Tag Archive for: workforce data
Are Millennials really changing the way we work?
Part 1 of our data driven investigation into the talent trends of 2014
Introducing a four part investigation into 2014’s key talent trends, thanks to our friends at Indeed
We’ve spent the past few weeks searching for a data driven way to investigate the top HR and talent trends of 2014. The real question that I wanted to ask here was: “are these real trends affecting business, or just a big media/blogger beat-up”?
Luckily, we found Indeed’s awesome job trends tool. If you’re not familiar with Indeed, it’s one of the world’s biggest job post aggregators. Indeed collects millions of job ads from sites across the web. This approach has quickly seen them become a recruiting powerhouse.
Each week, the team at Indeed make data from millions of job ads publically available and searchable. So we can look at how frequently key words (or phrases) are occurring in job ads, going back ten years.
It’s an incredibly powerful way to look at whether these HR trends are really changing the way that companies are hiring.
What do millions of job posts tell us about the real talent trends?
We picked out four trends that we’ve seen come up time and time again in the business press over 2014. These four trends are:
- Millennials are changing the way we work (part 1, today)
- HR is about to be taken over by data/finance (part 2, coming tomorrow)
- Technology is reshaping the way we work (part 3, coming this Thursday)
- Holacracy is set to make managers obsolete (part 4, coming this Friday)
We wanted to understand if these are real trends shaping the way companies are hiring, or if they just make great stories in the press. We’re going to dive into one of these topics per day over the next four days. So make sure you check back frequently!
Without further ado, let’s jump into Millennials and find out if they’re really reshaping the workplace…
Are Millennials really changing the way we work?
There has been a lot written about Millennials in the workplace over the past year. Here’s a couple of the more influential pieces that you might have seen
- Millennials at work: Reshaping the workplace (PwC)
- We don’t need to change the workplace for Millennials, we need to change the workplace for everyone (Cognology)
- 8 things you need to know about Millennials in the workplace (Business Insider)
- Why Boomers can play nice with Millennials at work (Forbes)
I’m going to highlight some of key attributes of a “Millennial friendly workplace” that just keep coming up throughout these articles:
- Flexibility
- Feedback
- Collaboration
- Friendly
- Work from home
To see if workplaces are really becoming more Millennial friendly, let’s have a look at these five terms in job advertisements:
Flexible
We know that Millennials want more flexibility and better work life integration. And this chart provides pretty strong evidence that workplaces are heading in this direction. Over the past 10 years, you can see the frequency that “flexibility” comes up in job adverts has nearly doubled. This is the most frequent of the Millennial related terms, appearing in nearly 15% of all job posts.
Feedback
Feedback has shown similar growth, albeit from a lower base. It’s interesting that the term has plateaued in job advertising since mid 2012.
Collaboration
Collaborative and friendly workplaces are commonly cited characteristics of a Millennial workplace. There’s an interesting relationship here between the “collaborative” and “friendly” workplace. Collaboration showed very strong growth over the period of 2005 to late 2011. It has plateaued since and fell significantly in 2014.
Friendly
In an interesting takeaway for your recruiting efforts, it seems that the “collaborative” workplace is out, and the “friendly” workplace is in. This was probably one of the bigger surprises in cutting the data. Over the past ten years there’s a real trend towards more friendly workplaces. I certainly didn’t expect to see such growth over the past 2-3 years.
Work from home
We’ve saved the most interesting for last! Because in identifying the real Millennial trends of 2014, “Work From Home” is the big growth story. Since early 2014, the term has shown accelerating growth with no end in sight (have a close look at the explosive growth from mid 2014).
Millennials really are reshaping the workplace
The data does show that out that these Millennial demands really are reshaping the workplace. More and more workplaces are offering what Millennials are ‘demanding.’
But there’s also a deeper trend here. It does appear that we’re moving to “Phase 2” of the Millennial friendly workplace.
- Phase 1 includes the trends of “Feedback”, “Flexibility” and “Collaboration”. These were trends that showed strong growth through to early 2012, and have now plateaued.
- Phase 2 includes the trends of “Friendly” workplaces, and “Work from home”. These two trends in particular have shown significant acceleration over the past three years – whilst some of these earlier trends have stagnated.
Where to next? I’d love to hear your thoughts on what else is could be included in phase two of the Millennial friendly workplace trend.
Interested in the real talent management trends of 2014? Don’t miss the other parts of this series….
If you loved these talent insights, there’s plenty more in this series:
- Millennials are changing the way we work (part 1, today)
- HR is about to be taken over by data/finance (part 2, coming tomorrow)
- Technology is reshaping the way we work (part 3, coming Thursday)
- Holacracy is set to make managers obsolete (part 4, coming Friday)
I’d always love to continue the conversation and discuss this article on Twitter. Tweet @cognology with your view on this research and any other key trends you’d like to see investigated.
Why is Australia ignoring talent management and recruitment risks?
Why does employee attraction and retention matter? And what should we do?
In my previous article on people risks in the ASX 100, I stressed the point that people are one of the biggest risks that all companies need to consider. This means the attraction and retention of critical staff should be a key priority for all boards and executives.
Recap: Only 20% of the ASX 100 recognise that talent retention and attraction is a key business risk
In case you missed part 1, here’s the quick recap. Only 50% of ASX 100 companies declare any people related risks to investors in their annual report. This falls to just one in five companies declaring the importance of attracting and retaining top talent. You can see the quick summary on key people risks as declared by the ASX 100 below.
Today we’re looking at which industries (and companies) are best practice in understanding their talent attraction and retention risks
You can see the breakdown by sector above. What we found really interesting here is how the healthcare and science sector makes no mention of attraction and retention. It’s common knowledge we don’t have enough science and technology graduates, so why do none of the top health and science companies declare attraction and retention as a risk? It seems that everyone is proclaiming a STEM shortage (apart from the companies who actually work in the industry).
And what about best practice at a company level?
What are the best companies saying about talent risk and mitigation? We wanted to highlight some of the statements that we thought were best practice. So here’s five of the best:
- ”People capability: Brambles is subject to the risk of not attracting, developing and retaining high-performing individuals. Furthermore, succession planning may not be managed effectively, so that talented individuals are able to be developed and promoted within the Group, rather than sourced externally. This could result in Brambles not having sufficient quality and quantity of people to meet its growth and business objectives.” – Brambles 2014 Annual Report
- “Myer supports the development of all our team through regular performance feedback, goal setting and career development sessions. Further skill and capability development opportunities are offered through on the job training, instructor-led training and online learning modules.” – Myer 2013 Annual Report
- “The attraction of high calibre employees, particularly for business critical roles is an ongoing challenge and despite a weakening resources sector, there continues to be a very competitive employment market for skilled professionals. Along with the focus on people-related productivity improvements, Monadelphous will continue to invest in the development and retention of its key talent to enable the Company to successfully achieve its vision and maintain its competitive advantage.” – Monadelphous 2013 Annual Report
- “Through the enhanced Performance and Talent process we have identified critical talent, including critical female talent, and have adopted a targeted retention approach for these employees. Our focus on retaining female employees has been supported in specific development programs including Career Conversations for Top Talent female managers, ATP, and provided industry networking opportunities such as Glass Elevator luncheons.” – Coca-Cola Amatil 2013 Annual Report
- “Retention – focus on retaining talent in APA –– Continue to offer flexible work arrangements through part time hours, job sharing, flexible start and finish times and purchase of additional annual leave. Over 90% of all flexible work arrangement requests have been approved during the Reporting Period. This includes a job share arrangement approved for two senior women in leadership roles. APA will continue to support such requests, where possible and appropriate.” – APA 2013 Annual report
Talent risk is only set to increase: So what should boards and executives do?
As I’ve written about previously, we’re going to have more positions than people very soon. Companies of all sizes need to be thinking about how to attract and retain top performers now, before the talent crunch hits. As our economy continues to grow faster than our population, we’ll have more jobs than we have people to fill them.
And as we touched on recently in our investigation into average employee value, companies have more invested in each individual employee than ever before. As that research showed, the future of work is likely to feature increasingly smaller companies with larger valuations. In this future, each individual employee is worth more to their organization than ever before. And as we all know, the smaller the organization, the larger the talent risk.
We know that the talent crunch is going to make quality employees harder to find and more expensive. For the majority of companies, there’s simply no excuse for not being upfront about the attraction and retention risk that they are facing. Here’s my two key recommendations for Australian boards and executives:
Recommendation 1: The risks around retention and attraction need to extend to more employees than executives and board members.
Most of the mentions of attraction and retention risks we found pertain to board members and executives. There’s no doubt that these people are key single point sensitivities. And they should be recognized as such in the annual report.
But there’s almost certainly other roles that are just as hard to recruit for (and are just as sensitive in terms of performance of the organization. There are sections in every annual report on the bonuses paid to board members as retention incentives. But there’s almost no mention of how to attract and retain top employees in any other part of the company. The recent underperformance of 2dayFM in Sydney following Kyle Sanderlands departure provides a very practical example of why key roles don’t always have to sit in the c-suite.
You need to have strategies in place to retain all your top performers regardless of what they do. Of course you want the best board members and executives, but talent risks and seniority aren’t always one and the same. Investors care about the risks to company performance, not the risks to the most senior staff. There’s a big difference here that is missed in just about all annual reports.
Recommendation 2: Organisations need a retention and attraction strategy (not just awareness)
A lot of annual reports mentioned the importance of attracting and retaining top talent, without explaining how. You can talk retention all you want, but it’s critical to have a strategy to back it up. In the same way, an annual report wouldn’t say the organization was planning to double business output without explaining how. Clear disclosure about the attraction and retention strategy is key information for investors in understanding how likely a business is to succeed in the near future.
In the examples above, Coke and APA do the best job of not just setting out the importance of talent to the business, but also clearly stating key strategies for retention and attraction. With Coca Cola, it’s about targeted networking and career conversations. At APA, it’s all about flexibility. It’s very easy to understand that they were written by a manager at the front line with actual experience in retaining staff. Whilst I love Brambles statement on the importance of their staff and talent – it’s very hard to understand what that actually means in terms of actions that managers are expected to take day-to-day.
Have you got another board level talent recommendation you’d like to see implemented across Australia’s largest companies?
If so, I’d love you to join me on Twitter @Cognology and let me know your thoughts. I’ll publish and retweet any great suggestions over the coming week.
50% of Australia’s largest companies ignore people as a key business risk: New Cognology research
Through my work at Cognology I spend most of my life thinking about talent management and employee risk. But I wanted to understand how much time other Australian CEOs and CFOs spend thinking about their key employee and people risks. So with my team of helpers here at Cognology HQ we’ve spent the past few weeks investigating how the largest companies in Australia recognise people risks.
To do this, we compiled the most recent annual reports for each of the ASX 100 (the largest 100 companies in Australia). We were looking at the section where each of these companies declare key business and investment risks. Broadly, this section is meant to describe all the critical risks that investors need to think about when choosing whether to invest money into the company or not.
We wanted to see which companies recognised people as a key business risk – and which didn’t. I suspected we’d get some variance, and that we’d find some outliers who ignored their people all together. But the truth was more astounding. It’s worth remembering here that we’re dealing with the 100 largest, most sophisticated companies in Australia. And when documenting their key business risks, just half declare ANY key business risk that’s related to their employees.
Just 50% of ASX Top 100 listed companies mention ANY employee related risk in the key business risks section of their latest annual report.
Remember that companies are required to disclose all key business risks to investors. And we’re talking about Australia’s largest and most sophisticated organisations. Yet people risks receive no mention at all for half of these companies.
I’d argue that for just about all of these companies, people are the most complex and unpredictable single part of the business. Which is exactly why I believe that people are the most valuable resource, and the biggest risk, to any organization. We’ll get back to my talent rant in a minute – but first some more context around the data.
The key employee risks that we were looking for
In working through these 100 or so annual reports, we classified employee and people risk into 5 common categories:
- Employee injury or safety. Here’s a good example from Dulux’s 2013 Report ”A death or major injury in the workplace would be devastating for employees and families and could jeopardise the group’s reputation as a first-choice employer.”
- Industrial relations risks. Risks like this one from Asciano’s 2013 report: ”[The risk of] Industrial relations activity that impacts the Company’s ability to meet its contractual and customer expectations”
- Retention and attraction of key personnel. For example from Brambles 2014 Annual Report: ”Brambles is subject to the risk of not attracting, developing and retaining high-performing individuals. Furthermore, succession planning may not be managed effectively, so that talented individuals are able to be developed and promoted within the Group, rather than sourced externally. This could result in Brambles not having sufficient quality and quantity of people to meet its growth and business objectives.”
- Inability to execute strategy or innovate. Here’s an example from Worley Parsons 2013 Annual Report: ”The risk of failing to develop and implement an effective business strategy. Failure to do so may over time lead to a loss of market share, damage to our reputation and negatively impact our financial performance.”
- Non-compliance with regulation or unethical practice. For example from Woolworths 2013 Annual Report: “There is a risk of non-compliance with, or additional obligations relating to, legal and regulatory obligations and expectations which may have a negative impact on Woolworths’ performance”.
Of these risks, employee injury was the most commonly cited
Just under a third of the largest companies in Australia mention employee safety and injury as a key business risk. It’s quite incredible just how many companies (especially in the resources sector) open up the annual report by stating: “safety is our #1 priority”, but then completely ignore safety in the key investment/business risks.
Of the other people risks, “non-compliance” was the second most common, followed by “retention and attraction of key personnel” and “Inability to execute strategy or innovate”. “Industrial relations risks” were least commonly cited, with just over 1 in 10 companies describing this risk in their annual report.
Only one in five companies makes the connection between talent and the share price!
I was shocked that “retention and attraction of key personnel” is cited by just one in five companies. I simply can’t believe this – based on the HR departments I’m talking to, this is a key concern for nearly 100% of large Australian companies. As these CHRO’s know, there’s a real war for top talent (whether that means building it or buying it).
But clearly the CFO is struggling to make the connection to the impact on the share price. So maybe the alternative way we should present this stat is: “only one in five Australian CFOs recognizes the risk of poor talent management on the future share price”.
People are the most valuable resource (and the biggest risk) to any company.
I’m still astounded by these results. Based on the large number of Australian companies who ignore people risk, I’m left wondering if some of these companies are secretly run by robots?
That said, I can understand how this happens. The CFO and the lawyers sit around in a room brainstorming investment risks. And they probably copy and paste from last year’s report most of the time.
But, why I’m so concerned is failure to recognize a risk is failure to plan for the risk. Because for most of these companies – talent and people are by far the biggest risk to the future share price. And perpetuating the illusion to shareholders that people are “all under control” is a massive mistake.
Personally, I’m looking forward to the day when the ASX makes it mandatory to report on your talent management strategy. I think it will be a great win for investors, and force CFOs to confront the talent challenge from a dollars and cents perspective. And I have no doubt that over the next 15 years we’ll see it happen. But we’ve got a long way to go yet. And getting more than one in five of the largest, most sophisticated companies in Australia to recognize the direct connection between attracting and retaining key people and the future share price is the first step.
When I look through the ASX 100 annual reports next year I hope to see more declarations of people risks. I’m also looking forward to monitoring the 50% of companies that don’t declare people risks. You can bet they’ll struggle in the coming years if the perspective in the c-suite doesn’t change.
And finally, make sure you stay tuned to the Cognology blog – we’ll release more detail from this research including an industry-by-industry breakdown over the coming weeks. Any guesses on how your industry shapes up?
About the data
This data uses the latest annual report publically available on the company website as at late September 2014.
Who are Australia’s most valuable employees?
I love thinking about the future of work. And recently there’s been a lot of discussion that the future of work means bigger companies employing less people. It’s hard to draw any other conclusion when you look at deals like the Facebook acquisition of WhatsApp, a US$19 billion dollar acquisition with just 55 employees. I’ll save you pulling out the calculator – Facebook are paying an incredible $350m or so per employee!
I wanted to understand the Australian perspective on whether we’re seeing the start of a major disconnect between employees and firm value. To do this we’ve spent some time running the numbers on the ASX 100. And the results might surprise you!
The average Australian employee is worth just over $1m
I’m just looking at the ASX 100 here. But that’s a pretty good representative sample, given that these 100 largest companies in Australia employ between them about 1.4m people.
At an aggregate level, these 100 companies are worth just over 1.4 trillion dollars (yes, with a T!). So at an individual level, that means that the market values each Australian employee at just over $1m ($1,002,617 to be exact).
Roughly that means that a company worth $100m will on average have about 100 employees. A company worth $10b will have about 10,000 employees (and so on).
Before you go asking your boss for a pay rise, it’s worth considering that this average masks some big differences. So of course I put together a top 10. And my vox-pop around the office shows that pretty much no one can guess which large Australian company has the most valuable employees.
I’ll save the suspense. Australia’s most valuable employees work at Transurban – the tollway giant that operates some of Australia’s most important highways.
Australia’s most valuable employees (market cap per employee)
A single employee at Transurban is worth nearly A$32 million dollars. The startling fact here is that depending on which day you look at the exchange rate, that’s more per employee than Facebook! (Their average employee value is a measly US$28 million). It’s also significantly more than Apple, Google, Amazon and Microsoft.
The rest of the Australian top 10 comprises APA Group (pipelines), Seek, Sydney Airport, Dexus (property), Duet (infrastructure), GPT (property), ASX (the stock exchange), Oil Search, Beach Petroleum and Woodside Petroleum.
Surprisingly, Seek is the only technology company to make the top 10. In Australia, it’s not technology, but tollways that win out in this list.
The big earners in the US work in the cloud. Here in Australia the big money is still in the ground.
On a sector-by-sector basis, it’s not surprising that the most valuable employees sit in property and infrastructure. Long term monopoly contracts and regulation mean that there’s simply less employees required to generate earnings. But what’s startling is just how significant the difference is between industries, with property and infrastructure employees worth nearly 3x more than the next most valuable sector.
Average market capitalization per employee (by sector):
The difference between Australia’s most valuable and least valuable employees is HUGE!
The great thing about the stock market is it doesn’t mess about with niceties. Between Australia’s most valuable employees (Transurban) and least valuable employees (Downer) there’s a difference of 367 times!
As well as this astoundingly large multiple, what’s interesting here is that the bottom 10 companies in this list are all subject to market and technological disruption. We’ve got a collection of steel makers (Bluescope and Arrium), retailers (JBHifi and Myer), logistics companies (Qantas and Toll) and engineering firms (ALS, Leighton, Worley and Downer).
The bottom 10
What does this all mean?
There’s a large number of conclusions that you can draw out of this data. And I’m sure others will have insights to share in the comments. But let me start with a couple:
- Given the dominance of infrastructure players in the top 10, do Australia’s most valuable companies rely on regulation, rather than innovation?
- Where are the technology companies? There’s a lot of talk get’s thrown around in the press about how Australian investors just don’t understand and value technology. This research provides some hard evidence in support of this claim.
- Many people have predicted that the future of work means larger companies employing fewer people. On the basis of this data I think we can say that the future of work will also be more and more unequal (with the gap between the most and least valuable continuing to increase).
I’m also looking forward to tracking these stats over time to see if the average Australian employee is getting more or less valuable. We’ll update this on a semi-regular basis to keep track.
There’s so many other insights to be had here, so make sure you stay tuned to the Cognology blog over coming weeks as we look in more depth at key industries and companies. But I’d also love to hear from you. What does this data tell you about the Australian workforce and the future of work?
About the data
These numbers are based on Google Finance data as at late September 2014. This was supplemented with WGEA data where necessary (some companies are quite tricky about hiding how many employees they have).
