levels of the
business, a number of interviewees
pointed out that this statement
appears inconsistent with their
practices, as long as they continue to
train and develop only their “elite”
managers. Leadership development
can become democratized, if workers
get a better understanding of what
development is, why it matters
for them, and how they can take
ownership of their own development.

In his study on how Colombian drug
traffickers were able to grow their
operations despite a multidecade
campaign against them costing
billions of dollars, Michael Kenney
found that a key factor was the
traffickers’ ability to outlearn and
outadapt their U.S. government
adversaries.17 Kenney discovered that
traffickers, despite lack of education,
were driven to learn and develop
by the “high risk/high return” for
learning. The rewards for those who
learned the most were money and
status; the risks for those who failed
to learn were prison and sometimes
death. Colombian drug cartels do
not have HR departments or training
companies to manage their training
programs, yet these young, often
uneducated traffickers still find
sufficient motivation in the
risk/return for learning to drive their
own development. If organizations
believe that their people would not
be motivated to take more ownership
of their own development, they
might stop and ask,“How clear and
visible is the ‘risk/reward’ for
learning in our organization?”

Leadership Development
for the Masses

What Development Might Look Like

Robert Kegan and Lisa Lahey (2009) suggest that you
would know that an organization had people taking
ownership of their ongoing development when you could
walk into an organization and any person could tell you:

1. What is the one thing they are working on that
will require that they grow to accomplish it

2. How they are working on it
3. Who else knows and cares about it
4. Why this matters to them

©2014 Center for Creative Leadership. All rights reserved. 18

“The industry needs to ask itself
how leadership development
became so elitist. The world’s
challenges are big enough
now that we need to think
about how we can democratize
leadership development, take
it back to the masses—to
the base and middle of the
socioeconomic pyramid, not
only the peak.”
David Altman
Executive Vice President–Research,
Innovation, & Product Development
Center for Creative Leadership

“It makes little sense to begin
executive development
processes at very senior levels,
as many companies do. Instead
the process must start early.”
Morgan McCall, Jr.

“Executive Ask”
Academy of Management Executive18

In addition to these points, interviewees suggested
that some of the following factors would also be
present in an organization where people were taking
greater ownership of their development:

• Recognition from senior leaders that in complex
environments, business strategies cannot be
executed without highly developed leaders
(and that traditional horizontal development
won’t be enough)

• Buy-in from the senior leaders that new methods
for development need to be used and that they
will go first and lead by example

• Staff to be educated on the research of how
development occurs and what the benefits are
for them

• For all staff to understand why development
works better when they own it

• A realignment of reward systems to emphasize
both development as well as performance

• Utilization of new technologies such as
Rypple,19 which allows people to take control of
their own feedback and gather ongoing
suggestions for improvement

• Creation of a culture in which it is safe to take the
type of risks required to stretch your mind into
the discomfort zone

We are already seeing examples of this happening at
innovative organizations such as W. L. Gore and IDEO,
as well as at younger companies like Google, where
managers may have up to 20 direct reports each.
Because top-down feedback and coaching is impractical
with so many direct reports, staff members are expected
to drive their own development by using peers to gather
their own feedback on areas to improve and to coach
each other on how they can develop.

19 ©2014 Center for Creative Leadership. All rights reserved.

Growth Fuels Growth

While many HR staff may be delighted at the possibility
that, in the future, people would take more ownership
for their own development, some may question whether
people are inherently motivated to grow. Yet, the majority
of people can reflect on what is common knowledge in
most workplaces: the people who grow the most are
also the ones hungriest to grow even more. Clayton
Alderfer’s Existence, Relations, Growth (ERG) model of
human needs identified that the need for growth differs
from the needs for physical well-being and relationships.20
Alderfer found that the need for physical well-being and
relationship concerns are satiated when met (the more
we get, the less we want), whereas the need for growth
is not (the more growth we get, the more we want).
The implication for development is that if we can help
people to get started on the path of genuine vertical
development, the drive for still more growth
gathers momentum.21

In addition, social psychologists have long identified
that a sense of autonomy (ownership) is crucial for
people to feel intrinsically motivated. If the experience
of development is combined with a sense of autonomy
over the development process, individuals are likely to
gain a significant boost in their motivation to

proceed. Finally, both Kegan and Torbert’s research
suggests that as more people transition from the levels
of the socialized mind to the self-authoring mind, there
will naturally be a greater drive for ownership
by individuals.

Of course not everything can be organized and carried
out by the individuals, and the role of learning and
development professionals within organizations will
remain crucial. However, it may transform into more of
a development partner whose main role is to innovate
new structures and processes for development. Marc
Effron, president of the Talent Strategy group, predicts
that much of the HR function may soon focus only on
developing talent, with much of the rest of their
duties being outsourced.

This could mean that rather than a traffic cop
selecting and directing people into programs, the
future L&D professional could become more like a
community organizer who facilitates people, processes,
systems, and structures that connect networks
of people to each other and spreads a culture of
development throughout the organization. Several
interviewees pointed out that the most effective
leadership development programs shift responsibility
for developing leaders away from HR and toward the
current leaders of the organization. GE, for example,
expects both the CEO and the senior managers to
spend a significant amount of time at its leadership
university (Crotonville) training future leaders. For
L&D professionals this would mean partnering with
senior leaders to build a true culture of development,
a task that would require a great deal of skill and
development for those who take up the challenge.
The role of the learning professional would become
both more critical to the business and more challenging
for its practitioners. And despite positive signs that
people are ready to take on greater ownership,
several interviewees point out that we may yet need
to be patient. It took us 50 years of the expert model
to arrive at our current mind-set for development;
it may take some time to transition to the next.

©2014 Center for Creative Leadership. All rights reserved. 20

Example of a development process
that increases ownership:
Feedforward coaching

What is it: A behavior change process designed for
busy, time-poor people who like to see measured results.
In the feedforward process an individual engages trusted
colleagues in a peer coaching process, asking each
colleague to do three things: focus on the future, give
only suggestions, make these something positive the
person can do.

How it works: Participants choose one or two areas they
want to improve and five to eight internal people they
trust who become feedforward coaches. With the support
of an internal or external coach, the leader gathers
monthly suggestions from the feedforward coaches as to
how she can improve in her chosen areas and progress
reports on how much she is changing. At the six- and
twelve-month points, a mini-survey measures the level of
her behavior change (Appendix 1).

Why it works for development: It is extremely
time-efficient, taking only two to three hours per
month, involves the people who know the leader best
to help him/her change, measures results, holds the
coachee accountable over time, and acknowledges that
behavior change is a process, not an event. Feedforward
puts responsibility for development into the hands
of individuals, then lets them tailor the process as to
who will be involved, what they will work on, and how
conversations will take place. In addition, the structure of
the process ensures continuous support and accountability
conversations with a coach, which helps people to keep
following through on their actions.

21 ©2014 Center for Creative Leadership. All rights reserved.

Trend 3: The decline of the heroic
leader–the rise of collective leadership

The story of the last 50 years of leadership development
has been the story of the individual. It began with
discoveries about “what” made a good leader and was
followed by the development of practices that helped a
generation of individuals move closer to that ideal. The
workplace context rewarded individuals who could think
through a situation analytically and then direct others to
carry out well-thought-through procedures. Leadership
was not easy, but the process itself was comparatively
clear. However, in the last 15 years this model has become
less effective, as the “fit” between the challenges of the
environment and the ability of the heroic individuals
to solve them has started to diverge. The complexity
of the new environment increasingly presents what
Ronald Heifetz calls “adaptive challenges” in which it is
not possible for any one individual to know the solution
or even define the problem (the recent U.S. debt crisis,
for example). Instead, adaptive challenges call for
collaboration between various stakeholders who each
hold a different aspect of the reality and many of whom
must themselves adapt and grow if the problem is to be
solved. These collectives, who often cross geographies,
reporting lines, and organizations, need to collaboratively
share information, create plans, influence each other, and
make decisions.

A simple inference for those in charge of leadership
development could be that we need to start teaching
managers a new range of competencies that focus on
collaboration and influence skills. However, several
interviewees suggest that something more significant
may be happening–the end of an era, dominated by
individual leaders, and the beginning of another, which
embraces networks of leadership.

The field of innovation has already begun this process.
Andrew Hargadon, who has researched how innovations
occur in organizations, says that until recently it was
common to think that innovations came from lone
geniuses who had “eureka” moments. However, in the
last 10 years, contrary to this “great man” theory,
researchers have shown that innovation is a result of large
numbers of connection points in a network that cause
existing ideas to be combined in new ways. Researchers
now say that innovation doesn’t emanate from individual
people; it “lives” in the social network.

Similarly, the field of leadership has long held up heroic
individuals as examples of great leaders who could
command and inspire organizations. This idea resonated
with the public, as well as business audiences who sought
to glean leadership secrets from these leaders’ books and
speeches. However, a future made up of complex, chaotic
environments is less suited to the problem solving of lone,
decisive authority figures than it is to the distributed
efforts of smart, flexible leadership networks.

This transition in thinking may not come quickly or easily.
This was evident in the media’s efforts to find the “leader”
of the movement that toppled Egyptian President Hosni
Mubarak. Many people were interviewed by the media
without it ever becoming clear who was directing the
movement. In contrast, the youths who utilized social
networking tools to force regime change after 30 years
seemed clear that for them leadership was not aggregated
in an individual (they didn’t have “a” leader), leadership
was distributed throughout their network. This was
not the first generation of youths to be frustrated with
Mubarak and want him ousted, but it was the first with
the tools and the collective mind-set to make it happen.

The younger generation’s comfort with social networking
as the preferred means of connecting and influencing
each other suggests that they will have little difficulty
in accepting that leadership can be distributed
throughout a network. But how quickly will others
take on this thinking?

©2014 Center for Creative Leadership. All rights reserved. 22

Redefining Leadership

A starting point for organizations may come from
helping their people redefine what is meant by the
term leadership. There has been a major trend
among organizational theorists to shift the focus
from leadership as a person or role to leadership
as a process. For example:

• the process of mobilizing people to face difficult
challenges (Heifetz, 1994)

• anyone and everyone who gets in place and helps
keep in place the five performance conditions
needed for effective group functioning22
(Hackman, 2002)

• “Leaders are any people in the organization
actively involved in the process of producing
direction, alignment, and commitment.”
(McCauley & Van Velsor, 2004)

“If leadership is seen as a social process that engages everyone in
a community, then it makes less sense to invest exclusively in the
skills of individual leaders.”
Grady McGonagill and Tina Doerffer

“The Leadership Implications of the Evolving
Web,” Bertelsmann Stiftung Leadership Series

A key distinction in the definitions at left is that leadership
can be enacted by anyone; it is not tied to a position of
authority in the hierarchy. Heifetz, in fact, believes it is
far easier to exercise leadership from a position outside
of authority, without the constraints that authority brings.
More importantly, these definitions do not tie the act of
leadership to an individual. Leadership becomes free to
be distributed throughout networks of people and across
boundaries and geographies. Who is the leader becomes
less important than what is needed in the system and how
we can produce it.

If leadership is thought of as a shared process, rather than
an individual skill set, senior executives must consider the
best way to help leadership flourish in their organizations.
Leadership spread throughout a network of people is more
likely to flourish when certain “conditions” support it,
including:

• open flows of information
• flexible hierarchies
• distributed resources
• distributed decision-making
• loosening of centralized controls

23 ©2014 Center for Creative Leadership. All rights reserved.

Organizations that choose to embrace these conditions
will align themselves with the wave of new technologies
that are changing the way we work and organize our
workplaces. Grady McGonagill and Tina Doerffer (2011)
suggest three stages of technological innovation that
have already occurred:

1. Web 1.0 (1991-2000) in which tools for faster,
cheaper, and more convenient forms of
communication (such as email) became available
and widely used

2. Web 2.0 (2001-2010) in which use of another set
of new tools for communication (such as wikis and
blogs) began enabling interaction and communication
in transformative ways

3. Web 3.0 (2011-present) in which powerful new
computing platforms (the Cloud), a second generation
of search tools, and meta-level methods for managing
knowledge (such as tags and folksonomies) are
beginning to realize the web’s potential to generate
more immediately and personally useful knowledge
from archived information

“Organizations and those who would exercise leadership have
no choice about whether to accept a new world that differs
fundamentally from the old. Welcomed or not, it is the inevitable
future and is becoming the present in many organizations at a
breathtaking pace. At the same time, there is a choice about
whether to deny and react to these cultural and economic shifts or
instead acknowledge and embrace them. And there is a choice as
well—for both organizations and individuals—about whether and to
what extent to cultivate the culture, mind-sets, skills, and knowledge
that make it possible to leverage the enormous potential of the
tools of the evolving web to better realize their purposes.”
Grady McGonagill and Tina Doerffer

“The Leadership Implications of the Evolving Web,”
Bertelsmann Stiftung Leadership Series23

While we are still in the early stages of thinking
about leadership development at a collective level, it
seems increasingly likely that future generations will
see leadership residing within networks as a natural
phenomenon. With the Internet and social networking
flattening hierarchies and decentralizing control,
leadership will be happening throughout the system,
so development methods will have to follow it there,
sooner rather than later.

©2014 Center for Creative Leadership. All rights reserved. 24

How Might Leadership Look
Different in a Network?

In order for organizations to become more effective at
using networks of leadership, interviewees suggested a
number of changes that would need to occur. First, at the
collective level, the goal for an organization would be to
create smart leadership networks, which can coalesce and
disband in response to various organizational challenges.
These networks might contain people from different
geographies, functions, and specializations, both within
and external to the organization. Just as brains become
“smarter” as the number of neural networks and
connections are increased, organizations that connect
more parts of their social system to each other and build
a culture of shared leadership will have greater
adaptability and collective capacity.

Second, organizations would use their leadership
development programs to help people understand
that leadership is not contained in job roles but in the
process that takes place across a network of people
to continuously clarify direction, establish alignment,
and garner commitment (DAC) of stakeholders. While
leadership may sometimes be enacted by an individual,
increasingly it will be a process that happens at the group
level, with various people’s contributions influencing
the DAC of the collective. As these changes happen, the
distinction between who is a leader and who is a
follower becomes less clear or relevant; everyone
will be both at different times.

Both the Center for Creative Leadership (CCL®) and
the Bertelsmann Foundation (a German research and
publishing foundation) are exploring new ways to think
about leadership development at the collective level.
Both advocate looking at different strata at which
leadership could take place. CCL outlines four levels,
which they call SOGI (Society, Organization, Group, and
Individual). At each of these levels they are innovating
different practices specifically designed to enhance this
strata’s level of development.24

“Some of the most important
innovations of coming decades
will not be new technologies, but
new ways of working together
that are made possible by these
new technologies.”
Thomas Malone
Patrick J. McGovern Professor
of Management, MIT Sloan
School of Management

Bertelsmann Stiftung (2010), in their comprehensive study
of leadership development best practices, suggested
that in the future, organizations could choose to invest
their leadership development efforts to improve
capacity at one of five different levels:

• individual capacity
• team capacity
• organizational capacity
• network capacity
• systems capacity
Depending on the area in which increased capacity is
desired, organizations will target different group sizes
and use different development practices (Appendix 4).
Not all types of organizations will need to adopt this new
paradigm of thinking. Traditional companies, in stable
environments requiring little creativity from staff, may
well be more effective if they stick to traditional,
individualistic command and control management styles.
However, organizations that expect to operate in VUCA
environments will quickly need to develop the types of
networks and cultures in which leadership flows through
the system. Complex environments will reward flexible
and responsive, collective leadership, and the time is fast
approaching for organizations to redress the imbalance
that has been created by focusing exclusively on the
individual leadership model.

25 ©2014 Center for Creative Leadership. All rights reserved.

Trend 4: A new era of innovation in
leadership development

If at least some of the changes mentioned in the
preceding sections do transpire, there are no existing
models or programs, which are capable of producing the
levels of leadership capacity needed. While it will be easy
for organizations to repeat the leadership practices that
they have traditionally used, this continuation makes
little sense if those methods were created to solve the
problems of 10 years ago. Instead, an era of innovation
will be required.

The creation of new development methods will be a
process of punctuated progress. Transformations are
most likely to begin with small pockets of innovators
within organizations, who sense that change is either
needed or inevitable. These innovators will need to be
prepared to experiment and fail in order to gain more
feedback from which to build their next iterations. L&D
innovators will need to look to find partners within and
outside of their organizations who they can join with to
create prototypes that push the boundaries of the
existing practices.

These types of innovative prototypes are already under
way. At CCL, Chuck Palus and John McGuire are partnering
with senior leadership teams to build “leadership cultures”
rather than individual leader programs. Leadership
teams engage in practices to elevate their own levels of
development, thus creating “headroom” for the rest of the
culture. Meanwhile, David Altman and Lyndon Rego are
spreading leadership capacity throughout the system by
taking CCL knowledge to the “base of the pyramid” and
delivering programs on the sidewalks and in villages in
Africa, Asia, and India.

Robert Kegan and Lisa Lahey are sharing their
Immunity to Change process with universities,
businesses, and school staff around the world.
Rather than try to do it all themselves, they are
equipping consultants, HR practitioners, and students
to take their work out into their communities. Lisa
Lahey comments, “We don’t expect to do it all, we
are just two people.”

DUSUP, a Middle East oil producer, has changed
its leadership programs from “content events” to
“development processes” in which managers take
ownership of their own development. All senior

“First the industry needs to
embrace the challenge of finding
a new approach to leadership
development and we haven’t
done that yet. We are going to
need to allow ourselves to come
to a whole new paradigm about
how to do this. We need to let
go of the old mental models
and find the people out there
on the fringe.”
Lucy Dinwiddie
Global Learning & Executive Development
Leader, General Electric

managers engaged in a six-month process in which
they learned the principles of development, then put
those principles into practice on themselves. Only after
they have had experience developing themselves with
the new tools do they start coaching their team
members to also apply them.

©2014 Center for Creative Leadership. All rights reserved. 26

In the future, innovative leadership development
networks will need to increase the number of
perspectives that they bring together, by crossing
outside of the boundaries of the leadership development
community and engaging other stakeholders to help come
up with transformative innovations. Conferences that
bring leadership development people together
may in time give way to virtual networks facilitated by
Organizational Development practitioners, which connect
diverse groups of people who all have a stake in the
process: executives, supervisors, customers, suppliers, as
well as leadership development specialists.

This would require a different skill set for many
learning and development specialists who must
transfer from creating the programs for the executives
to becoming the social facilitators of a construction
process that involves all of the stakeholders in the
system. Given this, the greatest challenge for the L&D
community may be the ability to manage the network
of social connections, so that the maximum number of
perspectives can be brought together and integrated.
The great breakthrough for the transformation of
leadership development may turn out not to be the
practices that are created but the social networking
process that is developed to continuously present new
practices to be distributed throughout the network.

All of these are early attempts
to address the principles suggested
in this paper:

• Build more collective, rather than individual,
leadership in the network.

• Focus on vertical development, not
just horizontal.

• Transfer greater ownership of development back
to the people.

These examples are not “answers” to the
development challenge but examples of innovations.
Even greater innovative breakthroughs in the future
may come from networks of people who can bring
together and recombine different ideas and concepts
from diverse domains. While leadership development
communities currently exist with this aim, many limit
their capacity for innovation by being excessively
homogenous, with most members exclusively
HR-related and of a similar generation and cultural
background. This limits the effectiveness of these
collectives, both in terms of the similarity of the
ideas they bring as well the implementation of those
ideas, which may fail to take into account the different
values and priorities of stakeholders who will have
to engage in any new practices.

27 ©2014 Center for Creative Leadership. All rights reserved.

Final Thoughts

Yesterday, I had lunch with a pair of New Zealand friends who are recent graduates from two prestigious Boston
universities. While discussing how to start a new business, my first friend said that at his school, professors now tell
them not to bother writing business plans, as you will never foresee all the important things which will happen once
you begin. Instead they are taught to adopt the “drunken man stumble,” in which you keep staggering forward in the
general direction of your vision, without feeling the need to go anywhere in a straight line. “That’s interesting,” said
my second friend. “At our school they call it the ‘heat-seeking missile’ approach. First you launch in the direction of
some potential targets, then you flail around until you lock onto a good one and try to hit it.”

At the start of this project I hoped that I would find some clear answers to what the future of leadership would
look like, but after dozens of interviews, months of reading, and weeks of consolidation, I am humbled to say
that what I now have is an educated “guess.” Will organizations really start to focus more of their efforts on
vertical development? Will they actually educate and then transfer greater ownership back to the individuals?
Will leadership really come to be seen as more of a collective process than an individual person? I am certain
it should, but can I say it will?

However, there is one thing that I have become certain of and that is that the methods that have been used in the
past to develop leaders really, truly, categorically will not be enough for the complexity of challenges which are on
their way for organizations (and broader society). Human resource people, O.D. theorists, consultants, and training
companies don’t have great influence over too many things that happen within organizations, but one area that
they do have a strong influence over is how leadership is understood and how leadership capacity is developed.
It seems to me that the art of practicing this area well is going to get much harder, as it, at the same time,
becomes much more important.

For any of us who might feel disheartened by the size of our challenges, we can take heart from the fact that, like
most future leadership challenges, we don’t have the solutions because there are no solutions (yet). The answers will
not be found in a report (even a good one) but discovered along the way on the messy path of innovation. And while
I like the thought that we will make our breakthroughs through the exciting metaphor of the heat-seeking missile, I
fear that it will be the “drunken man stumble” for us all. And though not elegant, it’s at least comforting to know that
the most important skill needed is the will to take another step forward. I offer this report as the first of many steps.

Nick Petrie
Cambridge, Massachusetts, August 2011

“In ice hockey they teach you to skate not to where the puck is,
but to where it is going next.”
Ashish Nanda
Robert Braucher Professor of
Practice, Harvard Law School

©2014 Center for Creative Leadership. All rights reserved. 28

Bibliography

EDA Pearson. (2009). Trends in executive development. Retrieved from
http://www.executivedevelopment.com/Portals/0/docs/EDA_Trends_09_Survey%20Summary

Goffee, R. (2006, March). Why should anyone be led by you?: What it takes to be an authentic leader.
Cambridge, MA: Harvard Business School Press.

Goldsmith, M., & Reiter M. (2007). What got you here won’t get you there: How successful people become even more successful.
New York: Hyperion.

Hackman, J.R. (2002). Leading teams: Setting the stage for great performances. Cambridge, MA: Harvard Business Press.

Heifetz, R. A. (1994). Leadership without easy answers. Cambridge, MA: Harvard University Press.

IBM. (2010, May). Capitalizing on complexity: Insights from the Global Chief Executive Officer Study. Retrieved from
http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03297usen/GBE03297USEN.PDF

Kegan, R., & Lahey, L. (2009). Immunity to change: How to overcome it and unlock potential in yourself and your organization.
Boston: Harvard Business School Press.

Kerr, S. (2004). Executive ask: How can organizations best prepare people to lead and manage others?
Academy of Management Executive, 18(3).

Kenney, M. (2007). From Pablo to Osama: Trafficking and terrorist networks, government bureaucracies, and competitive adaptation.
University Park: Pennsylvania State University Press.

McCauley, C., & Van Velsor, E. (2004). The Center for Creative Leadership handbook of leadership development.
San Francisco, CA: Jossey-Bass.

McGonagill, G., & Doerffer, T. (2011, January 10). The leadership implications of the evolving web. Retrieved from
http://www.bertelsmann-stiftung.de/cps/rde/xchg/SID-6822B895FCFC3827/bst_engl/hs.xsl/100672_101629.htm

McGuire, C., & Rhodes, G. (2009). Transforming your leadership culture. San Francisco: Jossey-Bass.

McIlvaine, A. (2010). The leadership factor. Retrieved from http://www.hreonline.com/HRE/story.jsp?storyId=330860027

Uhl-Bien, M., & Russ, M. (2009). Complexity leadership in bureaucratic forms of organizing: A meso model.
The Leadership Quarterly, 20(4), 631-650.

References

1 See IBM, Capitalizing on Complexity: Insights from the Global Chief Executive Officer Study. Retrieved from
http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03297usen/GBE03297USEN.PDF

2 Perrow, C. (1986). Snowden & Boone, 2007.

3 See EDA Pearson, Trends in Executive Development. Retrieved from
http://www.executivedevelopment.com/Portals/0/docs/EDA_Trends_09_Survey%20Summary

4 See A. McIlvaine, The Leadership Factor. Retrieved from http://www.hreonline.com/HRE/story.jsp?storyId=330860027

5 Ibid.

6 See M. Goldsmith and M. Reiter, What Got You Here Won’t Get You There: How Successful People Become Even More Successful.
(Hyperion, 2007).

7 Interestingly, the strong attachment to the pimping technique by senior surgeons has led to the teaching
mantra, “pimp ‘em till they bleed.”

8 Kegan, personal communication, January 2010.

9 R. Kegan and L. Lahey, . (2009). Immunity to change: How to overcome it and unlock potential in yourself and your
organization. Boston: Harvard Business School Press.

10 Ibid., p. 23.

11 For a fuller explanation of Torbert & Harthill Associates’ Action Logics, see Appendix 3.

12 See Personal and Organizational Transformations: Through action inquiry with. Dalmar Fisher, David Rooke and Bill
Torbert. Edge\Work Press, Boston MA (2000 ISBN 0-9538184-0-3)

13 McGuire and Rhodes (2009) outline six steps they recommend to develop leadership cultures: The Inside-Out, Role
Shifting Experience Phase; The Readiness for Risk and Vulnerability Phase; The Headroom and Widening
Engagement Phase; The Innovation Phase; The Structure, Systems, and Business Processes Phase; and The
Leadership Transformation Phase.

14 To learn about methodologies for how individuals vertically develop, refer to Kegan and Lahey (2009).

15 Richard Hackman, personal communication, November 2010.

29 ©2014 Center for Creative Leadership. All rights reserved.

©2014 Center for Creative Leadership. All rights reserved. 30

References

16 R. Goffee, Why Should Anyone Be Led by You?: What it takes to be an authentic leader (Harvard Business School Press,
March 2006).

17 For more on Kenney’s fascinating study on how drug cartels and terror groups became learning
organizations, see his book From Pablo to Osama: Trafficking and terrorist networks, government bureaucracies, and
competitive adaptation (Pennsylvania State University Press, 2007).

18 Executive Ask: How can organizations best prepare people to lead and manage others? (Academy of
Management Executive 18(3), 2004)

19 To learn more, refer to this article by Chelsea Pollen from Google, who outlines the ways in which online social tools
can be used for development: http://www.elearnmag.org/subpage.cfm?section=reviews&article=19-1

20 Hackman, personal communication, October 2010.

21 This poses an interesting question of whether we are likely to see greater divergence of development in organizations
We have seen this happening with pay rates over the last 50 years, with those at the top becoming far better
paid than those at the middle and bottom. It is interesting to consider if we could see something similar happen
with developmental levels and what that would mean.

22 Hackman’s five conditions are: a real team, compelling direction, enabling structure, supportive
context, expert coaching. For more, see J. R. Hackman, Leading Teams: Setting the stage for great performances.
(Harvard Business Press 2002).

23 G. McGonagill and T. Doerffer, The Leadership Implications of the Evolving Web, ( January 10, 2011).
Retrieved from http://www.bertelsmann-stiftung.de/cps/rde/xchg/SID-6822B895-FCFC3827/bst_engl/
hs.xsl/100672_101629.htm

24 See McGuire and Rhodes, Transforming Your Leadership Culture (San Francisco: Jossey-Bass, 2009).

Direct Report Feedback Summary

Appendix 1: Feedforward–Aggregated Feedback
Summary for a Group of Seven Managers

Some of the specific leadership skills that individuals committed to improve:

31 ©2014 Center for Creative Leadership. All rights reserved.

Mini-Survey Results

I will . . .
• Address issues/conflicts/problems both positively and developmentally
• Develop a (my group) strategy linked to the (company) business strategy
• Develop the best team
• Know what motivates my group to perform different tasks
• Delegate effectively to my new team
• Ensure that my conversations are not perceived as confrontational, and are more problem-solving
• Delegate more effectively
• More skillfully manage unanticipated challenges from internal business partners to improve
my communication to my stakeholders
• Do a better job of understanding what motivates people
• Know and communicate what my customers want

Has your manager become more (or less) effective
in the past few months on the following items?

-3 -2 -1 0 1 2 3 NCN NI

Personal Improvement Items:

Aggregate of Direct Report Feedback (# of
respondents)…………………………………………………………………

1 1 4 4 16 19 2 1

…………………………………………………………………………………..%
2.2 2.2 8.9 8.9 35.6 42.2

Has this manager become a more effective
leader in the past few months?………………………………………

1 1 4 1 4 12 1 1

…………………………………………………………………………………..% 4.3 4.3 17.4 4.3 17.4 52.2

Response and Follow-Up

Did this manager talk with you about his/her feedback and action plan
after the Leadership Workshop?

YES = 20
80%

NO = 5
20%

How much follow-up has this manager
done with you on his/her action item?

3 12% Did NOT Respond, No Follow-Up

4 16% Responded, but Did NOT Follow-Up

2 8% Responded, but a LITTLE Follow-Up

5 20% Responded, but Did SOME Follow-Up

5 20% Responded, but Did FREQUENT Follow-Up

6 24% Responded, but CONSISTENT/PERIODIC Follow-Up

Le
ss

E
ffe

ct
iv

e

N
o

Pe
rc

ep
tib

le

Ch
an

ge

M
or

e
Eff

ec
tiv

e
N
o
Ch
an

ge
N

ee
de

d
N

ot
E

no
ug

h

In
fo

rm
at

io
n

©2014 Center for Creative Leadership. All rights reserved. 32

Appendix 2: Example of Immunity to Change Map

Behavior Change Map

1
Behavior Goals
(Visible Goals)

2
Doing/Not Doing Instead
(Behaviors Which Work

Against the Goal)

3
Hidden Competing Goals

4
My Big Assumptions

I need to be more patient
with people

• Wait until they have
finished talking.

• Talk slower.
• Walk around the
office slower.

• Not pressure people
so much.

• Give other people a
chance to talk.

• Listen to people.

• I interrupt people when
they are talking.

• I make decisions
very quickly.

• I walk very fast around
the office.

• I talk very fast and
very loud.

• I sometimes forget to say
hello to people.

• I sometimes pay no
attention to people who
are talking.

Worries

• I will have to spend three to
four more hours every day. It
will mean long days.

• My family will be affected.
• My home life will affect my
work life.

• My attention will be diverted
to nonsense things and that
will delay important things.

I am committed to

• not wasting my time
on nonsense

• not damaging my
home life

• not seeing my
performance drop because
of people wasting my time

• not having my image and
career stalled because my
performance drops

• I need to be fast and
impatient all the time or
I will not get results.

• If I am not fast and impatient
all the time, my results will
decrease and my image will
be damaged.

33 ©2014 Center for Creative Leadership. All rights reserved.

Appendix 3: Torbert & Harthill Associates’ Action Logics

For more, see http://www.harthill.co.uk/leadership-development-framework/seven-action-logics.html

Action Logic Characteristics Leadership Strengths Weaknesses

Opportunist

Wins any way possible.
Self-oriented; manipulative;
“might makes right.”

Good in emergencies and in
sales opportunities.

Forcibly self-interested and
manipulative. Rejects feedback and
externalizes blame.

Diplomat

Avoids overt conflict.
Wants to belong; obeys group norms;
rarely rocks the boat.

Good as supportive glue within an office;
helps bring people together.

Avoids conflict, rigidly conforms and is
status-driven. Sees negative feedback
as punishment.

Expert

Rules by logic and expertise.
Seeks rational efficiency.

Good as an individual contributor. Critical and dogmatic. Chooses efficiency
over effectiveness. Resists “subjective”
feedback.

Achiever

Meets strategic goals. Effectively
achieves goals through teams; juggles
managerial duties and market demands.

Well suited to managerial roles; action
and goal oriented.

Can be over-driven to achieve
self-chosen “objective” standards.
Blind to complex subjectivity.

Individualist

Interweaves competing personal and
company action logics. Creates unique
structures to resolve gaps between strat-
egy and performance.

Effective in venture and consulting roles. Can be a maverick, an outsider or rebel.
Their independence can work against
collaboration.

Strategist

Generates organizational and personal
transformations. Exercises the power
of mutual inquiry, vigilance, and
vulnerability for both the short and
long term.

Effective as a transformational
leader within large contexts such
as organizations.

Tempted by the dark side of power. May
not employ their skills in a given context.

Alchemist

Generates social transformations.
Integrates material, spiritual, and
societal transformation.

Good at leading society-wide
transformations.

Personal suffering may obstruct the use
of their skills.

©2014 Center for Creative Leadership. All rights reserved. 34

Level of System
Targeted

Individual Capacity Team Capacity
Organizational

Capacity
Network Capacity Systems Capacity

Individuals

1. Develop capacity
of individuals for
self-awareness,
ongoing learning, and
exercising initiative

2. Develop capacity
of individuals to work
together in groups and
lead teams

3. Develop capacity
of individuals to
understand and lead
organizations

4. Develop capacity of
individuals to cultivate
and leverage peer
relationships

5. Develop capacity of
individuals to see the
big picture, understand
root causes, and
influence systems

Teams

6. Develop capacity of
teams to develop and
elicit the full potential
of all team members

7. Develop capacity of
teams to define and
attain purposes

8. Develop capacity
of teams to enhance
organizational
performance

9. Develop capacity
of teams to align their
goals and activities
across boundaries

10. Develop capacity
of teams to prototype
systems change

Organizations

11. Develop capacity
of organizations to
support staff, volunteer,
and board member
development

12. Develop capacity
of organizations to
support effective
teamwork

13. Develop capacity of
organizations to foster
internal collaboration
to effectively adapt to
challenges

14. Develop capacity
of organizations to
collaborate with one
another

15. Develop capacity
of organizational
coalitions to lead
systemic change

Communities

16. Develop capacity
of communities to
support reflective
learning and
engagement of
community members

17. Develop capacity of
communities to foster
and support inclusive
group initiatives

18. Develop capacity of
communities to sustain
organizations that
promote community
well-being

19. Develop capacity of
communities to learn
together and align
efforts toward common
goals

20. Develop capacity
of communities to
advocate systems
change

Fields of Policy and
Practice

21. Develop capacity
of fields to cultivate
innovative thought
leaders and
practitioners

22. Develop capacity
of fields to organize
around shared interests
and goals

23. Develop capacity of
fields to organize and
disseminate knowledge
and field best practices

24. Develop capacity of
fields to find synergies
across institutional
silos and disciplinary
boundaries

25. Develop capacity of
fields to generate policy
solutions and transform
institutional practices
and culture

Appendix 4: Bertelsmann Stiftung Leadership Development

Leadership Development Investment Matrix

Goal of Development Effort

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Strategies for Leadership Styles for Multi-Generational Workforce

Ahmed Al-Asfour
Oglala Lakota College

Larry Lettau

National American University

The workforce in the United States has been divided into four distinct groups, which are identified as
generations. Each generation has developed a set of values and attitudes that are different from one
another. Leaders in various organizational settings should understand these generational differences in
order to be more effective in leading a multigenerational labor force. In this study, the authors reviewed
literature related to this topic and examined each generation’s characteristics, lifestyles, values, and
attitudes. The conclusion from this study is that generational differences are legitimate diversity issues
that organizations need to recognize and understand.

INTRODUCTION

The workforce in the United States (U.S.) is more diverse than ever. Generational diversity in the

workplace has prompted professionals and scholars to debate how to lead organizations whose employees
have vastly different generational experiences. Each of these generations is a cohort with similar values,
attitudes, and beliefs, which can affect the way in which organizational leaders lead their employees.
There is no question that there are real differences, misunderstandings, and other unfortunate tensions
between and among employees that have been raised in different eras (DiRomualdo, 2006). As more
generations join the workforce, it will continue to be a necessity for leaders to understand how to
effectively lead these different generations (Yu, 2005). There is a need, therefore, for research in this area
to examine each generation, and for leaders to leverage research findings and apply them in their
organizations.

The literature available in the area of generational diversity in the workplace is minimal. However,
there has been an increase in research to better understand intergenerational diversity in the workplace
(Legas & Sims, 2011). It is the objective of this paper to explore the management dilemma that exists in
the workplace and to enrich the literature in the area of leadership and multi-generational workforce
interactions. Furthermore, the researchers of this paper aim to describe various leadership styles
appropriate to each generation’s characteristics and behavior, which leaders can utilize in their
organizations. The literature review presented in this study was designed to illustrate the need for more
research in the area of generational diversity and the importance for leaders to recognize the diversity of
different cohorts in order to address this growing phenomenon in the workplace.

58 Journal of Leadership, Accountability and Ethics vol. 11(2) 2014

THE U.S. GENERATIONS

For the first time, the U.S. has four generations of people working alongside one another (Haynes,

2011). Researchers such as (Arsenault, 2004; Crampton & Hodge, 2009; & Haynes, 2011) have indicated
that, due to changing demographics in the U.S., there are four generations in the workplace. Further, it has
been the general agreement among many experts that the U.S. workplace is changing and becoming
divided into cohorts (Crampton & Hodge, 2007). Each generational cohort shares a common social,
political, historical, and economic environment that distinguishes them from one another (Williams &
Page, 2011).

Before discussing the four generations in the workforce, it is important to note that there is some
disagreement among researchers surrounding the birth dates for each generation (Kapoor & Solomon,
2011). This article uses the four different generations identified by Zemke, Raines, and Filipczak (2000),
which are: Veterans (1922-1943), Baby Boomers (1944-1960), Generation X (1961-1980), and
Generation Y (1981-2001). There are different names that refer to each generation. For example, Veterans
are also referred to as Silent, Traditionalists, Roaring Twenties, Depression babies, and World War II
generation. Baby Boomers are also referred to simply as Boomers. Generation X is also referred to as the
Baby Bust generation. Finally, Generation Y is also referred to as the Millennial, Baby Boom Echo, and
the Nexters (Dwyer, 2009; Hammill, 2005). These four generations could have different expectations and
requirements due to their age differences (Hammill, 2005). Hence, it is important to study them closely.
Importantly, a lack of understanding of these generations has prevented organizations from capitalizing
on the strengths of their employees (Arsenault, 2004). Table I shows each generation’s birth years, core
values, and defining moments.

TABLE 1
THE U.S. WORKFORCE GENERATIONS

Generations Birth years Core values Defining moments

Veterans 1922-1943 Dedication, hard work The Great Depression,

respect for authority the Second World War;

Lindbergh, FDR

Baby Boomer 1944-1960 Optimism, personal JFK, civil rights and

gratification and growth women’s movements

Generation X 1961-1980 Diversity, techno-literacy Oil embargo, embassy hostages,

fun, informality AIDS

Generation Y 1981-2000 Optimism, civic duty, Terrorism, Oklahoma City

confidence, achievement bombing

Source: Zemke, Raines, and Filipczak (2000)

Journal of Leadership, Accountability and Ethics vol. 11(2) 2014 59

LEADERSHIP & GENERATIONAL DIFFERENCES

Generational differences in organizations inhibit the transfer of crucial information from managers in
leadership positions to entry-level employees. This can be attributed to differences in the values, attitudes,
and beliefs of each generation. How leaders view generational differences, and how each generation
views their leaders can also cause problems in the workplace (Zemke et al., 2000). This manifests itself
into a need for different leadership styles. Zemke et al. went further by indicating that different leadership
styles are needed in order to lead in an atmosphere of generational diversity. In table II, their proposed
style for each generation is explained. Furthermore, Davenport and Prusak (2000) suggested that there is
no uniform style of leadership. In effect, successful leaders will need to adapt their leadership styles to
meet their subordinates’ needs.

Meredith, Schewe, and Hiam (2002) stated that these differences, referring to values, attitudes, and
beliefs, require leadership styles that are flexible and able to adapt to all of the generational differences.
The applied leadership style should include a structure for “veterans that emphasizes delegation, an
individualist approach that values self-expression for Baby Boomers, an excitement style that makes Xers
feel like change agents, and a team objective that is relevant to Nexters’ values of accomplishing greater
societal and corporate goals” (Arsenault, 2004, p.129). A short and summarized explanation of the
preferred leadership style of each generation is discussed in table II and subsequently further discussions
followed for leadership for each generation.

TABLE 2
LEADERSHIP & GENERATIONAL DIFFERENCES

Generation Preferred leadership style

Veterans Tend toward a directive style that is simple and clear. Rationale for this style is
that the Veterans were men who were loyal to the organization. Within each
organization there was a clear well-defined hierarchy with very formal, military-
like relationships. Authority was highly respected.

Baby Boomers Prefer a collegial and consensual style. Passionate and concerned about
participation and spirit in the workplace. They espouse lots of communication,
sharing of responsibility, and respect for each other’s autonomy. Baby Boomers
despise the traditional hierarchy and make every effort to turn the hierarchy
upside-down.

Generation X Tend to be fair, competent and straightforward. Do not respect authority as did
past generations, as they prefer egalitarian relationships. Like to be challenged
and thrive on change. Brutal honesty is a trademark of this generation.

Generation Y Prefer a polite relationship with authority. Like leaders who pull people together.
Believe in a collective action and a will to get things changed.
Source: Zemke et al. (2000)

Leadership of the Veterans’ Generation

People in the Veterans’ Generation (a.k.a. G.I. Generation, The Great Depression and WWII
Generation, Senior and/or Traditionalists) were born between 1922 and 1943 and are between the ages of
71 and 92 as of 2014. Most were children during the Depression era and experienced traumatic times,
economic strife, and high unemployment rates. As young adults during WWII, their lives began with high
expectations, which were eventually shattered by the war. This generation has witnessed radical social,
economical, and technological changes, including threats by the Germans and the Japanese. In terms of
their characteristics, lifestyles, and attitudes, members of the Veterans’ Generation are considered to be

60 Journal of Leadership, Accountability and Ethics vol. 11(2) 2014

conservative and less materialistic as they become older (Fishman, 2004; Williams & Page, 2011). This
generation has intense loyalty to their employers, provides consistent performance, has strong work ethic
values, and strives for the betterment of their organizations before worrying about their own successes or
failures (Macon & Artley, 2009).

To lead this generation, leaders should be clear through command-and-control management and use
formal communication means such as memos (Hammill, 2005).The Veterans’ Generation prefers leaders
who provide feedback on a “need-to-know basis” (Crampton & Hodge, 2007, p.17). Trust and respect for
authority are key components between leaders and this generation. Salahuddin (2010) described the
leadership style for this generation as direct command-and-control. Salahuddin also indicated that
“Veterans do not think there should be equality among the members of a team” (p.3). This generation
likes to take charge, delegate, and have a stake in the decision making process. DiCecco (2006) stated that
the ideal leadership style for this cohort is directive, logical, and consistently fair to all team members.

Using agents of change is an imperative part of the leadership strategy for the Veterans to be included
and transformed in the future work environment. One of the keys to the integration of change into
corporate culture is through discovering how to communicate with the different generations as a tool to
defuse and resolve major confrontations and misunderstandings in the workplace (Hammill, 2005).
Another salient point expressed in the literature employs communication through mentorship. The
Veterans as well as the Baby Boomers make great mentors for Generations X and Y (Gursoy, Maier, &
Chi, 2008; Kapoor, & Solomon, 2011; Mikitka, 2009). A good mentorship program uses older Veterans
and Baby Boomers to “show the ropes” to, and improve the best practices of, Generations X and Y. At the
same time, communication flows back to the Veterans and Baby Boomers from Generations X and Y in
the form of computer technical support and tips for social media engagement. The aforementioned
arrangement inside the work environment is known as “appreciative inquiry” (Gursoy et al., 2008; Mann,
2006).

Even though this workforce generation is above 70 years of age, a significant number of these
individuals remain employed. Empirical evidence from (Smyer & Pitt-Catsouphes, 2007; Templer,
Armstrong-Stassen, & Cattaneo, 2010) concludes that three categories of Veterans remain at work: (a)
those who have a financial need to work, (b) those who really enjoy work, and (c) those who fit both the
aforementioned categories. The area of reward management needs to be revamped in order to retain and
attract older workers. Typical compensation systems follow the conventional wisdom form that some
financial incentive will motivate all employees (Al-Asfour, 2012; Templer et al., 2010). On the other
hand, the older Veterans simply enjoy teamwork as an avenue to seek a short-term increase in selected
social relationships triggered by the Socio-Emotional Selectivity (SOC) theory (Kooij, Jansen, Dikkers, &
De Lange, 2010). Stated another way, older workers tend to hold a firm association with short-term social
rewards over long-term rewards, particularly given their perception that the long-term is less important as
a satisfaction goal.

The Society for Human Resource Management (SHRM), (2004) recommended two important
leadership strategies that do work for this generation:

• Gain their confidence by demonstrating compassion and understanding; and
• Create positive working relationships by gaining trust and respecting their experience without

being intimidated by it.

Even though the Veterans’ generation numbers are decreasing in the workforce due to retirement,

many companies such as Sam’s Club and Wal-Mart continue to hire them for part-time jobs. This is
apparent when visiting any outlet of these two companies. Employees of this era strive to do what is best
for their organizations and leaders take these values as an opportunity to continue leveraging this
generation (Macon & Artley, 2009). The literature, although somewhat sparse, does reflect the crossover
effect from the one cohort to the next through the appreciation of a lifelong love for movies, music, and
various life-changing events recorded in the annals of history (Gibson, Greenwood, and Murphy Jr, 2011;
Murphy Jr, Gibson, Greenwood, 2010).

Journal of Leadership, Accountability and Ethics vol. 11(2) 2014 61

Leadership of the Baby Boomers’ Generation
The Baby Boomers (a.k.a. Boomers, Me Generation, Baboo, Love Generation, Woodstock

Generation, and Sandwich Generation) were born between 1944 and 1960 and are between the ages of 54
and 70 as of 2014. This generation was born during a time of dramatically increased birth rates between
the end of WWII and 1960. They value individualization, self-expression, and optimism. In terms of their
values, attitudes, lifestyles, and characteristics, the majority of the Baby Boomer generation has shown
that they are workaholics and driven by their career goals (Williams & Page, 2011). Williams and Page
described this generation as self-centered, suspicious of authority, family-oriented, and view health and
wellness as very important.

Leadership of the Baby Boomer cohort does, in many ways, parallel that of the Veterans. However,
Arsenault (2004) found through an extensive qualitative study that Baby Boomers manifest a unique
persona. This persona is the foundation for a propensity for Baby Boomers to be attracted to leadership
with caring, competent, and honest characteristics. The Baby Boomers held a strong admiration for, and
attachment to, leaders of their generation such as Martin Luther King and Gandhi (Arsenhault, 2004). The
same persona leads them to display ire when leadership engages in immoral or less than honest activities
such as the Clinton Whitehouse scandal (Arsenhault, 2004). The disappointment of Baby Boomers over
headlines of leadership wrongdoings is supported in another qualitative study by Gibson, Greenwood, and
Murphy Jr (2011). These findings show that Baby Boomers share instrumental values of honesty and
responsibility with Generation X and Generation Y but on terminal values by generation, self-respect
ranked number three among the Baby Boomer cohort (Gibson et al, 2011). Kapoor and Solomon (2011)
indicated that the Baby Boomers are “attached to an environment that values and respects their life
experiences and capabilities” (p.314).

Challenges for leadership of the Baby Boomers generation stem from the fast pace of changes in
technology. Given that the Baby Boomers did not grow up with computers at an early age, they tend to
resist new computing skills and operations. Often they seek very detailed and specific instructions for the
completion of a task (Gursoy et al., 2008). This bridge and workplace solution is achievable through
younger generations sharing technology expertise with the Baby Boomers (Stround, 2010). Mentoring is a
good tool to be used to lead this generation. In general, mentoring opens opportunities for the older
generations to impart years of knowledge to the younger generations, while the younger generations
mentor the older generations with regard to technology. Mentoring, coupled with job shadowing, creates a
bridge to gap the generational differences through communication that strengthens all generations
(Simoneaux & Stroud, 2010). The delivery of the two-way mentoring and sharing of information must
accommodate the Boomers who do not like to work independently. They expect to have meetings at any
time and any place. This differentiates the Baby Boomers from other generations such as Generation X
(Gursoy et al., 2008; Hammill, 2005; Mikitka, 2009; Simoneaux & Stroud, 2010).

The Baby Boomers’ generation also prefers to be treated equally, which requires a leadership style
that is collegial and consensual. Boomers believe in the participative style of leadership and involvement
in the decision making process. Because Veterans and Baby Boomers have a high respect for authority
within their organization, traditional hierarchy-based approaches to leadership should be used with this
generation (Crampton & Hodge, 2007). Even though this generation respects traditional hierarchy, it
makes every effort to turn the hierarchy upside-down and participate in organizational decision-making
(Zemke et al., 2000). However, when Baby Boomers achieve leadership positions, many of them do not
espouse a participative leadership style in regard to the other generations (Salahuddin, 2010).

SHRM (2004) recommended some examples of leadership strategies that have worked for this
generation which include:

• Support a work/life balance;
• Show appreciation for their energy and hard work;
• Approach them with respect for their achievements;
• Employ a leadership style that is collegial and consensual;
• Offer opportunities to serve as a coach as part of the change process;

62 Journal of Leadership, Accountability and Ethics vol. 11(2) 2014

• Challenge them to contribute, as part of a team to solve organizational problems; and
• Involve them in participating in the organization’s direction and implementation of change

initiatives.

Crampton and Hodge (2007) have also documented that Baby Boomers prefer a leadership style that

is collegial and consensual. Those that lead and work alongside them must respect their style. On the
other hand, Generation X tends to thrive in an environment of honest and direct work processes. In
addition, this generation wants to be rewarded for its dedication and likes to provide feedback to its
leaders through participation and reflection of different decision-making situations within their
organization. The United Nations Joint Staff Pension Fund (n.d.) identified that transformational
leadership is an ideal style for this generation. Leadership can develop tools that set the stage for
productive coexistence for both the Baby Boomer and the Generation X workers.

Leadership of Generation X

Generation Xers (a.k.a. Baby Bust, Why Me Generation, Slackers, and the Latchkey Generation)
were born between 1961 and 1980 and are between the ages of 34 and 53 as of 2014. The characteristics,
lifestyles, and attitudes of this generation include balancing family, life, and work. They are less
traditional than previous generations and tend to think more progressively (Williams & Page, 2011). With
Generation X, multiculturalism and thinking on a global scale have become the norm as they were raised
with more computers, experienced the rise of the Internet, and produced the 1990’s dot.com stars.
Generation X’s focus on family/life/work balance is a result of their latchkey existence growing up with
Baby Boomer parents. Given that Generation X grew up with computers in the home, technology is a
great training tool to empower them to realize a greater balance between family, lifestyle, and work
(Crampton & Hodge, 2007).

Many underlying differences in generations in the workplace originate from the generational view of
the most admired leaders for that particular cohort. The X Generation is no different in its view of
historical leaders, music preference, movies choice, and national/international events of the past seventy-
five years (Arsenault, 2004). Arsenault’s study included a list of the most admired historical leaders for
Generation X. Among them are Ronald Reagan, Nelson Mandela, and Bill Gates. Arsenault (2004) also
revealed that through generational ranking of admired leadership traits, Generation X ranked
determination in third place above the fifth place ranking by Veterans and Baby Boomers. Perhaps the
determination exemplified by Reagan during his sweeping changes to reduce taxes and reduce the size of
government, while working in an environment of a Democrat-controlled Senate and House, provided an
example of an egalitarian style that inspired Generation X to follow their core values and ambitions. A
highly admired leader, Bill Gates, changed the landscape of computer software and its association with
hardware throughout the computing world. The Generation X cohort tends to thrive in a work setting that
affords them the opportunity to promote socially-important interactions with supportive colleagues
(Benson & Brown, 2011; Wallace, 2006).

Generational leadership literature supports the concept that the workplace is constantly evolving and
changing. Leaders attempting to create an atmosphere of cohesive worker productivity, with regard to the
Generation Xers, may do well to promote a fun and informal workplace (Gibson et al., 2011; Patota,
Schwartz, & Schwartz, 2007). A shift in workplaces to become less hierarchical and less formal has
forced the relationships between employers and employees to become increasingly short-termed and
transactional. Currently, Generation X has been replacing the retiring Baby Boomers (Dwyer, 2009;
Tulgan, 2004). Individual careers have become much more fluid and self-directed. A new leadership
approach to Generation X needs to be progressively focused, employee-centered, and collaborative to fit
the needs of the generational gap (Dwyer, 2009).

Traditional approaches to leadership styles are not recommended for Generation X. Suggestions for
leading this generation includes: stressing that leaders want them to have a life, communicating upcoming
dramatic organizational changes, focusing on the importance of training and development, and

Journal of Leadership, Accountability and Ethics vol. 11(2) 2014 63

highlighting the importance of a learning inventory at the end of each day (Lewis, 2005). Leaders’ typical
comments about Generation X are as follows (American Institute of Architects, 2006):

• They ask why;
• They want things now;
• They are not committed;
• They do not respect authority;
• They are unwilling to “go the extra mile”; and
• They are far more interested in things other than their jobs.

American Institute of Architects (2006) suggested some strategies for leadership of Generation X,

these suggestions include:
• Diversity;
• Exploration;
• Experimentation;
• Team-based management;
• Team and individual credit;
• The idea is the power, not the person; and
• Showing a path of career opportunities.

SHRM (2004) also recommended some leadership strategies that do work for this generation, which

include:
• Tell them the truth;
• Offer mentoring programs;
• Clearly identify boundaries;
• Offer learning opportunities;
• Honor sense of work/life balance;
• Respect the experiences that have shaped their beliefs and thinking; and
• Clearly communicate that repetitive tasks and quality checks are part of the job.

Generation Xers prefer a leadership style that is fair, competent, and straightforward. The Xers

believe in bringing the “masses to the decision-making process” (Salahuddin, 2010, p.4). This generation
is more cynical about life when compared to the two previous generations. To lead this generation,
leaders must understand the characteristics and preferences of leadership styles and strategies discussed
herein. Because the Baby Boomers are retiring, Generation X is increasing its domination in the
workforce followed by Generation Y, which is also increasing its share in the labor market. If Generation
X is the “me generation”, Generation Y might be called the “why me” generation. These two generations
are the most technologically savvy generations in the workforce.

Leadership of Generation Y

People in Generation Y (a.k.a Gen Y, Millennials, Echo Boomers, Why Generation, Net Generation,
We Generation, Nexters, Ne(x)t Generation, Nexters, and iPod Generation) were born between 1981 and
2000 and are between the ages of 14 and 33 as of 2014. This generation grew up in a time of immense
and fast-paced changes. These changes offered full-time employment opportunities for both parents and
significant respect for ethnic and cultural diversity including social awareness, social justice, computers
and internet use, home, school, and work. The Generation Y is self-absorbed, self-reliant, and has a strong
sense of independence and autonomy (Williams & Page, 2011). Further, Generation Y individuals are
described as image-driven and they make personal statements of their own accomplishments, as they are
highly motivated towards their perceptions of success. Williams and Page (2011) described important key

64 Journal of Leadership, Accountability and Ethics vol. 11(2) 2014

values for this generation: choice, customization, scrutiny, integrity, collaboration, speed, entertainment,
and innovation.

Leadership for Generation Y is similar to that of Generation X. However, scholars in the field tend to
recommend an emphasis on continuous and instant feedback, as this generation expects instant and timely
feedback on work that they do. A polite relationship with authority should be encouraged by leaders to
use in leading this cohort. The U.S. Department of Commerce (2011) made the following
recommendations for leaders to lead this generation:

• Leaders to use e-mail as a primary communication tool;
• Ask them for their feedback and provide them with regular feedback;
• Use an information communication style that emphasizes the positive;
• Share information with them on a regular basis and keep them in the communication loops;

Additional strategies for leading Generation Y provided by (Allen, 2004; Verret, 2000) include:

• Make the workplace fun;
• Let them know that what they do matters;
• Praise them in public-make them a “star”;
• Be on the lookout for “rewarding opportunities”;
• Tell them the truth –don’t try to pull the wool over their eyes;
• Learn their “language” and communicate in terms that they understand;
• Be flexible, challenging, creative, and empowering in your management style; and
• Establish comfortable work environments, flexible work hours and project-centered work

rather than function-based responsibilities.

SHRM (2004) made additional recommendations:

• Offer mentoring programs;
• Provide structure and strong leadership;
• Be clear about expectations and long-term goals; and
• Take time to orient with respect to the organization’s culture.

SHRM (2004) also suggested additional recommendations for leading both Generations X and Y.

They recommended that leaders be honest with their employees, clearly identify boundaries, offer them
mentoring programs, communicate clearly, be clear about expectations, offer them learning opportunities,
and provide timely constructive feedback. While these recommendations should be used with all
generations, Allen (2004) suggested that they are highly encouraged with Generation Y as they admire
leaders with these characteristics and values. The next and final generation is Generation Z.

Leadership of Generation Z

People in the Generation Z (a.k.a Generation 9/11 and Generation XD) were born between 2001 and
the present time. This generation is the incoming generation to the workplace. Williams and Page (2011)
described the characteristics, lifestyles, and attitudes of this generation as “new conservatives embracing
traditional beliefs, valuing the family unit, self-controlled, and more responsible” (p.10). This generation
never lived without the Internet and is very tech savvy. Williams and Page (2011) indicated that
Generation Z believes that they can impact the world and they are a quite imaginative generation.
Because this generation has not entered the workplace yet, we cannot determine for certain the leadership
style that maybe appropriate for this generation. However, we can speculate that this generation will not
be too far from Generation Y. The United Nations Joint Staff Pension Fund (n.d.) classified Generations
Y and Z as similar in two areas: expectations of career planning and using a mix of different learning
styles. Hence, we can assume that the leadership style used for Generation Y will likely be acceptable and
effective with Generation Z.

Journal of Leadership, Accountability and Ethics vol. 11(2) 2014 65

SUMMARY

Each generation is shaped by its experiences, which brings a variety of strengths to the workforce.

Spiro (2006) stressed the importance of creating a work environment that meets the needs and
expectations of all employees, regardless of their generation. Issues relating to the economy, scientific
progress, technology, politics, social change, and other factors have an immense impact on each
generation in shaping its views and the characteristics of their working environment (Williams & Page,
2011). Because of these differences, leaders are encouraged to learn and understand these factors to better
lead each generational cohort.

Much of the reviewed literature in this study focused on the different generations in the workplace
and leadership styles. Each generation has its own unique values and views that are associated with the
era in which they were raised. These differences are apparent in the literature discussed in this article and
often lead to clashes between employees, managers, and leaders. What some leaders might view as
inappropriate, employees, depending on their generation, might view as appropriate. Therefore, leaders
need to understand the best way of leading people based on their generation and other diversity factors.

This article highlights the characteristics of each of the four generations currently in the workforce, as
well as a brief discussion of the generation newly entering the workforce, Generation Z. Moreover, the
primary focus of this paper is to describe and to recommend strategies that may be appropriate to use for
leadership with each generation. Being sensitive to the various generations will help leaders to become
more conscious of, and responsive to, their followers’ needs and behaviors.

RECOMMENDATIONS

Leading multi-generational organizations requires leaders to use different leadership styles. This may

lead to treating employees differently, which could cause legal ramifications for employers. Fortunately
though, Crampton and Hodge (2007) found that “there are a few problems associated with supervising
generational differences” (p. 21). The academic literature suggests that leaders need to “adjust” their style
of leading in order to become more effective leaders. Adjustments are recommended as long as it does not
lead to favoritism or discrimination of employees based on their generational cohort. Adjusting leadership
styles and strategies to lead each group requires the leaders to understand the four U.S. generations
currently in the workforce: Veterans, Baby Boomers, Generation X, and Generation Y. It should be noted
that a leadership style used with the Veterans’ generation could be applicable to the Baby Boomers
especially if they are born on the cusp of either generation (Arsenault, 2004). Aresenault referred to
individuals born on the edge of two generations as “tweeners” (p.125). This is because of the proximity to
the other generation.

Leaders should review their organizations’ overall policies and procedures and include any factors
that may affect employee performance. Asking employees from all generations to participate in this
process is crucially important, especially if an organization is experiencing some generational problems.
Because leaders tend to be older than their employees, leaders must understand that younger generations
want clear direction and constructive feedback on their performance on a constant pace. Crampton and
Hodge (2007) indicated that implications of multi-generational differences on general management
practices have not been fully understood. Hence, more research into leadership styles of different
generations is needed. Because Generation Z is beginning to enter the workforce, it also needs to be
examined by researchers and leaders in the field of social science. A part of leaders’ responsibilities is to
leverage employees to increase their productivity. Leveraging generational diversity and creating an
environment in which leaders form constructive employee interactions and using their differences to
strengthen organizational goals should be the ultimate objective.

It is also recommended that senior leaders develop new and innovative methods of training and
developing new leaders to lead multi-generational organizations. Encouraging employees to work with
one another by developing training teamwork models will help employees understand how to leverage
each other’s skills. This can be done by discussing with employees their generational differences and

66 Journal of Leadership, Accountability and Ethics vol. 11(2) 2014

looking for solutions to overcoming them during the training and seeking ways to increase collaboration
and communication. Developing training models can be a challenging task; however, the benefits of such
can overcome the cost. Organizations, in the end, have one ultimate goal: to maximize the creativity and
productivity of their employees in order to meet the needs of the organization for the benefit of
stakeholders and stockholders.

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ss Communication Quarterly XX(X)

Engaging Employees and Students in the Workplace and Classroom

Business Communication Quarterly

1Western Michigan University, USA

Corresponding Author:
Nancy M. Schullery, Department of Business Information Systems, Western Michigan University,
1903 W. Michigan Avenue, Kalamazoo, MI 49008, USA.
Email: nancy.schullery@wmich.edu

Workplace Engagement
and Generational
Differences in Values

Nancy M. Schullery1

Abstract

This article summarizes literature on workplace engagement, an issue that affects
organizations’ financial results and individuals’ personal lives. The newest of the four
generations in the workplace, Millennials, were recently shown to have different
values than the other two prevalent generations. Surveys taken by 16,000 high school
seniors of three generations on intrinsic, extrinsic, social, leisure, and altruistic values
at work show only the altruistic value is not statistically different. When aggregated,
these generational differences have noticeable practical impact. In the classroom,
engagement is essential to learning. Examples of engaging activities that address the
Millennials’ values are provided.

Keywords

business practices, corporate training, student expectations, learner-centered, pedagogy

This article provides a survey of the literature on workplace engagement, and explains
how the values of the newest generation in the workforce, the Millennials, differ from
previous generations. These value differences may diminish the effectiveness of
employers’ efforts to increase engagement, similar to the way differing values also
may reduce our own effectiveness in the classroom.

Information on engagement in the workplace is of interest to Business
Communication Quarterly readers for three reasons: First, we teach audience analysis,
for which an understanding of how these differing perspectives developed is helpful.
Second, as we increasingly teach online classes with diverse audiences, our own

Engaging Employees and Students in the Workplace and Classroom

Engaging Employees and Students in the Workplace and Classroom 253

classes may include multiple generations. Third, as we consult with organizations, we
may find that they are using the same erroneous strategies as those discussed here. An
exploration of employees’ underlying values can illuminate more effective approaches
toward engagement.

Other parallels exist. In the workplace, four generations may work side by side,
similar to the presence of multiple generations in our online classes. Classroom teach-
ers rise to similar challenges as do workplace practitioners, who are charged with
increasing employee engagement in ways that are perceived as fair and equally appeal-
ing to all employees, while meeting their diverse needs, interests, and values. Both
universities and organizations have invested substantial resources to recruit, retain,
and engage the Millennials, yet overall workplace engagement continues at dismal
levels. Many of the attempts to engage employees to be discussed here may have
fallen short due to unrecognized differences in generational values, which will be
explained. I will close with suggestions from the literature on how the Millennials’
distinct value preferences might be addressed in the classroom.

The four generations currently in the workplace include the Silent Generation, also
known as Traditionalists (1925-1945); Baby Boomers (1946-1964); Generation X or
GenX (1965-1981); and the Millennials (1982-1999). The latter are also known as Net
Gen, Gen Y, GenerationMe, Gen Net, and Digital Natives. A generation is typically
described as having been born within a specified range of birth years. Smith and
Clurman (1998) argued that those within a generation share “the life experiences of
their formative years” (p. 3). They include life experiences such as pop culture, eco-
nomic conditions, world events, natural disasters, and technology. However, consis-
tent birth years among researchers are generally agreed for only the first two
generations, Silents and Boomers. The first birth year for GenX, according to the great
majority of researchers cited in this article is either 1964 or 1965, with a generally
accepted end date for this generation of 1980 or 1981. Consistent birth years for both
GenX and the Millennials are likely to become firmer with time. Today, however, the
first year of Millennials’ birth varies from about 1977 to 1982, with the narrower range
of 1980-1981 used by most researchers shown here. Given the end date of 1981 for
the GenXers, I have adopted the birth year of 1982 for Millennials. Such slight varia-
tions are typically not an issue across the large samples discussed here because those
born in adjacent birth years are regarded as having been very close to the same shared
defining experiences (Parry & Urwin, 2010). Therefore, the data presented in this
article may be deemed comparable, as generational changes are generally understood
to describe gradual but steady changes over time “rather than sudden shifts at birth
year cutoffs” (Twenge, Campbell, Hoffman, & Lance, 2010, p. 1120).

The forces that influence and form these distinct generational cohorts are thought
to be strongest during childhood and early adolescence (Twenge et al., 2010). Boomers,
for example, are said to have been shaped by the advent of television. In 1950, only
12% of American households had televisions. Eight years later, 83% had at least one
(Tapscott, 2009). Traditionally structured families gathered around the television, as
the Silent Generation had gathered around the radio. Boomers saw as well as heard the

254 Business Communication Quarterly 76(2)

civil rights movement, the women’s movement, nightly protests against U.S. actions
in Vietnam, and the assassinations of John F. Kennedy; his brother, Robert Kennedy;
and the Rev. Martin Luther King Jr. (Tapscott, 2009).

GenX children were not as likely to gather with family around the television, as
families were increasingly likely to be composed of single parents facing workplace
demands, or dual-income earners who alternated child-care responsibilities. GenX-ers
were the first “latchkey” kids, who let themselves into the house after school and
watched television unsupervised until a caregiver (usually mom) came home. This
generation grew up with Sesame Street, learned about AIDS as it became an epidemic,
and watched the Berlin Wall fall (Twenge et al., 2010). Despite a marked decline in
the birth rate in the 1970s that resulted in a 15% decline in the number of GenXers
(Tapscott, 2009), they, unlike the Boomers, were confronted with high unemployment
and keen competition for jobs, as the Boomers had filled most positions. The eco-
nomic difficulties were compounded with the layoffs and corporate downsizings of the
recessionary early 1980s.

As the economy recovered, so did the birth rate, bringing a second boom with the
arrival of the Millennials. Televisions moved to the background, as computers now
made information available 24/7 for this generation. By 1994, 35% of schools pro-
vided access to the Internet in school (Tapscott, 2009). In 2003, Oblinger reported
survey results showing that 94% of 12- to 17-year-olds used the Internet for research
on school assignments, and 78% thought the Internet useful for school work. Computers
informed people of the Exxon Valdez oil spill, the Gulf War, and the scandal-ridden
downfall of major corporations (Tapscott, 2009; Twenge et al., 2010). Such national
events as Columbine in 1999 and several child kidnappings led to a cultural shift from
a lack of supervision to the opposite extreme, where parents became overly involved
in their children’s lives (Tulgan, 2009). Parents attempted to protect their children
from not only life-threatening events but also ego-damaging occurrences, such as fail-
ing grades. Children’s self-esteem was continually nurtured with praise (Tapscott,
2009). Rather than exploring the out-of-doors, protected children played indoors on
video games, an interactive experience in which they experientially learned what
actions were successful to increase their scores or vanquish an opponent, lessons that
were immediately reinforced. Recent research has led to the hypothesis that children’s
brains stimulated by digital technology may differ in both physical structure and func-
tion, especially if the stimulation occurs during critical periods of brain development
such as early childhood and adolescence (Tapscott, 2009). Specific examples of differ-
ences include the ability to process fast-moving images more quickly and the ability to
“access, sort, categorize, and remember” information well (Tapscott, 2009, p. 30).

A few authors have taken issue with the concept of a generation and inherent dif-
ferences (Parry & Urwin, 2010; Trzesniewski & Donnellan, 2010). However, the con-
cept has been generally well received in the popular literature and accepted among
employers (Alsop, 2008; Gilbert, 2011; Howe & Strauss, 2000; Sahoo & Sahu, 2009;
Tapscott, 2009; Tulgan, 2009). An understanding of generations is now broadly
accepted as a resource for the classroom (Hartman & McCambridge, 2011; Kassing,

Engaging Employees and Students in the Workplace and Classroom 255

Piemonte, Goman, & Mitchell, 2012; Taylor, 2010). The final frontier, academic the-
ory, appears also to be accepting generational differences as the evidence continues to
grow (Fairlie, 2011; Shuck, 2011; Twenge et al., 2010).

Engagement Definitions and Benefits
A key fact emerging from the breadth of literature on workplace engagement is that
researchers have developed numerous definitions. This article will emphasize defini-
tions from the academic literature, as practitioner definitions vary by organization
(BlessingWhite, Inc., 2011). Typically, employer definitions include components of
commitment, work ethic, loyalty, and satisfaction; the result is often a confounding of
variables (Shuck, 2011). An example is consultant researchers BlessingWhite, Inc.’ s
(2011) own assertion that employees “need to find purpose and satisfaction” in work
(p. 5). Thus, the firm’s model of engagement includes both the employee’s contribu-
tion to the company and the personal satisfaction the individual derives; the firm
insists that the two should be in “alignment” (p. 5). Academic definitions tend to parse
the components and proceed in multiple directions. The exact definition will be
quoted to avoid any misinterpretations due to semantics.

The seminal academic definition developed by Kahn (1990) identifies engagement
as “the harnessing” of the self to one’s role at work. The self is expressed “physically,
cognitively, and emotionally . . .” (Kahn, 1990, p. 694). Later authors described work
engagement as exceeding both basic motivation and work ethic. Instead, Schaufeli,
Martinez, Marques Pinto, Salanova, and Bakker (2002) termed it a “positive, fulfill-
ing, and work-related state of mind . . .” (p. 465). The state of mind terminology sug-
gests that engagement is the outcome of many variables over a period of time. Macey,
Schneider, Barbera, and Young’s (2009) definition is consistent in that engaged
employees choose to work harder. Their engaged employees “are [those who are]
more likely to [italics added] work harder through increased levels of discretionary
effort” (as cited in Bakker, 2011, p. 265).

Shuck (2011) provides an in-depth academic literature review, in which he catego-
rizes the breadth of definitions according to four perspectives. Shuck contrasts Kahn’s
(1990) need-satisfying framework; Maslach, Shaufeli, and Leiter’s (2001) antithesis
of burnout; Harter, Schmidt, and Hayes’s (2010) satisfaction-engagement notion; and
Saks’s (2006) multidimensional approach. Bakker (2011), who espouses the antithesis
of burnout approach, claims that “arguably the most often used definition of work
engagement” (p. 265) is that of Schaufeli and Bakker (2004), who find engagement to
be “a positive, fulfilling, work-related state of mind that is characterized by vigor,
dedication, and absorption” (p. 295). In this definition, vigor requires both high energy
and “mental resilience” at work (Bakker, 2011, p. 265). Such mental resilience might
also be termed “persistence when facing difficulties” (Kassing et al., 2012, p. 241).
Many of us can relate to the need for persistence. Dedication requires not only the
strong involvement we would expect but also reward for the employee who experi-
ences “a sense of significance, enthusiasm, and challenge” (Bakker, 2011, p. 265).

256 Business Communication Quarterly 76(2)

Finally, absorption is reserved for those who are “happily engrossed” in their work
(Bakker, 2011, p. 265). Although we can see a common thread here, consensus on the
specifics of a satisfactory definition has eluded both academics and practitioners.

Practitioners’ definitions also vary by organization (BlessingWhite, Inc., 2011);
however, employers commonly strive to increase their employees’ engagement,
which is reputed to have multiple, far-reaching benefits (Kumar & Sia, 2012; Sahoo
& Sahu, 2009). Quantifiable benefits include increased net revenue (22%), improved
earnings before taxes (43%), reduced team member turnover (19%), and lower work-
ers’ compensation claims (27%; Williams, 2010). Hewitt Associates found “high-
engagement firms” reported a 19% higher total shareholder return than average in
2009 (as cited by BlessingWhite, Inc., 2011, p. 7). In addition, high engagement has
been linked with improved employee retention, product quality, and improved cus-
tomer service, resulting in increased customer satisfaction and loyalty. The benefits
have further payoff with increased employee loyalty and advocacy on the firm’s
behalf (Kumar & Sia, 2012).

Employers’ Attempts to Increase Engagement
For employers to achieve the benefits of employee engagement, it is necessary to have
an understanding of the “drivers” that increase engagement, and the opposing
“threats” or perceived reductions in the driver that would diminish engagement (as
discussed below). Such threats jeopardized subject firms’ performance in 2009, as
measured by total shareholder return, to 44% below average (BlessingWhite, Inc.,
2011). The variables assessed to determine engagement levels are not totally control-
lable by either employer or employee, as interactions with colleagues and supervisors
are part of the dynamic. However, in one study of 6,500 managers across six compa-
nies, researchers found the most important engagement drivers were the employee’s
relationship with the immediate supervisor responsible for “managing [the employ-
ee’s] performance” and the employees’ own “career opportunities” for advancement
in the company (Gilbert, 2011, p. 2). In fact, “managing performance” (Gilbert, 2011,
p. 2) was the most frequent engagement driver. This indicator refers to Millennials
getting immediate, frequent, and direct feedback on their job performance. Just as
managing performance can enhance engagement, so too can poor supervisory man-
agement damage employees’ engagement. The most important threat to engagement
was “employer reputation,” which could diminish an employee’s pride in the com-
pany. Accurate information on drivers and threats to engagement is vital, as human
resource departments then can design interventions to increase the drivers and attempt
to reduce the threats, thus presumably also increasing benefits to the organization
(Bakker, 2011).

Interventions to improve the drivers of engagement may be considered necessary
due to a worldwide average engagement level of only 31% (BlessingWhite, Inc.,
2011), only slightly better than Gebauer and Lowman’s (2008) finding of worldwide
engagement levels at about 20% of the global workforce. In the more recent data,

Engaging Employees and Students in the Workplace and Classroom 257

BlessingWhite, Inc. (2011) found specific engagement levels varied from a high of
37% in India to a low of 17% in China. North America follows Australia with engage-
ment levels of 33% and 36%, respectively, with Europe (30%) and Southeast Asia
(26%) completing the areas assessed. In addition to geographic differences in engage-
ment, BlessingWhite, Inc. also identified generational differences, using Millennials’
birth years as 1978-1994.

North America may be unique in having generations in the workplace that differ in
their numerical proportions, as some other locations, notably Japan and Western
Europe, did not experience a baby boom after World War II (Tapscott, 2009). Of the
four generations BlessingWhite, Inc. studied in North America, the Boomers emerged
as the most engaged (39%), followed by GenXers at 35%, Millennials at 16%, and the
Silent Generation at a mere 10% (BlessingWhite, Inc., 2011). In general, engagement
correlated with rank, length of time employed in the organization, and with depart-
ments “closer to clients” (BlessingWhite, Inc., 2011, p. 10). Boomers at the peak of
their careers might be expected to be most engaged. The issue is how to increase the
engagement of other generations, especially the newest entrants to the workforce, the
Millennials, who have a reputation for expecting inflated salaries, quick advancement,
and work they enjoy. They find that many entry-level tasks fail to meet their standards
for challenging, meaningful tasks (Tulgan, 2009), a possible explanation for their low
engagement.

Responding to this issue of engagement is a challenge that practitioners are under
increasing pressure to meet, due to the necessity of replacing the soon-to-retire
Traditionalists and Baby Boomers. The first of the 75 million Baby Boomers (Tapscott,
2009) turned 66 years of age in 2012. The generation that followed, GenX, cannot
alone fill the vacant positions due to being 15% less populous than the Baby Boomers
(Tapscott, 2009). However, the Millennials (born since 1982) are a growing segment
of the workforce that already exceeds the Baby Boomers, previously the largest gen-
eration ever (Tapscott, 2009). Engagement of the younger generations is crucial for
employers who wish to gain and retain the best and the brightest of this large group.

Interventions have been tried before. Since at least the late 20th century, HR depart-
ments have sponsored a variety of efforts to increase engagement levels among the
GenXers, the workforce’s then-newest entrants. Employers attempted to lure top
recruits at that time with “fun” in the workplace (Bakke, 2005; Gavin & Mason, 2004;
Schullery, 2005).

However, Millennials pose challenges beyond those presented by the GenXers, due
to the former’s high self-esteem and high expectations (Tulgan, 2009). Combined with
the Millennials’ reluctance to give whole-hearted effort to anything they find less-than-
meaningful work, the cohort has gained a reputation as “entitled,” (Alsop, 2008, p. 24)
rather than as willing to work their way up. Thus, engaging the Millennials is critical, not
only to enjoy the benefits noted above but also to avoid increased turnover, as Millennials
are thought to job-hop if not engaged (Alsop, 2008; Hartman & McCambridge, 2011).
According to Tapscott (2009), employers who have been successful in attracting the
youngest generation realize that “for Net Gen-ers [Millennials], work should be fun. Net
Gen-ers see no clear dividing line between the two” (p. 92).

258 Business Communication Quarterly 76(2)

Recent examples of employers’ efforts to engage their employees include Google’s
provision of pool tables and a baby grand piano, and allowance for roller hockey in the
parking lot (Alsop, 2008). Google has also provided a rock-climbing wall on site, a
company pool, and a beach volleyball pit (Tapscott, 2009). Others have reported ame-
nities such as meditation rooms at eBay, and as much as 5 weeks time off in an
employee’s first year at KPMG (Twenge et al., 2010). To attract the most talented
recruits Microsoft can find to its campus headquarters near Seattle, Washington, the
company offers a private lake, 25 cafeterias, football, baseball, soccer, and volleyball
(Tapscott, 2009). The quantifiable success of these interventions is unknown, due to
the use of privately controlled assessment instruments and the proprietary nature of the
data found. In general, as the number of companies offering “fun” has increased, we
can conclude that management believes that offering fun in the workplace is a success-
ful strategy toward improved engagement of Millennials. However, a 16% engage-
ment rate among Millennials (BlessingWhite, Inc., 2011) suggests fun is not the final
answer. And, an additional downside exists.

Special amenities for Millennials have sometimes raised the ire of older genera-
tions who were not so favored and find the perceived inconsistency unfair (Tulgan,
2009). In addition, anecdotal reports of these interventions toward improved engage-
ment of the youngest generation have raised debate as to whether such efforts are
worthwhile and needed, or whether this generation simply sees themselves as “enti-
tled” (Alsop, 2008, p. 24). One way employers have tried to balance benefits to older
workers is by developing two-way mentoring plans (Meister & Willyerd, 2010). The
employer, recognizing the Millennial’s prowess with technology, pairs the younger
employee with a more experienced worker. The older employee provides a proverbial
wing to shelter the new arrival and guide the individual through the organizational
context toward success (Meister & Willyerd, 2010). In turn, the Millennials share their
technological expertise with the older employees, who may be struggling to unlearn
old habits and embrace new productivity tools. These matches are often beneficial to
both parties and to the employer, which gains two energized employees.

Meeting Millennials’ demands for work they enjoy and providing unlimited “fun”
shows a lack of leadership, in Tulgan’s view (2009, p. 16). He instead advises strong
leadership and commitment to “high-maintenance management” (Tulgan, 2009, p. 17) to
provide, not what Millennials want, but what they need. According to Tulgan (2009),
managers should insist that Millennials meet the organization’s standards, while meeting
Millennials’ desire for work that is engaging: “They want to learn, to be challenged, and
to understand the relationship between their work and the overall mission of the organiza-
tion. They want . . . some flexibility in where, when, and how they work” (Tulgan, 2009,
p. 13). Managers who “guide, direct, and support them every step of the way” will be
rewarded, he says, with exceptionally high performance from this newest workforce.

To provide the best guidance for the Millennials, it is helpful to be aware of recent
research that has identified differences in generational values. These values exert
direct influence on attitudes and behaviors. Twenge et al. (2010) reasoned that if dif-
fering attitudes and behaviors are caused by value-based differences, then differences
in generational behaviors may reflect differing values due to varied influences in

Engaging Employees and Students in the Workplace and Classroom 259

childhood and early adolescence. The researchers studied differences in work values,
which are conceptualized as “outcomes people desire and feel they should attain
through work” (Twenge et al., 2010, p. 1121). Twenge et al. sought differences
among Boomers, GenX, and the Millennials, whose childhood and early adult experi-
ences with the economy, cultural changes, and technology have differed markedly.
Unlike previous cross-sectional design studies that surveyed current employees of
varied ages, Twenge et al. (2010) reviewed existing data on values gathered from
high school seniors and argued that the worldview or values formed by then remain
consistent through early adulthood and even throughout one’s entire life.

Twenge et al. (2010) examined questionnaires administered to 16,507 graduating
high school seniors in their 18th year: 1976 for Boomers, 1991 for GenX, and 2006 for
Millennials. The birth years of these 18-year-olds are at the approximate midpoint of
the generational range. The results are unique among generational studies in examin-
ing a consistent age group, thereby separating the effects of age and longevity on the
job (Twenge et al., 2010). This research also reviewed the largest number of subjects
of any research to date, and used a cross section of subjects, as opposed to the narrower
groups used in smaller samples for studies of building trade workers (Real, Mitnick, &
Maloney, 2010), hospitality management employees (Chen & Choi, 2008), and
Canadian knowledge workers (Lyons, Duxbury, & Higgins, 2005). Of these, only
Lyons et al. (2005) used a comparable scale. Their results agreed with Twenge et al. in
that altruism was more important to Boomers than to Millennials; however, other
results differed. The differences may be explained due to the different measurement
instrument, smaller sample size, or cultural differences. The other studies focused on
other qualities important in the context of their workplaces.

Because of the large magnitude of the sample and the methodology of comparing
subjects of the same age, the Twenge et al. (2010) results will be discussed here. By
using data from the same survey with different generations at the same age, the
researchers controlled more variables than other studies. They obtained consistent
measures of the high school students’ values related to job stability, leisure time, and
23 different job characteristics. These measures quantified distinct differences in val-
ues categorized as extrinsic, intrinsic, altruistic, social, and leisure. The responses by
the high school seniors on the 5-point Likert-type scale at age 18 years can be expected
to be consistent with employees’ preferences in their work lives, as noted above.
Statistical measures of significant differences were used to determine if GenX and
Millennials’ responses differed from those of the Boomers.

Differences in Work-Related
Values Across Generations
Generational cohorts do hold similar values and differ from other cohorts. Significant
differences in job values were found to exist across the generations (Twenge et al.,
2010) and are summarized in Table 1. Significances are only shown for GenX and
Millennials, as the differences are with respect to the Boomers, whose ratings established
the baseline comparison. In Table 1, “1” designates the generation who agreed most

260 Business Communication Quarterly 76(2)

strongly on a 1 to 5 scale with statements relating to the value. For example, Boomers
rated intrinsic values higher than did either the GenXers or Millennials, but only the
Millennials’ difference in rating was significant. In contrast, GenX ratings of extrinsic
values significantly exceeded those given by both Boomers and Millennials. Both the
GenX and Millennials differed significantly from the Boomers in rating extrinsic
rewards related to work.

The results show that the Millennials are significantly more interested in extrinsic
rewards than are Boomers, although Millennials are less interested than GenX. Although
salaries and the material possessions that money can buy, as well as the accompanying
prestige, were still important to Millennials, these are significantly less important than
these values are to GenXers, who displayed “particularly pronounced” differences with
the Boomers (Twenge et al., 2010, p. 1132). This value was the only one that did not
change in a linear progression across the generations (Twenge et al., 2010).

In contrast, each generation is increasingly less likely to value intrinsic rewards as
highly as the previous generation. The Boomers rated having interesting and challeng-
ing work most highly, while each successive generation has had slightly less interest.
However, intrinsic rewards are still rated highly by all three generations. The
Millennials differed significantly from both of the other generations, although GenXers
and Boomers did not differ significantly from each other (Twenge et al., 2010).

Social rewards were similar to intrinsic rewards in having significantly less value
to Millennials than to GenX, who did not differ significantly from Boomers. This most
populous baseline group ranked the value most highly among all the generations,
which is consistent with the Boomers’ rating work as central to their lives (Twenge
et al., 2010). In contrast, the Millennials’ resulting low rating is surprising, given the
younger group’s avid interest in social media; they may simply wish to pursue friend-
ships outside the work environment.

The least contrast among generations was in the value of altruistic rewards, which
showed no significant differences across generations. In contrast to some theorists’
expectations (Howe & Strauss, 2000), Millennials were slightly less inclined than
either Boomers or GenXers to be attracted to a job that allows opportunities for volun-
teering during work hours, or where they have “an opportunity to be directly helpful

Table 1. Importance of Work-Related Values by Generation.

Value Boomers GenX Millennials

Leisure 3 2* 1*
Extrinsic 3 1** 2*
Intrinsic 1 2 3*
Altruistic 1 2 3
Social 1 2 3*

Source. Data based on Twenge, Campbell, Hoffman, and Lance (2010, pp. 1127-1129).
Note. Value of “1” indicates generation rating value most highly. Only the altruistic value showed no
significant differences among generations.
*p < .05. **p < .01. ***p < .001.

Engaging Employees and Students in the Workplace and Classroom 261

to others” (Twenge et al., 2010, pp. 1132-1133). Statistically, this value has equal
appeal for all generations.

The strongest statistical change in value ratings was for leisure rewards at work,
which was measured with questions related to a job that allows for self-paced work,
work that is “mostly free of supervision,” and time for “other things in your life,” as
well as increased vacation (Monitoring the Future Form 4 questions, as shown in
Twenge et al., 2010, p. 1127). In fact, GenXers and Millennials were “progressively
more likely” to value leisure at work (p. 1131), with each generation significantly more
likely to value leisure than the preceding cohort. The Millennials’ preference exceeded
Cohen’s (1977) generally accepted standard cutoff for a moderate effect size.

Although most of the generational differences found in values were limited to small
to moderate effects (Twenge et al., 2010) in the aggregate, the differences are of prac-
tical importance. Notably, the Millennials as a group had a smaller standard deviation
over the span of responses than either the GenX or Boomer generation (Twenge et al.,
2010), indicating that the Millennials as a group are more like-minded than other gen-
erations. Across all generations tested, the survey respondents were shown to have
interpreted the questions in a consistent way, ensuring that these value preferences are
indeed generational differences in the category tested.

The above results shed light on why Millennials may be perceived as having an atti-
tude of entitlement, as they value both leisure and extrinsic rewards highly. The impact of
the importance of leisure at work helps explain the rise in employers’ approach to provid-
ing fun at work, and the still-highly rated intrinsic value shows why Millennials want
work itself to be rewarding, which is more fun. The preference for intrinsic rewards is
consistent with Fairlie’s (2011) contention that “meaningful work” is strongly correlated
with employee engagement (p. 510). In academia, we see evidence of the leisure value
(i.e., for “other things” in your life, Twenge et al., 2010, p. 1127) when students choose
classes that meet twice a week rather than those meeting three times per week.

Pedagogical Application: Millennials in the Classroom
The distinct differences between the current generation (the Millennials) and preced-
ing generations (GenX and Boomers) suggest a need for classroom adaptation to
increase students’ engagement, as “. . . it is clear that creating an active, engaging
environment is key to learning for Millennials” (Werth & Werth, 2011, p. 14).
Recognizing the preferences shown in Table 1 by the Millennial students who domi-
nate many of our classrooms, we as teachers can use this information to inform our
instruction. By addressing the Millennials’ values, we are more likely to engage them
and increase their learning.

Adaptation to the Millennials’ values avoids the trap of mistaking “fun” as the
complete answer to the engagement riddle. Nor is technology alone the answer,
despite Millennials’ early conditioning on video games. The video games as interac-
tive, experiential learning tools, however, provide an example of learning as a “plug-
and-play experience” in which Millennials not only learn, but also interact with the
games in an enjoyable, challenging way, according to Alison Black (as cited in Werth

262 Business Communication Quarterly 76(2)

& Werth, 2011). Although Millennials’ brains may function differently due to early
exposure to digital technologies as noted earlier (Tapscott, 2009), their learning
options are broader than video games. However, many of the same trial-and-error
principles found in video games can be applied to learning business communication.

Experts in adult learning advocate moving away from lecturing Millennials to
using the principles designed for teaching adults (Werth & Werth, 2011). Knowles
(1980) identified four assumptions to make about maturing learners: (a) they gain self-
direction; (b) they gather experience, a useful resource on which to build learning; (c)
their focus on getting a job and succeeding in their careers tends to dominate motiva-
tion for learning; and (d) they expect what they learn to have immediate application.
Teaching based on these assumptions becomes more student-directed, with the instruc-
tor facilitating rather than lecturing (Werth & Werth, 2011).

My suggestion is that one additional element be considered in the analysis of our
student audiences to guide our facilitation of students’ learning: Millennials’ values.
This article provides information on those values. This information, combined with
the tested exercises and activities shown in previous articles in, for example, Business
Communication Quarterly, offers additional opportunities for engagement and learn-
ing. Table 2 provides a sample of recent articles, categorized by and aligned with the
Millennials’ values. The table illustrates how each of the values can be addressed to
reach a specific learning outcome. Those shown for “social” rewards address interper-
sonal skills, as the original value was measured on interest in making friends and

Table 2. Recent Business Communication Quarterly Resources on Engagement That Align With
Millennials’ Values.

Value(s) Addressed Author(s) Title

Leisure, social Kelm (2011) Social Media: It’s What Students Do
Extrinsic Brzovic and Matz (2009) Students Advise Fortune 500 Company:

Designing a Problem-Based Learning
Community

Intrinsic Pennell and Miles (2009) “It Actually Made Me Think”: Problem-Based
Learning in the Business Communication
Classroom

Intrinsic, social Conn (2008) Integrating Writing Skills and Ethics Training
in Business Communication Pedagogy: A
Resume Case Study Exemplar

Intrinsic, social Meredith (2012) Strategic Communication and Social
Media: An MBA Course From a Business
Communication Perspective

Social Hartman and
McCambridge (2011)

Optimizing Millennials’ Communication Styles

Altruistic Mabry (2011) Tackling the Sustainability Dilemma: A Holistic
Approach to Preparing Students for the
Professional Organization

Engaging Employees and Students in the Workplace and Classroom 263

having contact with “a lot” of people (Twenge et al., 2010, p. 1128). Several of the
articles could be used for more than one value.

The sample suggestions shown in Table 2 will challenge students with meaningful
activities and assignments that build effective skills for and address their interest in
obtaining career positions and advancing in those careers. These are only a sample of
potential exercises provided by this journal’s recent authors. Most of the sample exer-
cises require critical thinking, and encourage development of the ability to articulate
dissent, which is valued in engaged employees as necessary for accurate feedback and
organizational improvement (Kassing et al., 2012). Addressing Millennials’ values
can help engage students in the classroom and give them practice for the workplace so
that they are more independent and productive on the first day of employment.

Author’s Note

This article is based on a paper presented at the annual meeting of the Corporate Communication
International, New York, NY, USA, 2012. The author would like to thank the editors and
reviewers for their thoughtful questions and helpful comments.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship,
and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of
this article.

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Kassing, J. W., Piemonte, N. M., Goman, C. C., & Mitchell, C. A. (2012). Dissent expression as
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Kelm, O. R. (2011). Social media: It’s what students do. Business Communication Quarterly,
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Bio

Nancy M. Schullery is a professor in the Department of Business Information Systems at
Western Michigan University, where she has taught business communication, organizational
communication, and global business. Her industry experience led to research interests that
include collaboration in groups, personality traits and preferences, and the scholarship of teach-
ing and learning.

Copyright of Business Communication Quarterly is the property of Association for Business Communication

and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright

holder’s express written permission. However, users may print, download, or email articles for individual use.

Workplace Engagement, Generational Considerations, and Cultural Differences.html

Throughout the course, we have been focusing on business trends. This week, we will consider workplace engagement and commitment, generational differences, and cultural differences.

There is a great amount of research presenting evidence that engaged employees are happy, and happy employees feel more committed to the organization, which leads to reduced stress, tension, and conflict. If employees are unhappy or not engaged, they will leave. Technology has made changing jobs relatively easy, and employee turnover affects the bottom line of the organization.

Employees want a meaningful work environment before they can feel committed to an organization. Issues such as flexible schedules are important; many employees are caring for their aging parents and young children at the same time; many are working full-time and attending college. Organizations are struggling to find qualified employees; and global companies are struggling to find senior leaders. Perhaps a new type of leader is needed; one with trans-global leadership skills and cross-cultural competencies. Another line of thinking is changing from appointing an individual leader to creating a team of leaders.   

There are currently five generations in the global workforce: Traditionalists (or veterans), Baby Boomers, Gen X, Gen Y, and Gen Z – those who were born between 1994 and 2010. The Millennials (Gen Y) are starting to move into management and leadership positions, and many Gen Zs are graduating high school and college. The Traditionalists and early Baby Boomers are working longer – many have lost their retirement savings and cannot afford to retire. With this mix of generations in the workforce, there is a growing concern that it is difficult to please all employees.

Emerging countries such as the BRIC (Brazil, Russia, India and China) and MIKT (Mexico, Indonesia, South Korea and Turkey), may have five generations in the workforce. However, employee satisfaction and employee commitment may not mean the same in the United States as it does in developing and emerging countries. In today’s diverse, global environment, numerous differences are in effect:

Cultural: collectivism versus individualism;
Communication: high context, indirect styles versus low context, and direct styles;
Time Orientation: monochromic versus polychromic;
Ethics: deontological versus utilitarianism; and
Religious beliefs.

While diversity presents opportunities, it also presents challenges in the workforce. These challenges can present opportunities for doctoral students! As a doctoral student in the field of business and technology, there is an unlimited amount of topics and ideas from which to base your own research study. 

As a doctoral student, you must stand on the shoulders of those who went before, meaning your particular study must be based on one or more studies that were previously conducted. The use of theoretical and conceptual frameworks is part of the research. A conceptual framework pulls on concepts from several theories and conclusions to guide the research. A theoretical framework supports one theory. Most researchers use more than one theoretical framework in their studies. A study could be based on Transformational leadership and Emotional Intelligence, or Cultural Intelligence and Employee Commitment, as two examples.

An overview of the conceptual/theoretical framework concept was provided in Skill Builder 6, covered earlier. To prepare for this week’s assignment, practice using the following steps as an example. Note: The following is an example for illustrative purposes. You will repeat the steps when you work on your assignment.

Warm-Up Exercise

Be sure to complete this practice exercise so that you can complete the main assignment. Students who do not take the time to do the warm-up exercise usually do not successfully complete the assignment.

For this practice exercise, you will research the constructs or frameworks of transformational leadership using library provided resources. These sources provide the following for each management method, model, or concept: a concise description, its history, calculation, usage and application, process steps, strengths and benefits, limitations and disadvantages, assumptions and conditions, references, and an interactive user forum. The focus is on concepts that are both scientifically accepted and applicable in management practice.

Kessler, E. H. (Ed.) (2013). Encyclopedia of management theory (Vols. 1-2). Thousand Oaks, CA: SAGE Publications Ltd. doi: 10.4135/9781452276090

Kurian, G. T. (2013). The AMA dictionary of business and management. New York, NY: AMACOM, Publishing Division of the American Management Association. Retrieved from https://ebookcentral.proquest.com/lib/ncent-ebooks/detail.action?docID=1153980

For the warm-up exercise, use the dictionaries provided above to locate an academic definition of transformational leadership. Then, examine Bernard Bass’s (1993) seminal work listing four behaviors. Next, research the Multifactor Leadership Questionnaire, which is used by researchers when researching this topic. This article also covers this topic:

Avolio, B., Bass, B., & Jung, D. (1999). Re-examining the components of transformational and transactional leadership using the Multifactor Leadership Questionnaire. Journal of Occupational & Organizational Psychology, 72(4), 441-462.

http://proxy1.ncu.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=2635131&site=eds-live

Here is an example of what your response would look like this, if you were to present Transformational Leadership:

Transformational Leadership

The seminal author for the Transformational Leadership framework is Bernard Bass. One instrument that is used for data collection is the Multi-Factor Leadership Questionnaire by Bass and Avolio. The focus of the Transformational Leadership framework is based upon the following behaviors: (a) Idealized Influence, (b) Inspirational Motivations, (c) Intellectual Stimulation, and (d) Individual Consideration. A second instrument that could be used is the Full-Range Leadership Model by Bass and Avolio (Statistics Solutions MLQ. (n.d.). Additional survey instruments are listed on the (Statistics Solutions) webpage, as well as Google.com. The NCU library has myriad journal articles as well as dissertations on the subject. Additional dissertations on the Transformational Leadership Framework may be found in the ProQuest Dissertations in the NCU library. Transformational Leadership framework is often combined with additional frameworks. Transactional versus Transformation Leadership, or Transformational Leadership and Emotional Intelligence, are two examples.

References

Avolio, B. J. (2011). Full range leadership development Thousand Oaks, CA: SAGE Publications Ltd. doi: 10.4135/9781483349107 http://sk.sagepub.com.proxy1.ncu.edu/books/full-range-leadership-development-2e

Statistics Solutions Multi-Factor Leadership Questionnaire (MLQ). (n.d.). Retrieved from http://www.statisticssolutions.com/multifactor-leadership-questionnaire-mlq/

Statistics Solutions Directory (n.d.). Retrieved from http://www.statisticssolutions.com/directory-of-survey-instruments/

Global Human Capital Trends

2

0

1

5

Leading

in the new world of work

Contents

Introduction | 2

Leading

Leadership: Why a perennial issue? | 1

7

Learning and development: Into the spotlight |

25

Engaging

Culture and engagement: The naked organization |

3

5

Workforce on demand: Are you ready? |

4

3

Performance management: The secret ingredient |

51

Reinventing

Reinventing HR: An extreme makeover |

6

1

HR and people analytics: Stuck in neutral |

71

People data everywhere: Bringing the outside in | 7

9

Reimagining

Simplification of work: The coming revolution |

8

7

Machines as talent: Collaboration, not competition |

95

Editors |

10

2

Acknowledgements |

103

Global Human Capital leaders |

105

Human Capital country leaders | 105

Leading in the new world of work

1

Introduction: Leading in
the new world of work

GLOBAL organizations today must navigate a “new world of work”—one that requires
a dramatic change in strategies for leadership,
talent, and human resources.

In this new world of work, the barriers
between work and life have been all but
eliminated. Employees are “always on”—hyper-
connected to their jobs through pervasive
mobile technology.

Networking tools like LinkedIn, Facebook,
and Glassdoor enable people to easily monitor
the market for new job opportunities. Details
about an organization’s culture are available
at the tap of a
screen, providing
insights about
companies to
employees and
potential employ-
ees alike. The
balance of power
in the employer-employee relationship has
shifted—making today’s employees more like
customers or partners than subordinates.

Many of today’s employees work in global
teams that operate on a 24/7 basis. An increas-
ing number of skilled workers in this new
world work on a contingent, part-time, or
contract basis, so organizations must now
work to integrate them into talent programs.
New cognitive technologies are displacing
workers and reengineering work, forcing
companies to redesign jobs to incorporate new
technology solutions.

Demographic changes are also in play.
Millennials, who now make up more than half
the workforce, are taking center stage. Their
expectations are vastly different from those

of previous generations. They expect acceler-
ated responsibility and paths to leadership.
They seek greater purpose in their work. And
they want greater flexibility in how that work
is done.

For human resources (HR) organizations,
this new world requires bold and innovative
thinking. It challenges our existing people
practices: how we evaluate and manage people
and how we engage and develop teams; how
we select leaders and how they operate. HR
organizations now face increasing demands
to measure and monitor the larger organiza-

tional culture,
simplify the work
environment,
and redesign
work to help
people adapt.

For HR and
talent teams,

20

15 will be a critical year. As these forces
gather momentum, we see 2015 as a time for
creativity, bold leadership, and a fundamental
reimagining of the practices HR leaders have
used for years.

Our global research

Deloitte’s 2015 Global Human Capital
Trends report is one of the largest longitudinal
studies of talent, leadership, and HR challenges
and readiness around the world. The research
described in this report involved surveys and
interviews with more than 3,

30

0 business
and HR leaders from

106

countries. (See the
appendix to this chapter for details on survey
demographics.) The survey asked business and

In this new world of work, the
barriers between work and life
have been all but eliminated.

Global Human Capital Trends

2015

2

HR respondents to assess the importance of
specific talent challenges facing their organiza-
tion and to judge how prepared they were to
meet these challenges.1 Using these responses,
we calculated a “capability gap” for each chal-
lenge, measuring the difference between an
issue’s importance and an organization’s readi-
ness to address it.2

In this year’s report, we explore 10 major
trends that emerged from our research, which
reflect four major themes for the year: lead-
ing, engaging, reinventing, and reimagining
(figure 1). We also present the capability gaps
associated with each of these trends, and offer
practical insights to help you address each of
these challenges in your organization.

All the data from this research can be
viewed by geography, company size, and
industry using an interactive tool, the Human
Capital Trends Dashboard. This tool, avail-
able at www.deloitte.com/hcdashboard, lets
you explore the data visually to see how talent
priorities vary around the world.

Leading in the new world
of work: The 10 trends

Figure 2 shows respondents’ ratings of
the importance of 10 talent challenges along-
side their rated readiness to address each
challenge.3 These data highlight substantial
capability gaps in all 10 areas. Comparing these
results to the data from last year, we see that

Figure 1. The 10 trends in the 2015 Global Human Capital Trends report

Leading

Leadership: Why a
perennial issue?
Companies are struggling to
develop leaders at all levels
and are investing in new and
accelerated leadership models.

Learning and development:
Into the spotlight
Companies are actively exploring
new approaches to learning and
development as they confront
increasing skills gaps.

Engaging

Culture and engagement:
The naked organization
Organizations are recognizing
the need to focus on culture and
dramatically improve employee
engagement as they face a
looming crisis in engagement and
retention.

Workforce on demand:
Are you ready?
Companies are taking a more
sophisticated approach to
managing all aspects of the
workforce, including the hourly,
contingent, and contract
workforce.

Performance management:
The secret ingredient
Organizations are replacing
traditional performance
management with innovative
performance solutions.

Reinventing

Reinventing HR:
An extreme makeover

HR is undergoing an extreme
makeover to deliver greater
business impact and drive HR and
business innovation.

HR and people analytics:
Stuck in neutral
Too few organizations are actively
implementing talent analytics
capabilities to address complex
business and talent needs.

People data everywhere:
Bringing the outside in

HR and talent organizations
are expanding their HR data
strategies by harnessing and
integrating third-party data about
their people from social media
platforms.

Reimagining

Simplification of work:
The coming revolution
Organizations are simplifying
work environments and practices
in response to information
overload and increasing
organization and system
complexity.

Machines as talent:
Collaboration, not competition
The increasing power of
computers and software to
automate and replace knowledge
workers is challenging
organizations to rethink the
design of work and the skills their
employees need to succeed.

Graphic: Deloitte University Press | DUPress.com

Leading in the new world of work
3

http://www.deloitte.com/hcdashboard

the capability gap in many of these areas has
increased in magnitude (figure 3), suggest-
ing that the accelerating economy and rapid
changes in the workforce have created even
more urgency in the need to adapt HR and
people practices around the world.

Based on the survey data, interviews, and
secondary research, we provide more detail on
each of these challenges and recommendations
for how leaders can begin to address them in
this report’s 10 chapters:

1. Culture and engagement: The naked orga-
nization. This year, culture and engagement
was rated the most important issue overall,4

slightly edging out leadership (the No. 1
issue last year). This challenge highlights
the need for business and HR leaders to
gain a clear understanding of their orga-
nization’s culture and reexamine every
HR and talent program as a way to better
engage and empower people.

2. Leadership: Why a perennial issue?
Building leadership remains paramount,
ranking as the No. 2 issue in this year’s
survey.5 Yet despite the fact that nearly 9 out
of 10 respondents surveyed cite the issue as
“important” or “very important,” the data
also suggest that organizations have made
little or no progress since last year: The
capability gap for building great leaders has
widened in every region of the world.

3. Learning and development: Into the
spotlight. This year’s third most important
challenge6 was the need to transform and
accelerate corporate learning, up from No.
8 in 20

14

. The percentage of companies
rating learning and development as very
important tripled since last year. But even
as the importance of this issue rose, the
readiness to address it went down. Only 4

0

percent of respondents rated their organiza-
tions as “ready” or “very ready” in learning
and development in 2015, compared to

75

percent in 2014.

Graphic: Deloitte University Press | DUPress.com

Very ready

Ready

Somewhat
ready

Not ready

Very
important

Important

Somewhat
important

Not
important

10

0

90

80

70

60

50

40

30

20

10

0
Culture &

engagement
Learning &

development

Workforce
capability

HR & people
analytics

Machines
as talent

100

90
80
70
60
50
40
30
20
10
0

Leadership Reinventing

HR

Performance
management

Simplification
of work

People data
everywhere

78

47

–

31

78

42

–

36

74

46

–

28

71
42

-30

70

43

–

27

68

39

–

29

66

35

-31

63

37

–

26

55

35

-20

50
31

–

19

Figure 2. Talent trends: Global importance vs. readiness

Global Human Capital Trends 2015

4

Graphic: Deloitte University Press | DUPress.com
0

-5

-10

-15

-20

-25

-30

-35

-40

Culture &
engagement

Learning &
development

Workforce
capability

HR & people
analytics

2014 capability gap 2015 capability gap

Leadership

-34

-36

–

23

-31 -31-30

-24

-29

-16

-27

-9

-28

-30

-27

Reinventing
HR

Performance
management

Figure 3. Capability gaps in selected areas, 2014 and 2015

4. Reinventing HR: An extreme makeover.
The fourth biggest issue was the need to
reskill HR itself.7 This area also shows
little progress since last year. Both HR and
business leaders, on average, rated HR’s
performance as low; furthermore, business
leaders rated HR’s performance 20 percent
lower than did HR leaders, showing how
important it is to accelerate HR’s ability
to deliver value as the economy improves.
Perhaps because of these dim views of HR’s
performance, we found an increasing trend
of CEOs bringing in non-HR professionals
to fill the role of CHRO.

5. Workforce on demand: Are you ready?
Eight out of 10 respondents surveyed
cited workforce capability as being either
“important” or “very important” in the
year ahead, indicating the demand for
skills that is driving a trend toward greater
use of hourly, contingent, and contract
workers. This trend highlights the need to
develop better processes, policies, and tools
to source, evaluate, and reward talent that
exists outside of traditional corporate and
organizational balance sheets.

6. Performance management: The secret
ingredient. One of the biggest needs in the
new world of work is the need to rethink
how organizations manage, evaluate, and
reward people. New, agile models for
performance management have arrived,
and we see these new performance manage-
ment models as a core component of this
year’s focus on engagement, development,
and leadership.

7. HR and people analytics: Stuck in neutral.
HR should now make serious investments
in leveraging data to make people decisions.
People analytics, a strategy that has been
evolving over the last several years, has the
potential to change the way HR will work.
However, HR organizations appear to be
slow in developing the capabilities to take
advantage of analytics’ potential.

8. Simplification of work: The coming revo-
lution. Last year’s Global Human Capital
Trends report identified the “overwhelmed
employee” as an emerging trend. This year,
the percentage of respondents who regard
this as a “very important” issue rose from

21

percent to 24 percent. This heightened

Leading in the new world of work
5

recognition is just the beginning of what we
see as a long-term movement by companies
to simplify work, implement design think-
ing, overhaul the work environment, and
help employees focus and relieve stress. We
are entering an era of “doing less better”
rather than “doing more with less.”

9. Machines as talent: Collaboration, not
competition. Cognitive computing—the
use of machines to read, analyze, speak,
and make decisions—is impacting work at
all levels. Some believe that many jobs will
be eliminated. HR teams must think about

how to help redesign jobs as we all work
in cooperation with computers in almost
every role.

10. People data everywhere: Bringing the
outside in. The explosion of external people
data (data in social networks, recruiting
networks, and talent networks) has cre-
ated a new world of employee data outside
the enterprise. It is now urgent and valu-
able for companies to learn to view, man-
age, and take advantage of this data for
better recruiting, hiring, retention, and
leadership development.

Figure 4. Importance of challenges in different regions

AMERICAS EUROPE, MIDDLE EAST, & AFRICA ASIA PACIFIC

Trends Global
North

America

Latin &
South

America

Africa

Central &
Eastern
Europe

Middle
East

Nordic
Countries

Western
Europe

Southeast

Asia

Asia

Oceania

Culture &
engagement

78

76

84

83

76 75 74 76

79

72

78

Leadership 78 80

82

84 75 75

73

74 82 73

77

Learning &
development

74 73 79

81

70 78 71

69

77 72 66

Reinventing
HR

71

67

78 77 71 76 71 66 75 66 72

Workforce
capability

70 72 72 78 67 74

64

67 81 66 71

Performance
management

68 64 74 78 68 69

62

62 74 63 68

HR & people
analytics

66 66 70 72 60 67

65

60 71 64 66

Simplification
of work

63 59 66 69 65

61

64 60 66 62 60

Machines
as talent

55 46 63 62

57

57 50

49

61 55 43

People data
everywhere

50

45

54

55 47 49 45 46 55

52

45

Note: Figures represent the importance index score for each challenge calculated on a 0–100 scale, as described in endnote 1. Rankings are
based on actual scores when decimals are taken into consideration. Differences may not be statistically significant.

Graphic: Deloitte University Press | DUPress.com

No. 1 No. 2 No. 3 No. 4 No. 5

Global Human Capital Trends 2015
6

Six key findings

As we analyzed the data and talked exten-
sively with companies around the world about
these issues, we uncovered six key findings that
paint a high-level picture of how organizations
are approaching talent and work.

“Softer” areas such as culture
and engagement, leadership,
and development have become
urgent priorities.

As the economy grows and skills become
more specialized, the competition for talent
has increased. This has driven culture and

engagement, leadership, and development to
the top of the human capital agenda. These
challenges consistently ranked as the top three
most important issues across regions (figure 4)
and industries (figure 5).

Especially notable in these results is the
prominence of culture and engagement. While
leadership has been the top issue in past
years, this is the first time culture and engage-
ment has been viewed as the most important
challenge overall. In fact, the proportion of
respondents citing culture and engagement as
a “very important” issue almost doubled this
year, from 26 percent to 50 percent. Almost
two-thirds of our HR respondents are look-
ing at ways to update or revamp their entire

Figure 5. Importance of challenges in different industries

Trends Global
Consumer
business

Energy &
resources

Financial
services

Life sciences
& health

care

Manufacturing

Professional
services

Public sector

Technology,
media, &

telecommuni-
cations

Culture &
engagement

78 81 76 81 79 75 78 75 77

Leadership 78 80 79 81 78 77 77 78 77

Learning &
development

74 74 73 74 71 70 76 77 75

Reinventing
HR

71 74 71 72 73 70 69 72 71

Workforce
capability

70 69 72 70 74 68 72 68 73

Performance
management

68 70 66 69 67 66 69 67 71

HR & people
analytics

66 66 66 69 65 64 67 64 67

Simplification
of work

63 64 60 64 63 62 64 64 63

Machines
as talent

55

53

54 55 50 53 57

56

57

People data
everywhere

50 49 49 50 50

48

50 48 52

Note: Figures represent the importance index score for each challenge calculated on a 0–100 scale, as described in endnote 1. Rankings are
based on actual scores when decimals are taken into consideration. Differences may not be statistically significant.
Graphic: Deloitte University Press | DUPress.com
No. 1 No. 2 No. 3 No. 4 No. 5
Leading in the new world of work
7

strategy to measure, manage, and improve
employee engagement.

Every program in HR must address issues
of culture and engagement: how we lead, how
we manage, how we develop, and how we
inspire people. Without strong engagement
and a positive, meaningful work environment,
people will disengage and look elsewhere
for work.

Leadership and learning have
dramatically increased in importance,
but the capability gap is widening.

As the economy recovers, companies see an
accelerating demand for leadership at all levels,
especially among Millennials.8 This may be one
reason that the proportion of respondents rat-
ing leadership as “very important” rose by

32

percent over last year, and the capability gap is
increasing. Yet, as noted above, improvements
are not coming fast enough. Only 6 percent
of companies feel fully ready to address their
leadership issues, only 10 percent feel com-
fortable with their succession program, and
only 7 percent have strong programs to build
Millennial leaders.

Learning and development showed a simi-
lar pattern. On average, respondents’ ratings
of the importance of this issue quadrupled
this year over last year’s ratings.9 Moreover,
while this issue had the smallest capability
gap last year at -9, this year, the gap widened
significantly to -28. This result suggests that,
while technical and professional skills are a
top priority, corporate training departments
have fallen behind. Companies are strug-
gling to redesign the training environment,

incorporate new learning technologies, and
utilize the incredible array of digital learning
tools now available.

HR organizations and HR skills are
not keeping up with business needs.

As previously noted, compared with last
year, the capability gap for virtually every
talent issue increased in magnitude (figure
3). Meanwhile, business leaders and HR
respondents themselves continue to give HR
borderline failure/barely passing grades. At a
time when talent is indisputably a CEO-level
issue, this should be setting off alarms in every
HR organization.

HR organizations rated their teams the
equivalent of a C-minus (an average of
1.65 on a five-point scale), showing almost
no improvement over last year’s ratings.
When we asked business leaders to rate
HR, the score was even lower. Business
leaders rated HR a D-plus (an average of
1.32 on a five-point scale), indicating their
increased expectations.10

Given these poor grades, it is not surpris-
ing that only 5 percent of the HR leaders
surveyed this year believe their organization’s
talent and HR programs are “excellent” and
only 34 percent rate them as “good” (figure
6). The rest—about 61 percent, or nearly two
out of three—believe their HR solutions are
barely adequate or falling behind. And HR’s
self-assessment of its skills has hardly budged
over the last two years. The upshot: As business
is growing and changing exponentially, HR is
improving at a much slower pace.

Graphic: Deloitte University Press | DUPress.com

GPA: 1.65

GPA: 1.32

Non-HR

HR

Underperforming Getting by Adequate Good

Excellent

8% 21% 32% 34%

5%

14% 24% 34% 24%

4%

Figure 6. HR performance rated by HR and non-HR leaders

Global Human Capital Trends 2015
8

The silver lining is that while the aver-
age HR scorecard has barely improved in
the past year, organizations whose HR func-
tions have made strides are reaping signifi-
cant benefits across the spectrum of talent
issues. Organizations whose HR teams rate
themselves as “excellent” (5 percent) also far
outperform their peers in every talent capabil-
ity by between 40 and 60 percent, according
to research.

11

HR technology systems are a
growing market, but their promise
may be largely unfulfilled.

HR’s self-assessed lag is taking place amid a
steady increase in HR investment. HR spend-
ing grew by 4 percent in 2014 over 20

13

, with
much of this growth dedicated to technol-
ogy.

12

Further, according to this year’s research,
nearly 6 in 10 companies are planning to
increase HR spending in the next 12–

18

months (figure 7).

Why is this money not resulting in
improved outcomes? The widening capability
gaps in areas such as learning and develop-
ment, engagement and culture, and leader-
ship, coupled with Deloitte’s client experience
with HR technology, suggests that the heavy
increased spending on technology has not
been accompanied by similar investments in
process and people. HR technology invest-
ments are critical—and the market for these

solutions has grown by 50 percent into a $10
billion industry in the last five years.13 But
when it comes to critical issues like learn-
ing, engagement, and the work environment,
HR organizations have not transformed fast
enough. Implementing new tools without
redesigning processes and retraining HR does
not solve talent problems. The lesson is not
to stop spending on technology, but to make
sure complementary investments are made in
programs that redesign processes, develop new
learning content and programs, and train both
leaders and the HR team.

Talent and people analytics are a
high priority and a tremendous
opportunity, but progress is slow.

Analytics is on the agenda of almost every
HR team we surveyed, with three in four
respondents rating it as “important” or “very
important.” But despite this interest, our
research shows only a small improvement in
analytics capabilities. Thirty-five percent of this
year’s respondents reported that HR analytics
was “under active development” at their orga-
nizations—just slightly more than the propor-
tion of respondents who said the same last year
(33 percent) (figure 8). And this year, only 8.

44

percent of the respondents surveyed believe
their organizations have a strong HR analytics
team in place, a very slightly higher percentage
than last year’s figure. These findings suggest

Graphic: Deloitte University Press | DUPress.com

Note: Percentages may not total 100 percent due to rounding.

0 10% 20% 30%

40%

2%

6%

35%

4

1%

15%

50%

Significantly increase (more than 5%)

Increase

Remain the same

Decrease (1–5%)

Significantly decrease (more than 5%)

Figure 7. Plans to invest in HR over next 12–18 months

Leading in the new world of work
9

that new vendor tools have hit the market, but
teams are still not fully enabled, trained, or
organized to succeed.

The role of outside data is now integral to
an HR analytics solution. Data from social net-
works and external job sites is vital to under-
standing retention, engagement, and employee
career needs. In fact, some executives have
found that external people data is more accu-
rate and useful than data inside the company.
How can companies make sense of this sea of
data, much of which is out of their control?
More importantly, how can organizations
transform this data into a strategic advantage
on the talent front?

We see people analytics as an accelerating
trend—part of a new set of critical skills for
HR, business, and leadership. Companies that
take the time and make the investment to build
people analytics capabilities will likely out-
perform their competitors significantly in the
coming years.

Simplification is an emerging
theme; HR is part of the problem.

Last year, many executives were surprised
to see the “overwhelmed employee” emerge

as a significant problem around the world.
This year, we decided to dig deeper by assess-
ing how companies are dealing with this
issue. What emerged was what we perceive as
a potential revolution in the way companies
organize and operate, all built around the
imperative to radically simplify work environ-
ments, practices, and processes.

In this year’s survey, 71 percent of compa-
nies rated work simplification as an “impor-
tant” or “very important” issue, and 74 percent
believe their work environment is “very
complex” or “complex” (figure 9). More than
half have programs to simplify work to drive
productivity gains and relieve unnecessary and
counterproductive pressures on employees
(figure 10). Some HR organizations themselves
are working to simplify some of their proce-
dures: Companies are starting to phase out
traditional performance management pro-
cesses, notorious for their burdensome nature,
in favor of more streamlined approaches.

We believe that this is just the beginning
of a major movement to apply innovative
approaches and techniques like “design think-
ing” to simplify and rationalize the workplace
of the 21st century.

Graphic: Deloitte University Press | DUPress.com

Excludes respondents who answered “not applicable.” Percentages are displayed to two decimal places to show the differences between the
2014 and 2015 results.

0 5%

8.

44%

35.4

8%

35.9

3%

34.53%

33.82%

15.82%

15.06%

8.09%

-4.80%

-3.90%

4.

91

%

6.34%

6.

49%

10% 15% 20% 25% 30% 35%

Strong

Under active development

Planning how to proceed

Limited

Not considering
at this time

2014 2015

40%

2.3

7%

4.

33%

Figure 8. Current state of HR analytics capabilities, 2014 and 2015

Global Human Capital Trends 2015
10

Graphic: Deloitte University Press | DUPress.com

0 10% 20% 30% 40% 50%

1%
4%

22

%

25%

49%

Very complex

Complex

Somewhat complex

Simple

Not on our radar

Figure 9. Current state of complexity of the work environment and business practices

Graphic: Deloitte University Press | DUPress.com
0 10% 20% 30% 40% 50%

22%

25%
44%

10%

Major program in place

Some activities in place

Considering simplification program

No plans to simplify

Figure 10. Do respondents have programs in place to simplify work practices?

A new playbook for new times

Growth, volatility, change, and disrup-
tive technology drive companies to shift their
underlying business model. It is time for HR
to address this disruption, transforming itself
from a transaction-execution function into a
valued consultant that brings innovative solu-
tions to business leaders at all levels.

Unless HR embraces this transformation, it
will struggle to solve problems at the pace the
business demands. Today’s challenges require a
new playbook—one that makes HR more agile,
forward thinking, and bolder in its solutions.

Our goal in this research is to give business
and HR leaders fresh insights and perspectives
to shape thinking about priorities for 2015.
In a growing, changing economy, business
challenges abound. Yet few can be addressed
successfully without new approaches to solving
the people challenges that accompany them—
challenges that have only grown in importance
and complexity.

Our advice is simple: Jump into the fray
with enthusiasm. Seize ownership of these
challenges and show leadership in addressing
them. Make 2015 a year of bold leadership in
helping your organization thrive in this new
world of work.

Leading in the new world of work
11

Appendix: Survey demographics

Graphic: Deloitte University Press | DUPress.com
Note: Figures may not total 100 percent due to rounding.

Latin & South America

Western Europe

North America

Asia
Africa

Central & Eastern Europe

Nordic Countries

Oceania

Southeast Asia

Middle East

United States

South Africa

India

Brazil

China

Canada

Spain

Japan

Belgium

Mexico

United Kingdom

Australia

Germany

France

Netherlands

Italy

Region

25%
22%

16%

12%

11%

4%
3%
3%
2%
1%
5%
4%
4%
4%
4%
3%
3%
3%
2%
2%
2%
2%
1%
1%
1%

13%

Country

Our survey includes data from 3,333 respondents.

All other countries = 47%

Other

Life sciences
& health care

Public sector

Energy and
resources

Industry

Financial
services

Consumer
business

Manufacturing

Professional
services

Technology, media, &
telecommunications

Non-HR
HR

Respondent job function

27%

73%

Large
(10,001+)

Medium
(1,001 to 10,000)

Small
(1 to 1,000)

Organization size

22%

31%

47%

Respondent level

C-suite

Individual
contributor

Mid-level
33%

13%

54%

15%

14%

13%

12%
12%

8%
8%

11%
5%

Figure 11. Survey demographics

Global Human Capital Trends 2015
12

Endnotes

1. We asked respondents to rate each issue’s “im-

portance” and their organization’s “readiness” to
address it on a four-point scale: “not important/
ready,” “somewhat important/ready,” “impor-
tant/ready,” and “very important/ready.” These
ratings were then indexed on a 0–100 scale in
which 0 represents the lowest possible degree of
importance/readiness (“not important/ready”),
and 100 represents the highest possible degree
of importance/readiness (“very important/
ready”). An overall index score was calculated
for each trend using the respondents’ ratings of
“importance” and “readiness.” The index scores
were also used to calculate the “capability gap”
described in the following endnote.

2. The Deloitte Human Capital Capability Gap is
a research-based score that shows HR’s relative
capability gap by looking at the difference
between the “readiness” and “importance” index
scores for each trend. It is computed by taking
the “readiness” index score and subtracting the
“importance” index score based on the 0–100
scale described in the previous endnote. For
example, a trend with a readiness index score of
50 and an importance index score of 80 would
produce a capability gap of -30. Negative values
suggest a shortfall in capability, while positive
values suggest a capability surplus.

3. Using the normalized scores described in
endnote 1.

4. According to its importance index score
calculated as described in endnote 1.

5. According to its importance index score
calculated as described in endnote 1.

6. According to its importance index score
calculated as described in endnote 1.

7. According to its importance index score
calculated as described in endnote 1.

8. According to the 2015 Deloitte Millennial
Survey, Millennials’ expectations are different

from those of older leaders. Millennials place a
much higher priority on corporate purpose (77
percent believe “purpose” is their No. 1 reason
for selecting an employer) and on employee
wellness than older leaders. At the same time,
they feel left out of the leadership pipeline: Only
one-third believe their organization makes “full
use” of their skills. Forty-three percent believe
they will need to exit their current employer
to find the opportunities they need. Deloitte,
“Mind the gaps: The Deloitte Millennial survey
2015,” 2015, http://www2.deloitte.com/global/
en/pages/about-deloitte/articles/millennialsur-
vey.html.

9. According to its importance index score across
all respondents in each of the Global Human
Capital Trends 2014 and 2015 surveys.

10. The GPA is the weighted average score of
responses for excellent (4), good (3), adequate
(2), getting by (1), and underperforming (0).
The percentage values for organizations rating
themselves as underperforming and getting by
is calculated with a negative value that helps us
determine the overall GPA. The letter grade is
assigned as follows: A = 4, B = 3, C = 2, D = 1,
E = 0.

11. David Mallon, Karen Shellenback, Josh Bersin,

and Brenda Kowske, PhD, High-impact HR:
Building organizational performance from the
ground up, Bersin by Deloitte, July 2014, http://
www.bersin.com/library.

12. Karen O’ Leonard and Jennifer Krider, HR
Factbook 2015: Benchmarks and trends for US
HR organizations, Bersin by Deloitte, January 14,
2015, http://www.bersin.com/Practice/Detail.
aspx?id=18200.

13. Katherine Jones, PhD, The market for talent
management systems 2014: Talent optimization
for the global workforce, Bersin by Deloitte, June
2014, http://www.bersin.com/library.

Leading in the new world of work
13

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/Practice/Detail.aspx?id=18200

http://www.bersin.com/Practice/Detail.aspx?id=18200

http://www.bersin.com/library

Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | jbersin@deloitte.com

Josh Bersin founded Bersin & Associates, now Bersin by Deloitte, in 2001 to
provide research and advisory services focused on corporate learning. He is an
active researcher and industry analyst, a frequent speaker at industry events,
and a popular blogger. He has spent 25 years in product development, product
management, marketing, and sales of e-learning and other enterprise technologies.

Dimple Agarwal, Deloitte MCS Limited | dagarwal@deloitte.co.uk

Dimple Agarwal is the global leader for Organization Transformation and
Talent. She consults at the C-suite level on operating model and organization
design, HR and talent strategies, merger integration, and major transformation
programs. Agarwal’s 20 years of consulting experience includes working in the
UK, Netherlands, France, Switzerland, India, Malaysia, Nigeria, and the UAE.

Bill Pelster, Deloitte Consulting LLP | bpelster@deloitte.com

Bill Pelster is a Deloitte Consulting LLP principal with over 20 years of
industry and consulting experience. In his current role, he is responsible for
leading the Integrated Talent Management practice, which focuses on issues
and trends in the workplace. In his previous role as Deloitte’s chief learning
officer, Pelster was responsible for the total development experience of Deloitte
professionals, including learning, leadership, high potentials, and career/life
fit. Additionally, he was one of the key architects of Deloitte University.

Jeff Schwartz, Deloitte Consulting LLP | jeffschwartz@deloitte.com

A principal with Deloitte Consulting LLP, Jeff Schwartz is the leader of the
Human Capital practice in US India, based in New Delhi, and the global leader
of Human Capital Talent Strategies and Marketing, Eminence, and Brand. A
senior advisor to global companies, Schwartz’s recent research focuses on talent
in global and emerging markets. He is a frequent speaker and writer on issues
at the nexus of talent, human resources, and global business challenges.

Authors

Global Human Capital Trends 2015
14

mailto:%20jbersin%40deloitte.com?subject=

mailto:bpelster@deloitte.com

Leading

WHY is leadership a perennial issue? For the third year in a row, leadership
soared to become one of the most pressing
talent challenges faced by global organizations.
Nearly 9 out of 10 global HR and business
leaders (86 percent) cited leadership as a top
issue. Fully 50 percent of respondents in our
survey rated their leadership shortfalls as “very
important.” Yet only 6 percent of organiza-
tions believe their leadership pipeline is “very
ready”—pointing to a staggering capability
gap. (See figure 1 for capability gaps across
regions and selected countries). Respondents’
overall capability gap in leadership, which has
grown in magnitude since last year (figure
2),1 is striking, considering that leadership
program spending has increased compared to
last year.2

If nearly every company recognizes lead-
ership as a critical talent problem, why are
so few companies making any progress in
addressing it?

The short answer is that many compa-
nies treat leadership sporadically, confining
development to a select few employees, failing
to make long-term investments in leadership,
and neglecting to build a robust leadership

pipeline at all levels. For all the talk about
leadership as a CEO-level priority, too many
companies do not consistently invest in this
area. Issues that hold back effective leadership
development include:

• Leadership for the few, not the many: At
the top of the corporate pyramid, fewer
than 50 percent of C-suite executives feel
they are receiving any development at all.3
Meanwhile, lower down in the organiza-
tion, just 6 percent of survey respondents
report they have “excellent” programs in
place to develop Millennials. This is despite
the fact that 53 percent of Millennials aspire
to become the leader or senior executive of
their own organization.4

• Lack of consistent investment: Many
organizations view leadership as a short-
term training program or series of episodic
events that are funded one year but not
the next. Companies that “get it” (GE, for
example) invest in developing leaders dur-
ing good times and bad rather than treat-
ing it as a luxury they can only afford in
strong years. In fact, research shows that

Leadership:
Why a perennial issue?

• Organizations around the world are struggling to strengthen their leadership pipelines,
yet over the past year businesses fell further behind, particularly in their ability to
develop Millennial leaders.

• Eighty-six percent of all surveyed HR and business leaders cite leadership as one of their
most important challenges.

• A focus on leadership at all levels, coupled with consistent year-over-year spending in
this area, is key to building sustainable performance and engaging employees in the
new world of work.

Leading in the new world of work

17

high-performing companies spend 1.5 to 2
times more on leadership than other com-
panies, and reap results that are triple or
quadruple the levels of their competitors.5

• A weak leadership pipeline: Unless devel-
oping leadership is treated as an ongoing,

strategic initiative by HR and the busi-
ness, leadership pipelines will be weak and
potentially impact the ability of the business
to deliver on its strategy. Recent research
shows that only 32 percent of organiza-
tions have a steady supply of leaders at the
top levels, while only 18 percent regularly

Graphic: Deloitte University Press | DUPress.com

US -39

-34 Australia

-42 Brazil

–

41

Japan

-23 China

–

38

India

France -29

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Mexico -36

Germany -26

North
America

Latin & South
America

Nordic
countries

Western
Europe

Central &
Eastern Europe

Middle East Africa Asia Oceania

-39 -37 -30 -32 -36 -44 -39 -34

-38

Italy -30

UK -35

Canada -37

Belgium -36

-39 Netherlands

Spain -36

-38 South Africa

Brazil

Japan      

Netherlands
United States
South Africa
India
Canada

Mexico

Belguim

Spain
United Kingdom
Australia
Italy
France
Germany
China

Capability gaps in
selected countries:

Capability gaps by region:

-55 -5

-42

-41

-39

-39
-38
-38

-37

-36
-36
-36
-35
-34
-30
-29

-26

-23

Europe, Middle East, and AfricaAmericas Asia-Pacific

Southeast
Asia

-41

Figure 1. Leadership: Capability gap by region

Graphic: Deloitte University Press | DUPress.com

The percentage change figure and up arrow denote an increase in the magnitude of the capability gap.

2015

2014

78

5.8%

42

7440

Importance Readiness

GAP: -36

GAP: -34

Figure 2. Change in leadership capability gap between 2014 and 2015

Global Human Capital Trends 2015
18

hold their leaders accountable to identify
and develop successors.6 Only 10 per-
cent of respondents to this year’s survey
believe they have an “excellent” succession
program, and 51 percent state that their
programs are weak or have none at all.

Faced with these challenges, organizations
often believe they can simply “buy” a solution
to develop leaders. Off-the-shelf leadership
development solutions are fragmented and
of inconsistent quality. With so many models
and approaches—from large firms to business
schools to boutiques—it is hard for many com-
panies to architect the tailored yet integrated
experiences they need.

Despite these challenges, new data-driven
tools offer innovative approaches to help accel-
erate leadership by better assessing leadership
qualities, understanding career patterns of
successful leaders, and learning what develop-
ment works best. For example, companies can
now look at talent movement data and use
people analytics to see which job experiences
and backgrounds produce the best leaders.
They can then target training that best prepares
leaders to learn from this experience, and use
assessment tools to measure capability uplift
and readiness for the next level.

As the global economy gathers momen-
tum, companies need to seize this opportunity
to transform their leadership development
programs from a perennial question mark to a
source of strategic strength.

Lessons from the front lines

In late 2012, T-Mobile was on the edge. In
addition to having experienced the turmoil
of an unconsummated merger with AT&T
in 2011, the company had difficulty differ-
entiating itself in a hyper-competitive sector
and competing at scale against much larger
competitors. While profitable, it was losing
customers at an alarming rate. It also had a
great, collaborative culture, but was not able
to capitalize on its key strengths to disrupt the
status quo.

John Legere, T-Mobile’s new CEO, had
decided to shake up the industry. Starting in
early 2013, Legere and the senior leadership
team rapidly introduced their “Un-carrier”
strategy in a series of bold moves that created
first-mover advantage and took the industry
by surprise. This series of quickly unfolding
events, which continued throughout 2014, put
in motion a transformation not only in the
industry, but also within the company. By defi-
nition, things needed to change on the inside if
they were to change outside.

One element of this internal transformation
was to rethink the way the company’s people
were managed. “The combined HR leadership
team knew we needed to look hard at all our
people practices, so we started with a fresh
sheet of paper and a focus on next practices,
not best practices,” said Ben Bratt, VP HR and
head of talent and organization capability.
“We knew that our managers had to embody
Un-carrier in everything they did, but we had
little to offer them on their journey to a new set
of leadership capabilities. And we didn’t want
to recreate the past. We wanted to build toward
the future.”

T-Mobile decided early on to recreate a
significant focus on first- and second-line
leadership, and to radically rethink mothballed
high-potential efforts. “Sometimes, you have to
pause to go fast,” said Melissa Davis, director of
leadership and organization development. “We
focused on a six-week ‘dash’ to get crystal clear
on the new capabilities needed, and we rapidly

With so many models and
approaches—from large firms to
business schools to boutiques—
it is hard for many companies
to architect the tailored
yet integrated experiences
they need.

Leading in the new world of work
19

developed a new framework and strategy
that drove toward core elements like custom-
ers, goal setting, coaching, development, and
engagement. These capabilities are now the
underpinning of all leadership development.”

To help shape the new, empowering culture
in a way reflective of the Un-carrier spirit,
T-Mobile embarked on a series of leadership
investments, including:

• A high-potential program aimed at getting
directors ready for VP roles

• A “dead simple” 360-feedback tool that
aligned with the new leadership framework,
with real-time support for selected directors
to take action on the feedback

• A new, high-octane two-day “manager mas-
tery” program for frontline managers

“We are taking a new approach to develop-
ing our 4,500 first- and second-line leaders,”
said Bratt. “These leaders and their teams
touch more than 1.5 million customers each

year, so we need them to inspire their teams to
produce great results and deliver world-class
customer service at each ‘moment of truth.’ By
focusing on leadership at all levels, we know
we can continuously transform the teams that
work with our customers, delivering the indus-
try’s leading service, support, and quality care
with the Un-carrier spirit.”

This “clean sheet of paper” approach to
leadership development and the emerg-
ing momentum in the talent development
space has dovetailed with similar redesign
efforts across all HR groups. From paring
down and overhauling approaches to per-
formance management, to creating radical
transparency in the hiring process, to giving
employees an “always on” voice that managers
can immediately mine for valuable insights,
T-Mobile is equipping managers to lead the
Un-carrier revolution.

Where companies can start

• Start with commitment to leadership
development from the top: Without CEO
ownership, leadership development will
likely never be a long-term commitment.
Engage top executives to maintain a contin-
uous investment in leadership development.

• Answer the question: Leadership for
what? Begin a conversation about your top
business priorities. Then, build a capability
framework for selection, assessment, devel-
opment, and succession that defines the
leadership you need for today and tomor-
row. Keep the model simple—it should
be your “language for leadership” across
the enterprise.

• Develop inclusive leaders at all levels:
While many executives worry about top
leadership, mid-level and first-level leaders
actually operate the company and are the
future strategic leaders of the organization.
They also interact with customers every
day. Capable and engaging managers and
supervisors can drive performance, foster

Global Human Capital Trends 2015
20

engagement, and increase retention. This
requires focusing on growing segments of
leaders such as Millennials, global leaders,
and women—and tailoring development to
their unique needs and preferences.

• Make talent development and succession
a priority: Reward leaders for developing
successors and sharing talent. Without a
process to seed and feed the pipeline with
the best, most diverse talent, your leader-
ship investments will not deliver value.

• Develop or leverage a capability model:
Build a framework for assessment,

development, and coaching. New models
are now available, but companies can ben-
efit by keeping the model simple and focus-
ing on implementing leadership models
and programs.

• Extend boundaries to create new leader-
ship development opportunities: Work
with business partners, universities, non-
governmental organizations, and other
third-party organizations to create a range
of new leadership experiences, including
pro bono and community service projects.

BOTTOM LINE

In today’s competitive business environment and rapidly evolving world of work, organizations must
continuously develop a robust portfolio of leaders who are ready to engage employees, push forward
growth strategies, drive innovation, and work directly with customers. Companies that fail to invest
continuously in the leaders of tomorrow may find themselves falling behind their competitors.

Leading in the new world of work
21

Endnotes

1. We asked respondents to rate each issue’s “im-
portance” and their organization’s “readiness” to
address it on a four-point scale: “not important/
ready,” “somewhat important/ready,” “impor-
tant/ready,” and “very important/ready.” These
ratings were then indexed on a 0–100 scale in
which 0 represents the lowest possible degree of
importance/readiness (“not important/ready”),
and 100 represents the highest possible degree
of importance/readiness (“very important/
ready”). An overall index score was calculated
for each trend using the respondents’ ratings of

“importance” and “readiness.” The scores were
also used to calculate the “capability gap,” which
is computed by taking a trend’s “readiness”
index score and subtracting its “importance” in-
dex score. For example, a trend with a readiness
index score of 50 and an importance index score

of 80 would produce a capability gap of -30.

2. Karen O’Leonard and Jennifer Krider, Leader-
ship development factbook 2014: Benchmarks
and trends in U.S. leadership development, Bersin
by Deloitte, May 2014, http://www.bersin.com/
library.

3. “Deloitte business confidence report 2014: The
gap between confidence and action,” Deloitte
Development LLC, 2014, http://www2.deloitte.
com/us/en/pages/operations/articles/cxo-confi-
dence-survey.html.

4. “Mind the gaps: The Deloitte Millennial survey
2015,” Deloitte, 2015, http://www2.deloitte.com/
global/en/pages/about-deloitte/articles/millen-
nialsurvey.html.

5. O’Leonard and Krider, Leadership development
factbook 2014.

6. Ibid.

Global Human Capital Trends 2015
22

http://www.bersin.com/library

http://www.bersin.com/library

http://www2.deloitte.com/us/en/pages/operations/articles/cxo-confidence-survey.html

http://www2.deloitte.com/us/en/pages/operations/articles/cxo-confidence-survey.html

http://www2.deloitte.com/us/en/pages/operations/articles/cxo-confidence-survey.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/millennialsurvey.html

Adam Canwell, Deloitte MCS Limited | adacanwell@deloitte.co.uk

Adam Canwell has a strong track record of working with leadership teams for
identifying priorities and leading programs to effectively deliver change. He
has deep experience in the design and delivery of leadership programs to
increase their performance. Canwell has an MSc in organizational change
from Oxford/HEC. He also holds master’s and bachelor’s degrees from
Oxford University, where he studied philosophy, politics, and economics.

Jason Geller, Deloitte Consulting LLP | jgeller@deloitte.com

Jason Geller is Deloitte Consulting LLP’s national managing director for Human
Capital Consulting in the United States and a member of the Deloitte India board.
He is responsible for overall strategy, financial performance and operations, tal-
ent recruitment and development, and service delivery. Geller has served as a US
Deloitte Consulting board member, global and US leader for HR Transformation,
and US Human Capital chief strategy officer. He advises organizations on their HR
and talent transformations.

Heather Stockton, Deloitte Canada | hstockton@deloitte.ca

Heather Stockton leads Deloitte Canada’s Human Capital practice and is the
organization’s Financial Services Industry leader. She advises executives on execut-
ing business transformations, merger integrations, talent management strategies,
and changing operational models. Stockton supports restructuring, organizational
design, global business transformation, leadership assessments, and talent strategies
for numerous groups in banking, insurance, pension funds, and payments.

Authors
Leading in the new world of work
23

THIS year, corporate learning and develop-ment (L&D) burst onto the scene as one
of the most pressing business and talent issues
facing our respondents.2 Business and HR
leaders report that corporate learning capabili-
ties are waning (39 percent say the problem is
“very important,” more than three times last
year’s percentage), and companies are now
competing heavily for new technical and pro-
fessional skills. This research tells us that 2015
will be a critical year for targeted investment
in learning.

In this year’s Global Human Capital Trends
survey, more than 8 out of 10 (85 percent)
respondents cited learning as “important” or
“very important,”—up 21 percent from last
year. Yet, in a troubling development, more
companies than ever report they are unpre-
pared to meet this challenge. The capability
gap between the importance of the issue and
the ability to respond grew in magnitude by an
enormous 211 percent over the last 12 months
(from -9 to -28).3 (See figure 1 for capability

gaps across regions and selected countries, and
figure 2 for year-over-year changes in the gap.)

Why the huge increase in need and growing
gap in capability?

To start with, senior business leaders
increasingly see shortages of skills as a major
impediment to executing their business strate-
gies. Only 28 percent of the respondents to this
year’s survey believe that they are “ready” or
“very ready” in the area of workforce capabil-
ity. As the economy improves and the market
for high-skill talent tightens even further, com-
panies are realizing they cannot simply recruit
all the talent they need, but must develop
it internally.

Faced with gaps in talent and skills, CEOs
are turning to CHROs and CLOs to ask for
more and better learning platforms and prod-
ucts. Just when the need is most urgent, HR
organizations face a massive digital transfor-
mation in the learning and training industry,
plus new expectations by employees for on-
demand learning opportunities.

Learning and development:
Into the spotlight

• Companies see an urgent need to build skills and capabilities and are now focused on
transforming their learning organizations and strategies.

• Learning and development issues exploded from the No. 8 to the No. 3 most important
talent challenge in this year’s study, with 85 percent of survey participants rating
learning as a “very important” or “important” problem. Despite this demand, capabilities
in learning dropped significantly; the gap between importance and readiness was more
than three times worse in 2015 than in 2014.

• Companies that transform their learning and development organizations are not
only able to accelerate skills development, but also can dramatically improve
employee engagement and retention—one of the biggest challenges cited by this
year’s respondents.1

Leading in the new world of work
25

The last three years have witnessed an
explosion of new learning offerings, includ-
ing MOOCs (more than 400 universities now
offer free or low-cost courses), digital learning
tools, video offerings, and new cloud-based
training systems. These new learning platforms
are easy to use, provide access to internal and

external content, and use analytics to recom-
mend content in a manner similar to Netflix
and Amazon.

Innovative and engaging learning solu-
tions today are on-demand, fast to absorb,
and available on mobile devices.4 Yet, while
employees now demand a personalized, digital

Graphic: Deloitte University Press | DUPress.com

-26 Australia

-22 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Germany -23

North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-30 -31 -27 -23 -20 -38 -33 -28 -24

Italy -25

UK -20

Canada -28

Belgium -24

-29 Netherlands

Spain -20

South Africa
Brazil

India      

Japan
Mexico

US

Netherlands
Canada
Australia
Italy
Belgium
Germany
China
Spain
United Kingdom
France
Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-38
-37

-32

-31
-30
-30
-29
-28
-26
-25
-24
-23

-22

-20
-20

-17

Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-38

France -17

US -30

-37 Brazil

Mexico -30

-32 India

-38 South Africa

-31 Japan

Figure 1. Learning and development: Capability gap by region

Graphic: Deloitte University Press | DUPress.com
The percentage change figure and up arrow denote an increase in the magnitude of the capability gap.

211%

46

5950

GAP: -28

GAP: -9

742015

2014

Importance Readiness

Figure 2. Change in learning and development capability gap between 2014 and 2015

Global Human Capital Trends 2015
26

learning experience that feels like YouTube,
many companies are stuck with decades-old
learning management systems that amount to
little more than a registration system or course
catalog. Research shows that less than 25 per-
cent of companies feel comfortable with today’s
digital learning environment.5 This year’s
trends survey results support this: Only 6 per-
cent of respondents rate themselves excellent at
providing mobile learning, only 6 percent rate
themselves excellent at incorporating MOOCs
into their learning and development programs,
and only 5 percent rate themselves excellent
at using advanced media such as video, audio,
and simulations—essential capabilities in a
world dominated by digital learning platforms.

This may be starting to change, however.
Many companies
are starting to invest
more heavily in
learning and devel-
opment to build the
skills they need.

Last year, the
learning and devel-
opment market
grew by 14 percent,
while spending on
leadership develop-
ment grew at an
even faster rate.6 The
learning technology
market grew by 27
percent and is now a
$4 billion industry.7 Last year, more than $400
million was invested in fast-growing learn-
ing providers such as EdX, Khan Academy,
Coursera, and Udemy, which have emerged as
large marketplaces for online training, serv-
ing millions of users after only a few years
of operation.8

But new technology is only one part of
a learning transformation. Companies such
as Philips are rationalizing their distributed
learning teams, cutting down on duplicative
content, and consolidating technologies to
build an integrated, consistent learning envi-
ronment.9 MasterCard ties learning directly to

business strategies and has assigned product
managers to help make sure learning is directly
relevant to individual employees.10

And technology is no substitute for
the expertise of a company’s own people.
Companies are also increasingly unleash-
ing the power of their own experts. Google’s
Googler-to-Googler program is one good
example of how companies promote a learning
culture. Karen May, Google’s head of people
operations, says that giving employees teaching
roles makes learning a natural part of the way
employees work together, rather than some-
thing HR is making them do.11

Deckers Outdoor, a leading shoe manufac-
turer (the maker of Ugg footwear and other
well-known brands), has redefined its learning

strategy as a critical
part of employee
engagement, com-
munications, and
culture. Not only has
Deckers revitalized
its digital learn-
ing experience, but
the company also
considers all learn-
ing programs to be
programs to engage
people and drive the
corporate culture.
Each program
includes an element
of “why” and com-

municates purpose and meaning, not just con-
tent. This approach fits in with Deckers’ culture
of not merely “teaching people,” but “inspiring
people to learn.”12

Deckers’ head of L&D is also responsible for
employee engagement, culture, and employee
communications. Her team tells stories about
learning successes and career growth; they give
people artifacts to take to their desks to remind
them to learn; and they focus on change man-
agement and communication as an integral
part of the learning environment. The result is
not only strong business results but also one of
the lowest turnover rates in the industry.

With a background in
employee development,

change, and leadership, the
CLO of today wears many

hats: chief capability officer,
chief leadership officer,
chief talent officer, and

even chief culture officer.

Leading in the new world of work
27

Beyond filling skill and capability gaps,
some companies are realizing other goals
through learning and development trans-
formation. TELUS, one of Canada’s fastest-
growing telecommunications companies,
recently revitalized its learning platforms
with improved technology, the assignment of
“product managers for learning” within L&D,
and the adoption of new contextual learning
tools. Following these steps, employee reten-
tion improved by 30 percent.13

As companies begin the transformation
process, chief learning officers are taking on
critical business roles. With a background
in employee development, change, and
leadership, the CLO of today wears many
hats: chief capability officer, chief leadership
officer, chief talent officer, and even chief
culture officer.14

Lessons from the front lines

Nestlé recently completed a review of
how learning could play a more strategic
role in a world dominated by the need for
innovation, agility, and social, mobile, and
digital technology.

The company’s CLO, Fausto Palumbo,
presented a bold view that learning could be
a strategic lever within the organization to
change the way employees think and act. This
led to a review of enterprise-wide leadership
programs and the initiation of a pilot program
with the mission of reimagining the learning
experience for senior executives.

Instead of a lecture-based program, Nestlé
developed a multifaceted experiential learning
model that included a wide variety of activities:

• A multi-day, high-stress simulation around
key leadership topics

• Reactions to real-time/simulated data from
product-specific social and mobile feeds

• Product development by widely distrib-
uted design and development teams using
digital technologies

• Prototype development of new products
using digital printing

To ensure that learning was not an isolated
event but rather integrated into daily work, the
company set up a series of video and digital
presentations before the live learning module
was launched; it also built follow-up events.

Through this learning program, the next
generation of senior leaders were rapidly intro-
duced to a social and mobile world where agil-
ity and innovation are the disruptive norms.
The pilot provided the foundation for how the
company will use learning to drive its agenda
in a digital world where social and mobile need
to be part of every executive’s toolkit. With
the success of the pilot, the learning team is
now moving quickly to reinvent other critical
leadership programs.

Global Human Capital Trends 2015
28

Where companies can start

• Reimagine the learning experience: This
year is the time to reimagine and redesign
your learning experience. Look at your
learning management systems and content
strategy, and expand your thinking to create
an environment that attracts and encour-
ages people to learn.

• Assess your current learning offerings:
Analyze where your current L&D money is
going. Research shows that most companies
underestimate their spending by a factor
of two to three, and many have uncoordi-
nated and duplicative programs and tools
throughout the company.15 A project to find
and rationalize learning spending often
identifies areas to reengineer with little
incremental investment.

• Centralize spending and strategy while
carefully distributing learning capabili-
ties: Great learning teams have a strong
leader and spend money strategically,
with centralized operations focused on
technology, content, tools, and methods.
They focus on technical, professional, and
leadership programs across the company.
They distribute programs locally, leveraging

centralized infrastructure and common
learning elements.

• Assign a learning technology and design
thinking team: Companies need to
redefine learning as an agile and routine
experience. This often requires the assign-
ment of a development team to build a new
“learning architecture” as well as assigning
people to be “product managers,” not just
instructional designers.

• Reimagine measurement: The old mea-
surement models no longer provide enough
information. Look at measuring all types
of activity, and capture data about learn-
ing like you do from outside customers.
Monitor metrics such as activity and usage,
feedback, and net promoter scores, as well
as satisfaction and instructor ratings.

• Elevate the job of chief learning officer:
In times like these the CLO plays a critical
role. Elevate this position to attract experi-
enced learning, technology, and HR leaders.
The CLO must create a vision for the future,
put in place a business and operating plan
that scales, centralize strategy and architec-
ture, and engage top leadership in building
a learning culture.

BOTTOM LINE

Learning today has become a business-critical priority for increasing skills, improving the leadership
pipeline, and enhancing employee engagement. As the corporate learning market undergoes a digital
transformation, this is the year to assess your current learning environment and implement a new
vision to build a corporate learning experience that touches every employee in a significant way.

Leading in the new world of work
29

1. After studying more than 30 different research
studies on retention and engagement, research-
ers found that focus on company-specific train-
ing is one of the strongest contributors to em-
ployee engagement and retention. Research also
shows that “high-impact” learning organizations
deliver 30 percent higher customer service and
show similar high performance in innovation.
See Angela L. Heavey, Jacob A. Holwerda, and
John P. Hausknecht, “Causes and consequences
of collective turnover: A meta-analytic review,”
Journal of Applied Psychology

98

, No. 3 (2013),
pp. 412-453; David Mallon, High-impact learn-
ing culture: The 40 best practices for creating an
empowered enterprise, Bersin & Associates, June
2010, http://www.bersin.com/library or http://
www.bersin.com/hilc.

2. In this research, respondents were asked to
rate their talent challenges by importance on a
four-point scale (“very important,” “important,”

“somewhat important,” and “not important”).
The ranked list of challenges listed by impor-
tance is given in the introduction to this report.

3. We asked respondents to rate each issue’s “im-
portance” and their organization’s “readiness” to
address it on a four-point scale: “not important/
ready,” “somewhat important/ready,” “impor-
tant/ready,” and “very important/ready.” These
ratings were then indexed on a 0–100 scale in
which 0 represents the lowest possible degree of
importance/readiness (“not important/ready”),
and 100 represents the highest possible degree
of importance/readiness (“very important/
ready”). An overall index score was calculated
for each trend using the respondents’ ratings of

“importance” and “readiness.” The scores were
also used to calculate the “capability gap,” which
is computed by taking a trend’s “readiness”
index score and subtracting its “importance” in-
dex score. For example, a trend with a readiness
index score of 50 and an importance index score
of 80 would produce a capability gap of -30.

4. Todd Tauber and Dani Johnson, The next
evolution of learning content, Bersin by Deloitte,
December 2014, http://www.bersin.com/library.

5. Todd Tauber and Dani Johnson, The next evolu-
tion of learning content, Bersin by Deloitte, fall
2014, http://www.bersin.com/library.

6. Karen O’Leonard and Jennifer Krider, The lead-
ership development factbook 2014: Benchmarks
and trends in U.S. leadership development, Bersin
by Deloitte, May 2014, http://www.bersin.com/
library; Karen O’Leonard, The corporate learning
factbook 2014: Benchmarks, trends, and analysis
of the U.S. training market, Bersin by Deloitte,
January 2014, http://www.bersin.com/library.

7. David Mallon, Todd Tauber, and Wendy Wang-
Audia, Learning management systems 2014:
Provider comparisons and profiles, Bersin by
Deloitte, August 2014, http://www.bersin.com/
library.

8. Ellis Booker, “Education tech investments
surpassed $1 billion in 2012,” January 25, 2013,
http://www.informationweek.com/software/ed-
ucation-tech-investments-surpassed-$1-billion-
in-2012/d/d-id/1

108

366?.

9. Personal communication with Philips execu-
tives.

10. Katie Kuehner-Hebert, “Teaching collaboration
at MasterCard: Priceless,” Chief Learning Officer,
October 16, 2014, http://www.clomedia.com/
articles/

58

98-teaching-collaboration-at-master-
card-priceless.

11. Sarah Kessler, “Here’s a Google perk any com-
pany can imitate: Employee-to-employee learn-
ing,” Fast Company, March 26, 2013, http://www.
fastcompany.com/3007369/heres-google-perk-
any-company-can-imitate-employee-employee-
learning.

Endnotes
Global Human Capital Trends 2015
30

http://www.bersin.com/library

http://www.bersin.com/hilc

http://www.bersin.com/hilc

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://www.informationweek.com/software/education-tech-investments-surpassed-$1-billion-in-2012/d/d-id/1108366?

http://www.informationweek.com/software/education-tech-investments-surpassed-$1-billion-in-2012/d/d-id/1108366?

http://www.informationweek.com/software/education-tech-investments-surpassed-$1-billion-in-2012/d/d-id/1108366?

http://www.clomedia.com/articles/5

89

8-teaching-collaboration-at-mastercard-priceless

http://www.clomedia.com/articles/5898-teaching-collaboration-at-mastercard-priceless

http://www.clomedia.com/articles/5898-teaching-collaboration-at-mastercard-priceless

http://www.fastcompany.com/3007369/heres-google-perk-any-company-can-imitate-employee-employee-learning

http://www.fastcompany.com/3007369/heres-google-perk-any-company-can-imitate-employee-employee-learning

http://www.fastcompany.com/3007369/heres-google-perk-any-company-can-imitate-employee-employee-learning

http://www.fastcompany.com/3007369/heres-google-perk-any-company-can-imitate-employee-employee-learning

12. Todd Tauber, Three marketing lessons for learn-
ing & development, Bersin by Deloitte, June 24,
2014, http://www.bersin.com/library.

13. Elana Varon, “How TELUS engages employees
through pervasive learning,” http://www.sap.
com/bin/sapcom/en_us/downloadasset.2014-
06-jun-24-09.how-telus-engages-employees-

through-pervasive-learning-pdf.bypassReg.html.

14. Karen O’Leonard, Today’s world-class chief
learning officer, Bersin by Deloitte, May 31, 2012,
http://www.bersin.com/library.

15. O’Leonard and Krider, The corporate learning
factbook 2014.

Leading in the new world of work
31

http://www.bersin.com/library

http://www.sap.com/bin/sapcom/en_us/downloadasset.2014-06-jun-24-09.how-telus-engages-employees-through-pervasive-learning-pdf.bypassReg.html

http://www.sap.com/bin/sapcom/en_us/downloadasset.2014-06-jun-24-09.how-telus-engages-employees-through-pervasive-learning-pdf.bypassReg.html

http://www.sap.com/bin/sapcom/en_us/downloadasset.2014-06-jun-24-09.how-telus-engages-employees-through-pervasive-learning-pdf.bypassReg.html

http://www.sap.com/bin/sapcom/en_us/downloadasset.2014-06-jun-24-09.how-telus-engages-employees-through-pervasive-learning-pdf.bypassReg.html

http://www.bersin.com/library

Jonathan Eighteen, Deloitte MCS Limited | jeighteen@deloitte.co.uk

Jonathan Eighteen has over 15 years of industry and consulting experience.
In his current role, he leads the Learning Solutions practice for Deloitte
UK, where he consults with corporate learning and leadership development
departments. He frequently speaks on the challenges businesses face
regarding modernizing L&D and the use of innovative learning technologies.
Eighteen has lived and worked in the United Kingdom, the United
States, and Asia Pacific, and his experience spans multiple industries.

Josh Haims, Deloitte Consulting LLP | jhaims@deloitte.com

Josh Haims currently leads the Learning and Development practice of Deloitte
Consulting LLP and is the co-lead of the organization’s Global Learning Services
team. His consulting experience over the last 15 years includes learning strategy,
governance, operations improvement, vendor strategies, curriculum transforma-
tion, evaluation, and employee engagement, along with talent management, change
management, HR technology implementation, and risk management/regulatory
compliance strategies.

Jen Stempel, Deloitte Consulting LLP | jstempel@deloitte.com

Jen Stempel is a leader in Deloitte Consulting LLP’s Human Capital Learning
Solutions practice in the United States. Her learning experience includes strategy
development, governance, process improvement, vendor optimization, and cur-
riculum rationalization, as well as the design and development of learning programs.
Stempel leads large-scale assessment and transformation projects to rationalize and
optimize the learning function; her focus is on transforming learning operations to
support and advance business goals.

Bernard van der Vyver, Deloitte Consulting BV | bevandervyver@deloitte.nl

Bernard van der Vyver is a leading advisor on human capital matters, focusing on
learning and development. By merging his background in technology (and its effec-
tive use) with the development of people, van der Vyver brings a unique strength to
the HR domain. A global learning solutions leader, he aspires to grow and strengthen
the global learning community by leveraging knowledge and expertise to deliver
learning solutions that bring unique value to his clients.

Authors
Global Human Capital Trends 2015
32

mailto:jstempel%40deloitte.com?subject=

Engaging

TODAY’S organizations live in the Glassdoor era. Every corporate decision
is immediately publicly exposed and debated.
Once-private issues are now posted online
for every employee—and every potential
employee—to read. An organization’s culture—
which can be loosely defined as “the way things
work around here”—is increasingly visible for
all the world to see.

Given the harsh spotlight of this new trans-
parency, an organization’s culture can become
a key competitive advantage—or its Achilles’
heel. Culture and engagement are now business

issues, not just topics for HR to debate. And
there’s no place for organizations to hide.

This year, employee engagement and cul-
ture issues exploded onto the scene, rising to
become the No. 1 challenge around the world
in our study.1 An overwhelming

87

percent of
respondents believe the issue is “important,”
with 50 percent citing the problem as “very
important”—double the proportion in last
year’s survey. Two-thirds (66 percent) of HR
respondents reported that they are updating
their engagement and retention strategies (fig-
ure 1). Along with decreasing readiness, our

Culture and engagement:
The naked organization

• In an era of heightened corporate transparency, greater workforce mobility, and severe
skills shortages, culture, engagement, and retention have emerged as top issues for
business leaders. These issues are not simply an HR problem.

• Culture and engagement is the most important issue companies face around the world.
87 percent of organizations cite culture and engagement as one of their top challenges,
and 50 percent call the problem “very important.”

• Organizations that create a culture defined by meaningful work, deep employee
engagement, job and organizational fit, and strong leadership are outperforming their
peers and will likely beat their competition in attracting top talent.

Graphic: Deloitte University Press | DUPress.com

Updated in the past 18 months

Currently updating

Outdated

No strategy

28%

38%

16%

18%

10%0 20% 30% 40% 50%

Figure 1. Status of retention and engagement strategy

Note: Only HR respondents were asked this question.

Leading in the new world of work
35

data also showed substantial capability gaps in
engagement and culture across countries and
regions (figure 2).

Research shows that in most companies,
engagement is low. According to the Gallup
polling firm, only 13 percent of the global
workforce is “highly engaged.”2 Upwards of
half the workforce would not recommend their
employer to their peers.3

Despite this challenge, a substantial propor-
tion of the respondents in this year’s survey (22
percent) report that their organizations have
either a poor program to measure and improve
engagement, or no program at all. Only 7
percent rate themselves excellent at measuring,
driving, and improving engagement and reten-
tion (figure 3). And only 12 percent believe

their organizations are excellent at effectively
driving the desired culture.

This is a new and systemic problem for
organizations worldwide. Why has it become
so acute?

• Employees are now like customers;
companies have to consider them volun-
teers, not just workers: As the job market
has heated up and new technologies have
exploded, power has shifted from the
employer to the employee. Websites like
Glassdoor, LinkedIn, Facebook, and oth-
ers not only increase transparency about
a company’s workplace; they make it far
easier for employees to learn about new job
opportunities and gain intelligence about
company cultures.

Graphic: Deloitte University Press | DUPress.com

-31 Australia

-22 China
The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Germany -25

North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-29 -36 -25 -29 -31 -37 -34 -27 -32

Italy -34

UK -24

Canada -25

Belgium -32

-31 Netherlands

Spain -30

Brazil
South Africa
Italy
Mexico

Belgium     

Japan
Australia
Netherlands
Spain
US
India
France
Canada
Germany
United Kingdom
China
Capability gaps in
selected countries:
Capability gaps by region:
-55 -5

-43

-35
-34

-33

-32
-32
-31
-31
-30
-30
-28
-27
-25
-25
-24
-22
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-37

France -27

US -30

-43 Brazil

Mexico -33

-28 India

-35 South Africa

-32 Japan

Figure 2. Culture and engagement: Capability gap by region

Global Human Capital Trends 2015
36

• Leaders lack an understanding of and
models for culture: Culture is driven from
the top down. Yet most executives cannot
even define their organization’s culture,
much less figure out how to disseminate it
through the company.

• The new world of work changes the way
we engage people: The world of work is
very different from and more complex
than it was only a few years ago. Employees
today work more hours and are nearly
continuously connected to their jobs by
pervasive mobile technologies. They work
on demanding cross-functional teams that
often bring new people together at a rapid
rate. Flexibility, empowerment, develop-
ment, and mobility all now play a big role in
defining a company’s culture.

• Employees’ motivations have changed:
Today’s workers have a new focus on pur-
pose, mission, and work-life integration.4
Research shows that a variety of complex
factors contribute to strong employee
engagement, including job design, manage-
ment, work environment, development,
and leadership.5 Today, more than twice
as many employees are motivated by work
passion than career ambition (12 percent vs.
5 percent), indicating a need for leadership
to focus on making the work environment
compelling and enjoyable for everyone.6

Culture and engagement is no longer
an arcane topic owned by HR. It is now an
imperative for every leader and every executive
in the organization. Many studies now show
that highly engaged companies can hire more
easily, deliver stronger customer service, have
the lowest voluntary turnover rates, and be
more profitable over the long run.7

Google, a highly rated “best place to work”
in many studies, focuses heavily on culture.8
The company regularly measures dozens of
factors to understand what makes people pro-
ductive and happy. This research has shaped
Google’s workplace culture in myriad ways—
from the company’s open workplace design to
the provision of free gourmet food and on-site
laundry services for employees.

Although culture and engagement play such
a critical role in business performance, most
organizations do a poor job of measuring their
achievements or shortcomings. Historically,
companies have relied on annual engagement
surveys, often costing hundreds of thousands
of dollars and taking months to deploy. And
very few companies have a process or tools to
measure culture and learn where it is strong,
weak, or inconsistent. At a time when corpo-
rate cultures are being continuously debated,
shaped, and redefined on social networks, the
once-a-year survey is perilously obsolete.

Fortunately, new tools are emerging to
provide organizations with real-time senti-
ment and employee feedback. A new breed of
vendors offers pulse survey tools, employee

Graphic: Deloitte University Press | DUPress.com
Excellent

Good

Fair

Poor

No program

7%
33%
38%
16%
6%
10%0 20% 30% 40% 50%

Figure 3. Respondents’ ratings of retention and engagement program capabilities

Leading in the new world of work
37

sentiment management tools, culture assess-
ment tools, and real-time employee monitoring
tools to help leaders and supervisors rapidly
assess when engagement is high and when
problems are arising.9 These new tools make it
possible for organizations to monitor employee
sentiment with the same level of rigor and
speed as they measure customer sentiment.10

Ultimately, the issues of culture and engage-
ment are driven by leadership. Companies
pushing aggressive growth plans, experienc-
ing financial stress, or going through layoffs
or mergers often see a radical shift in culture.
While most leaders are measured on the basis
of business results, organizations must begin
holding leaders accountable for building a
strong and enduring culture, listening to feed-
back, and engaging and retaining their teams.

HR should also understand the impact of
performance management, work-life balance,
and flexibility on engagement. While manage-
ment prac-
tices once
pushed com-
panies toward
a highly
competitive
performance
management
process, in
2015, many
companies
are finding
that pressure
and competi-
tion often
lead to high turnover and ultimately poorer
business results.

Lessons from the front lines

A series of events at one global financial
services company not only fed a negative
public perception of the company, but also
generated a lack of trust internally. To turn the
organization around, the company launched
a five-year transformation program, a key

component of which was to build a sustainable,
values-driven culture across the organization.

This cultural transformation had three key
distinguishing principles that were critical to
the program’s success:

• Leadership drives culture which in turn
drives performance: Company lead-
ers should drive the change and be
highly accountable

• Processes, policies, and systems should be
congruent with the company’s new purpose
and underpinning values

• The results should be measurable and
reported both internally and externally,
providing a highly visible yardstick
of progress

To jump-start the transformation, HR
introduced a series of leadership and devel-

opment
programs
to support
employees in
being will-
ing and able
to live the
new values.
There was an
initial focus
on informing,
engaging, and
empowering
senior leaders
and culture

carriers to promote the company’s new values,
equipping them with the necessary insight,
knowledge, and tools to drive the change. All
processes, policies, and systems were then
aligned with the new culture, with perfor-
mance management, talent management,
recognition, and learning all transformed to
reflect the new values and behaviors. The com-
pany also deployed a cultural assessment tool
to understand and measure the conditions for
successful transformation.

While most leaders are measured
on the basis of business results,

organizations must begin holding
leaders accountable for building
a strong and enduring culture,

listening to feedback, and engaging
and retaining their teams.

Global Human Capital Trends 2015
38

These activities had a strong and measur-
able business impact. The result: an improved
public reputation; an aligned senior leadership
group with culture at the top of their agenda;
a growth in trust both internally and exter-
nally; and stronger employee engagement and
commitment to the organization’s new culture
and values.

Where companies can start

• Engagement starts at the top: Make
engagement a corporate priority, and mod-
ernize the process of measuring and evalu-
ating engagement throughout the company.
Benchmark the company, strive for external
recognition as validation of efforts, and
reinforce to leadership that the engagement
and retention of people is their No. 1 job.

• Measure in real time: Put in place real-
time programs to evaluate and assess orga-
nizational culture, using models or tools to
better understand where it is strong, where
it is weak, and how it really feels to workers.

• Make work meaningful: Focus on leader-
ship, coaching, and performance man-
agement to help employees make their
work meaningful. Reinforce the impor-
tance of a coaching and feedback culture,
and teach leaders how to be authentic
and transparent.

• Listen to the Millennials: Their desires,
needs, and values will shape the organiza-
tion’s culture over the next 10 years.

• Simplify the work environment: Read our
research in this report on the simplification
of work to help reduce the burden of today’s
24/7 work environment.

BOTTOM LINE

The old adage “culture eats strategy for breakfast” applies to every organization today. Business and
HR executives must understand that highly engaged companies attract the best talent, have the lowest
voluntary turnover rates, and are more profitable over the long run.11 Companies should use 2015 as
a time for change. By focusing on driving engagement through the right corporate culture, companies
can improve execution, retention, and financial performance.

Leading in the new world of work
39

http://dupress.com/articles/work-simplification-human-capital-trends-2015/

http://dupress.com/articles/work-simplification-human-capital-trends-2015/

1. We asked respondents to rate each issue’s “im-
portance” and their organization’s “readiness” to
address it on a four-point scale: “not important/
ready,” “somewhat important/ready,” “impor-
tant/ready,” and “very important/ready.” These
ratings were then indexed on a 0–100 scale in
which 0 represents the lowest possible degree of
importance/readiness (“not important/ready”),
and 100 represents the highest possible degree
of importance/readiness (“very important/
ready”). An overall index score was calculated
for each trend using the respondents’ ratings of

“importance” and “readiness.”

2. Steve Crabtree, “Worldwide, 13% of employees
are engaged at work,” Gallup, October 8, 2013,
http://www.gallup.com/poll/165269/worldwide-
employees-engaged-work.aspx.

3. Bersin by Deloitte proprietary research conduct-
ed with Glassdoor, November 2014.

4. Deloitte, “Business needs to reset its purpose
to attract Millennials, according to Deloitte’s
annual survey,” press release, January 14, 2015,
http://www2.deloitte.com/global/en/pages/
about-deloitte/articles/2015-millennial-survey-
press-release.html.

5. The five key elements that contribute to engage-
ment are meaningful work, hands-on manage-
ment, career and growth opportunity, flexible
and humane work environment, and trust in
leadership. Together, these form the basis of a
20-element model we call “Simply Irresistible.”

Josh Bersin, The five elements of a ‘simply irresist-
ible’ organization, Bersin by Deloitte, April 10,
2014, http://www.bersin.com/library.

6. John Hagel III, Passion versus ambition: Did
Steve Jobs have worker passion?, Deloitte
University Press, November 19, 2014, http://
dupress.com/articles/employee-passion-
ambition/?coll=6211.

7. Great Place to Work® Institute, “What are the
benefits? The ROI on workplace culture,” http://
www.greatplacetowork.com/our-approach/
what-are-the-benefits-great-workplaces, ac-
cessed February 19, 2015.

8. Farhad Manjoo, “The happiness machine: How
Google became such a great place to work,” Slate,
January 21, 2013, http://www.slate.com/articles/
technology/technology/2013/01/google_people_
operations_the_secrets_of_the_world_s_most_
scientific_human.html.

9. Josh Bersin, “Why the talent management
software market will radically change,” Forbes,
December 29, 2014, http://www.forbes.com/
sites/joshbersin/2014/12/29/how-and-why-the-
talent-management-market-is-changing/.

10. Josh Bersin, “Becoming irresistible: A new
model for employee engagement,” Deloitte
Review 16, January 26, 2015, http://dupress.com/
articles/employee-engagement-strategies/.

11. Great Place to Work® Institute, “What are the
benefits? The ROI on workplace culture.”

Endnotes
Global Human Capital Trends 2015
40

http://www.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx

http://www.gallup.com/poll/165269/worldwide-employees-engaged-work.aspx

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/2015-millennial-survey-press-release.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/2015-millennial-survey-press-release.html

http://www2.deloitte.com/global/en/pages/about-deloitte/articles/2015-millennial-survey-press-release.html

http://www.bersin.com/library

http://dupress.com/articles/employee-passion-ambition/?coll=6211

http://dupress.com/articles/employee-passion-ambition/?coll=6211

http://dupress.com/articles/employee-passion-ambition/?coll=6211

http://www.greatplacetowork.com/our-approach/what-are-the-benefits-great-workplaces

http://www.greatplacetowork.com/our-approach/what-are-the-benefits-great-workplaces

http://www.greatplacetowork.com/our-approach/what-are-the-benefits-great-workplaces

http://www.slate.com/articles/technology/technology/2013/01/google_people_operations_the_secrets_of_the_world_s_most_scientific_human.html

http://www.slate.com/articles/technology/technology/2013/01/google_people_operations_the_secrets_of_the_world_s_most_scientific_human.html

http://www.slate.com/articles/technology/technology/2013/01/google_people_operations_the_secrets_of_the_world_s_most_scientific_human.html

http://www.slate.com/articles/technology/technology/2013/01/google_people_operations_the_secrets_of_the_world_s_most_scientific_human.html

http://www.forbes.com/sites/joshbersin/2014/12/29/how-and-why-the-talent-management-market-is-changing/

http://www.forbes.com/sites/joshbersin/2014/12/29/how-and-why-the-talent-management-market-is-changing/

http://www.forbes.com/sites/joshbersin/2014/12/29/how-and-why-the-talent-management-market-is-changing/

http://dupress.com/articles/employee-engagement-strategies/

http://dupress.com/articles/employee-engagement-strategies/

Authors

David Brown, Deloitte Touche Tohmatsu | davidbrown@deloitte.com.au

David Brown is the Human Capital leader for Australia, providing human capital advice
to many of Australia’s leading organizations. His experience covers the full spectrum of
HR management, with a focus on HR strategy and execution, leadership, transformational
change, and workforce productivity. Brown has over 30 years’ experience in HR, having
spent 20 years in lead HR roles for major multinationals and the past 10 years in
consulting leadership roles. He has lived and worked in North America, Europe, and Asia.

Sonny Chheng, Deloitte Consulting LLP | schheng@deloitte.com

Sonny Chheng is a principal in Deloitte Consulting LLP’s Human Capital practice. He has
more than 15 years of experience working with clients across industries to develop and
implement organization and talent solutions that deliver the business benefits of transfor-
mation efforts. He has advised clients on business issues including M&A, strategy changes,
cultural transformation, and technology implementation. In addition to serving clients,
Chheng leads Deloitte’s culture service offering.

Veronica Melian, Deloitte SC | vmelian@deloitte.com

Veronica Melian is a partner and the Human Capital practice leader for Deloitte
LATCO based in Uruguay. She has over 18 years of industry and consulting
experience, specializing in large-scale transformation projects including HR
transformation and strategic change. Melian leads regional projects helping
global companies to implement their strategic initiatives in Latin America. She
is a frequent speaker on HR trends, organizational change, and culture.

Kathy Parker, Deloitte Canada | katparker@deloitte.ca

Kathy Parker is a partner with Deloitte’s Greater Toronto Area Human Capital
practice. A consultant with more than 18 years’ experience, she specializes in
helping clients design and deliver strategic change management programs. Parker
is both the global and national Culture Service leader and Strategy Change
leader in the GTA and co-leads the national Strategy Change Service.

Marc Solow, Deloitte Consulting LLP | msolow@deloitte.com

Marc Solow, a director with Deloitte Consulting LLP, leads the organization’s HR shared
services market offering in the United States. He has nearly 25 years of experience as a
consultant and HR practitioner. Solow has led the consulting services in support of several
global HR transformation, shared services, and outsourcing projects for large, complex
clients in a variety of industries, including insurance, health care, life sciences, consumer
and industrial products, and energy.

Leading in the new world of work
41

IN our initial Global Human Capital Trends report in 2013, we described the rapidly
emerging “open talent economy” and outlined
how talent strategies were moving beyond
traditional corporate and organizational bal-
ance sheets to tap
into a broad range
of external talent.
This external talent
market includes
joint ventures and
partners, contracted
and outsourced
employees, freelance
workers, and com-
petitions for ideas
and solutions.

This year, the “on
demand” and “on tap” talent markets continue
to grow and to challenge companies’ ability to
effectively manage their total workforce,2 as
companies expand their use of external talent
sources to gain access to badly needed capa-
bilities, In fact, in this year’s Global Human
Capital Trends research, workforce capability
was rated the fifth most important challenge.

Yet as the importance of workforce capabil-
ity builds among corporate leaders—with the
trend’s importance index climbing from 62
last year to 70 this year—organizations’ readi-
ness to address it has slipped, with its readi-

ness index dropping
from 46 to 43.3 And
although workforce
capability had only
the eighth-largest
capability gap overall,
there was significant
geographic variation,
with particularly pro-
nounced capability
gaps being reported
in Japan and South
East Asia (figure 1).

Today’s workforce is no longer a set of
employees who come into the office or factory
each morning or shift and go home each night.
More and more of the workforce is composed
of contingent employees working variable,
often part-time hours or schedules, compen-
sated hourly, operating remotely, or actually
working for an external firm.

Workforce on demand:
Are you ready?

• Companies are taking a more sophisticated approach to managing all aspects of their
workforce, including the hourly, contingent, and contract workforce.

• More than one-third (34 percent) of all workers in the United States are contract
workers,1 and more than half (51 percent) of our respondents say their need for
contingent workers will keep growing over the next three to five years.

• The on-demand workforce offers companies the ability to tap into extensive networks
of innovators, technical experts, and seasoned professionals. To engage and retain
them, companies should think broadly about how their HR programs, strategies, and
analytics tools could be applied not only to full-time employees, but also to contingent
and part-time workers.

Today’s workforce is no
longer a set of employees
who come into the office
or factory each morning

or shift and go home
each night.

Leading in the new world of work
43

http://www2.deloitte.com/global/en/pages/human-capital/articles/global-human-capital-trends-2013.html

http://www2.deloitte.com/global/en/pages/human-capital/articles/global-human-capital-trends-2013.html

The challenges presented by the on-demand
workforce are significant. But the trend itself
seems irreversible, driven by the networked
nature of work, the multigenerational work-
force, a desire for more flexible working
conditions, and the demands of business.
Researchers estimate that as many as 30 to
40 percent of all US workers today are con-
tingent.4 In fact, just over half (51 percent) of
respondents in our survey report that their
need for contingent workers will continue to
grow over the next three to five years (figure 2).

For years, roles such as delivery drivers,
food service professionals, custodians, and
other hourly positions have been outsourced
to agencies. But today, roles that can be filled
by contingent workers include IT profes-
sionals, engineers, computer programmers,

accountants, and those in other technical
positions, which are commonly outsourced to
contractors or staff augmentation firms. These
workers are engaged as freelancers or tempo-
rary employees for a project.5

Typically, the need for such talent was
considered to be a procurement problem, man-
aged through vendor contracts and external
staffing firms. Yet as these types of workers
become more important, HR should now con-
sider them an integral part of the workforce.
It’s time for HR to consider all workers in its
talent strategy, regardless of their contingent or
full-time status.

How can organizations best manage this
new “freelance economy” of valued staff ?
Which elements of the talent management
process should be applied to contingent

Graphic: Deloitte University Press | DUPress.com
Japan      
Netherlands
South Africa
US
Belgium     
Brazil
India
Australia
Canada
Mexico

UK

Germany
Italy
France
Spain
China

-47

-40
-38
-32
-31
-30
-30
-28
-27
-27
-24
-22

-18

-15
-10

-7

Capability gaps in
selected countries

US -32

-28 Australia

-30 Brazil

-47 Japan

-7 China

-30 India

France -15

Capability gaps by region:
The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Mexico -27

Germany -22

-31 -25 -19 -22 -21 -37 -35 -27 -28

Italy -18

UK -24
-55 -5

Canada -27

Belgium -31

-40 Netherlands

Spain -10

-38 South Africa
North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe
Middle East Africa Asia Oceania
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-43

Figure 1. Workforce capability: Capability gap by region

Global Human Capital Trends 2015
44

workers—and why? Some of the biggest issues
to consider include:

• How do we recruit from a highly diverse
set of talent pools, including expert net-
works and specialists? Important HR
practices include understanding the com-
pensation and tax implications of contract
workers’ location and managing new rules
such as the federal Affordable Care Act in
the United States.

• How do we manage freelance and out-
sourced staff ? Should we on-board, train,
manage, set goals, and engage these workers
like our full-time employees?

• How do we administer and oversee
contingent workers, many of whom may
be managed by procurement and not even
included in HR systems? While leading
HR systems vendors are adding hourly
workforce management systems to their
products, they have yet to integrate with
external networks like Elance, Topcoder,
Freelancer, and other contingent expert net-
works. These networks of experts are like
employee pools that can now be included in
the workforce.6

• How should compensation be structured?
What is the implication of contingent or
hourly workers earning more than salaried

workers? Should they get the same holidays
or other benefits?

• How can we engage contingent work-
ers and integrate them into our culture?
Everyone in an organization impacts
culture, engagement, and corporate brand.
Organizations should include contingent
workers in the development and manage-
ment of workplace culture, making sure
they are well engaged and represent the
company well. Companies should con-
sider including contractors in programs
like on-boarding, development, and even
performance management.

• How should we measure contingent work-
ers’ performance? Measuring the perfor-
mance of contingent workers in a manner
consistent with non-contingent workers is
critical to avoid a dual class system. How
can a company extend its performance
management process to get a holistic view?

Companies are now beginning to realize
that contract labor is often highly talented and
should be managed strategically. New expert
networks like Kaggle (an external network of
data scientists who bid on analysis problems)
and Innocentive (an online competitive mar-
ketplace where companies can post problems
for innovators from all over the world to bid on
and respond) make it easier for organizations

Graphic: Deloitte University Press | DUPress.com
Note: Percentages may not total 100 percent due to rounding.

Increase significantly

Increase

No change

Decrease

Decrease significantly

51%
7%

44%
31%
14%
3%
10%0 20% 30% 40% 50%

}
Figure 2. Respondents’ plans for usage of contingent workers over the next three to five years

Leading in the new world of work
45

to outsource problems to networks of experts
without having to hire full-time staff. Netflix,
Procter & Gamble, NASA, and GE are among
the organizations that use such services to find
innovators in the freelance economy.7 In doing
so, they are essentially tapping into a workforce
of independent workers, whether as firms
or individuals.

Companies are also successfully leveraging
the contingent workforce to drive innovation
and new ideas. More than half of Procter &
Gamble’s product initiatives involve significant
collaboration with outside innovators. Through
its Connect and Develop program, the com-
pany now has more than 1,000 agreements
with external innovation partners. It uses
crowdsourcing to get new ideas for hundreds
of products. This external talent has helped
P&G develop hundreds of successful offerings,
such as Swiffer Dusters, the Crest SpinBrush,
and Olay Regenerist.8

Lessons from the front lines

The on-demand workforce brings many
challenges to organizations as they look at
ways to integrate each workforce segment,
such as hourly, salary, contingent, contractor,
and vendor staff, into a complex ecosystem.
One area that has received a great deal of
focused attention is the optimization of the
hourly workforce.

For example, one of Florida’s most com-
prehensive private, not-for-profit health
care networks needed better insights into its
labor utilization and budget. Serving nearly
2 million residents in central Florida annu-
ally, the company aimed to manage its limited
resources more effectively through a better

understanding of its complete labor activity
and associated costs.

In early 2013, this health care provider
decided to tackle the problem by identify-
ing opportunities to reduce any unintended
extra spending on its workforce. During this
assessment, the company examined its annual
timecard data to quantify potential improve-
ments and savings opportunities as well as
operational improvements.

The result: an estimated savings range
between $700,000 and $1.8 million that grew
sharply to $3.16 million once the analysis
included more extensive data. Savings resulted
from four dimensions of leading practices in
workforce utilization: system design enhance-
ment, process and management enforcement,
benchmarking and analytics, and governance
and accountability enrichment.

By implementing improvements in these
areas, this employer has gained valuable line-
item insights for aligning labor activity with
budget objectives. The company has docu-
mented millions of dollars in savings opportu-
nities from this initiative because it has enabled
the company to have data-driven conversations
about how best to utilize its workforce.

Where companies can start

• Proactively plan for a hybrid workforce
that includes owned and on-demand
employees: Evaluate skill needs, including
needs for technical, creative, and manage-
rial skills, and analyze and explore how to
create combinations of on-roll and on-
demand talent to meet those needs. Don’t
be afraid to tap into expert networks rather
than hire people outright.

The on-demand workforce brings many challenges to
organizations as they look at ways to integrate each workforce
segment, such as hourly, salary, contingent, contractor, and
vendor staff, into a complex ecosystem.

Global Human Capital Trends 2015
46

• Educate business and HR leaders on
the range of on- and off-balance-sheet
approaches to talent: Many business and
talent leaders are less than familiar with
the rapid expansion of on-demand and
off-balance-sheet global talent models
and markets. HR leaders should take the
lead and provide research, options, and
information to business leaders on the full
range of available on-demand and related
talent markets.

• Put in place integrated management and
risk controls across the business, procure-
ment, and HR teams: On-demand and
open talent economy models require new
working relationships beyond traditional
silos—across the business, the supply chain,
and HR. Levels of training and on-boarding
activities should match the type of contrac-
tor or employee (for instance, companies
could offer less intensive on-boarding to
temporary workers).

• Extend your performance management
and analytics efforts to on-demand talent:
What factors drive performance, continuity,

strength of engagement, cost, and flex-
ibility for different types of talent? With a
growing portion of the workforce in new
working arrangements, understanding
how to develop, engage, and manage these
employees will be critical if HR leaders are
to optimize the entire employee base.

• Develop HR and IT systems to support
on-demand talent: Many HR processes
and systems are geared almost entirely to
support full-time, on-payroll employees.
HR professionals should evaluate how to
modify and customize talent processes,
including acquisition, assessment, develop-
ment, compensation, benefits, and retention
and career programs, to accommodate new
categories of employees.

• Assign ownership and governance of on-
demand workforce management: Ensure
that lines of authority are clear, and define
criteria for success in managing on-demand
workers. Is it time for a director of extended
workforce management or a dedicated
workforce management office?

BOTTOM LINE

The on-demand and extended workforce—contingent, part-time, remote, and contract workers—
is now a critical part of virtually every company’s talent pool. Managing this complex workforce
effectively and with greater sophistication will require new, integrated relationships across HR and
procurement as well as with business leaders.

Think broadly about the range of talent practices your organization uses for full-time, on-roll
employees, and consider how they may be applied to other categories of the on-demand workforce.
Programs to consider extending could include those around workplace culture, engagement, analytics,
productivity tools, performance management, collaboration, and retention. In short, it is time for HR to
take ownership and share the management responsibilities for on-demand workers—and not to leave
it to the procurement department alone.

Leading in the new world of work
47

1. Sara Horowitz, “Freelancing and the future
of work,” FreelancersUnion.org, September
7, 2011, https://www.freelancersunion.org/
blog/2011/09/07/freelancing-and-the-future-of-
work/.

2. “Workers on tap: The rise of the on-demand
economy poses difficult questions for workers,
companies and politicians,” Economist, Janu-
ary 3, 2015, http://www.economist.com/news/
leaders/216373

93

-rise-demand-economy-poses-
difficult-questions-workers-companies-and.

3. We asked respondents to rate each issue’s “im-
portance” and their organization’s “readiness” to
address it on a four-point scale: “not important/
ready,” “somewhat important/ready,” “impor-
tant/ready,” and “very important/ready.” These
ratings were then indexed on a 0–100 scale in
which 0 represents the lowest possible degree of
importance/readiness (“not important/ready”),
and 100 represents the highest possible degree
of importance/readiness (“very important/
ready”). An overall index score was calculated
for each trend using the respondents’ ratings of

“importance” and “readiness.” The scores were
also used to calculate the “capability gap,” which
is computed by taking a trend’s “readiness”
index score and subtracting its “importance” in-
dex score. For example, a trend with a readiness
index score of 50 and an importance index score
of 80 would produce a capability gap of -30.

4. US Department of Labor/Bureau of Labor Sta-
tistics, http://www.bls.gov/home.htm.

5. Michael Woody, “Freelancing in America: Rise
of the contingent workforce,” Fox Business, Sep-
tember 30, 2013, http://www.foxbusiness.com/
personal-finance/2013/09/30/freelancing-in-
america-rise-contingent-workforce/.

6. David Creelman, John Boudreau, and Ravin
Jesuthasan, “Tongal, eLance, and Topcoder
will change how you compete,” Harvard Busi-
ness Review, November 7, 2014, https://hbr.
org/2014/11/tongal-elance-and-topcoder-will-
change-how-you-compete.

7. 7. Sarah Kessler, “How Kaggle solves big prob-
lems with big data contests,” Mashable, March
26, 2012, http://mashable.com/2012/03/26/
kaggle/; Steve Bennett, “What are analytic
marketplaces?,” Data Science Central, September
16, 2014, http://www.datasciencecentral.com/
profiles/blogs/what-are-analytic-marketplaces;

“Mapping dark matter,” Kaggle, https://www.
kaggle.com/content/kaggle/img/casestudies/
Kaggle%20Case%20Study-NASA , accessed
February 23, 2015; “GE tackles the industrial
Internet,” Kaggle, https://www.kaggle.com/
content/kaggle/img/casestudies/Kaggle%20
Case%20Study-GE , accessed February 23,
2015.

8. Procter & Gamble, “Partnering with the world
to make greater value,” https://www.pg.com/
en_US/downloads/innovation/C_D_factsheet.
pdf, accessed January 20, 2015.

Endnotes
Global Human Capital Trends 2015
48

https://www.freelancersunion.org/blog/2011/09/07/freelancing-and-the-future-of-work/

https://www.freelancersunion.org/blog/2011/09/07/freelancing-and-the-future-of-work/

https://www.freelancersunion.org/blog/2011/09/07/freelancing-and-the-future-of-work/

http://www.economist.com/news/leaders/21637393-rise-demand-economy-poses-difficult-questions-workers-companies-and

http://www.economist.com/news/leaders/21637393-rise-demand-economy-poses-difficult-questions-workers-companies-and

http://www.economist.com/news/leaders/21637393-rise-demand-economy-poses-difficult-questions-workers-companies-and

http://www.bls.gov/home.htm

http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise-contingent-workforce/

http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise-contingent-workforce/

http://www.foxbusiness.com/personal-finance/2013/09/30/freelancing-in-america-rise-contingent-workforce/

https://hbr.org/2014/11/tongal-elance-and-topcoder-will-change-how-you-compete

https://hbr.org/2014/11/tongal-elance-and-topcoder-will-change-how-you-compete

https://hbr.org/2014/11/tongal-elance-and-topcoder-will-change-how-you-compete

http://mashable.com/2012/03/26/kaggle/

http://mashable.com/2012/03/26/kaggle/

http://www.datasciencecentral.com/profiles/blogs/what-are-analytic-marketplaces

http://www.datasciencecentral.com/profiles/blogs/what-are-analytic-marketplaces

Lisa Disselkamp, Deloitte Consulting LLP | ldisselkamp@deloitte.com

Lisa Disselkamp is a director in the HR Transformation practice of Deloitte
Consulting LLP. Her work focuses on workforce management (WFM) business
practice and technology design, including timekeeping, labor scheduling, leave
management, and labor optimization analytics. She has led large and complex mul-
tistate WFM system assessments and deployments. Disselkamp has been tendered
as an expert legal witness helping defend employers in class action litigation and has
authored three books on WFM systems.

Werner Nieuwoudt, Deloitte Consulting Pty | wnieuwoudt@deloitte.co.za

Werner Nieuwoudt is the Human Capital leader for Africa. Prior to taking this role,
he spent 13 years leading the Deloitte Business Process Solutions practice, whose
services include human capital outsourcing offerings such as recruitment, skills
development, and payroll services. He was recently the COO for Deloitte Consulting
Africa and helped establish the organization’s consulting practices in Zambia and
Mozambique. Nieuwoudt has significant experience in the mining and public
sector industries.

David Parent, Deloitte Consulting LLP | dparent@deloitte.com

A principal with Deloitte Consulting LLP, David Parent has helped numerous
organizations assess and improve their approaches to talent management and HR
operations to meet business objectives. He leads clients through HR transformations
or redesigns encompassing the organizational, process, service delivery, and people
dimensions, and has facilitated change management on large mergers and technol-
ogy projects. Parent holds several internal leadership roles focused on recruiting and
developing talent.

Authors
Leading in the new world of work
49

mailto:ldisselkamp@deloitte.com

THE secret is out. Many organizations used to think of performance management as a
backward-looking assessment program owned
by HR. No longer. Performance management
is being reinvented for a new, forward-looking
purpose: to serve as an efficient, focused busi-
ness process that improves employee engage-
ment and drives business results.

Redesigned
performance
management
processes may or
may not include
year-end ratings,
but across the
board, they tend
to focus less on
evaluation and
more on agile goal setting, regular feedback,
coaching, and development. They shift the
focus away from forced-distribution rank-
ings and much more toward helping manag-
ers coach people to succeed. By changing this
one HR “ingredient,” it is possible to affect
many others.

Our research indicates that the transforma-
tion of the aging performance management
process is long overdue. Last year, only 8
percent of the HR respondents in our survey
believed that their performance management
process drove business value.1 This year, the
importance of performance management
rose significantly, with 75 percent of respon-

dents rating it an
“important” or
“very important”
issue, up from 68
percent last year.

So far, how-
ever, the rising
importance
of revamping
performance

management is just beginning to translate into
a positive view of the process. Just 10 percent
of survey respondents believe that perfor-
mance management is a good use of time
(slightly more than the 6 percent from last
year), and just over half (56 percent) believe
that it positively affects employee engagement
and performance (figure 1). Moreover, the

Performance management:
The secret ingredient

• As companies struggle with leadership, engagement, and capability challenges, they are
realizing that the performance management process affects all of these challenges.

• Change is underway: 89 percent of respondents recently changed their performance
management process or plan to change it within 18 months.

• Innovative new performance management models are now becoming an imperative
as businesses modernize and improve their talent solutions. Companies leading this
transformation are redefining the way they set goals and evaluate performance,
focusing heavily on coaching and feedback and looking for new technologies to make
performance management easier.

Our research indicates that the
transformation of the aging
performance management

process is long overdue.

Leading in the new world of work
51

Graphic: Deloitte University Press | DUPress.com

-33 Australia

-21 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.
Germany -23
North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-27 -32 -28 -26 -32 -34 -34 -27 -31

Italy -27

UK -21

Canada -26

Belgium -36

-37 Netherlands

Spain -28

Brazil
Netherlands
Belgium
South Africa
Australia
Japan
France
Mexico
India
Spain
US
Italy
Canada
Germany
China

United Kingdom   

Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-39
-37
-36
-36
-33
-31
-30
-30
-29
-28
-28
-27
-26
-23

-21

-21
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-30

France -30

US -28

-39 Brazil

Mexico -30

-29 India

-36 South Africa

-31 Japan

Figure 2. Performance management: Capability gap by region

Graphic: Deloitte University Press | DUPress.com

Driving feedback and
development through
performance process

Demonstrating
performance process as an

effective use of time
1% 49% 40%

10%

Driving business value
through performance

process
34% 54% 12%

Driving engagement and
high performance through

performance process
44% 46% 10%

51%1% 37% 11%

Not applicable Weak Adequate Excellent

Figure 1. Respondents’ evaluation of their performance management processes

Global Human Capital Trends 2015
52

overall capability gap in performance manage-
ment grew by almost one-third. (See figure 2
for capability gaps across regions and selected
countries.)

Our survey results present a clear signal
that the pressure to change is acute and that
companies are finally taking steps to address
the problem (figure 3).

What is driving the urgency around perfor-
mance management? One factor could be that
today’s biggest challenges include engagement,
retention, and capability development. Most
companies tell us that an “up or out” perfor-
mance management process alone simply does
not help address these challenges, and in many
cases makes them worse. A large life sciences
company, for example, discovered through
research that its performance discussions were
focused primarily on an employee’s level of pay
rather than on useful feedback, coaching, and
performance improvement.

A well-functioning performance manage-
ment process should facilitate good manage-
ment by good managers who are trained as
coaches and mentors rather than as evalua-
tors and graders. Today’s job market is highly
dynamic and transparent. High-potential
young employees want regular feedback and
career progression advice, not just “once and
done” reviews. And companies are finding
significant gaps in leadership and capabilities
that need to be addressed.

As companies reengineer performance
management, many changes have occurred
over the past year.

• The agile movement has permeated busi-
ness, changing how companies set goals
and manage people. Intel, for instance,
uses a transparent, agile goal management
process known as OKR (Objectives and
Key Results) that focuses on giving people
stretch goals and helping them to establish
regular, achievable results that others can
support.2 This approach, which is cur-
rently sweeping across technology compa-
nies, illustrates how dynamic the process
should be.

• A number of companies, including Adobe,
Juniper, and Microsoft, have revamped
the process to reduce the impact of rat-
ings.3 This reflects a recognition that

Graphic: Deloitte University Press | DUPress.com
18%

29%

42%

11%
10%0 20% 30% 40% 50%

Plan to review in the next 18 months

Currently evaluating

Reviewed and updated in the last 18 months

No plans to review

Figure 3. Respondents’ plans for updating performance management systems

Today’s job market is highly
dynamic and transparent. High-
potential young employees want
regular feedback and career
progression advice, not just
“once and done” reviews.

Leading in the new world of work
53

ratings-based performance management
negatively impacts culture and engagement,
which ranks as the most important issue in
our survey. Research has shown that giving
numeric ratings undermines engagement
and self-confidence.4

• A new focus on managing to strengths, not
weaknesses, is emerging. Research shows
that a person’s best performance comes
when they are given meaningful work that
leverages their personal strengths and aspi-
rations. Rather than simply evaluate people
against goals, new performance models
help create jobs or move people into roles
where they can succeed.5

• Technology now makes transparent goal-
setting and agile performance manage-
ment easier than ever. A host of new tools
permits
employees
to share
their goals,
provide
feedback
and recogni-
tion to oth-
ers online,
and even
“gamify” the
performance
management
process to
make it more productive and useful.

• The link between performance manage-
ment and compensation is weakening.
Traditionally, organizations directly linked
raises to performance ratings, making these
ratings even more threatening and disrup-
tive to employees. Today, the compensation
process is being broadened.6 Companies are
starting to base compensation decisions on
the competitive value of an employee and
real-world market conditions.

With the advent of more tools for real-
time, pulse-based monitoring of feedback
and engagement, the performance manage-
ment process is becoming more integrated
with strategies for employee engagement. For
example, a large insurance company, which is
going through a major restructuring to build
global business units in Asia, is using the rede-
sign of its performance management process
to drive change and bring its new management
philosophy to its people. Already, the pro-
cess of discussing, redesigning, and training
people on the process is re-energizing the
entire organization.

Feedback and team management are also
integral to performance management redesign.
New models focus on team-centric goal-setting
and tools to help teams improve collaboration
and performance. Bottom-up feedback from
employees, often gathered through the engage-

ment process,
helps managers
see their own
weaknesses and
improve their
own perfor-
mance. This, in
turn, makes the
performance
management
process more
developmental
for both leaders
and their teams.

Finally and unsurprisingly, data is becom-
ing an even more important part of the per-
formance management process, and new tools
are accelerating this ongoing development. For
example, today, many companies model their
performance process around the normal distri-
bution or bell curve. Yet this distribution does
not accurately model business performance.7
When companies hire top people and coach
them to succeed, the performance curve often
shifts to reflect many high performers and a
small number of “hyper-performers.” By look-
ing more carefully at the real distribution of

Bottom-up feedback from
employees, often gathered

through the engagement process,
helps managers see their own
weaknesses and improve their

own performance.

Global Human Capital Trends 2015
54

performance, companies can accurately reward
those who contribute the most.

Lessons from the front lines

Last year, we examined Adobe, which
abolished performance scores in 2012. In their
place, Adobe instituted “check-ins”—ongoing
discussions between managers and employees
to set expectations, offer feedback on perfor-
mance, and recognize strong work. The initial
impact was profound: Adobe benefited from a
30 percent reduction in voluntary turnover in a
highly competitive talent environment.

Last fall, we checked in on the company’s
“Check-in” program and found that Adobe’s
leaders were focusing on three major areas:
increasing the organization’s comfort with the
program, reinforcing the need for check-ins,
and integrating the approach into other areas
of talent management. Adobe found that man-
agers had difficulty with growth discussions,
as they felt they did not have all the answers
for staff in guiding them around promotional
opportunities. In response, Adobe developed
a series of resources focusing on coaching and
growth to equip managers to be better coaches
and to ask powerful questions. Importantly,
the curriculum focused not just on training
managers, but also on training employees to
coach themselves and drive their own growth.
The organization also reframed the concept of
growth to focus on growing one’s own skills
to continue to remain relevant in a rapidly
changing environment.

Adobe has also reinforced the need for
check-ins by having senior manager role
models share their Check-in experiences
with employees throughout the organization.
The company has also put a large emphasis
on ensuring that managers of managers are
checking in on the Check-in experience. In
addition, managers who receive low scores
on the employee engagement survey receive
feedback on how to improve their Check-in
practices. Finally, Adobe has worked to
integrate Check-in into other areas of talent
management. New employees receive training

on Check-in during the onboarding process.
“Role-modeling Check-in” is now one of the
five leadership competencies that all leaders at
Adobe must demonstrate.

Nearly three years into the process, Adobe’s
HR leaders believe that people find it much
easier to start a conversation regarding perfor-
mance. Further, engagement surveys show that
employees have higher expectations of perfor-
mance conversations and receive better feed-
back than ever before. Turnover levels remain
very low, with voluntary attrition continuing to
decline, despite the exceptionally competitive
talent market in which Adobe operates.

Where companies can start

• Simplify: Get rid of unnecessary, time-
consuming, paper-filled steps.

• Align philosophy with strategy: Explicitly
define the company’s performance manage-
ment philosophy and be sure that this phi-
losophy is aligned with the organization’s
strategy and culture. Clarify the behaviors
expected of managers and senior business
leaders as a part of this process. Determine

Leading in the new world of work
55

http://dupress.com/articles/hc-trends-2014-performance-management/

BOTTOM LINE

Done poorly, performance management can not only waste valuable time, but also have
a negative effect on engagement and retention. Done well, it can be one of the most
inspiring and developmental events in an employee’s career, as well as drive performance
improvements and organization-wide results.

Look hard at your performance process and push toward simplification and strengths-
based assessment and coaching. Train managers on how to give feedback. Goals should be
agile and updated regularly, and software should be simple and easy to use. The days of
traditional appraisals and forced ranking are coming to an end; performance management
is now a tool for greater employee engagement.

the firm’s philosophy and strategy before
choosing software to implement it.

• Separate performance from compensa-
tion: Take a step back and think about the
entire structure before moving ahead with
process reform. Disconnect performance
management conversations from compen-
sation conversations. Discussions about
compensation often block an employee’s
ability to hear and adopt the feedback that
can lead to improved performance.8

• Build a new performance management
culture: Encourage ongoing feedback,
enable effective coaching through train-
ing, and use change management and

communications teams to shift the per-
formance management culture from an
emphasis on top-down evaluation to
continuous development.

• Empower local managers: Give manag-
ers the authority to recognize and reward
employee performance throughout the year.
Invest in leadership development that helps
managers learn how to coach and develop
their teams.

• Ditch the curve: Tying employees to a
normalized curve can inhibit performance.
Relax the curve and let local management
decide where to spend incremental dollars.

Global Human Capital Trends 2015
56

Endnotes

1. Lisa Barry, Andrew Erhardt-Lewis, Stacia Garr,
and Andy Liakopoulos, Performance manage-
ment is broken: Replace “rank and yank” with
coaching and development, Deloitte University
Press, March 4, 2014, http://dupress.com/arti-
cles/hc-trends-2014-performance-management/.

2. “OKR,” Wikipedia, http://en.wikipedia.org/wiki/
OKR.

3. Stacia Sherman Garr, Reengineering for agility:
How Adobe eliminated performance appraisals,
Bersin by Deloitte, September 2013, http://www.
bersin.com/library; Stacia Sherman Garr, How
Juniper moved beyond performance scores to
align performance management to organizational
values: Part 4 of the Abolishing Performance
Scores webinar series, Bersin by Deloitte, De-
cember 5, 2013, http://www.bersin.com/library;
Shira Ovide and Rachel Feintzeig, “Microsoft
abandons ‘stack ranking’ of employees: Software
giant will end controversial practice of forcing
managers to designate stars, underperformers,”
Wall Street Journal, November 12, 2013, http://
online.wsj.com/news/articles/SB10001424052

702303460004579193951987616572?mod=W
SJ_hps_MIDDLENexttoWhatsNewsFifth.

4. David Rock, “SCARF: A brain-based model for
collaborating with and influencing others,” Neu-
roLeadership Journal, 2008, http://www.your-
brain-at-work.com/files/NLJ_SCARFUS .

5. Josh Bersin, “Becoming irresistible: A new
model for employee engagement,” Deloitte Re-
view 16, http://dupress.com/articles/employee-
engagement-strategies/.

6. To understand why forced ranking and the nor-
mal curve no longer describe the pattern of per-
formance in most companies, read Josh Bersin,

“The myth of the bell curve: Look for the hyper-
performers,” Forbes, February 19, 2014, http://
www.forbes.com/sites/joshbersin/2014/02/19/
the-myth-of-the-bell-curve-look-for-the-hyper-
performers/.

7. Ibid.

8. Barry, Erhardt-Lewis, Garr, and Liakopoulos,
Performance management is broken.

Leading in the new world of work
57

http://dupress.com/articles/hc-trends-2014-performance-management/

http://dupress.com/articles/hc-trends-2014-performance-management/

http://en.wikipedia.org/wiki/OKR

http://en.wikipedia.org/wiki/OKR

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572?mod=WSJ_hps_MIDDLENexttoWhatsNewsFifth

http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572?mod=WSJ_hps_MIDDLENexttoWhatsNewsFifth

http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572?mod=WSJ_hps_MIDDLENexttoWhatsNewsFifth

http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572?mod=WSJ_hps_MIDDLENexttoWhatsNewsFifth

http://www.your-brain-at-work.com/files/NLJ_SCARFUS

http://www.your-brain-at-work.com/files/NLJ_SCARFUS

http://dupress.com/articles/employee-engagement-strategies/

http://dupress.com/articles/employee-engagement-strategies/

http://www.forbes.com/sites/joshbersin/2014/02/19/the-myth-of-the-bell-curve-look-for-the-hyper-performers/

http://www.forbes.com/sites/joshbersin/2014/02/19/the-myth-of-the-bell-curve-look-for-the-hyper-performers/

http://www.forbes.com/sites/joshbersin/2014/02/19/the-myth-of-the-bell-curve-look-for-the-hyper-performers/

http://www.forbes.com/sites/joshbersin/2014/02/19/the-myth-of-the-bell-curve-look-for-the-hyper-performers/

Authors
David Parent, Deloitte Consulting LLP | dparent@deloitte.com

A principal with Deloitte Consulting LLP, David Parent has helped numerous organizations
assess and improve their approaches to talent management and HR operations to
meet business objectives. He leads clients through HR transformations or redesigns
encompassing the organizational, process, service delivery, and people dimensions, and
has facilitated change management on large mergers and technology projects. Parent
holds several internal leadership roles focused on recruiting and developing talent.

Nathan Sloan, Deloitte Consulting LLP | nsloan@deloitte.com

Nathan Sloan is a principal in Deloitte Consulting LLP’s Human Capital practice
based out of Charlotte, NC. He has over 15 years of experience working with compa-
nies to determine the organizational and talent priorities required to implement their
business strategies. He focuses on organizations in the retail and wholesale distribu-
tion sector. Sloan is the leader for Deloitte’s National Talent Strategies practice and
oversees the development of all talent management solutions.

Akio Tsuchida, Deloitte Tohmatsu Consulting Co., Ltd | akitsuchida@tohmatsu.co.jp

Akio Tsuchida is the Human Capital leader for Japan. With more than 15 years of
human capital consulting experience, Tsuchida has rich expertise in total rewards
and performance management, executive compensation, workforce planning, and
talent management. He has led large-scale business transformation projects related
to cross-border M&A, post-merger integration, corporate restructuring, and glo-
balization. He has a master’s degree in labor relations and human resources from
Michigan State University.

Global Human Capital Trends 2015
58

Reinventing

Global Human Capital Trends 2015
60

HR is at a crossroads. Once designed pri-marily as a compliance function, today’s
HR organization must be agile, business-
integrated, data-driven, and deeply skilled in
attracting, retaining, and developing talent.

These business imperatives demand not
only a new organizational model for HR itself,
but also a massive reskilling of HR profes-
sionals around the world. They also create
an unprecedented opportunity for HR to
play a preeminent role at the highest levels of
business strategy.

Faced with these new pressures and oppor-
tunities, how do our respondents rate HR’s
performance? Unfortunately, not very highly—
and not significantly better than in past years,
as evidenced by HR’s stagnating “grade point
average” (figure 1).1

The question is, do HR organizations have
the right capabilities to meet business needs?
Recent research shows that only 30 percent of
business leaders believe that HR has a repu-
tation for sound business decisions; only 28
percent feel that HR is highly efficient; only

Reinventing HR:
An extreme makeover

• HR needs an extreme makeover driven by the need to deliver greater business impact
and drive HR and business innovation.

• While CEOs and top business leaders rate talent as a key priority, only 5 percent of
survey respondents rate their organization’s HR performance as excellent. This year,
HR’s self-assessment showed virtually no improvement over last year’s.

• Companies are now moving beyond talk to action, revisiting the required capabilities of
the HR function, building HR universities, and modernizing relationships with internal
business partners.

Graphic: Deloitte University Press | DUPress.com
Note: Percentages may not total 100 percent due to rounding.

2015 22%10% 32% 31% 5%

2014 31%24%10% 30% 5%

2013 38%23%14% 21% 3%

11%
Underperforming Getting by Adequate Good Excellent

GPA: 1.5

GPA: 1.6

GPA: 1.3

Figure 1. Respondents’ ratings of the HR organization’s performance

Leading in the new world of work
61

22 percent believe that HR is adapting to the
changing needs of their workforce; and only
20 percent feel that HR can adequately plan for
the company’s future talent needs.2 Meanwhile,
our survey shows that just 11 percent of
respondents feel that their organizations pro-
vide “excellent” development for HR (figure 2).

To put it bluntly, HR is not keeping up with
the pace of change in business. Today, there is
a yawning gap between what business lead-
ers want and the capabilities of HR to deliver,
as suggested by the capability gap our survey
found across regions and in different countries
(figure 3).

A makeover is necessary

Several factors are converging that should
make reinventing HR a critical priority for
companies around the world.

• CEOs and other senior executives are more
worried about talent than ever before.
Eighty-seven percent of our respondents
are deeply concerned about culture and
employee engagement, 86 percent about
their leadership pipeline, and 80 percent
about workforce capabilities.3 At the same
time, 80 percent of survey respondents
believe their company’s HR skills—or lack
of skills—are a significant issue.4

• Many organizations are moving to a global
business services model, and back-office
functions and systems are transitioning to
cloud technology. HR is often at the fore-
front of this transition. As a result, the HR
function has an opportunity to play a lead-
ing role in defining the scope of retained
functional roles such as business partners
and centers of excellence.

• The newer HR technology platforms now
offer integrated systems and more access
to data, including analytics and assessment
science. Employee self-service is now a
reality, all but eliminating the need for HR
generalists. Yet HR continues to struggle to
optimize analytics.

• A highly competitive global talent market
has shifted power into the hands of employ-
ees, forcing HR to redesign programs in the
face of a much more demanding workforce.

• Traditional HR practices such as per-
formance management and leader-
ship and development are undergoing
radical change, forcing HR to throw
away the old playbook and deliver more
innovative solutions.

Graphic: Deloitte University Press | DUPress.com
Note: Percentages may not total 100 percent due to rounding.

1%10% 43% 46% 10%

41%10% 46% 12%

55%34%14% 11%

Not applicable Weak Adequate Excellent

Holding HR accountable
for providing innovative
solutions and programs

Preparing HR staff to
deliver programs aligned

with business needs

Providing HR staff with
appropriate training and

experiences

Figure 2. Respondents’ views of HR’s capabilities

Global Human Capital Trends 2015
62

Graphic: Deloitte University Press | DUPress.com

-36 Australia

-19 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.
Germany -22
North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-27 -33 -30 -25 -28 -45 -33 -29 -32

Italy -27
UK -24

Canada -30

Belgium -24

-37 Netherlands

Spain -31

Brazil
Netherlands
Australia
Japan
Mexico
India
Spain
Canada
South Africa
Italy
US
Belgium
United Kingdom
Germany
China

France   

Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-40
-37
-36
-35
-35
-34
-31
-30
-29
-27
-26
-24
-24
-22

-19

-15
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia

-38

France -15

US -26

-40 Brazil

Mexico -35

-34 India

-29 South Africa

-35 Japan

Figure 3. Reinventing HR: Capability gap by region

Several key changes are now underway that
we believe will continue to gain momentum in
2015. First, HR is being forced to redefine its
role from “service provider” to an enabler and
builder of talent. HR’s traditional employee
service mission is now handled through opera-
tional services groups, modern human capital
management technologies, and easy-to-access
online and mobile applications. The rapid
evolution of cloud technology is encompass-
ing even more HR activities than traditional
models, leaving HR to spend the majority of
its time on advising and consulting executives
on people-related strategies. In this new world,
HR operational effectiveness and efficiency are
table stakes.

Second, HR is shifting from a group of
generalists to a team of highly skilled business

consultants. Leading organizations have
many more HR specialists who operate at the
local business-unit level to help deliver better
results, including faster time to market and
greater customer satisfaction and operational
efficiency. These specialists work with each
other through communities of expertise, using
centralized systems, processes, and shared
frameworks that remain agile enough to act
locally to help leaders solve problems.

Finally, professional development and
research have emerged as key HR capabilities.
Companies with strong development programs
and focused strategies to incorporate external
data far outperform their peers.

An example of a new approach to reskilling
HR leaders is demonstrated by the HR leader-
ship master class piloted by the India-based

Leading in the new world of work
63

organization Aditya Birla Group (ABG). ABG
is one of the world’s leading global conglomer-
ates, operating in 36 countries with more than
120,000 employees. To support and drive the
group’s global expansion and growth plans
(more than half of the group’s revenues today
come from outside
of India), a key
component of its
HR transforma-
tion program is to
increase the skills of
the company’s HR
leadership team,
including the chief
people officers
in each of ABG’s
group companies and ABG’s global centers of
expertise. ABG planned and conducted a two-
day “master class” for its senior HR leaders to
kick off the shift in HR leadership capabilities.
The master class, developed and delivered in
partnership with external experts, focused on
business, technology, and HR trends, empha-
sizing areas such as performance (productivity
and innovation), leadership and talent, and
teaming. It also sought to uncover informa-
tion on how HR leaders were dividing their
time between strategic and operating priorities.
A critical part of the master class was a deep
dive on business and economic value—a unit
aimed at helping HR leaders better understand
and speak the language of business, economic
value, and HR program design. The program
ended with each executive and each team
mapping out his or her own capability develop-
ment plan, which could include areas such as
analytics, business acumen, coaching, facilita-
tion, change management, social media, and
HR technology.

Some organizations are recognizing that
the development of HR business partners can
include a common curriculum across func-
tions. For instance, one major global oil and
gas company developed a common behav-
ioral framework and consistently deployed it

across all of its 12 global functions. In its four
larger functions (IT, finance, HR, and legal),
the framework was complemented by face-
to-face programs (for senior colleagues) and
virtual programs (for junior business partners)
designed to enhance participants’ skills. Each

program was spon-
sored at the C-suite
level, and included
a series of “strategic
challenges” focus-
ing on real-time
business issues the
function faced. The
concept of “lead-
ers leading leaders”
was central to the

program: Executive vice president-level leaders
delivered part of the more senior program,
and the senior group, in turn, was involved in
delivering the program to the junior cohorts.

It all starts with the senior
HR leader

In this era of rapid business change, the role
of the CHRO becomes radically different and
more demanding than ever. Today’s CHRO
must be innovative and business-savvy and be
able to stand toe to toe with the CEO. At the
same time, a CHRO must know how to bring
the HR team together and help it evolve into a
more distributed, business-integrated function.
CHROs must also be comfortable adopting
and embracing technology and analytics,
which are integral to HR’s future success.

One sign that many organizations are
expecting something fundamentally differ-
ent from HR is that they are bringing in a
fundamentally different kind of executive as
CHRO. Research shows that nearly 40 percent
of new CHROs now come from the business,
not from HR. At Liberty Mutual, for instance,
the chief talent and enterprise services officer,
Melanie Foley, previously served as execu-
tive vice president of distribution at Liberty
Personal Markets.

Research shows that
nearly 40 percent of new

CHROs now come from the
business, not from HR.

Global Human Capital Trends 2015
64

Lessons from the front lines

Like many other global companies,
Halliburton was struggling to adjust to a 21st-
century talent environment that demanded
new approaches to learning and development,
a clear understanding of how to use data to
drive decisions, and a better grasp of strategic
business priorities. Unlike at many organiza-
tions, however, Halliburton’s HR team recog-
nized these challenges as an opportunity to
transform HR from a transactional organiza-
tion into a business-aligned trusted advisor
and solutions provider.

The process involved a number of steps.
The company started by launching a survey of
business leaders to understand exactly what
they needed from HR. The findings from this
research provided
the foundation for
a new vision of
Halliburton’s HR
organization built
around a strong
business case
for HR.

With its trans-
formation, the HR
function is seeking
to shift from the HR
generalist model
to an HR business
partner role. Instead
of simply manag-
ing transactions,
implementing poli-
cies, and developing
programs, the new
HR organization aims to focus on understand-
ing the needs of the

business and delivering
value-added solutions.

The Halliburton HR team recognized that
business-facing HR professionals could not
operate as strategic business advisors and part-
ners without standardizing, automating, and
reorganizing how repeatable, operational work
was done. This was necessary to build cred-
ibility for the new operating model and for the

new kind of relationship that HR was seeking
to establish with the business. The HR team
established a global HR operations organiza-
tion with four regional hubs to absorb much
of the transactional work, and introduced
new online technology to support managers
in requesting services from this group. At the
same time, the team engaged the larger human
resources community as change agents to
educate managers and to drive the transition to
a new operating model.

To implement this new vision, Halliburton
researched best practices and engaged HR
leaders in a series of workshops designed to
clearly define the new skills and competen-
cies required for HR. As the transformation
evolved, the HR organization developed a
maturity map to track progress and worked

with company lead-
ers to determine
the most effective
way for HR business
partners to impact
business priorities.

Of course, a
transformation
of this magnitude
could not occur
without a signifi-
cant investment in
people. As part of
this investment,
Halliburton created
an internal “College
of HR” that offered
a blended learn-
ing curriculum to
address HR learn-

ing needs, including workshops on consulting
skills and interactive webinars on the new HR
service delivery model. The college offered
blended learning activities in four areas: foun-
dational HR, business acumen, consulting, and
organizational capability. Innovative branding
efforts, including the development of the ava-
tars “Hal E. Burton” and “Hallie Burton,” have
assisted with the transformation, helping to

Instead of simply managing
transactions, implementing

policies, and developing
programs, the new HR
organization aims to

focus on understanding
the needs of the

business and delivering
value-added solutions.
Leading in the new world of work
65

direct program participants to the right places
in their learning curriculum.

The transformed HR organization fea-
tures two primary types of HR employees.
Operations partners work with line manag-
ers and employees to support implementa-
tion at the local level. Business partners work
with more senior business leaders to ensure
that the business’s needs are met. Each type
of partner is expected to use industry knowl-
edge, understand the human implications of
business problems, and align HR’s metrics to
business results. Partners identify real business

needs and then incorporate metrics into deci-
sion making. They also work as consultants
to the business, building partnerships and
trust, applying active listening and question-
ing techniques, and utilizing coaching skills.
In addition, they strive to build organizational
capability in areas such as leadership devel-
opment, succession planning, organization
development, team effectiveness, workforce
planning, and talent analytics.

Paramount to this effort’s success has been
the active sponsorship and commitment of
Halliburton’s HR leadership team. The com-
pany’s HR executives have been personally
involved in a number of College of HR pro-
grams, participating in session design and
delivery and driving accountability and active
participation within their teams.

Where companies can start

• Design the HR organization to deliver
solutions: For many businesses, it is time
to redesign HR with a focus on consult-
ing and service delivery, not just efficiency
of administration. HR business partners
must become trusted business advisors with
the requisite skills to analyze, consult, and
resolve critical business issues.

• Create business-integrated “networks
of excellence.” Rather than locating HR
specialists in central teams, embed them
into the business—but coordinate them
by building a strong network of expertise.
Recruitment, development, employee rela-
tions, and coaching are all strategic pro-
grams that should be centrally coordinated
but locally implemented. When specialists
in these areas live and work close to the
business, their impact is greatly enhanced.

• Make HR a talent and leadership magnet:
How do people get HR jobs in your com-
pany? If they accidentally move into HR,
this may be holding you back. Create rigor-
ous assessments for top HR staff and rotate

Global Human Capital Trends 2015
66

high performers from the business into HR
to create a magnet for strong leaders.

• Invest in HR development and skills as if
the business depended on it: HR profes-
sionals at all levels need continuous pro-
fessional development. Create your own
“HR university” and invest in professional

development to make sure your HR team
is constantly sharpening its own saw and
developing the necessary skills to survive.
Focus on capabilities such as business acu-
men, consulting and project management
skills, organizational design and change,
and HR analytical skills.

BOTTOM LINE

HR needs to raise its game by aligning its skills and capabilities with the organization’s overall business
goals. As HR pursues its own makeover, its strategic role must also change to meet the intense
pressures of today’s business environment.

Imagine an organization where business leaders look to HR for advice as they develop business
strategies to drive growth, where HR is considered the developer of talent and leadership across the
business, and where business leaders respect and admire the HR professionals as co-leaders of the
business. This can all happen, but only with an extreme makeover of HR.

Leading in the new world of work
67

1. The GPA is the weighted average score of
responses for excellent (4), good (3), adequate
(2), getting by (1), and underperforming (0).
The percentage values for organizations rating
themselves as underperforming and getting by
is calculated with a negative value that helps us
to determine the overall GPA. The letter grade
is assigned as follows: A = 4, B = 3, C = 2, D =
1, E = 0.

2. David Mallon, Karen Shellenback, Josh Bersin,

and Brenda Kowske, PhD, High-impact HR:
Building organizational performance from the
ground up, Bersin by Deloitte, July 2014, http://
www.bersin.com/library.

3. Figures refer to the percentage of respondents
rating each issue as “important” or “very impor-
tant.”

4. The 80 percent figure refers to the percentage of
respondents rating reskilling HR as “important”
or “very important.”

Endnotes
Global Human Capital Trends 2015
68

http://www.bersin.com/library

http://www.bersin.com/library

Art Mazor, Deloitte Consulting LLP | amazor@deloitte.com

A principal with Deloitte Consulting LLP, Art Mazor collaborates with com-
plex global clients to achieve high business impact with a focus on transform-
ing human capital strategies, programs, and services. With a balance of strategic
planning, operating model and organization design, process transformation, tech-
nology deployment, governance, and change management, Mazor helps enter-
prises generate tangible results through innovative and pragmatic solutions.

Hendrik Schmahl, Deloitte Germany | hschmahl@deloitte.de

Hendrik Schmahl oversees HR strategy and HR transformation initiatives for Deloitte
Consulting GmbH in Germany, working with a broad range of clients and industries. He
has 15 years of experience working in international consulting with a proven track re-
cord in various industries. His focus areas are HR strategy, HR transformation and road-
map, HR operating and service delivery model and capabilities, and HR shared services.

Michael Stephan, Deloitte Consulting LLP | mstephan@deloitte.com

Michael Stephan is the global leader for HR Transformation. A principal with Deloitte
Consulting LLP, Stephan develops and integrates HR service delivery models across the
operations and technology spectrum, with a focus on optimizing the delivery of HR ser-
vices. His global consulting experience includes HR strategy, HR operating model design
and implementation, HR business process outsourcing, global technology deployment,
and enterprise transition management.

Jaime Valenzuela, Deloitte Audit y Consult. | jvalenzuela@deloitte.com

Jaime Valenzuela is the leader of the Human Capital practice in the Americas and the
leader of the Human Capital practice in Chile. He has over 25 years’ experience in the
areas of business and HR strategy. Valenzuela has led projects related to HR strategy and
alignment, organization design, workforce analysis and optimization, change manage-
ment and culture, and compensation strategy alignment. He has also served senior exec-
utives in national and multinational companies, with responsibilities at the regional level.

Brett Walsh, Deloitte MCS Limited | bcwalsh@deloitte.co.uk

Brett Walsh leads Deloitte’s global HC group and is the HR Transformation practice
leader for Deloitte UK. As a Deloitte UK partner, he consults with executives around the
world on HR strategy, merger integrations, and major transformation and technology
programs, including back-office shared services and outsourcing. His particular expertise
is in HR and change management. Walsh has an MBA from Warwick University and is a
fellow of the Institute of Business Consultants.

Authors
Leading in the new world of work
69

mailto:amazor%40deloitte.com?subject=

AMONG all the challenges we studied this year, people analytics presented the
second-biggest overall capability gap for orga-
nizations, trailing only the need to build better
leadership. (See figure 1 for capability gaps
across regions and selected countries).

Why is this issue so prominent? Today, as
many companies prove the power of analytics,
a new race is under way to gain a competitive
advantage by understanding all elements of
the workforce.

Google uses analytics to gain insights into
the impact of every interview and source of
hire.3 Many companies, including Pfizer, AOL,
and Facebook, now analyze the factors that
correlate with high-performer retention. BP
uses analytics to evaluate its training. SAB
Miller uses analytics to drive high quality stan-
dards across a variety of programs worldwide.

Despite these and other high-profile uses
of analytics, our survey confirms that most
organizations have been slow to get started.
Respondents showed little change in their
ratings of their analytics capabilities since last
year, and more than half of our respondents

rate their organizations weak at scorecarding
(figure 2).

Organizations are still new to this disci-
pline, and many suffer from poor data qual-
ity, lack of skills, and a weak business case for
change.4 While people analytics programs can
deliver a high ROI, HR leaders have difficulty
building an integrated plan.5 And more than 80
percent of HR professionals score themselves
low in their ability to analyze—a troubling fact
in an increasingly data-driven field.

As HR analytics teams struggle to build
this capability, vendors are starting to fill the
gap. Today, nearly every HR software vendor
is eager to sell packaged predictive analytics
tools, often built right into their talent and HR
management software.6

But buying more data-driven HR and talent
management software is just the first step—it
will take several years for businesses to fully
absorb this technology. Companies with lead-
ing capabilities in HR and people analytics
have been building these capabilities for three
years or more.

HR and people analytics:
Stuck in neutral

• Too few organizations are actively implementing people analytics1 capabilities to address
complex business and talent needs.

• Three in four surveyed companies (75 percent) believe that using people analytics is
“important,” but just 8 percent believe their organization is “strong” in this area—
almost exactly the same percentage as in 2014.

• Companies that build capabilities in people analytics outperform their peers in quality
of hire, retention, and leadership capabilities, and are generally higher ranked in their
employment brand.2

Leading in the new world of work
71

Graphic: Deloitte University Press | DUPress.com

-38 Australia

-22 China
The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.
Germany -22
North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-34 -30 -39 -26 -26 -38 -36 -30 -36

Italy -21

UK -24

Canada -35

Belgium -28

-41 Netherlands

Spain -23

Netherlands
Japan
Australia
Brazil
Canada
South Africa
US
India
France
Mexico
Belgium
United Kingdom
Spain
China
Germany

Italy  

Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-41
-39
-38
-35
-35
-34
-34
-33
-31
-30
-28
-24
-23
-22
-22
-21
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-40

France -31

US -34

-35 Brazil

Mexico -30

-33 India

-34 South Africa

-39 Japan

Figure 1. HR and people analytics: Capability gap by region

Graphic: Deloitte University Press | DUPress.com
Not applicable Weak Adequate Excellent

36% 9%53%2%

39% 8%51%2%

33% 5%59%3%

31% 7%62%

33% 5%61%1%

29% 8%62%1%

25% 4%69%2%

26% 7%66%1%

Utilizing HR and talent
operational reporting and

scorecards

2015
2014
2015
2014
2015
2014
2015
2014

Conducting multi-year
workforce planning

Correlating HR data to
business performance

Using HR data to predict
workforce performance

and improvement

Figure 2. Respondents’ evaluation of their HR and people analytics capabilities

Global Human Capital Trends 2015
72

Where can an organization best apply
analytics to improve talent management? Some
possible areas include:

• Understanding and predicting reten-
tion: With retention and engagement now
becoming a CEO-level issue, understanding
why people leave a company has become
a top priority. One vendor we know of has
become so sophisticated at this analysis
that it can predict retention within weeks,
simply based on data available from an
individual’s behavior on social media. This
type of data-driven insight has become a
hot commodity in Silicon Valley’s new race
to attract and retain top software engineers.

• Boosting employee engagement: While
changing behavior among managers often
proves harder than simply uncovering
facts, many companies are using analytics
to identify ways to increase engagement
and/or boost retention. One company, for
instance, found that its compensation was
too evenly distributed, pleasing mid-level
performers but leading high achievers to
depart for greener pastures.

• Expanding the sources of talent and
improving the quality of hires: After years
of forcing job candidates to endure endless
rounds of interviews and tests, Google used
data to discover that, after the fourth inter-
view, every following interview is largely a
waste of time.7 Not only did this discovery
streamline recruiting, it also helped the
company understand what management
factors led to the best job performance.
Based on insights from its “people sci-
ence” work, Google wrote its manifesto
on leadership.8

• Profiling high performers in sales and
customer service: Companies such as
Oracle and ADP analyze sales performance
based on talent characteristics.9 They

can now better decide who to hire, how
to set quotas, and who should become a
sales leader.

Beyond those more common applications,
people analytics are beginning to be used in
more advanced ways. Many financial services
firms, for instance, have turned to analytics to
understand and predict ethics and compliance
problems. As new government regulations
place greater burdens on financial institutions
to prevent misconduct, a tool that accurately
forecasts which employees are most at risk
of committing ethical transgressions offers a
critical insight.

Analytics reaches into other exciting areas
as well, such as how people learn and prog-
ress in their career. Learning management
systems vendors now offer new tools that use
data to “recommend learning” in the same
way as Amazon and Netflix recommend books
and movies.

The common theme connecting all these
applications is simple: They address business
issues, not merely HR issues. Connecting these
tools to business needs helps build the case for
investment in and deployment of analytics.

Companies can move faster on analytics
by considering a cross-disciplinary approach.
One company created a cross-functional team
called “HR Intralytics” to model ways in which
the efficiency and effectiveness of its people
services could be improved. This team worked
with finance and business operations to visual-
ize data across processes, defining the business
benefits of improvements to various parts of
HR. The output was so compelling to the board
of directors that it approved funding for a
major transformation—including a dedicated
people analytics center of excellence.

As people analytics takes hold, data-driven
decisions will become a common theme across
all parts of HR. Organizations should invest
aggressively in this new discipline, link it to
the rest of the business, and reskill their teams
to bring data to work in every major people-
related decision.

Leading in the new world of work
73

Lessons from the front lines

HR leaders at ConAgra Foods are using
analytics to calculate and report the total
cost of its workforce rather than leaving this
important task solely to the finance function.
Until recently, the company has struggled
to collect accurate data about its workforce.
Information was spread across the organiza-
tion, making it difficult to reconcile. Analytics
solutions allow the company to gain better
insights into employee data, providing cur-
rent and projected headcount as well as total
workforce costs.

Following a major acquisition in 2012,
business leadership gave HR a mandate both
to acquire the best talent in the business and to
understand the true cost of its talent. HR’s ana-
lytics team began searching for a solution that
would deliver extensive self-service analytics
capabilities to stakeholders as well as provide
accurate workforce costs and support future
planning scenarios.

Partnering with finance, the team mapped
all available data and processes. The HR system
held employee-specific data on salary and

benefits, while an ERP system from finance
provided aggregate cost data. Using a cloud-
based system, the team aggregated all work-
force cost data. To calculate the total cost of the
workforce, the team developed a taxonomy of
the different elements going into this figure,
including direct compensation, benefits,
employee costs for labor, and workforce over-
head, as well as the subcategories under each.

After collecting and aggregating the data,
ConAgra can now visualize these different
elements in a single, interactive application
displaying a wide range of metrics, includ-
ing actual and planned headcount and actual
versus planned workforce costs. HR and
finance professionals are now able to analyze
and optimize investments across a wider range
of workforce costs. The company can now see
the impact of spending on a minute level and
understand how workforce costs impact its
financial plan. For instance, the company can
model workforce costs at two different loca-
tions, or better understand the cost of entering
new markets. In the past, these calculations
would have been highly time-consuming and
error-prone to compute by hand.10

Where companies can start

• Build the right team and show the return
on investment: An analytics team should
be multi-disciplinary, combining employees
with business knowledge and those with
technical skills. Since it is hard to find peo-
ple with a combination of all the necessary
skills, the most effective approach may be
to build a highly diverse team.11 Employees
with physics and engineering backgrounds
and industrial-organizational psychologists
are often good candidates for the team.
Pair them with a talent expert who under-
stands the people dimension. Add team
members with skills in communication,
visualization, and consulting to help drive
value, and remember to quantify the value
that better decision making is bringing to
the organization.12

Global Human Capital Trends 2015
74

• Start with the tools you have:
Organizations do not need to purchase new
software to start the transformation. Using
the analytics tools built into spreadsheets
is a good place to start, allowing organiza-
tions to put existing capabilities to work to
analyze data that are too often underused.
Do not let the perfect be the enemy of
the good; it is better to do analytics based
on less-than-perfect data than to do no
analytics whatsoever.

• Partner with IT: Data quality is often a
problem when it comes to the people side
of the business. HR teams must enlist the
support of IT early to help build a program
to clean up, rationalize, and continuously
monitor data quality.

• Use analytics on the HR organization
to show analytics’ potential: Assimilate
data on the demand and supply profile of
HR services, and apply the principles of
modeling, forecasting, and visualization to
illustrate the dynamics of the function itself.
Look for areas in the HR operating model
that can be improved, quantify the potential
impact, and then design embedded analyt-
ics as part of the new landscape.

• Focus on immediate business needs:
Analytics is a business priority, not merely
an HR tool. When analytics connects
directly to business issues, the argument for
investment becomes more powerful to the
organization as a whole. Start with a well-
known problem—be it turnover, sales pro-
ductivity, or customer service quality—and
start studying the people factors that drive
outcomes. Sophistication comes with time
and investment, and showing early results
will help sell the program to business lead-
ers. More integrated tools are now available,
and if early results drive value, companies
can justify major investments.

• Leverage embedded analytics by upgrad-
ing technology platforms: More than 70
percent of our respondents are upgrading
or have recently upgraded their core HR
systems with new cloud platforms. The
business case for these systems should
include a hard look at the potential ben-
efits from robust people analytics. Because
reducing turnover, improving sales produc-
tivity, and increasing the quality of hires all
have a tremendously high ROI, analytics
often represents a strong business case to
justify modernizing the HR infrastructure.

BOTTOM LINE

Data and analytics are key to solving many of the problems we identify in this report: engagement,
leadership, learning, and recruitment. Companies that excel in talent and HR analytics can be
positioned to out-compete and outperform their peers in the coming years. Without early, substantial
investments, however, it is difficult to get traction. Companies should therefore make a serious
commitment to this discipline, search for robust solutions from their core system vendors, and hire
people into HR who have an interest and background in analytics and statistics.

Leading in the new world of work
75

1. Note: In last year’s report we referred to “talent
analytics.” This year, we are using the more
common term for this new function in HR, now
often called “people analytics.”

2. Bersin by Deloitte, High-impact talent analyt-
ics: Building a world-class HR measurement and
analytics function, October 2013, http://www.
bersin.com/library.

3. John Sullivan, “How Google became the #3
most valuable firm by using people analytics to
reinvent HR,” ERE.net, February 25, 2013, http://
www.ere.net/2013/02/25/how-google-became-
the-3-most-valuable-firm-by-using-people-
analytics-to-reinvent-hr/.

4. Josh Bersin, High-impact talent acquisition: The
big reveal, Bersin by Deloitte, September 17,
2014, http://www.bersin.com.

5. Josh Bersin, The datafication of HR, Deloitte
University Press, January 17, 2014, http://du-
press.com/articles/dr14-datafication-of-hr/.

6. Josh Bersin, “The people analytics market heats
up with new cloud offerings,” Forbes, November
4, 2014, http://www.forbes.com/sites/joshber-

sin/2014/11/04/the-talent-analytics-market-
heats-up-with-new-cloud-offerings/.

7. Conversations with Google’s People Operations
team, November 2014.

8. Henry Blodget, “8 habits of highly effective
Google managers,” Business Insider, March 20,
2011, http://www.businessinsider.com/8-habits-
of-highly-effective-google-managers-2011-3.

9. Personal communications with company execu-
tives.

10. Karen O’Leonard, Continuous, cost-driven work-
force planning: ConAgra foods transforms the role
of hr through analytics, Bersin by Deloitte, Janu-
ary 2015, http://www.bersin.com/library.

11. Karen O’Leonard, High-impact talent analyt-
ics: Organizing and staffing your talent analytics
function, Bersin by Deloitte, September 10, 2014,
http://www.bersin.com/library.

12. Josh Bersin, “The geeks arrive in HR,” Forbes,
February 1, 2015, http://www.forbes.com/sites/
joshbersin/2015/02/01/geeks-arrive-in-hr-peo-
ple-analytics-is-here/.

Endnotes
Global Human Capital Trends 2015
76

http://www.bersin.com/library

http://www.bersin.com/library

http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/

http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/

http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/

http://www.ere.net/2013/02/25/how-google-became-the-3-most-valuable-firm-by-using-people-analytics-to-reinvent-hr/

http://www.bersin.com

http://dupress.com/articles/dr14-datafication-of-hr/

http://dupress.com/articles/dr14-datafication-of-hr/

http://www.forbes.com/sites/joshbersin/2014/11/04/the-talent-analytics-market-heats-up-with-new-cloud-offerings/

http://www.forbes.com/sites/joshbersin/2014/11/04/the-talent-analytics-market-heats-up-with-new-cloud-offerings/

http://www.forbes.com/sites/joshbersin/2014/11/04/the-talent-analytics-market-heats-up-with-new-cloud-offerings/

http://www.businessinsider.com/8-habits-of-highly-effective-google-managers-2011-3

http://www.businessinsider.com/8-habits-of-highly-effective-google-managers-2011-3

http://www.bersin.com/library

http://www.bersin.com/library

http://www.forbes.com/sites/joshbersin/2015/02/01/geeks-arrive-in-hr-people-analytics-is-here/

http://www.forbes.com/sites/joshbersin/2015/02/01/geeks-arrive-in-hr-people-analytics-is-here/

http://www.forbes.com/sites/joshbersin/2015/02/01/geeks-arrive-in-hr-people-analytics-is-here/

Carl Bennett, Deloitte Consulting LLP | carbennett@deloitte.com

Carl Bennett is a Deloitte Consulting LLP principal with more than 20
years of experience helping clients drive higher levels of organizational
performance with analytics. He currently supports the US federal government
with pioneering analytics solutions that empower federal leaders to make
data-driven workforce talent decisions and provide insight into cost-savings
opportunities. He also leads the Deloitte Survey Research Center and is
a member of Deloitte’s Nationstockal Analytics Leadership team.

Laurence Collins, Deloitte MCS Limited | lcollins@deloitte.co.uk

Laurence Collins focuses on HR transformation, helping organizations develop mea-
surement and analytic capabilities that create business value. From the adoption of
predictive technologies to manage workforce risks to simulations of process improve-
ments, these approaches are applied across the HR function through a concept known
as HR Intralytics. Collins’ work includes tracking the value of this capability and link-
ing the resultant business impacts back to HR performance improvement.

Authors
Leading in the new world of work
77

mailto:lcollins%40deloitte.co.uk?subject=

LEADING organizations routinely use both internal and external data to build their
brand, find new customers, manage risk, and
make investment decisions. What if HR could
leverage data just as effectively? That time
has come.

Accessing employee data outside your
organization isn’t just interesting—it’s power-
ful. Despite being the lowest-ranked among
this year’s challenges in terms of both its
importance and its capability gap, 52 percent
of respondents still believe that capitalizing
on “people data everywhere” is “important” or
“very important.” (See figure 1 for capability
gaps across regions and selected countries). In
2015, we believe this trend will be more about
taking advantage of available opportunities
rather than about risking incurring opportu-
nity costs through inaction. Today’s forward-
thinking HR organizations are well aware of
the treasure trove of data available through
outside sources—such as social networks—
that can help monitor and build employment
brand, identify and recruit talent, better
understand compensation strategies, recognize
flight risk, and monitor employee satisfaction
and engagement. As one executive commented

to us as we conducted this research, “Why
do social media sites like LinkedIn appear
to know more about my employees than we
do, and how can we leverage these data and
insights?”

Recruiters now routinely use social tools
like LinkedIn, Facebook, Twitter, and others to
source and identify candidates. LinkedIn alone
generates significant annual revenue by selling
access to people data1—the largest customer
being HR organizations using data to recruit
potential hires.

An important factor driving this trend is
that data volunteered by individuals on social
networking sites is often far more compre-
hensive and accurate than the data within
corporate HR systems. HR leaders report that
employee profiles on LinkedIn and other social
media outlets are more accurate and complete
than their own internal employee records.

In addition to Facebook and LinkedIn,
many other sources of outside data can provide
critical insights. This has led to the rise of new
companies offering tools and services that
harness external “people data everywhere” to
help HR organizations make better leadership,
talent, hiring, and management decisions.

People data everywhere:
Bringing the outside in

• HR and talent organizations are expanding their HR data strategies by harnessing and
integrating external data from social media platforms and other external sources.

• This trend is accelerating as more employee data appears online. Thirty-nine percent of
surveyed companies are now leveraging social data to support efforts around recruiting,
engagement, and understanding employment brand.

• While analytics programs based on internal data can be tremendously valuable, the
most powerful solutions will leverage external as well as internal data to inform critical
talent decisions.

Leading in the new world of work
79

Dozens of new startups are building additional
tools to enable HR to make sense of the moun-
tains of data now available:

• A new startup vendor, Degreed.com, aggre-
gates external people data about training
and education with the goal of providing a
complete, externally validated “transcript”
of all their education during their career.2

• Several start-ups now monitor social net-
working data to try to predict patterns of
external job-seeking behavior and reten-
tion risk. These companies claim that their
data is more predictive of an employee’s
likelihood of leaving than any internal
data available.

• The amount of external data about the
workforce is growing. Companies like

Glassdoor.com, Careerbliss.com, Realref.
com, Jobiness.in, Thejobcrowd.com,
Indeed.com, Payscale.com, and dozens of
others now crowd source company reviews,
salaries, and feedback on organizations,
making employer information more public
every day.

Despite the wealth of publicly available data
and the incredible opportunities it offers, most
people analytics teams still focus on analyzing
internal data.3 Only 5 percent of companies
participating in this year’s study believe they
have an “excellent” policy for leveraging social
data (figure 2), and none of the US respondents
to our survey consider themselves “excellent.”
More than half of our respondents (56 percent)
rated themselves “weak” in leveraging social
media data, and 81 percent report that they are

Graphic: Deloitte University Press | DUPress.com

-20 Australia

-17 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Germany -21

North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-18 -19 -17 -18 -12 -16 -24 -21 -19

Italy -25

UK -15

Canada -17

Belgium -18

-24 Netherlands

Spain -16

Japan
Brazil
Italy
Netherlands
France
South Africa
Germany
Australia
Mexico
Belgium
US
Canada
China
India
Spain

United Kingdom     

Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-31
-26
-25
-24
-23
-22
-21
-20
-20
-18
-18
-17
-17
-16
-16
-15
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-30

France -23

US -18

-26 Brazil

Mexico -20

-16 India

-22 South Africa

-31 Japan

Figure 1. People data everywhere: Capability gap by region

Global Human Capital Trends 2015
80

“not ready” or only “somewhat ready” to take
advantage of this growing trend.

There are some well-defined markets
where the use of personal data is likely to grow
quickly. In 2015, millions of people will be
streaming data about their location and per-
haps even their heart rate to public websites.
Just as individuals may use tools like FitBit
for their personal well-being, workers could
collect and share information to become what
some have called “the quantified employee.”4
Businesses using this information are gleaning
key insights. Hitachi’s “Business Microscope”
product, for instance, which uses employee ID
cards to monitor location, enabled the com-
pany to discover that engineers who eat lunch
in larger groups are more productive.

One stumbling block to capitalizing on
externally sourced information is that many
companies do not know who owns employee
data, whether internal or posted publicly. In
fact, 46 percent of the respondents to our sur-
vey think their company owns employee data,

while 43 percent believe data is jointly owned
with the employee. More broadly, data privacy,
protection, and security are a growing con-
cern. Many companies, for example, find their
internal memos leaked and posted online. As a
result, HR organizations entrusted with more
people data must be even more vigilant about
privacy, security, and confidentiality training.

Shifting attitudes toward transparency—
driven in large part by Millennials’ expecta-
tions—will also play a significant role in
answering key questions around who “owns”
HR data. In fact, one in four respondents to
our survey said that their employers now give
employees full transparency into the data
they collect.

Lessons from the front lines

AOL, one of the original brands associ-
ated with the Internet, is now a major media
technology company with approximately 4,500

Graphic: Deloitte University Press | DUPress.com

10% 56%5% 34% 5%

Not applicable Weak Adequate Excellent

Leveraging social media data on
employees to improve recruiting,

engagement, and employment brand

Figure 2. Respondents’ assessment of their capabilities in leveraging social media data

Graphic: Deloitte University Press | DUPress.com

Company

Company and employee

Employee

Not sure

Other

46%

43%

3%
7%
1%
10%0 20% 30% 40% 50%

Figure 3. Respondents’ perceptions about who owns employee data at their organization

Leading in the new world of work
81

global employees, owning such brands as
The Huffington Post, TechCrunch, Engadget,
MAKERS, and Mapquest. As one might imag-
ine, technical and creative professionals at AOL
(now headquartered in New York City) are in
great demand. People who come to AOL also
have the opportunity to work at Google and a
variety of start-ups in the New York area.

The company has invested in talent and
people analytics for many years, and has
recently started to focus on understanding
the factors that drive people to stay with the
company or leave. Leaders realized that the
biggest drivers of retention are not always com-
pensation and benefits, but a variety of intan-
gible issues, including other job opportunities
available, the brands and positions at compet-
ing companies, and the skills and experience of
their people.

To understand this issue, the company has
embarked on a program to leverage external,
publicly available data about the demand for
jobs and skills. Working with San Francisco-
based start-up talent analytics firm hiQ Labs,
AOL is now carefully looking at patterns
among people who leave, what factors might
entice people away from AOL, and what
benefits and improvements the company
can implement to help it attract people with
top skills. The head of people analytics, John
Callery, believes that this focus on “people data
everywhere” is giving the company a whole
new perspective on ways in which it can better
attract, engage, and excite current employees
and technical leaders. The company’s experi-
ence working with hiQ Labs already shows

that external data is a powerful way to predict
and understand retention and to find ways to
further engage the workforce.

As Darren Kaplan, CEO of hiQ Labs, states,
“For applications like predicting flight risk
or understanding the drivers of retention,
our experience shows that public data can be
significantly more predictive than internal HR
data about people.”

Where companies can start

• Partner with marketing: Marketing teams
are already solving the problem of moni-
toring, leveraging, and managing external
data. They often have tools and processes
in place to find and monitor data about
companies and their people.

• Buy and access tools to tap into major
social networks: Tools that explore
LinkedIn, Twitter, Facebook, Glassdoor,
and other networks are mature and avail-
able today. Companies of all sizes should
investigate these tools and become com-
fortable with the use of external data for
sourcing, recruiting, and monitoring their
employment brand.

• Recognize that the drive for transpar-
ency is here to stay: While compensation
and employee engagement data, though
increasingly visible through services such as
Glassdoor, is not yet public, it is possible to
see such data becoming available outside a
company in the future.

BOTTOM LINE

External data about candidates, employees, and potential contractors are now available
throughout the Internet. These data make up a critical part of a company’s strategy to
understand its employment brand, identify strong candidates, understand employee
engagement, and predict and try to reduce flight risk. This year, organizations should
upgrade their focus on the use of external data within HR, as it has become a fast-growing
part of the HR analytics strategy.

Global Human Capital Trends 2015
82

1. “LinkedIn announces fourth quarter and full year
2014 results,” LinkedIn, press release, February 5,
2015, http://investors.linkedin.com/releasedetail.
cfm?ReleaseID=895070.

2. What is Degreed?,” Degreed.com, https://degreed.
com/about, accessed February 23, 2015.

3. Josh Bersin, Karen O’Leonard, and Wendy
Wang-Audia, High-impact talent analytics:

Building a world-class HR measurement and
analytics function, Bersin by Deloitte, October
2013, http://www.bersin.com/library.

4. Josh Bersin, “Quantified self: Meet the quanti-
fied employee,” Forbes, June 25, 2014, http://
www.forbes.com/sites/joshbersin/2014/06/25/
quantified-self-meet-the-quantified-employee/.

Endnotes
Leading in the new world of work
83

http://investors.linkedin.com/releasedetail.cfm?ReleaseID=895070

http://investors.linkedin.com/releasedetail.cfm?ReleaseID=895070

https://degreed.com/about

https://degreed.com/about

http://www.bersin.com/library

http://www.forbes.com/sites/joshbersin/2014/06/25/quantified-self-meet-the-quantified-employee/

http://www.forbes.com/sites/joshbersin/2014/06/25/quantified-self-meet-the-quantified-employee/

http://www.forbes.com/sites/joshbersin/2014/06/25/quantified-self-meet-the-quantified-employee/

Michael Gretczko, Deloitte Consulting LLP | mgretczko@deloitte.com

A principal with Deloitte Consulting LLP, Michael Gretczko focuses on large, complex
global HR transformation efforts using sourcing, SaaS/ERP/self-service technologies,
shared services, and process reengineering. He works with organizations to increase
the value they are able to leverage from their special workforce segments, such as
globally mobile employees and the contingent workforce. Gretczko works across
industries and has been involved in many complex HR transformation initiatives.

Michael Stephan, Deloitte Consulting LLP | mstephan@deloitte.com

Michael Stephan is the global leader for HR Transformation. A principal with Deloitte
Consulting LLP, Stephan develops and integrates HR service delivery models across
the operations and technology spectrum, with a focus on optimizing the delivery of
HR services. His global consulting experience includes HR strategy, HR operating
model design and implementation, HR business process outsourcing, global technol-
ogy deployment, and enterprise transition management.

Authors
Global Human Capital Trends 2015
84

Reimagining

L AST year’s Global Human Capital Trends chapter on “the overwhelmed employee”
became one of the most popular articles
Deloitte has ever published—a sign that the
phenomenon was hitting organizations even
faster and harder than we thought.1 The
capability gaps we observed with regard to the
simplification of work (figure 1) reinforce the
importance of the issue of the overwhelmed
employee. In this year’s research, we explored if
organizations were doing anything to address
this concern.

Consider some data: In one day more than
100 billion emails are exchanged, yet only one
in seven is critically important.2 The average
employee now spends over one-quarter of
the workday reading and answering emails.3
People now check their mobile phones more
than 150 times a day.4 And a new study by
the National Journal found that 40 percent of
workers believe it is not possible to succeed at
work, make a good living, and have enough
time to contribute to family and community.5

There are many reasons for work overload:
always-on technology, global 24/7 demands,
and the proliferation of messaging and social

tools we have at our fingertips. But another
important driver is complexity in work prac-
tices, business processes, and jobs. In this year’s
survey, 74 percent of all respondents (includ-
ing those at small companies) rated their work
environment as either “complex” or “highly
complex” (figure 2).

We see five primary drivers for this trend:

• Pervasive technology and connectiv-
ity: Life, family, and work are all blend-
ing together as our mobile devices deliver
constant access to work information. While
filtering and sorting tools are coming,
most employees are flooded with too much
random information. By nature, people
become addicted to this stimulus, feeding a
vicious cycle of “always feeling like we’re at
work.”6

• Complexity in technology: New technol-
ogy features arrive faster than most people
can learn to use them. The ever-increasing
focus on technology for the sake of tech-
nology has come to an end: The simplest
products are the ones now most widely

Simplification of work:
The coming revolution

• Organizations are simplifying work in response to employees becoming overwhelmed by
increasing organizational complexity, growing information overload, and a stressful 24/7
work environment.

• More than 7 out of 10 surveyed organizations rated the need to simplify work as an
“important problem,” with more than 25 percent citing it as “very important.” Today,
only 10 percent of companies have a major work simplification program; 44 percent are
working on one.

• Design thinking, work redesign, and technology replacement are becoming critical
programs for HR and business leaders seeking to simplify work practices and systems.

Leading in the new world of work
87

http://dupress.com/articles/hc-trends-2014-overwhelmed-employee/

Graphic: Deloitte University Press | DUPress.com

-24 Australia

-16 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Germany -19

North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-25 -27 -28 -24 -31 -29 -30 -25 -25

Italy -38

UK -25

Canada -27

Belgium -30

-38 Netherlands

Spain -15

Italy
Netherlands
Brazil
Japan
Belgium     
South Africa
Canada
India
Mexico
United Kingdom
US
Australia
France
Germany
China
Spain
Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-38
-38
-37
-34
-30
-30
-27
-27
-27
-25
-25
-24
-21
-19
-16
-15
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-30

France -21

US -25

-37 Brazil
Mexico -27

-27 India

-30 South Africa

-34 Japan

Figure 1. Simplification of work: Capability gap by region

used. HR software buyers today want sys-
tems with fewer features and less complex-
ity, not more.7 Yet simplification for users

at the front end usually adds complexity
at the back end when multiple systems
are combined.

Graphic: Deloitte University Press | DUPress.com
Note: Percentages may not total 100 percent due to rounding.
Very complex
Complex
Somewhat complex
Simple
Not on our radar
25%
49%
22%
4%
1%

10%0 20% 30% 40% 60%50%

Figure 2. Respondents’ assessment of their workplace’s complexity

Global Human Capital Trends 2015

88

• Globalization: Most companies, even small
businesses, have clients, partners, and sup-
pliers around the world. Projects, confer-
ence calls, meetings, and emails happen at
all hours of the day and night.

• Increased administrative and compliance
demands: Workers worldwide face increas-
ing administrative and compliance head-
aches that demand time and engagement.
Deloitte Australia found that 1 out of 11
people in Australia now works in a compli-
ance role—more than are employed in the
country’s entire mining industry.8 One bank
noted that its compliance costs tripled to
$265 million in the last three years, in part
due to the need to file 3,150 reports totaling
80,000 pages.

• Overly complex business processes and
systems: Business and HR processes have
become too complex. Adobe found that its
performance management process was so
complex it took almost 1.8 million person-
hours per year to complete.9 A large manu-
facturer reported that more than 4,000
different tasks, rules, compliance processes,
and procedures were required to build one
of its major products.10

Happily, change is coming. From IDEO’s
redesign of the shopping cart to transforma-
tions brought about by Uber, AirBnB, and

Open Table, whole industries are being rocked
by dynamic technological and design innova-
tions aimed at simplifying the way we live.
To think that this trend will not happen in
the workplace is likely wrong. So for many
businesses, it’s time to rethink the underly-
ing model of how work gets done—before
competitors do.

How can work be simplified, making sys-
tems easy to use? Some work will—and should
—simply go away, like the plethora of unread,
unnecessary emails. More broadly, HR should
be the catalyst for the entire organization to
declutter,11 advising the business on how to
save time and reduce the number of emails and
meetings. HR’s role should not simply be to
implement talent management practices, but
to make people more productive and enhance
their level of engagement with the firm.

Some steps are already being taken. Some
companies are now waking up to the need to
simplify the work environment, reduce work-
load, eliminate steps, and engineer simpler
applications that do not require a great deal
of training or time to use. Our survey found
that 10 percent of companies have programs
to simplify work practices and 44 percent are
planning to build such programs—indicating
that just over 5 in 10 organizations are directly
trying to address this challenge (see figure 3).

Recognizing that we can’t slow the pro-
liferation of technology, companies are now

Graphic: Deloitte University Press | DUPress.com
Note: Percentages may not total 100 percent due to rounding.
Major program in place
Some activities in place

Considering simplification
program

No plans to simplify
10%
44%
22%
25%
10%0 20% 30% 40% 50%

Figure 3. Respondents’ simplification programs and plans

Leading in the new world of work
89

embracing practices to stop emails on week-
ends, implement simpler tools, and even
penalize people for sending emails while on
vacation. Coca-Cola, to cite one example,
recently shut down voice mail to “simplify
the way we work and increase productivity.” 12
Company leaders are asked to model behaviors
that help people slow down and think. Google,
for example, has published a manifesto on
“nine rules for email” to help internal teams
stay productive.13

Some companies are starting to treat “time
capital” with the same seriousness as financial
capital.14 One approach is to cut back on the
seemingly endless rounds of meetings and
conference calls. This serves the dual purpose
of increasing efficiency and creating a calmer,
more relaxed environment where employ-
ees can actually think. Recent psychological
research suggests that multitasking could be
changing the structure of our brains by wear-
ing away the grey matter, which is the part of
the brain that processes information.15

Flexible working conditions and extended
benefit policies also reduce worker stress, as
can open work environments that promote
more relaxed person-to-person interactions.
Research suggests that people are more pro-
ductive, more relaxed, and more engaged when
they personally interact with their peers.

Simplification may be one of the most
important and underutilized tools in an orga-
nization’s arsenal. The opportunity can lie both
in simplifying the work environment and in
simplifying the work itself. In 2015, companies
should continue to take steps to streamline
work, reduce administrative burdens, and
simplify complex processes. Companies can
“simplify” without being “simplistic”—and the
entire organization can benefit as a result.16

Lessons from the front lines

GE, a company that is used to reinvent-
ing itself, has implemented a strategic focus
on simplification over the last several years.
The company builds complex products; yet

increasingly, employees and customers were
noting that the company itself had become too
complex: Customer outcomes were slowing as
processes grew burdensome. A more nimble,
entrepreneurial approach was needed. Led by
Jeff Immelt, the CEO, simplification is now an
integrated part of GE’s strategy, encompassing
lean management, speed and competitiveness,
commercial intensity, and digital capability.
Simplification represents a cultural as well as a
structural transformation.

First, GE is asking leaders to implement
lean management: remove layers, increase
spans of control, and reduce the number of
checks and approvals needed to get things
done. Wherever there is complexity and dupli-
cation, shared services are being created. The
company is also making work easier by imple-
menting new digital technologies that make
employees more productive wherever possible.

Second, GE has developed a holistic
program called FastWorks. FastWorks, which
is based on the lean start-up methodology,
involves a new way of working that begins
with an intensified focus on—and understand-
ing of—customer needs. Experimenting and
iterating quickly to create solutions that add
value or create value are hallmarks of the
approach. FastWorks is being used throughout
GE to help teams move faster, bring GE closer
to customers, and to maintain a high level of
customer input and involvement across the
product lifecycle.

Third, GE is implementing a set of mindset,
belief, and behavioral changes to help lead-
ers and employees reduce complexity and to
create a new culture within GE. The culture
of simplification is coming to life through a
set of new “GE Beliefs,” which are focused on
delivering fast, better solutions to customers.
The GE Beliefs, created through a crowdsourc-
ing process within GE, are:

• Customers determine our success

• Stay lean to go fast

• Learn and adapt to win

Global Human Capital Trends 2015
90

• Empower and inspire each other

• Deliver results in an uncertain world

The GE Beliefs play a large role in lead-
ership development and are also used to
change how GE recruits, how it manages
and leads, and how its people are evaluated
and developed.

Fourth, GE has recently redesigned its
performance management process, with an
emphasis on agility, continuous discussions,
and customer outcomes. Today, rather than
targeting goals, managers emphasize priori-
ties, helping employees continuously adapt and
channel their efforts to the most important
customer needs. The old world told people to
“do more with less.” Today, GE tells its people
to “do fewer things better.” This freedom and
support to continuously focus, spend time with
customers, and avoid trying to do too many
things at once is core to GE’s new management
process (renamed Performance Development),
bringing simplification to the work life of
every employee.

For GE, simplification is now part of its new
culture. The focus on simplification is helping
employees to focus as well as helping the com-
pany to operate faster, compete more vigor-
ously, reduce costs, and improve quality.

Where companies can start

• Make simplification a business and HR
priority. Start by creating a team focused
on simplifying the work environment.

Acknowledge the problem and agree on the
need to simplify work. Ask employees about
time-wasting and complex processes, and
develop a business case to justify redesign.
Ensure that HR is involved in any discus-
sions about simplifying work.

• Get email and unproductive meetings
under control. Reducing the number of
emails, meetings, and conference calls gives
people a calmer, more relaxed environment
in which to work and think. Research also
indicates that people who use their phones
for email at night are less productive during
the day.17

• Invest in more integrated, simpler tech-
nology: Major technology vendors now
have programs to simplify their applica-
tions and tools. Both SAP and Oracle, for
instance, go to market promoting the value
of simplifying IT.18 Rather than looking for
more features, companies should evaluate
software based in part on its ease of use.

• Implement design thinking and process
simplification within HR: Design thinking
is a new process that brings user interface
designers, process experts, and graph-
ics people together to make work systems
more functional and easier to use. HR
teams should serve as an organizational
role model by removing steps and using
design thinking to implement “just enough”
process and technology to help people get
the job done.19

BOTTOM LINE

Technology, globalization, and compliance needs continuously add complexity to work. Left
unaddressed, this can lead to an organizational environment that damages employee engagement,
lowers quality, and reduces innovation and customer service. At the same time, technology and design
thinking are converging in a way that offers significant opportunities to get ahead of the curve.
Business and HR leaders should put “simplification” on the agenda for 2015 and focus on individual,
organizational, and work-specific programs that reduce complexity and help people focus on what
really matters.

Leading in the new world of work
91

1. Tom Hodson, Jeff Schwartz, Ardie van Berkel,
and Ian Winstrom Otten, The overwhelmed
employee: Simplify the work environment,
Deloitte University Press, March 7, 2014, pp.

97

–

104

, http://dupress.com/articles/hc-trends-
2014-overwhelmed-employee/.

2. Get out of your own way: Unleashing productivity,
Deloitte Touche Tohmatsu, 2014, http://www2.
deloitte.com/content/dam/Deloitte/au/Images/
infographics/au-deloitte-btlc-get-out-of-your-
own-way .

3. Todd Wasserman, “Email takes up 28% of
workers’ time,” Mashable, August 1, 2012, http://
mashable.com/2012/08/01/email-workers-time/.

4. KPCB, “Internet trends 2014—Code conference,”
May 28, 2014, http://www.kpcb.com/internet-
trends.

5. “New Allstate/National Journal heartland moni-
tor poll finds narrow majority of Americans see
work/life balance as attainable,” National Journal,
http://www.nationaljournal.com/press-room/
new-allstate-national-journal-heartland-mon-
itor-poll-finds-narrow-majority-of-americans-
see-work-life-balance-as-attainable-20141114,
accessed January 20, 2015.

6. Larry Rosen, “Rewired: The psychology of
technology,” https://www.psychologytoday.com/
blog/rewired-the-psychology-technology.

7. Katherine Jones, PhD, The buyer’s guide to select-
ing HCM software, Bersin by Deloitte, July 2014,
http://www.bersin.com/library.

8. Get out of your own way.

9. Stacia Sherman Garr, Reengineering for agility:
How Adobe eliminated performance appraisals,
Bersin by Deloitte, September 2013, http://www.
bersin.com/library.

10. Personal communication from company execu-
tives.

11. Josh Bersin, Simplify: The decluttering of human
resources, Bersin by Deloitte, August 9, 2014,
http://joshbersin.com/2014/08/simplify-the-
decluttering-of-human-resources/.

12. Duane D. Stanford, “Coca-Cola disconnects
voice mail at headquarters,” Bloomberg, Decem-
ber 22, 2014, http://mobile.bloomberg.com/
news/2014-12-22/coca-cola-disconnects-voice-

mail-at-headquarters.html.

13. Eric Schmidt and Jonathan Rosenberg, “9 rules
for emailing from Google exec Eric Schmidt,”
TIME, September 24, 2014, http://time.
com/3425368/google-email-rules/.

14. “[L]eaders at one large manufacturing company
recently discovered that a regularly scheduled
90-minute meeting of mid-level managers cost
more than $15 million annually. When asked,

‘Who is responsible for approving this meet-
ing?,’ the managers were at a loss. ‘No one,’ they
replied. ‘Tom’s assistant just schedules it and the
team attends.’ In effect, a junior VP’s administra-
tive assistant was permitted to invest $15 million
without supervisor approval. No such thing
would ever happen with the company’s financial
capital.” See Michael C. Mankins, Chris Brahm,
and Gregory Caimi, “Your scarcest resource,”
Harvard Business Review, May 2014, https://hbr.
org/2014/05/your-scarcest-resource.

15. Fiona Macrae, “Multi-tasking makes your brain
smaller and could be hurting your career: Grey
matter shrinks if we do too much at once,” Mail
Online, February 16, 2015, http://www.dailymail.
co.uk/sciencetech/article-2768303/Do-use-
smartphone-tablet-watching-TV-Then-brain-
wasting-away.html.

16. Bersin, Simplify.

17. Klodiana Lanaj, Russell E. Johnson, and Chris-
topher M. Barnes, “Beginning the workday yet
already depleted? Consequences of late-night
smartphone use and sleep,” Organizational
Behavior and Human Decision Processes 124, No.
1 (2014): pp. 11-23, http://www.sciencedirect.
com/science/article/pii/S0749597814000089.

18. Doug Henschen, “SAP’s McDermott: Say good-
bye to ‘too complex,’” InformationWeek, June 4,
2014, http://www.informationweek.com/soft-
ware/enterprise-applications/saps-mcdermott-
say-goodbye-to-too-complex/d/d-id/1269412;

“Simplifying IT leads to better business outcomes,
according to research from leading analyst firm,”
Oracle, press release, July 7, 2014, http://www.
oracle.com/us/corporate/pressrelease/simplify-
ing-it-070714?rssid=rss_ocom_pr.

19. Bersin, Simplify.

Endnotes
Global Human Capital Trends 2015

92

http://dupress.com/articles/hc-trends-2014-overwhelmed-employee/

http://dupress.com/articles/hc-trends-2014-overwhelmed-employee/

http://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-btlc-get-out-of-your-own-way

http://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-btlc-get-out-of-your-own-way

http://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-btlc-get-out-of-your-own-way

http://www2.deloitte.com/content/dam/Deloitte/au/Images/infographics/au-deloitte-btlc-get-out-of-your-own-way

http://mashable.com/2012/08/01/email-workers-time/

http://mashable.com/2012/08/01/email-workers-time/

http://www.kpcb.com/internet-trends

http://www.kpcb.com/internet-trends

http://www.nationaljournal.com/press-room/new-allstate-national-journal-heartland-monitor-poll-finds-narrow-majority-of-americans-see-work-life-balance-as-attainable-20141114

http://www.nationaljournal.com/press-room/new-allstate-national-journal-heartland-monitor-poll-finds-narrow-majority-of-americans-see-work-life-balance-as-attainable-20141114

http://www.nationaljournal.com/press-room/new-allstate-national-journal-heartland-monitor-poll-finds-narrow-majority-of-americans-see-work-life-balance-as-attainable-20141114

http://www.nationaljournal.com/press-room/new-allstate-national-journal-heartland-monitor-poll-finds-narrow-majority-of-americans-see-work-life-balance-as-attainable-20141114

https://www.psychologytoday.com/blog/rewired-the-psychology-technology

https://www.psychologytoday.com/blog/rewired-the-psychology-technology

http://www.bersin.com/library

http://www.bersin.com/library

http://www.bersin.com/library

Simplify: The Decluttering of Human Resources

Simplify: The Decluttering of Human Resources

http://mobile.bloomberg.com/news/2014-12-22/coca-cola-disconnects-voice-mail-at-headquarters.html

http://mobile.bloomberg.com/news/2014-12-22/coca-cola-disconnects-voice-mail-at-headquarters.html

http://mobile.bloomberg.com/news/2014-12-22/coca-cola-disconnects-voice-mail-at-headquarters.html

http://time.com/3425368/google-email-rules/

http://time.com/3425368/google-email-rules/

https://hbr.org/2014/05/your-scarcest-resource

https://hbr.org/2014/05/your-scarcest-resource

http://www.dailymail.co.uk/sciencetech/article-2768303/Do-use-smartphone-tablet-watching-TV-Then-brain-wasting-away.html

http://www.dailymail.co.uk/sciencetech/article-2768303/Do-use-smartphone-tablet-watching-TV-Then-brain-wasting-away.html

http://www.dailymail.co.uk/sciencetech/article-2768303/Do-use-smartphone-tablet-watching-TV-Then-brain-wasting-away.html

http://www.dailymail.co.uk/sciencetech/article-2768303/Do-use-smartphone-tablet-watching-TV-Then-brain-wasting-away.html

http://www.sciencedirect.com/science/article/pii/S0749597814000089

http://www.sciencedirect.com/science/article/pii/S0749597814000089

http://www.informationweek.com/software/enterprise-applications/saps-mcdermott-say-goodbye-to-too-complex/d/d-id/1269412

http://www.informationweek.com/software/enterprise-applications/saps-mcdermott-say-goodbye-to-too-complex/d/d-id/1269412

http://www.informationweek.com/software/enterprise-applications/saps-mcdermott-say-goodbye-to-too-complex/d/d-id/1269412

http://www.oracle.com/us/corporate/pressrelease/simplifying-it-070714?rssid=rss_ocom_pr

http://www.oracle.com/us/corporate/pressrelease/simplifying-it-070714?rssid=rss_ocom_pr

http://www.oracle.com/us/corporate/pressrelease/simplifying-it-070714?rssid=rss_ocom_pr

Dimple Agarwal, Deloitte MCS Limited | dagarwal@deloitte.co.uk

Dimple Agarwal is the global leader for Organization Transformation and Talent.
She consults at the C-suite level on operating model and organization design,
HR and talent strategies, merger integration, and major transformation pro-
grams. Agarwal’s 20 years of consulting experience includes working in the UK,
Netherlands, France, Switzerland, India, Malaysia, Nigeria, and the UAE.

Burt Rea, Deloitte Consulting LLP | brea@deloitte.com

Burt Rea brings extensive knowledge in advising leadership teams on
managing transition and change to implement new strategies, processes,
structures, and systems. He has led projects in organization and role design,
change management, virtual work, employee and leadership training,
communications, and talent strategies for numerous global companies. Burt
also serves Deloitte Consulting LLP internally, leading initiatives to enhance
its organizational culture and adopt advanced workplace strategies.

Ardie van Berkel, Deloitte Consulting BV | avanberkel@deloitte.nl

Ardie van Berkel is the Human Capital leader for the Netherlands and also a
member of Deloitte’s supervisory board in the Netherlands. She is an active market-
facing client service partner who consults on merger integrations, organizational
design, HR strategies, and change management to support major transformation
programs, primarily in the public sector.

Authors
Leading in the new world of work
93

EXCITING cognitive computing technolo-gies are now able to perform many tasks
once considered solely the domain of humans.
Cognitive technologies such as speech recogni-
tion, computer vision, and machine learning
are converging to produce machines that can
talk, see, read, listen, and even learn by watch-
ing YouTube videos.1

Close to 60 percent of leaders in this year’s
survey rated the issue of “machines as talent”
“important” or “very important.” Yet, while
many executives are interested, few have a
strong grasp of the issue or its implications.
Capability gaps around the issue are evident
worldwide (figure 1). In fact, only 5 percent
of executives surveyed believe they have a
detailed understanding of how cognitive com-
puting will impact their workforce (figure 2).

The impact of computing on work is
not new, but it is accelerating. An Oxford
University study that examined the impact of
technology on hundreds of occupations in the
United States found that nearly half of total US
employment could potentially be automated
over the next decade or two.2

The more radical changes are those brought
on by cognitive computing—technologies that
allow computers to replace tasks previously
done by people. With these changes, work can
become better, faster, and even safer.

Today, health care workers, customer
service agents, sales people, and even retail
workers benefit from automation and cognitive
technologies, helping them to diagnose and
prescribe drugs more rapidly, solve problems,
recommend the right product, or simply take
an order. Some jobs are being eliminated and
others are changing. In the coming era of
human-machine collaboration, jobs, organiza-
tions, and management practices will need to
be thoughtfully and deliberately redesigned.
Job rotation will happen more quickly, with
shorter lead times. Employees—as well as
executives and managers—will need to acquire
new skills.

An emerging theme in this area is the idea
that machines are collaborators, not competi-
tors, in the workplace. Consider, for instance,
Associated Press (AP), which is implement-
ing a system to automate the writing of
corporate earnings reports. AP’s goal was not

Machines as talent:
Collaboration, not competition

• The increasing power of computers and software to perform cognitive tasks is
challenging organizations to rethink the design of work and the capabilities their
employees need to succeed.

• Nearly 6 out of 10 respondents surveyed rated this trend as “important” or “very
important,” but fewer than 1 in 10 claim to have an excellent understanding of
its implications.

• By staying abreast of changes in cognitive technologies and focusing on strategies to
help redesign work, HR can drive productivity improvements and help people redefine
their roles while maximizing the benefits of these new technologies.

Leading in the new world of work
95

Graphic: Deloitte University Press | DUPress.com

-16 Australia

-11 China

The Deloitte Human Capital Capability Gap is a research-based score that shows HR’s relative capability gap by looking at the difference between respondents’
average “readiness” and “importance” ratings for each trend, indexed on a 0–100 scale. It is computed by taking the “readiness” index score and subtracting the
“importance” index score. For example, a trend with a readiness index score of 50 and an importance index score of 80 would produce a capability gap of -30.
Negative values suggest a shortfall in capability, while positive values suggest a capability surplus.

Germany -9

North
America
Latin & South
America
Nordic
countries
Western
Europe
Central &
Eastern Europe

Middle East Africa Asia Oceania
-16 -24 -18 -15 -18 -24 -27 -20 -16

Italy -27

UK -12

Canada -19

Belgium -17

-19 Netherlands

Spain -7

Brazil
Japan
Italy
Mexico
India
South Africa
Canada
Netherlands
France
Belgium
Australia
US
United Kingdom
China
Germany

Spain     

Capability gaps in
selected countries:
Capability gaps by region:
-55 -5
-34
-31
-27
-27
-24
-24
-19
-19
-18
-17
-16
-15

-12

-11

-9
-7
Europe, Middle East, and AfricaAmericas Asia-Pacific
Southeast
Asia
-34

France -18

US -15

-34 Brazil

Mexico -27

-24 India

-24 South Africa

-31 Japan

Figure 1. Machines as talent: Capability gap by region

to put journalists out of work but rather to
increase—by a factor of over 10—the number
of companies it covers, from 300 to 4,400.

In other words, AP’s scale and reach has
increased without increasing its need for labor.
Reporters, for their part, can now concentrate

Graphic: Deloitte University Press | DUPress.com

Detailed
understanding

Some
understanding

Limited
understanding

No understanding

Not on my radar

5%
25%

39%

17%

14%
10%0 20% 30% 40% 50%

Figure 2. Respondents’ understanding of thinking machines

Global Human Capital Trends 2015

96

on tasks that require more ingenuity and add
more value than the routine drafting of earn-
ings reports.3 As Lou Ferrara of AP says, “This
is about using technology to free journalists to
do more journalism and less data processing,
not about eliminating jobs.”

Similarly, as translation programs have
become more efficient, the job of a translator
has changed to become more like that of an
editor.4 E-discovery in litigation is performed
with assistance from computers. Amazon
is using robots more, redefining warehouse
workers’ jobs.5 And the list of examples
goes on:

• An insurance company allows customers to
take photos of their auto accidents and sub-
mit them electronically to claims software,
which accelerates the claims process.

• Barclays now validates the identity of callers
through voice recognition instead of by ask-
ing them questions.6

• Automated fraud detection systems help
service agents make more profitable deci-
sions with less extensive training.

• At Volkswagen, robots help manufactur-
ing line workers do more work with fewer
work-related injuries.7

As more types of knowledge and physical
work continue to be displaced by technology,
HR and talent leaders can play a major role in
this transition.

Talent and learning teams need to under-
stand technology and use “design thinking” as
a way to integrate technology into the work-
place. By leading the process of “job redesign,”
developing hard-hitting training programs,
and working with technologists on the imple-
mentation of new technology, talent and HR
leaders can help ease the transition of these
technologies into the workforce and improve
productivity and engagement as a result.

Lessons from the front lines

Recent efforts by the health benefits com-
pany Anthem, previously Wellpoint, to develop
a leading integrated health care platform pro-
vide an example of how collaboration between
people and machines can advance business
goals. Anthem’s platform links data from a
variety of sources using a cognitive computer
system, allowing employees to more effectively
administer customer benefits while reducing
overall costs.

In the past, nurse practitioners spent
hundreds of thousands of hours analyzing
whether proposed treatments were consistent
with Anthem’s policies. These decisions involve
detailed knowledge of medical science, patient
history, and the prescribing doctor’s treat-
ment rationale. Now, the process is partially
automated by a cognitive computing system
that uses hypothesis generation and evidence-
based learning to generate confidence-scored
recommendations that help nurses make faster
decisions about treatment requests. Over time,
confidence ratings in the system, as well as its
accuracy, have improved. For some outpatient

Leading in the new world of work
97

requests, in fact, the system can automatically
approve requests. Throughout the process,
Anthem “teaches” the system how to recog-
nize the organization’s guidelines and policies.
As one Anthem executive noted, “The more
we taught, the faster the cognitive platform
learned.”

Where companies can start

• Explore and learn: Invest the time and
effort to learn about how cognitive tech-
nologies can impact business, jobs, and
productivity. This is a ripe area for applied
research and development within HR as
well as with business units and technology
teams. What cognitive technologies and
advanced robotics solutions are currently
being used, and what is on the horizon? The
speed of technological innovation means
that techniques that appear to be years in
the future are coming online faster than
ever. The opportunity for HR and busi-
ness leaders to improve their “sensing” and

quickly get up to speed on these advances
represents potentially significant frontiers
in productivity and work and job design.

• Share experiences: Given the scope and
speed of advances in cognitive technologies
and robotics, there are opportunities for
business and HR teams to collaborate with
universities, technology companies, and
industry suppliers and partners to under-
stand what is coming and identify ways of
working beyond the enterprise.

• Experiment with new job models: Find
opportunities to pilot cognitive technolo-
gies and present leaders with options for
creating value with them.

• Evaluate what does and does not work:
Review and analyze new combinations of
technologies and robotics and their impact
on job design, productivity, and worker
satisfaction. Conduct analyses of how these
technologies improve, or diminish, both
productivity and employee engagement.

BOTTOM LINE

As cognitive technologies truly take hold in the next decade, it is important for business
and HR leaders to be proactive and get ahead of this trend. Business and HR leaders should
look beyond the alarmist hype of predictions that employees are doomed to be replaced
by thinking machines and advanced robotics. HR’s role is to focus on the opportunities
cognitive technologies offer through collaboration between people and machines to
make companies more efficient, productive, and profitable, and jobs more meaningful
and engaging. Both business leaders and HR professionals should seize this opportunity
to think creatively in helping their organizations take full advantage of emerging
cognitive technologies.

Global Human Capital Trends 2015
98

1. University of Maryland, “Robots learn to use
kitchen tools by watching YouTube videos,”
January 12, 2015, https://cmns.umd.edu/news-
events/features/2708.

2. Carl Benedikt Frey and Michael A. Osborne,
The future of employment: How susceptible are
jobs to computerisation?, University of Oxford,
September 17, 2013, http://www.oxfordmartin.
ox.ac.uk/publications/view/1314.

3. Paul Colford, “A leap forward in quarterly earn-
ings stories,” Associated Press, June 30, 2014,
http://blog.ap.org/2014/06/30/a-leap-forward-
in-quarterly-earnings-stories/.

4. Martin Williams, “Tech is removing language
barriers—but will jobs be lost in translation?,”
Guardian, September 19, 2014, http://www.the-
guardian.com/education/2014/sep/19/tech-re-

moving-language-barriers-jobs-lost-translation.

5. Katie Lobosco, “Army of robots to invade Ama-
zon warehouses,” CNN Money, http://money.
cnn.com/2014/05/22/technology/amazon-
robots/.

6. Matthew Finnegan, “Barclays to offer voice
recognition for telephone banking,” Computer-
world UK, June, 23, 2014, http://www.comput-
erworlduk.com/news/applications/3526401/
barclays-offer-voice-recognition-for-telephone-
banking/.

7. Jennifer Hicks, “Volkswagen turns robotic arms
into production assistants,” Forbes, August 29,
2013, http://www.forbes.com/sites/jennifer-
hicks/2013/08/29/volkswagen-turns-robotic-
arms-into-production-assistants/.

Endnotes
Leading in the new world of work

99

https://cmns.umd.edu/news-events/features/2708

https://cmns.umd.edu/news-events/features/2708

http://www.oxfordmartin.ox.ac.uk/publications/view/1314

http://www.oxfordmartin.ox.ac.uk/publications/view/1314

http://blog.ap.org/2014/06/30/a-leap-forward-in-quarterly-earnings-stories/

http://blog.ap.org/2014/06/30/a-leap-forward-in-quarterly-earnings-stories/

http://www.theguardian.com/education/2014/sep/19/tech-removing-language-barriers-jobs-lost-translation

http://www.theguardian.com/education/2014/sep/19/tech-removing-language-barriers-jobs-lost-translation

http://www.theguardian.com/education/2014/sep/19/tech-removing-language-barriers-jobs-lost-translation

http://money.cnn.com/2014/05/22/technology/amazon-robots/

http://money.cnn.com/2014/05/22/technology/amazon-robots/

http://money.cnn.com/2014/05/22/technology/amazon-robots/

http://www.computerworlduk.com/news/applications/3526401/barclays-offer-voice-recognition-for-telephone-banking/

http://www.computerworlduk.com/news/applications/3526401/barclays-offer-voice-recognition-for-telephone-banking/

http://www.computerworlduk.com/news/applications/3526401/barclays-offer-voice-recognition-for-telephone-banking/

http://www.computerworlduk.com/news/applications/3526401/barclays-offer-voice-recognition-for-telephone-banking/

http://www.forbes.com/sites/jenniferhicks/2013/08/29/volkswagen-turns-robotic-arms-into-production-assistants/

http://www.forbes.com/sites/jenniferhicks/2013/08/29/volkswagen-turns-robotic-arms-into-production-assistants/

http://www.forbes.com/sites/jenniferhicks/2013/08/29/volkswagen-turns-robotic-arms-into-production-assistants/

David Schatsky, Deloitte LLP | dschatsky@deloitte.com

David Schatsky analyzes emerging technology and business trends for
Deloitte’s leaders and clients. His recent published works include Signals for
Strategists: Sensing Emerging Trends in Business and Technology (RosettaBooks
2015), as well as Demystifying artificial intelligence: What business leaders
need to know about cognitive technologies and Cognitive technologies: The
real opportunities for business (Deloitte University Press, 2014–15). Before
joining Deloitte, David led two research and advisory firms.

Jeff Schwartz, Deloitte Consulting LLP | jeffschwartz@deloitte.com

A principal with Deloitte Consulting LLP, Jeff Schwartz is the leader of the Human
Capital practice in US India, based in New Delhi, and the global leader of Human
Capital Talent Strategies and Marketing, Eminence, and Brand. A senior advisor to
global companies, Schwartz’s recent research focuses on talent in global and emerg-
ing markets. He is a frequent speaker and writer on issues at the nexus of talent,
human resources, and global business challenges.

Authors
Global Human Capital Trends 2015
100

Editors

Josh Bersin, Bersin by Deloitte, Deloitte Consulting LLP | jbersin@deloitte.com
Josh Bersin founded Bersin & Associates, now Bersin by Deloitte, in 2001 to
provide research and advisory services focused on corporate learning. He is an
active researcher and industry analyst, a frequent speaker at industry events,
and a popular blogger. He has spent 25 years in product development, product
management, marketing, and sales of e-learning and other enterprise technologies.
Dimple Agarwal, Deloitte MCS Limited | dagarwal@deloitte.co.uk
Dimple Agarwal is the global leader for Organization Transformation and
Talent. She consults at the C-suite level on operating model and organization
design, HR and talent strategies, merger integration, and major transformation
programs. Agarwal’s 20 years of consulting experience includes working in the
UK, Netherlands, France, Switzerland, India, Malaysia, Nigeria, and the UAE.
Bill Pelster, Deloitte Consulting LLP | bpelster@deloitte.com
Bill Pelster is a Deloitte Consulting LLP principal with over 20 years of
industry and consulting experience. In his current role, he is responsible for
leading the Integrated Talent Management practice, which focuses on issues
and trends in the workplace. In his previous role as Deloitte’s chief learning
officer, Pelster was responsible for the total development experience of Deloitte
professionals, including learning, leadership, high potentials, and career/life
fit. Additionally, he was one of the key architects of Deloitte University.
Jeff Schwartz, Deloitte Consulting LLP | jeffschwartz@deloitte.com
A principal with Deloitte Consulting LLP, Jeff Schwartz is the leader of the
Human Capital practice in US India, based in New Delhi, and the global leader
of Human Capital Talent Strategies and Marketing, Eminence, and Brand. A
senior advisor to global companies, Schwartz’s recent research focuses on talent
in global and emerging markets. He is a frequent speaker and writer on issues
at the nexus of talent, human resources, and global business challenges.
Global Human Capital Trends 2015

102

mailto:%20jbersin%40deloitte.com?subject=

mailto:bpelster@deloitte.com

Acknowledgements

Global Human Capital Trends 2015 is the product of a worldwide team working over the past year,
including hundreds of contributors from across the Deloitte network and the counsel and input of
our clients.

Special thanks

Julie May for directing the Global Human Capital trends program. You seamlessly stitched together
the various threads of the project, including managing dozens of country champions and an edito-
rial team with more than 70 authors and contributors, to deliver a truly global survey and report.
We appreciate your vision for the end product, your ability to juggle the many details of a truly
multifaceted project, and your tenacity and grace.

Ben Dollar, Jen Stempel, Gregory Vert, Elizabeth Lisowski, and Hunter Wilcox for leading
the Global Human Capital Trends program management office. Thanks to David Lee and Tom
Atkinson for detailed research support. We are also grateful to Catherine Madden and Dan
Henebery for driving the enhancements of the human capital dashboard to facilitate deeper explo-
ration of the survey findings.

Junko Kaji, Matthew Lennert, Emily Koteff-Moreano, and the incredible Deloitte University Press
team, led by Jon Warshawsky, for their editorial and design skills. You pushed us to sharpen our
thinking and to deliver (we trust) sharper messages and practical insights.

Christy Hodgson, Alice Worsham, and Haley Pearson for leading our integrated marketing pro-
gram, developing a series of initiatives to share the global report and survey through a growing web
of digital, traditional marketing, and social media channels. Thanks to Melissa Doyle and Marielle
Legair for managing the public relations programs.

The 2015 partner and director Global Human Capital Trends advisory council: Cathy Benko, Dave
Foley, John Hagel, Tom Hodson, David Mallon, Jaime Valenzuela, Ardie van Berkel, Michael
Stephan, Heather Stockton, and Jungle Wong. Thank you for your input throughout the process of
identifying the trends and shaping the report.

Finally, a heartfelt thank you to Brett Walsh and Jason Geller, the global and US leaders of our
Human Capital practices. We are grateful for your unwavering leadership, support, and counsel
throughout this journey.

Leading in the new world of work
103

Acknowledgements (cont.)

Global survey and research team

Research leaders
Shrawini Vijay and Hemdeep Singh

Research team
Megha Agrawal, Ekta Khandelwal, Tapas Tiwari, Zarmina Parvez, Ankita Jain, Mankiran Kaur,
Rahat Dhir, Adhaar Gour, Rahul Sharma, and Saurabh Kumar

Contributors by chapter

Leadership: Why a perennial issue?
Vishalli Dongrie, Josh Haims, Kim Lamoureux, Todd Tauber, Rens van Loon, and Alan Wang

Learning and development: Into the spotlight
Richard Barrett, Diana Dai, Pip Dexter, Jason Galea, Todd Tauber, Amy Titus, and Henri Vahdat

Culture and engagement: The naked organization
Juliet Bourke, David Mallon, Sjoerd van der Smissen, Nicky Wakefield, Natalie Wharton, and
Jungle Wong

Workforce on demand: Are you ready?
Anneke Andrews and Robin Erickson

Performance management: The secret ingredient
James Edwards and Stacia Garr

Reinventing HR: An extreme makeover
Mark Bowden, Mark Charron, Jonathan Eighteen, Ron Harman, Sandra Houillier, Rowena Moffat,
Mark Maclean, Karen Shellenback, Petra Tito, and Jill Trafford

HR and people analytics: Stuck in neutral
Stavros Demetriou, Boy Kester, Bart Moen, and Karen O’Leonard

People data everywhere: Bringing the outside in
Mark Bowden, Andrew Hill, Karen O’Leonard, and Brett Walsh

Simplification of work: The coming revolution
Juliet Bourke, Stephen Harrington, Tom Hodson, and Mary Ann Stallings

Machines as talent: Collaboration, not competition
Alejandra D. Agostino and David Mallon

Global Human Capital Trends 2015
104

Global Human Capital leaders

Brett Walsh
Global Human Capital leader
Deloitte MCS Limited
bcwalsh@deloitte.co.uk

Dimple Agarwal
Global Organization Transformation &
Talent leader
Deloitte MCS Limited
dagarwal@deloitte.co.uk

Michael Stephan
Global HR Transformation leader
Deloitte Consulting LLP
mstephan@deloitte.com

David Foley
Global Actuarial & Advanced Analytics leader
Deloitte Consulting LLP
dfoley@deloitte.com

Nichola Holt
Global Employment Services leader
Deloitte Tax LLP
nicholt@deloitte.com

Jeff Schwartz
Global Human Capital leader, Marketing,
Eminence, and Brand
Deloitte Consulting LLP
jeffschwartz@deloitte.com

Human Capital country leaders

Americas & Chile

Jaime Valenzuela
Deloitte Audit y Consult.
jvalenzuela@deloitte.com

United States

Jason Geller
Deloitte Consulting LLP
jgeller@deloitte.com

Canada

Heather Stockton
Deloitte Canada
hstockton@deloitte.ca

Mexico

Tomas Fernandez
Deloitte Consulting Mexico
tofernandez@deloittemx.com

Uruguay, LATCO

Veronica Melian
Deloitte SC
vmelian@deloitte.com

Argentina

Leonardo Pena
Deloitte & Co. S.A.
lepena@deloitte.com

Americas

Leading in the new world of work
105

mailto:jvalenzuela%40deloitte.com?subject=

mailto:jgeller%40deloitte.com?subject=

mailto:hstockton%40deloitte.ca?subject=

mailto:vmelian%40deloitte.com?subject=

Asia Pacific & China

Jungle Wong
Deloitte Consulting (Shanghai) Co. Ltd,
Beijing Branch
junglewong@deloitte.com.cn

Australia

David Brown
Deloitte Touche Tohmatsu
davidbrown@deloitte.com.au

India

P. Thiruvengadam
Deloitte India
pthiruvengadam@deloitte.com

Japan

Kenji Hamada
Deloitte Tohmatsu Consulting Co. Ltd
kehamada@tohmatsu.co.jp

Korea

Kihoon (Alex) Jo
Deloitte Consulting
kijo@deloitte.com

New Zealand

Hamish Wilson
Deloitte
hawilson@deloitte.co.nz

Southeast Asia

Nicky Wakefield
Deloitte Consulting Pte Ltd
nwakefield@deloitte.com

Asia Pacific

Brazil

Henri Vahdat
Deloitte Consultores
hvahdat@deloitte.com

Caribbean/Bermuda Cluster

Maghalie Van Der Bunt
Deloitte Dutch Caribbean
mvanderbunt@deloitte.com

Colombia

Beatriz Dager
Deloitte Ases. y Consulto
bhdager@deloitte.com

Costa Rica

Arturo Velasco
Deloitte & Touche S.A.
arvelasco@deloitte.com

Ecuador

Roberto Estrada
Andeanecuador Consultores
restrada@deloitte.com

Panama

Jessika Malek
Deloitte Consultores
jmalek@deloitte.com

Peru

Alejandra D’Agostino
Deloitte & Touche SRL
aldagostino@deloitte.com

Venezuela

Maira Freites
Lara Marambio & Asociados
mfreites@deloitte.com

Americas (cont.)

Global Human Capital Trends 2015
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EMEA & the Netherlands

Ardie Van Berkel
Deloitte Consulting BV
avanberkel@deloitte.nl

United Kingdom

Anne-Marie Malley
Deloitte MCS Limited
amalley@deloitte.co.uk

Feargus Mitchell
DTRAB Ltd
fmitchell@deloitte.co.uk

Africa

Werner Nieuwoudt
Deloitte Consulting Pty
wnieuwoudt@deloitte.co.za

Austria

Christian Havranek
Deloitte Austria
chavranek@deloitte.at

Belgium

Yves Van Durme
Deloitte Consulting
yvandurme@deloitte.com

Central Europe

Evzen Kordenko
Deloitte Advisory s.r.o.
ekordenko@deloittece.com

CIS

Christopher Armitage
CJSC Deloitte & Touche CIS
carmitage@deloitte.ru

Cyprus

George Pantelides
Deloitte Ltd
gpantelides@deloitte.com

Denmark

Anja Ellegard Dahl
Deloitte Denmark
adahl@deloitte.dk

Ethiopia

Kemal M. Rashid
Deloitte Consulting
kerashid@deloitte.com

Finland

Anne Grönberg
Deloitte Oy
anne.gronberg@deloitte.fi

France

Philippe Burger
Deloitte Conseil
phburger@deloitte.fr

Guy Aguera
Deloitte Conseil
gaguera@deloitte.fr

Germany

Udo Bohdal-Spiegelhoff
Deloitte Germany
ubohdal@deloitte.de

Greece

Eleana Giabana
Deloitte Business Solutions S.A.
egiabana@deloitte.gr

Ireland

Cormac Hughes
Deloitte & Touche
cohughes@deloitte.ie

Italy

Lorenzo Manganini
Deloitte Consulting SRL
lmanganini@deloitte.it

Europe, Middle East, and Africa

Leading in the new world of work

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Kenya

Kimani Njoroge
Deloitte Consulting Ltd
knjoroge@deloitte.co.ke

Luxembourg

Filip Gilbert
Deloitte Tax & Consulting
fgilbert@deloitte.lu

Middle East

Ghassan Turqieh
Deloitte & Touche (M.E.)
gturqieh@deloitte.com

Nordics

Eva Tuominen
Deloitte Oy
eva.tuominen@deloitte.fi

Norway

Bjorn Helge Gundersen
Deloitte AS
bgundersen@deloitte.no

Poland

Magdalena Jonczak
Deloitte Business Consulting S.A.
mjonczak@deloittece.com

Portugal

João Vaz
Deloitte Consultores, S.A.
jvaz@deloitte.pt

Spain

Enrique de la Villa
Deloitte Advisory, S.L.
edelavilla@deloitte.es

Switzerland

Sarah Kane
Deloitte Consulting Switzerland
sakane@deloitte.ch

Tunisia

Emna Kharouf
Deloitte Conseil Tunisie
ekharouf@deloitte.tn

Turkey

Ayse Epikman
Deloitte Turkey
aepikman@deloitte.com

Europe, Middle East, and Africa (cont.)

Global Human Capital Trends 2015
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