Boomers currently make up less of the workforce than ever before, with their promotion rates in the banking industry alone falling from 5% to 3% since 2006. One might think the current majority of Gen X employees are filling that gap.
However, it’s the younger Gen Y that is currently claiming the spotlight, according to a PwC report on the banking industry called Value Through Your People.
The study looked at each generation of workers and reviewed data pertaining to workforce composition and performance in the banking sector from 2006 to 2010, with a focus on large and medium-sized Canadian banks, including the “Big Five.”
The study found that the voluntary turnover rate of employees under 30 has declined from 25% in 2006 to 16% in 2010, and their promotion rates have remained steady at 20%.
In contrast, the promotion rates for Gen X employees have actually fallen from 11% to less than 10% over the same period, despite the fact they are at crucial points in their careers that should be “peak years of mobility,” according to Philip Hunter, director in PwC’s people and change practice.
The upward mobility and rising retention rate of Gen Y employees is partly due to economic volatility and a difficult job market, but PwC has also found that institutions have strived to shape work environments to make them more suitable for younger workers in recent years, with the goal of engaging younger hires and fostering loyalty.
The question is: Are financial institutions paying the same attention to their Gen X employees?
The report states, “With older workers staying on longer and [with] younger employees hunger[ing] for advancement [and] coming up from below, the potential for disaffection in the Generation X ranks is significant.”
In addition, Boomers and Gen Y employees have also continued to dominate headlines and the attention of employers over the same period, with Boomers being characterized as having valuable knowledge and Gen Y employees being identified as young, energetic and innovative individuals.
While Gen X is by far the largest generational employee group for Canadian banks, comprising a “quiet majority” of between 55% and 60% of the total workforce, they are facing major hurdles, and are being undervalued and overlooked.
The ratio of Baby Boomers to Gen Y employees at Canadian banks has also shrunk from 6:1 to less than 2:1. At this rate, the more aggressive and competitive Gen Y will soon outnumber boomers in the next three to five years, and pose a possibly greater threat to Gen X mobility.
“Gen Xers are being ‘squeezed’ by older workers delaying retirement and younger workers,” Hunter believes. “Contributing factors may also include changes to operating models favouring relationship skills [over] management expertise, and career paths characterized by more stringent promotion criteria at more senior levels, which would disproportionately impact Gen Xers.”
Karen Forward, director in PwC’s financial services people and change practice, urges banks to consider how each generation contributes to its organization and lines of services.
“Banks will need to look at collaboration tools and skill transfer programs to address the ‘squeeze’ and keep these key employees engaged,” Forward says.
She points to tools such as social media, which has already led to more efficient collaboration between different groups and sectors. Institutions now need to create clear roles and opportunities for Gen X employees, which allow them to lead and take part in crucial decisions.
“These companies are like a family and each group brings something different to the table,” Forward says. “You can’t characterize each level by simply saying ‘This is Gen X and this is Gen Y’. Boomers have great knowledge, Gen X offers stability and strength, and Gen Y has energy. Each has to be considered in terms of their value rather than their age.”
Hunter adds: “The challenge will be making certain that Gen X employees feel valued by providing them with opportunity [and] allowing them to also share their own expertise and knowledge with [upcoming generations].”