14
Jul

X, Y, Z … Boom! How will Changing Demographics Impact Corporate Culture?

Are you ready?

By: Donna Taglione, Vice President

Full transparency: I am a baby boomer. Born right in the middle of the largest generation–until Millennials. For many of my generation, retirement is a dirty word; it’s an inevitability to be delayed as long as possible. As a group, Baby Boomers have been fighting aging since we turned 30! After all we weren’t supposed to trust anyone over 30 until, of course, we became 30 ourselves and realized we were just getting started.

All kidding and old jokes aside, the reality is that 10,000 Boomers will turn 65 every day between now and 2029. Retirement has already started for many and isn’t that far off for more than half of the Baby Boom generation. My children, Millennials that they are, are probably saying “Finally! What’s taking you so long?” But the sheer volume of pending retirements is staggering and prompts the question how will the obvious “changing of the guard” affect corporate life?

Demographers and business historians estimate that Baby Boomers currently hold 56% of corporate leadership positions. Additionally, two-thirds of all businesses (about 4 million companies) are owned by Baby Boomers. Yet, according to a survey of Fortune 1000 employers, and of critical importance to business in general, 62% of Fortune 1000 employers believe that Baby Boomer retirements will result in a skilled labor shortage sometime in the next five years. In the next 5 years! How is this possible? What should people and companies be doing to prepare for a potential gap in skills? Are companies and their mid-career managers (Gen X and Gen Y) prepared for corporate memory to walk out the door?

Truth be told, with each generation there is always a need for new and fresh perspectives. Somehow it is a lot easier to swallow that new idea when you are on the younger end of the continuum espousing it rather than on the side that finds itself thinking “been there done that”!  Yet companies and managers are going to have to creatively manage the knowledge transfer required as the current generation of executives makes room for the next generation.

Partial retirement or flexible working arrangements–typically a two-year offer with reduced hours and benefits–is one way companies are exploring the retention of certain levels of management so their knowledge can be shared with those next in line for their pay grade. Reverse mentoring, popularized by former GE Chairman Jack Welsh, matches senior executives with 20 and 30-somethings to share experiences. Reverse mentoring closes the knowledge gap for both older and younger age groups and can identity future leaders. Succession planning prepares others internally to assume key business positions. Encore consultancy – when a person “retires” on Friday yet returns on Monday as a part-time consultant for the job they just left – has caught on in some organizations. Are these enough? Are companies paying attention to what corporate life will be like after a generation of workers retire?

I distinctly remember going to my father’s retirement party. Lots of people I’d never met before talking about a side of my dad that I never really knew at home. It was quite enlightening to hear that your dad–the guy who fell asleep on the couch waiting up for you–was a person others looked up to and respected. I don’t think a lot of companies “do” retirement parties anymore. My dad worked for the same company for 37 years. That kind of tenure is almost unheard of now. When I retire, even though I’ve been in the same industry for over 30 years, I’ll have worked at the same company for about 12 years. Certainly not worthy of a full blown celebration. But party or no party, over the course of the next fifteen years, one very large generation, used to setting standards for how things get done (Baby Boomers), is about to retire and be replaced by an even larger generation (Gen Y/Millennials) in the early to middle stage of their careers. Are we ready?

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29
Jan

How Will Current Economic Conditions and Manufacturers Influence Millennial Car Buyers?

millennial_with_keys

By: Dave Emig, Research Director; Anthony Crechiolo, Market Research Intern

The average price of gasoline in the U.S. has continued to fall the past two years. This past year in particular, the average price of gasoline has fallen from $3.36 per gallon to just $2.42. That’s just over a 38% drop in one year. With many analysts indicating gasoline prices are to remain low into 2017, many wonder what kind of effect this will have on future vehicle sales in the U.S. The answer may lie in how 2015 evolved.

2015 was a record year for automotive sales, coming in at 17.5 million vehicles sold, a 5.7% increase from 2014. Digging deeper, we actually see a drop of over 2% in car sales from 2014 to 2015, while sales of large vehicles were up over 23%. Only looking at these numbers, it seems that Americans have a positive outlook towards the future and are putting their savings at the pump towards a bigger vehicle. This statement may be correct for Americans as a whole, but does it hold true for the next generation of car buyers, Millennials, who are just now entering into the car buying market?

In order to answer this question, I think it is important to first look at how buying a car for Millennials is different than previous generations.

Buying a car used to be a rite of passage to freedom, a way to connect with friends and escape from the parents’ sphere of influence. A car used to give you access to find and define yourself as a young adult. Because of how technology has allowed Millennials to be connected to everything at all times, they tend to break away from their parents’ sphere of influence at a much younger age. However, unlike previous generations, Millennials are entering adulthood at a much later age. Buying their first car still represents this next step into adulthood, but the difference is that this generation has already developed their individual identities before venturing out on their own.

Most Millennials are not entering adulthood until they have completed their secondary education and have found an entry-level job. At that point, they are moving out of the house, figuring out their student loan payments, budgeting daily expenses, putting money away for retirement, and to top it off, looking for a new car. Most entry-level jobs do not provide the income to spend a lavish amount on a vehicle, so Millennials are often restricted to the small or compact car segments because of the limited amount of disposable income they have available.

However, Millennials who are looking to purchase a vehicle have two macro circumstances that make right now the opportune time to purchase a car: low gas prices and low interest rates. There is also the idea, stated earlier, that older consumers’ demand may be shifting away from cars to larger vehicles. This change in demand would keep mid and full size sedan prices low in the short term, but Millennials will likely need convincing to move up from their compact and small car segments.

It seems that Millennials don’t put the same emotion or value on their first car as previous generations have because it doesn’t give them the same type of freedom, as they are already aware of their unique identity. A vehicle to them is more of a machine that serves a functional need – getting them from point A to point B.

But with cars having more connective technology than ever before, will automotive manufacturers use their advertising prowess to convince these first-time consumers that cars can not only keep you connected, but have space for their friends to tag along, too?

Currently, there are hardly any advertisements targeting this group of first time buyers. You see it over and over again, commercials for a mid to full size sedan that emphasize re-kindling that childhood passion. If the idea that the older consumer is shifting from purchasing cars to a larger vehicle is true, it might be time for automotive manufacturers to increase advertising towards the next generation for these types of vehicles. If we see a shift in advertising affordable mid to full size sedans to first time buyers, the automotive industry could continue to boom.

As a result of the recent recession, Millennials feel an increased emphasis on not overextending themselves financially. As you move further along in life and become more financially secure, then you can push your financial boundaries. This trend can be noticed with most Americans; as they move up in their career, they also move up in vehicle class. If automotive manufacturers realize this and are able to persuade these first-time buyers into the purchase of a larger vehicle, they will make more money over time, since this type of buyer moves up the career path more quickly because of their higher starting point.

Will automotive manufacturers be able to persuade Millennials to spend the extra disposable income they have available on upgrading their first car purchase? Or will they just accept that first-time car buyers will come in at a lower vehicle segment and spend their extra dollars on other technology that will continue to make their lives more connected? The future of the automotive industry is in the hands of Millennials—the next generation of savvy consumers.

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3
Nov

What Would You Tell Your Younger Self?

what-would-you-tell-your-younger-self

By Donna Taglione, Vice President

A recent project reminded me that we all learn from our own life experiences. Earlier this year I moderated a series of focus groups with people who had retirement investment products – Roth IRAs, 401Ks, and brokerage accounts. These groups were segmented demographically by age.

Some groups were with people in the early phases of their career trying to balance retirement savings with new house purchases and babies. Others were mid-career, worried about their own savings but mega-concerned about how to save for their children’s college education. Still others were divided into two categories – five years away from retirement and those recently retired.

The most interesting question I asked during these sessions was “what advice would you give your younger self?” Having listened to some heartfelt responses across the groups, and having read posts in the Huffington Post, on the BBC, and even E!Online, all of which asked versions of the same question, I decided to do what market researchers do best and ask a broader group – our staff – the same question.

Generationally, we have all the major demographic segments covered at Morpace: Millennials (1982-2004), Gen X (1965-1981), Boomers (1946-1964), and a few on the youngest end of the Greatest Generation (1930-1946).

What I learned was interesting…

My financial focus group participants overwhelmingly advised “don’t underestimate the power of compounding,” not surprising given the topics we covered. In other words, invest as much as you can beginning with your first job – you won’t miss money you don’t see. It was their version of the Ronco advertisements touting “set it and forget it!”

The overarching theme from my Morpace internal query was gratitude. Regardless of age, Morpace employees advised their younger selves to appreciate what they have in the moment. This appreciation might be for something as simple as free time – the ability to come and go as one pleases before the demands of a job, a partner, and/or children. It certainly includes appreciating family, especially grandparents since they love nothing more than spending time with their family.

Directly linked with gratitude was kindness to one’s self and others. Kindness includes not only being nice, but standing up for those that are picked on. Most everyone can recall a middle school or high school group that left them feeling excluded and, with the wisdom of hindsight, realized maybe the “cool clique” wasn’t so cool after all.

Gratitude and kindness were followed closely by versions of “this too will pass.” There is an old expression – the rearview mirror has 20/20 vision – meaning everything is clearer when you can look back on it, when the drama of the moment is replaced by perspective. Several mentioned learning the benefits of patience – patience to let dramatic situations play out without jumping to conclusions – of learning to pause, reflect, and wait before judging a person you barely know.

Confidence and trusting one’s own instincts are important pieces of younger self advice. We must learn to own our decisions – the good, the bad and the ugly – acknowledge what happened, and move on. Things are not always someone else’s fault.

Interestingly, there is a longing for some youthful chutzpah. Moving away from home – you can always come back. Trying a different career. Taking chances. (I loved this one: “Dye your hair the funkiest color imaginable. If you wait until you’re in your 20’s to do it, it won’t fit with your job. And if you wait until your 80’s, people will think you are senile!”)

Our collective advice to our younger selves was to be less concerned about failing and become more fearless than fearful. We’d all be wise to think like Thomas Edison: “I have not failed. I’ve just found 10,000 ways that won’t work!” – or to remember Henry Ford’s advice: “Failure is simply the opportunity [emphasis added] to begin again, this time more intelligently.” Whether financially, as in my focus groups, or in life, fearing less seems to be good advice regardless of age. Our younger selves might have benefited from that advice, but our current selves can too!

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