Students of organizational behavior — and all corporate compliance officers should be in that camp — love to talk about the different generations in the workforce today, and how the mix of those generations will change in the future.
If traditional alignment between work experience and job level continues, we’ll soon be running out of seasoned senior executives.
Today let’s focus on one specific challenge with the intergenerational organization that will come to the fore by the mid-2020s. If traditional alignment between work experience and job level continues, we’ll soon be running out of seasoned senior executives.
More precisely, we’ll hit a period where Baby Boomers have retired, and most Millennials and Generation Z will still be in the earlier parts of their careers. That will leave Generation X to hold down the leadership fort — but there are not quite enough of them to fill the vacancies left by exiting Baby Boomers.
Data in the U.S. Census provide the numbers for this shift. When you rank 2018’s total population by age, the single largest group are 27-year-olds. There are 4.81 million of them to be exact. If you were to make a Top 10 list, Millennials age 23 to 30 would occupy eight of those slots. Baby Boomers appear only once, in ninth place, with 4.45 million 58-year-olds. Generation Xers, defined as people currently 40 to 54 years old, don’t crack the Top 10 at all.
Now consider what those numbers tell us about the workforce in 2028. If we use 2018 data as a yardstick, in 10 years the United States will have more people age 21-50 than we do today, but fewer people 51-65.
In other words, the business world will have a larger population of younger workers, and a smaller population of seasoned executives.
In other words, the business world will have a larger population of younger workers, and a smaller population of seasoned executives. So what does that mean for large organizations trying to set a strong ethical tone at the top, and have that tone echo down through younger, less experienced middle and lower ranks?
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Embed Ethical Due Diligence into the Hiring Process
There’s a lot to consider about how shifting demographics will affect your company’s recruitment, training, and executive communications.
One natural response is to say, “Hire people with better ethics!” That’s a vital point, but translating it into a personnel strategy is more complicated.
Remember that businesses are becoming much more specific about the skills that they want. Recruitment software gets more sophisticated every day, with algorithms parsing resumes and LinkedIn profiles for all sorts of keywords related to specific talents.
We can’t fault the HR department for that approach; professional and technical skills will always be the priority in hiring. Still, it might miss insights about a candidate’s ethical values.
So compliance officers will need to think more about how to “screen” for ethics within the hiring processes. Ideally, CCOs can work with HR and recruiting to amend those processes so that they take ethics into account from the start — as opposed to the compliance officer performing an “employee ethics check” at the tail end. That’s not how we perform due diligence on third parties, and it shouldn’t be how we perform due diligence on prospective employees.
You’ll also need to do the same as Millennials and Generation Z work their way up the management track. This requires training that develops employees to be ethically aware, and compensation and promotion policies that include some element of ethical awareness.
But wait — isn’t that important already? Don’t companies try to look for ethical employees now? Yes, but shifts in demographics, business behavior, and public attitudes, however, are going to make these points more important in the decade to come.
Why This Matters
First, the business environment is going keep getting more complicated: extended enterprises that encompass more third parties, more interdependence among business partners, more regulation and risk management requirements. The potential for misconduct or violations will increase.
Second, the world is going to keep getting more transparent. More data about corporate conduct will continue to be available online, more quickly, to be dissected more swiftly by outsiders on social media. Those dissections may not be fair or accurate, but they will be a fact of life.
Those forces will drive up the importance of getting ethical conduct right from the start, just as senior leadership ranks will come to depend more on Millennials and Generation Z.
So finding employees with good ethical judgment, who know how to navigate complex business environments where the correct answer might not always be clear, but the wrong answer could bring punishing consequences — that will be something corporations need to do, if they want to thrive in the 2020s and beyond.