Deloitte Millennial Model An approach to Gen Y Readiness

Attracting, developing and retaining Generation Y is a challenge worth investing in. We believe no employer is better positioned to do so than the Federal Government.

The Challenge The writing is on the wall that the federal workforce will soon undergo a transformation. First, the Baby Boomers will rapidly begin leaving the Civil Service as 40 percent of the federal workforce is slated to retire within the next five years, according to the Office of Personnel Management. Meanwhile, a 2009 report published by the non-profit Partnership for Public Service predicts that the Federal Government will make nearly 273,000 hires in missioncritical fields by the year 2012, adding to the magnitude and difficulty of the imminent federal workforce transition.1 This looming talent crisis is often described as a tsunami headed towards the U.S. Government, threatening to wash away critical institutional knowledge and manpower. The Federal Government already has a grayer workforce than the private sector workers over age 40 represent 74 percent of federal staff, while those under 30 represent just eight percent. Comparatively, in the private sector, 25 percent of workers are under the age of 30.2 With a significant percentage of the federal workforce already nearing retirement, now is the time to capitalize on opportunities to recruit, develop and retain top talent from the younger generations. Federal Workforce Age Distribution 8% 18% 31% 43% Private Sector Workforce Age Distribution 25% 24% 25% 26%

Generation Y referring to people born between the late 1970s and the early 2000s, who are also known as Millennials3 is the largest young generation from which the Federal Government can and should recruit. But recruiting, retaining and developing this generation is something that the government has had difficulty doing using current methods and practices. Consequently, government faces two linked challenges: dealing with the retirement of the Baby Boomers and updating its practices to attract their replacements.

Age Range Under 30 3039 4049 50 and over

1 Where the Jobs Are 2009. http://wherethejobsare.org Partnership for Public Service. 2009. 2 Annual Report 2008. http://ourpublicservice.org Partnership for Public Service. 2009.

3 The book-end years of Generation Y are loosely defined across bodies of literature, so we define Generation Ys boundaries without exactitudes

Deloitte Millennial Model An Approach to Gen Y Readiness 1

The Data A 2008 study showed that Government/Public Service is the number-one desired career path for graduating college seniors, almost exclusively members of Generation Y.4 Despite Gen Ys interest in public service, research about Gen Y and the federal workforce suggests that federal human capital policies and practices lag behind what is needed to attract Millennials. As a result, the flow of qualified young talent into the government has slowed to a trickle.

It is not surprising that federal agencies have been unable to capitalize on a pool of young talent who are eager to serve. Among other things, an antiquated and sometimes confusing federal hiring process makes it hard for new college graduates to find, apply for and be hired into entrylevel positions in the public sector. This problem seems especially acute when comparing the Federal Government to the private sector. In the private sector many employers travel to college campuses touting challenging, developmental and lucrative opportunities that entice this nations highly educated and motivated young workforce, building campus brands and talent pipelines even before graduation. The role of internships exemplifies the differences between the ability of the private sector and government to capitalize on interested talent. Internships, originally designed as educational opportunities for students, are now critical parts of talent pipelines, especially for highly motivated and sought-after top talent. In fact, 40 percent of American undergraduate students find the opportunity for full-time employment the most important part of an internship.5 But even those students who demonstrate strong interest in federal work by completing an internship with a federal agency are likely frustrated in their efforts to find a permanent role: Federal agencies convert only six percent of their interns to permanent positions, compared to a conversion rate of 50 percent in the private sector.6 Given the intense competitiveness of internships and companies increasing reliance on them as a pipeline to secure the interest of top talent before graduation, the governments six percent conversion rate represents both a key risk and a major opportunity for improvement. It is both a cause and symptom of the Federal Governments challenges in recruiting Millennials.

4 Great Expectations: What Students Want in an Employer and How Federal Agencies Can Deliver It. Partnership for Public Service and Universum January 2009.

5 Ibid. 6 Leaving Talent on the Table. Partnership for Public Service. April 2009.

Moreover, recruiting a new generation of federal employees is not the only challenge even the Gen Y recruits who find their way into a full-time Civil Service positions often choose to leave quickly, despite the cohorts strong interest in public service. Retention is especially difficult since Millennials have different attitudes and expectations towards work than previous generations. Yet, the federal workplace and career model are still largely structured for the expectations of a mature and retiring workforce.

generations currently eligible for federal employment, and cares about compensation, benefits, and job security less than any of those groups.7 In that survey, 55 percent of Gen Y respondents rated growth potential as a very important workplace value whereas only 43 percent of managers reported growth potential as very important. Gen Y respondents and managers also differed in opinion about job security and compensation and benefits: only 35 percent of Gen Y respondents listed job security as very important compared to 39 percent of mangers, generally not members of Generation Y. Moreover, only 38 percent of Gen Y respondents listed compensation and benefits as very important, compared to 53 percent of managers surveyed. In this and other surveys, clear differences emerge between the generations in their values and expectations towards the workplace. Despite the differences between Gen Y and other generations, the federal workplace does have attributes that Gen Y values highly. According to a survey conducted by Johnson Controls, the opportunity to do meaningful work and have a high quality of life two factors that Gen Y finds attractive were selected by 24 percent and 27 percent, respectively, of 18-25 year old participants as being one of their top three factors for selecting an employer.8 This is especially true in the United States 18-25 year old survey participants in the US reported meaningful work and quality of life as their top two factors when selecting an employer, helping explain why Government/Public Service is the most desired career path by graduating seniors. This nations top private employers have heeded the call, and are already transforming their human capital practices to identify and recruit the best and brightest young minds. In contrast, the Federal Government is at a disadvantage. Facing a possible retirement tsunami with an underfed pipeline of young, qualified staff, the Federal Government faces major obstacles to recruiting, retaining and developing the talent required to achieve its goals and objectives in the coming decades.

For example, a 2006 survey conducted by Gallup and the Council for Excellence in Government revealed that Gen Y cares more about growth potential than older

7 Uncle Sam Wants Fresh Talent. Gallup Management Journal. April 2007 8 Generation Y and the Workplace: Annual Report 2010. Johnson Controls Global Workplace Innovation. 2010.

Deloitte Millennial Model An Approach to Gen Y Readiness 3

The Opportunity It need not be so. The irony of the current situation is that no employer is better positioned than the Federal Government to offer Generation Y the employment experience it craves. The Federal Government can speak to Gen Ys sense of civic engagement and public service. The breadth and size of federal agencies gives the Federal Government the opportunity to offer Millennials the diversity of experiences that they long for, surpassing even the best corporate rotational programs. We believe that no employer can more effectively leverage Gen Ys curiosity and desire to make an impact than the Federal Government can if it chooses to transform its human capital practices. The reasons for choosing transformation are clear and compelling. The Federal Government needs to replenish its pipeline of civil servants. But because agencies goals and objectives are increasingly difficult to achieve, we believe the Federal Government should do more than just backfill its retiring workforce; it should takes steps to fill its ranks with the best and brightest Gen Y employees in the marketplace. These employees are hotly pursued by the private sector in an intensely competitive market for top talent. Our research suggests that Gen Y is a globalized, tech-savvy and networked workforce that is naturally at ease with sharing information, functioning collaboratively, and nimbly adjusting to emerging challenges all priorities that the government has struggled to pursue in the last decade.9 As a result, Gen Y can do more than just fill the impending talent gap. It can reenergize government and be the catalyst to help transform it into a high-performing twenty-first century organization with model workforce practices. By focusing more effort on Gen Y issues, we believe that government agencies will improve their workforce practices in several areas. For instance, by addressing Gen Ys need for mentorship, agencies will have the opportunity to increase rates of knowledge transfer while improving employee engagement. Additionally, by providing Gen Y employees with meaningful roles and responsibilities and improved onboarding processes, agencies will reap the benefits of improved productivity and performance. As their level of representation in the federal workforce increases, Gen Y employees will shift existing agencies into a more
9 Generation Y: Inspiring change in the federal government and the creation of a networked workforce. Deloitte Development. 2010.

collaborative mindset. The natural ability of Gen Y to work collaboratively and break down organizational silos will inevitably transform the government into a networked workforce, adept at solving problems that require information-sharing, resource-sharing, and collaboration.10 In short, the Federal Government stands to benefit greatly from embracing Gen Y, and Gen Y stands to benefit greatly from the opportunities a federal career could provide. Now is the governments opportunity to take advantage of Gen Ys interest in public service and desire to get involved in serving our nation. Millennials are rapping on the door of government. Our government must open up and show them in.
10 Ibid

The Millennial Model To support agencies as they look to build their Gen Y workforces, Deloitte has developed a tool to help agencies assess and develop new programs to harness Gen Y, the future workforce. The tool, called The Millennial Model, is an assessment that helps evaluate a federal agencys Gen Y Readiness a thorough look at an agencys ability to recruit, retain and develop Gen Y talent and provide them an environment in which they can thrive. This tool quantifies the level of maturity of an agencys Gen Y readiness in the following eight focus areas: Career development Communication Community & leadership Compensation & benefits Onboarding Performance management Training Work-life balance

The results of Deloittes Gen Y Readiness evaluation will provide agency leaders with information they can use to more effectively understand their agencys strengths and development areas regarding Gen Y issues. Agency leaders will also have a better idea of which levers they could pull to improve Gen Y Readiness and which focus areas should be addressed most urgently.

Work-life Balance

Career development Communication

Training

Gen Y Readiness

Community & leadership Compensation & benets

Performance management Onboarding

Our research indicates that for agencies to reach a mature state of Gen Y Readiness, they should be able excel in each of these areas. These eight focus areas were identified based on Deloittes research of Generation Y trends, publications on workforce strategy, and input from Deloitte Human Capital subject matter specialists and Gen Y employees from both the public and private sectors. Using this tool, Deloitte is equipped to help government agencies assess the current state of their Gen Y Readiness. For each of the eight focus areas listed above, Deloitte practitioners will use the tool to evaluate an agencys level of maturity as being in one of the following stages: developing, basic, progressing, advanced, or market leading. For example, an evaluation may indicate that an agency has market leading onboarding and training programs, but only basic performance management systems and career development opportunities.

Deloitte Millennial Model An Approach to Gen Y Readiness 5

Concluding Thoughts The evidence is clear that the retirement of the Baby Boomers will have a significant impact on the federal workforce. Its also clear that if these talent and recruitment issues are not addressed, the ripple effects on the Federal Governments ability to achieve its goals and objectives might be far-reaching and pervasive. Generation Y is clamoring to be part of the solution. Research indicates that Gen Y is a large cohort that is eager for public service careers, can replenish the federal talent pipeline, and has the skills needed by agencies to deliver on governments twenty-first century mission. Generation Y can represent an answer to both the challenge of the retirement tsunami and the challenge of reshaping human capital practices for the twenty-first centurys workforce. In addressing that second challenge, Generation Y represents an opportunity to transform government into a modern employer that can effectively execute a modern governmental mission. Attracting, developing, and retaining Generation Y is a challenge worth investing in. We believe no employer is better positioned to do so than the Federal Government. To learn more about how Generation Y can help achieve a Networked Workforce in the Federal Government, read Generation Y: Inspiring change in the federal government and the creation of a networked workforce.

Authors *Eden Schiffmann, consultant, Deloitte Consulting LLP *Neil Tambe, analyst, Deloitte Consulting LLP Michael Gelles, Psy.D., director, Deloitte Consulting LLP Rachel Azaroff, analyst, Deloitte Consulting LLP Eric Goldfarb, consultant, Deloitte Consulting LLP Henry Siemon, consultant, Deloitte Consulting LLP For more information Michael Gelles Director Deloitte Consulting LLP Tel: +1 202 572 7667 Email: mgelles@deloitte.com
*Indicates primary author

As used in the document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. This white paper includes data and information that shall not be disclosed outside of government and shall not be duplicated, used, or disclosed in whole or in part for any purpose other than consideration of this white paper. In no event shall any part of this white paper be used in connection with the development of specifications or work statement with respect to any solicitation subject to full and open competition requirements. This restriction does not limit the governments right to use information contained in these data if they are obtained from another source without restriction. This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication. 2010 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

DCS0686632