With unemployment at a 33 year low, rising competition to retain and attract skilled staff is causing businesses to think differently about their management techniques.

The skills shortage is unlikely to improve in the short-term as Australia's ageing population reduces the pool of available employees. The Australian Bureau of Statistics predicts the ratio of working age Australians to people aged over 65 will halve by 2040.

With many businesses identifying people ahead of growth and profitability as their primary concern¹, developing meaningful relationships with employees is vital for future business success.

The new rules of engagement

At the core of talent retention is employee engagement, a term used to describe an individual's feelings towards their employer. Engaged employees display a propensity to go above and beyond the call of duty to contribute to their employer's objectives. Engagement moves beyond traditional measures of involvement, such as loyalty measured by tenure, to capture the extent to which an employee demonstrates their belief in the mission, vision and values of an organisation.

Understanding what motivates your employees

Understanding employee motivation is one of the best starting points for companies seeking to improve engagement levels.

While sources of motivation vary between individuals, there will be common threads in the material and emotional needs of particular age groups at similar stages of life.
For example, employees starting out in their careers are often focused on gaining experience and moving up the career ladder quickly, while those nearing the ends of their careers value job stability and income certainty as they attempt to maximise their income before retirement.

By dividing employees into age groups (see box 1), it is possible to identify the core motivational differences between groups. Combining an understanding of these needs with the overall people strategy for an organisation, can help develop relevant, effective measures to attract and retain the skills an organisation needs to achieve its goals.

Applying diversity techniques to employee retention

Strategies devised to introduce and encourage diversity in the workplace can be applied to meet the needs of different generational groups. The same principles of improving understanding and respect between different groups can help improve relationships, particularly where managers and the teams they are responsible for are from different groups.

With an increased understanding of what individuals' needs are, managers have a better chance of engaging with their employees and building solid relationships. Creating an open dialogue between managers and the individuals within their teams enables a two-way exchange, where the needs and expectations of both parties can become aligned with an organisation's strategy, and where differences can be addressed.

Engineering flexibility into people policies

Having recognised the need for different employee benefits to meet the needs of different groups, the next step in improving employee engagement is to allow managers discretion in the way they implement these benefits.

An example of this is flexibility in working hours. The role for managers is to address the needs for flexibility on an individual basis with employees. Where one team member needs to be able to drop children off at school in the morning and come in later another may wish to take a longer lunch break to go to the gym.

By addressing needs on an individual basis, policies are more likely to be effective in achieving employee engagement.

Source: Beyond the baby boomers: the rise of Generation Y. Opportunities and challenges for the funds management industry by Bernard Salt, KPMG.

Useful links

For more information on this topic click on one of the links below:

KPMG publishes a number of reports and surveys on demographic and other issues facing business on their website:
www.kpmg.com.au

The Australian Institute of Management also publishes reports on managing the future on its website:
www.aim.com.au