Workforce for the Future

Preparing for the Workforce for the Future

The accelerating pace of change has affected all industries and is changing the nature of work.
Shifting demographic patterns, the rapid pace of technological advancements, the shift to
knowledge-based economies and increasing pressures for innovation, productivity and cost-
containment will set the pace for work of the future. Globalization is impacting US-based, local
businesses and even government agencies as a number of competitive outsourcing
opportunities present themselves to agencies facing markedly reduced funding and tax sources.
Over the next 10 to 15 years these factors will shape the future of work and will impact key
aspects of the workplace including workforce size, composition, compensation, work design and
management practices.

Formed over 80 years ago, Metropolitan will be affected at least as rapidly as many
organizations as it faces replacement of up to 47 percent of its current workforce in the next
5-10 years -- a workforce with an average tenure of 18.9 years performing jobs in over
250 different specialties in an organization with less than 2,000 people.

This paper will describe (1) the challenges being faced by Metropolitan (and all industries) in
preparing for the workforce of the future, (2) several challenges unique to Metropolitan, (3) the
implications of these challenges for human resources, and (4) the implications for Metropolitans
efforts to manage the workforce of the future and operate an effective and efficient enterprise
serving a wide range of stakeholders.

Challenges for the Workforce of the Future

Shifting Demographics
The large population cluster of Baby Boomers has begun entering its retirement cycle. These
changes have been projected to result in significant reductions in the availability of critical skills
and experience in the workplace. In addition, when the infusion of a replacement workforce is
accomplished, it is expected that multi-generational issues will create new internal challenges
which will impact organizations. Some of these include:

Multi-generational challenges and expectations
o Challenging work and growth opportunities
o Creating and maintaining effective performance-based systems
o Ability to have impact
o Expectations of empowerment
o Timely feedback on performance
o Maintaining and communicating culture and values of the organization
o Access to information
o Access to technology
o Mobile computing and telecommuting
o Rapid promotions and career opportunity
o Desire for job satisfaction and competitive pay systems
o Work-life balance
o Diverse workplace and hiring
o Maintaining technical competencies and skills
o Attraction and retention of quality staff
o Ability to multitask and maintain connectivity
o Engaging learning tools when they are needed
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Workforce for the Future

Technology Changes
J ust as the traditional car mechanic has been replaced by electronically-savvy car technicians, a
recent Rand Study argued technological advances are expected to continue to increase
demand for a highly skilled workforce, to support higher productivity growth, and to change the
organization of business and the nature of employment relationships; more rapid transfer of
knowledge and technologies, and mobile populationsis partly the result of inexpensive, rapid
communications and information transmission enabled by the Information Technology
revolution. Technology advancements are also occurring in biotechnology, materials sciences,
nano-technologies and many other areas that will impact the water industry. These
technological advances will create new jobs and cross-disciplinary skill requirements that will
challenge current job design.

The rapid pace of technology changes will tax slower organizational processes for re-skilling the
workforce, rapid procurement of needed resources and flexibilities in moving staff to short-term
assignments in and out of the organization to leverage new technologies and collaborations.
Other issues include:

Paradigm Shifts to Leverage Technology
o New skill-set needs (e.g., science, technology, green)
o Ability to adapt to changing technology while maintaining skills to address older
systems
o Moving from task-oriented work assignments to providing services and solutions
o Moving from slow, centralized decision-making to rapid, empowered
decision-making
o Moving from lifetime skills and specialties to lifelong-learning and new skill sets
o Moving from intuitive decision making to fact-based analysis and decision making
o Moving from a Not my job to let me help you solve this problem culture
o Moving from routine work to non-routine work
o Moving from adequate skills to well-educated and highly proficient skills

Cost-Containment and Productivity Pressures
As globalization and other financial pressures have increased during the past decade, many
organizations have been very successful in leveraging technology to boost productivity and
performance. This has left management of human capital as the other key opportunity for
cost-containment and productivity gains. The workforce of the future will be working in
organizations with strong performance-based systems which incentivize both high performance
and alignment to company strategies, values and work practices. Hiring will focus on attracting
top talent that fits the organization culture. Cost-containment pressures may increase the focus
on hiring talent with the right skill sets rather than internally training staff. Responsible financial
decision making will be expected at all levels and from all employees. Other issues include:

Workforce Factors for Cost-Containment and Productivity
o Labor costs
o Hiring for culture fit, motivation and technical skills
o Decentralized organizational strategies vs. centralized processes
o Aggressive testing for technical competence
o Ongoing organizational restructuring and work redesign for productivity and
efficiency
o Improved problem-solving skill sets
o Financial responsibility as a core value
o Traditional facility requirements and location needs may change
o Increased telecommuting and flexible job arrangements increasing productivity
and the need to deal more swiftly with performance issues
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Workforce for the Future

Unique Workforce of the Future Challenges for Metropolitan

Planning for the future Metropolitan workforce must include some unique factors. Metropolitans
complexity requires extensive coordination with internal and external stakeholders. There are
externally and internally imposed processes that impact (and slow) decision-making that may be
difficult for the next-generation workforce to accept. The business need for speed and agility
has emerged as an important issue over the past decade as Metropolitan has adapted to major
changes in availability of water supply sources, changes to treatment processes and regulatory,
legislative and judicial rulings.

Metropolitan is a complex organization
o Complex water business with $1.6B revenue and $4B multi-year Capital
Improvement Program (CIP) addressing:
Water supply
Water treatment and quality
System reliability
Distribution and conveyance
Engineering and construction
Property management
External affairs/legislative
Core corporate functions
o 2,000 employees; 100 contingent workers; 1,200 retirees; 250 managers; four
employee bargaining units
o 250 different job descriptions and classifications
o Maintaining older technologies while embracing newer advanced technologies
o Subject to many regulations, legal constraints and labor contracts that impact
workforce issues

Metropolitan was built-to-last
o Unique mix of traditional technologies requiring old skill sets and new solutions
requiring advanced skills and tools
o Ongoing tension between maintaining past proven practices and introducing
improvement using new solutions
o Maintaining traditional skills not seen by employees as competitive skills for
21
st
century
o In some areas, Metropolitan must grow and develop own workforce skills

Managing the Workforce for the Future

There is abundant evidence that companies preparing to address the workforce of the future
must also address three key issues:

1. What changes in management practices are required to manage and lead a 21
st
century
workforce?

2. How the Human Resources function will address these future workforce challenges?

3. What potential future workforce issues should Metropolitan be prepared to address?

MANAGEMENT PRACTICES
The workforce for the future will expect management practices that empower, enable and
encourage innovation, follow-through and results. These types of management practices are
reflected in Metropolitan's high performance workplace organizational goals, but could grow into
larger issues as previous generations of managers face new generations of employees.
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Workforce for the Future

Some minimum management skills will be:
o Strong leadership
o Management alignment (everyone on same page)
o Creating urgency and passion
o Efficient decision-making process and organization structure
o Effective change management and sponsorship
o An increase in risk taking and entrepreneurial mindset
o Virtual environment
o Strong project management
o Strong employee engagement
o Fiscal astuteness and accountability at all levels
o Harmony between labor and management
o Effective balance between represented and unrepresented workers
o Strong performance management systems

METROPOLITAN HUMAN RESOURCES MUST CHANGE
The Human Resources Group including Risk Management and Workers Compensation at
Metropolitan has an operating budget just under $10M, 47 staff and over 90 key processes that
support a diverse set of customers including management, employees, temporary labor and
retirees as well as interfaces with a wide range of vendors, state and federal regulators and four
labor bargaining units with individually unique negotiated contracts. The potential financial
impact on Metropolitan for human resources matters has been estimated to impact over
$1.5 billion of costs during the next five years. In addition, hiring decisions that will be made
during the next 5-10 years will have multi-billion dollar impact as we replace a retirement-ready
workforce with new talent.

Historically, the HR organization has been subject to numerous audits and management
reviews and has been directed to make improvements. Nevertheless, progress has not met
expectations and instability has characterized HR leadership. During the past 12 years there
have been 10 HR leaders.

Historical Issues that have hampered HR
Lack of comprehensive HR vision
Transactional focus
Reporting relationship within Metropolitan
High turnover of HR managers (10 in 12 years); old problems remained unfixed
Reputation as inaccessible, inconsistent and non-responsive
Decisions not tied to business
Dated, traditional view of HR role
Old problems with limited progress; many solutions launched, few targets hit
Risk averse
Broken process mechanics
Adversarial labor relations
Lack of procedural discipline
Insufficient competencies and skills in key areas

Recent Changes to Metropolitan HR
The role of the modern Human Resources organization is changing in many leading
organizations. There is abundant evidence that organizations that effectively manage their
human capital benefit with improved (and often outstanding) business performance. Effective
HR leaders have a seat at the table with line management in determining the people practices
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Workforce for the Future

that will contribute to successful organizational performance. This modern business

partner/change agent role to managing Human Resources is not understood by many.

Outside Industry Trends in Human Resources
The world is increasingly complex: web, technology, workforce, costs, rapid change,
etc.
As business problems become more complex, so is the nature of HR's role
Expanded roles for HR:
o Administrative leaders / technology/systems experts
o Strategic business partner
o Lead change and make it sustainable
o Champions for employees and developing the leadership
HR expected to contribute at strategic level; at the table
Expanded HR competencies and professionalism required

Changes to Metropolitan Human Resources
A new HR Director has been tasked to transform HR at Metropolitan and the Board has
re-established the Organization and Personnel Committee to place more focus on the HR area.
Human Resources has now been elevated to report to the Chief Administrative Officer and
given an expanded role in managing people-related issues in the organization. This change is
consistent with modern HR practices throughout the public and private sectors of business.

New Metropolitan HR Director Status
Senior Leader with strong private sector business reporting to Chief Administrative
Officer
Board mandate to modernize HR with business focus
3-5 year modernization journey set with Board support
Organization and Personnel Committee launched to ensure successful change
Pursue restructuring and staff changes
Focus on integrated HR strategy aligned with business needs

Preparing Metropolitan Human Resource for Future Workforce Challenges
Like many organizations, Metropolitan faces a number a challenges resulting from rapid shifts
that are occurring in workforce demographics and expectations, increasing complexity of
business operations, increased regulatory challenges, an increasingly difficult financial
environment, competition for limited talent and opportunities to increase performance and
productivity while simplifying processes and speeding decision making.

Metropolitan has a sound foundation to begin with. When asked to assess the effectiveness of
high performance workplace practices at Metropolitan, employee feedback from the Voices
2009 Survey indicated an average favorable rating of 63 percent on 45 topics covered.
Nevertheless, organizational human resource challenges to prepare for the future workforce will
require new Human Resources practices and management practices, changes to existing
organizational processes and structures as well as new approaches to managing and leading
the workforce.

Workforce Challenges at Metropolitan
Water business is rapidly changing and cost containment has become an imperative
Large change in workforce expected with multigenerational issues within five years
Replacement skills difficult (over 250 specialized job functions)
Recognizing new training methodologies will be required for a less experienced
workforce than in the past
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Workforce for the Future

Expanding focus on people performance, empowerment, productivity, fiscal

responsibility and organizational agility
Organizational readiness for a new future
Continuous raising of the performance bar
Applying greater consequences for lack of performance
Bureaucratic pockets and cumbersome approval processes
Lack of effective succession processes to identify untapped talent and potential
Need for united push toward culture change when necessary and proactive people
leadership
Enhancing management alignment, ownership, active sponsorship and deployment of
consistent human resources practices
Establishing a greater blend of public and private personnel practices
Modernizing HR organization systems and staff responsibilities
Raising internal awareness of Metropolitan's business needs and outcomes


How We Will Get There The HR Mission

The mission of the new Human Resources Group is to ensure that Metropolitan organizational
practices are a model of effective management that fosters a high performance culture that
unleashed the potential employees bring to work every day, ensures accountability and effective
consequences for achieving high standards of performance, establishes the effective
management of people as a core managerial competency, encourages financial responsibility
and ensures excellent human resources practices to support customers.

To enable Human Resources to address future workforce challenges, a comprehensive
HR Strategy has established foundational elements required to ensure Metropolitan readiness
for the future. It is expected that these foundational changes can be accomplished over the
next two to three year period. But change must be sponsored and driven by Senior
Management as well as HR.

HR Strategy Objectives (3-5 Year Journey)
1. High Performance Workplace Engagement, accountability, high performance
2. Management Excellence Effective people management a competency
3. Financial Responsibility Act like it is your own money
4. Integrated Talent Management Right people, right skills, right job, right time
5. Human Resources Excellence High credibility HR counsel sought after

CORE HR PROCESS OBJECTIVES:
Core HR processes involve over 90 key areas. Some areas, such as recruitment, have been
studied extensively and a number of process improvements have been implemented. For all
areas, the day-to-day mechanics of a process are key to ensuring responsive and effective
service delivery. Current efforts are focused to ensuring that the HR process architecture aligns
process performance with Metropolitan business needs. The focus is on fast, reliable
performance.

TOTAL COMPENSATION
Metropolitan provides a variety of tools that deliver financial value to employees and retirees.
Integration of compensation planning, benefits design, job analysis and job classification and
the management of HR information systems that are required to support these activities into one
organization will result in improved alignment to strategic objectives, more cost-effective
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Workforce for the Future

management of resources and improvement in value of funds used to secure the future of the
workforce.

Future Challenges in Total Compensation
Developing cost-effective alternatives to rising healthcare and benefit costs
Competitively positioning compensation to attract and retain key talent and high
performing employees as competition for talent increases
Redesigning compensation practices that will foster a pay for performance philosophy
and differentially incentivizes and rewards high performance of both individuals and
teams
Ensuring employees understand the total value of the compensation and benefits they
receive and have increasing flexibility to tailor benefits to fit their personal needs and
lifestyles
Establishing incentives and accountabilities for employee performance
Using HRIS to provide people-related information where and when it is needed in a
cost-effective, user-friendly manner which supports sound business decision making
Ensuring up-to-date job profiles and reinventing the job evaluation system

HR Information Services (HRIS)
Compliance with record keeping requirements
Timely access to records and analysis while protecting confidentiality
Cost-effective, optimized systems and development of HRIS processes

INTEGRATED TALENT MANAGEMENT
The workforce for the future will require a significant investment in people. Many components of
a talent management system must work together to ensure that Metropolitan has the right
people for the right jobs with the right skills at the right time. These components require a
coordinated and consistent approach that accomplishes the intended results without increasing
exposure to litigation or violation of regulations while also ensuring that Metropolitans
investment in the people it hires yields engaged and enabled employees who continuously add
value to the business throughout their careers. Some key objectives for these talent
management elements include:

Organization Design
An efficient and effective organization with clear responsibility, authority and
accountability
Work that aligns with business goals and future needs

Workforce Planning
Proactive planning on key issues that will affect workforce
Assessing current and projected demographic trends
Linking workforce strategies to business outcomes
Ensuring ability to fill critical skills and positions
Strategic investments in developing existing talent to meet future needs
Attracting, developing and promoting talented people
Ensuring well-rounded and knowledgeable managers and employees
Addressing and respecting diversity goals
Creating a succession pipeline
Ensuring fast, agile and supportive HR processes
Ensuring workforce planning and talent management are priorities
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Workforce for the Future

Talent Acquisition
Attracting and hiring high quality talent
Establishing a Metropolitan brand in the talent marketplace
Expanding Metropolitan's use of internet-based sourcing tools
Providing speedy and flexible staffing solutions for future vacancies
Improving defensible testing and selection tools
Readiness to address skill shortages

Retention
Engaging, informing and motivating throughout the employee lifecycle
Making Metropolitan a compelling and productive place to work

High Performance Standards
Defining the behaviors and results that are important and measuring them
Fostering a culture of high standards of performance
Valuing contribution and success
Addressing low performance

Learning and Development
Focusing on the right skills and competencies
Preparing employees for future business needs
Defining critical managerial competencies
Fostering continuous learning
Reducing cost impact and time away from job for training

Leadership Development
Defining leadership competencies
Establishing an Executive development program
Providing mid-management development
Providing front-line manager development
Creating a pipeline of future managers

Succession
Determining future workforce needs
Assessing critical positions and capabilities
Determining bench-strength needs and timing
Leveraging existing talent and critical knowledge
Creating a pool of internal candidates ready to fill future positions
Developing critical leadership capabilities


HR EXCELLENCE
The role of the Human Resources organization is also changing as companies shift to
knowledge-based environments. Providing credible and responsive HR customer service
requires the HR team to possess critical competencies that encompass traditional HR roles but
also add key elements that enable HR to have a key role at the executive table.
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Workforce for the Future

Additional Core HR Processes are:

Labor Relations
Building positive relationships with bargaining units
Implementing Interest-Based Bargaining
Speeding the resolution of employee concerns and grievances
Advising management on preventing and handling employee relations issues

Risk Management
Continuing to safeguard the Metropolitan property, financial and human resources from
the adverse impact of loss
Serving as a resource for information relating to risk, insurance, contracts and safety
issues

Workers Compensation and Medical
Providing the mandated services, benefits and evaluations as cost effectively as
possible.
Preparing for changes as the workforce ages where we will see fewer, more expensive
workers compensation claims and an increased number of accommodation requests on
both an industrial and non-industrial Labor negotiations.


Human Resources 2060

Predicting the future is not without its risks. It is clear, however, that major shifts will impact how
Metropolitan and other companies will address a changed future. A 2006 report by the Boston
Consulting Group foresees a number of challenges for Management for the 21st Century over
the next 15 years or so. (see figure below)
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Workforce for the Future

From Boston Consulting Group Report on Management in the 21

st
Century.
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Workforce for the Future

Over the next 30 50 years, large-scale shifts in workforce demographics, both locally and
globally, as well as shifting global economics will lead to changes that affect the future
Metropolitan workforce. While the exact timing of anticipated changes is uncertain, there are
many changes predicted in the literature for the future workforce. These changes have a
number of practical implications for Metropolitan.


POTENTIAL LONG-TERM IMPACTS ON THE WORKFORCE FOR THE FUTURE

TIMEFRAME ANTICIPATED CHANGES WORKFORCE IMPACTS
2010 -2020 Focus on performance
Talent and experience
shortfalls
Baby boomers delay
retirement
Rise of Asia
24/7 information
Short-term focus on career
advancement
Shortened retirements
Global technical expertise
marketplace
HR as decision science
New labor market mix
Self-managed teams
Lifelong learning
Rigorous accountability systems
Labor shortages
Leadership shortages
3 generations in workforce
Global competition for local talent
Work-life balance and flexible
benefits issues
eBay labor markets
Pension planning changes
New generation of older workers
New 21
st
Century skill requirements
Flexible work arrangements
New class of managers
Data on everyone
Diverse workforce
Accountability systems
Competency-based systems
2021- 2040 People are the last frontier
for organizational
performance and
differentiation
Global competitions and
dominance change
functional specialties
HR executives increasingly
in CEO roles
Anytime, anywhere
collaboration
HR becomes transparent
People are valued as key
organizational assets
Virtual organizations
HR experience critical to CEO
advancement
Reconfigurable legal entities change
government practices to match
business peers
Management does the visible HR
work
2041 - 2060 Human Resources
becomes the bedrock of
national economies
Labor Unions as partners
Public service draws the best CEO
leaders from the best industries
using best human resource
practices
Labor Unions as champions for
competitive practices

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Conclusion

Preparing Metropolitan for the Workforce for the Future will require a coordinated effort by
management, employees and the Board. Processes which foster internal discussion and
external research on workforce trends in different industries, trades and professions will enable
Metropolitan to proactively compete for and retain talent, re-skill the current workforce, energize
high performance and cost-effectively deliver responsive customer service. Change will come
in many forms over the next 50 years.

Knowing what to do, as history evidences, is not enough to implement the changes necessary
for a workforce of the future. Three factors will be critical to Metropolitan's success: (1) strong
leadership that expands the foundations of high performance workplace practices, ensures
management practices that evidence effective people management and a strong financial
responsibility ethos that permeates the organization, (2) a commitment to budget for the tangible
investments required to ensure that a high quality workforce is both hired and developed to
ensure Metropolitan's future and, (3) management sponsorship that generates passion and
urgency throughout the organization about making these changes happen. Together, these
factors will ensure that the workforce changes outlined here translate into proactive,
cost-effective work that supports the needs of Metropolitan's many stakeholders.