U.S companies are preparing for significant demographic changes in the next five years, but few are looking beyond recruiting to key issues such as retention and promotion strategies, according to a recent Hewitt Associates survey.

Hewitt's survey, "Preparing for the Workforce of Tomorrow," shows that companies expect considerable demographic change in workforce age (60 percent), racial/ethnic diversity (52 percent), and gender (40 percent) in the next five years. And, while 68 percent of companies have measurable goals for recruiting a diverse workforce, only 44 percent have similar promotion goals and 32 percent have the same type of retention goals. What's more, 28 percent of companies have yet to establish any goals for attaining a diverse workforce.

"Obviously, recruiting and retention are closely linked," said Andrés Tapia, Hewitt's global leader for Diversity, Inclusion, and Corporate Social Responsibility. "If retention does not receive equal attention as recruitment, the result will be a 'revolving door,' where expensive recruitment efforts are always at full peak, due to a disproportionately high attrition rate."

In addition, this study shows that most organizations understand their retention strategies need to change, but the same can't be said for promotion criteria. Specifically, 54 percent of companies anticipate revising retention strategies, given the demographic changes to the workforce. Meanwhile, 35 percent plan to modify recruitment practices. However, none of the companies in this study believe their policies around promotion criteria are a major consideration for change.

"It's disconcerting to think that companies aren't planning to revamp their promotion initiatives," said Tapia. "It's time for organizations to prove their commitment to diversity by focusing on promotion opportunities for historically underrepresented groups in order for recruitment and retention programs to work."

Changing Workforce Prompts Companies to Revise Policies
In terms of accommodating the needs of a diverse workforce, 81 percent of companies have/plan to have initiatives to develop a more inclusive company culture, 65 percent translate/will translate employee communications into languages other than English, and 65 percent tailor/will tailor products and services to its diverse workforce.

"Companies need to pay particular attention to the unique needs of each demographic segment within its workforce," said Tapia. "For example, we know from experience that things such as health and retirement benefits, authority, and job satisfaction have different meanings depending on race, gender, or age group. It's critical that organizations take these differences into account in developing materials and communicating to each segment."

Workforce Diversity and the Changing Face of Consumers
As Hewitt's study also indicates, only 12 percent of these organizations believe their workforce demographics are closely aligned to that of their customers, while 42 percent say they are less diverse than their customers, and 46 percent feel they reflect the demographics of their customers to some degree.

"Some companies truly understand the importance of having a diverse workforce, especially as it relates to the changing face of their customers," said Tapia. "However, for those organizations still not convinced, they should realize that by 2008, minority buying power will exceed $1.5 trillion, according to the Selig Center for Economic Growth at the University of Georgia."

Getting Started Building the Workforce of Tomorrow
So, what can a company do to begin preparing for a diverse workforce? Hewitt provides the following tips.

Understand how the demographic changes will impact your industry and company.
The U.S. Department of Labor predicts that by 2008, 70 percent of the new entrants into the workforce will be women and people of color. Meanwhile, in the next decade, there will be a significant labor shortage (anywhere from 10 - 23 million) largely due to baby boomer retirements and a smaller emerging labor pool. Companies need to know how these changes will impact their organizations.

Assess your organizational readiness for a more diverse workforce.
Increased diversity often brings with it increased tension and complexity. Hewitt recommends conducting a cultural audit, using the following questions as guides:

• Do you have HR and business processes in place to support diversity and a culture of acceptance?
  
  
• Is diversity viewed as something that will enhance your teamwork, decision making, and business results overall?
  
  
• Is the business case for diversity part of the company's business strategies and goals?
  
  
• Do HR and business leaders understand what cross-cultural competence would look like in your organization?
  
  
• Does the organization have the resilience for a long-term process to achieve breakthroughs in diversity and inclusion?
  
  

Develop robust retention strategies.
Studies consistently point out that top minority talent is looking for connections to leadership and opportunities for challenging assignments, which increase the chances of retaining this talent. Providing connection and opportunities requires careful evaluation of existing procedures and policies. For example, an organization should look at everything from talent assessment and mentoring to career development and succession planning with the needs of a diverse workforce in mind. For some companies, this will show the need for changes in retention strategies.

Understand how your customer base is changing, and develop products and services for these markets.
Multi-cultural marketing is nothing new, but still represents significant potential. Tapping into an increasingly diverse workforce to assist with target market efforts could help an organization reach groups that before may have been overlooked. Doing this effectively may also address diversity retention issues by creating another opportunity for women and minorities to provide additional value to the organization.