Age gap in the technology industry
Welcome to
Observateur’s second blog about globalization and global indicators!
This
week, we welcome a new team member in our team, Ivy. Ivy is from China and
finished her exchange semester in Germany a while ago. Now, she is a final year
student in marketing.
For this
second blog we chose age gap as an indicator in order to analyse human
resources management in the technology industry from a global perspective.
Globalization has made boundaries more permeable where distance becomes almost
irrelevant, it also has increased the expansion of international commerce and
the growth of many MNC’s, including those from the technology sector. As
companies are seeking for strategies to overcome the challenges posed by
globalization, their employees had slowly become a source of differentiation,
managing experienced versus talented workers is a major issue in the technology
industry. In this blog, we will collect data from 2 important MNC’S in this
particular industry which are IBM and Microsoft.
Table 1: Age gap between the two countries
representing the two regions
Companies/Countries
|
USA
|
China
|
IBM
|
45.6
|
32
|
Microsoft
|
44
and +
|
26.5
|
Table 2: Employee tenure rate
Companies
|
|
IBM
|
8
|
Microsoft
|
3
|
Why there is an age gap between employees from the East versus employees
from the West in the technology industry?
We will answer to this question by analyzing 2 different aspects: the rapid
evolving market in this particular industry and the saturated knowledge but
experienced employees from the previous generation versus the new talented
generation with great potential.
1 The evolving market of technologies
The history of IT development in most part of Asia is
not as long as that in US. Take China for example, IBM, Microsoft entered into
China market in late 1990s, while DELL began its business in China in 2005. The
education of IT and high-tech started late in China. Not many Universities
provided programs for IT and high-tech until 2000. After 2000, a large number
of IT and high-tech graduates started their career in this industry. So the
average age of IT employees in China is quite young.
IT industry is a fast moving industry. The
employee’s turnover rates remain high in Asia. The reason for high turnover
rates varies among different countries. The average salary of Asian employees
is not as high as that of American employees even for those working in different
branches of the same company. A large number of Chinese IT employees leave the
industry after working two to four years, so more than 50% of Chinese IT
employees only have an experience of less than four years. Situation is
different in India; many India IT employees seek to find jobs in US. Very few
Indians can get degrees higher than bachelor. Most of them choose to go to
America after graduation. If a company has a high turnover rate, it will be not
healthy for them to grow. The costs of hiring replacements and training new
employees will be very high. The high turnover rate might become an obstacle
for the development of the whole industry in the long term. So managers in IT
companies such as IBM, Microsoft and Dell should consider how to keep employees
in Asia market. Companies can provide employees with higher salaries, better
working environment and welfares.
2 Experience versus talents
Age discrimination in IT industry exists in
both America and Asia. But the situation in Asia is worse.
In America, if you are above 45 years old and work in IT industry, it will be
impossible for you to switch to another company in the same industry. But if
you are an IT employee in China, you will be considered old when you turn to
30.
Employers in Asia tend to hire young
graduates. They think employees in IT industry must keep learning new knowledge
to make themselves competitive. It will be easier for young graduates to be
fast learners. And employees need to work intensively to catch up the project
schedules. This kind of task requires them to have bodies in good condition and
being able to work under great pressure. Employers think it will be hard for
staff older than 30 to manage the projects.
On contrary, American employers value
experience more. They prefer experienced employees neither too young nor too
old. After many years working in IT industry, many American employees become
expert in this field. They can get high salaries and be respected by their
colleagues and the society. But in Asia, due to culture differences, the
society looks down to technical staff, including IT technical employees. If
Asian technical employees do well in his job, they will be promoted to manager.
Some of them find they can achieve higher social status and higher salaries as
managers; they just leave the industry and go to other companies to pursue a
better career. Other technical employees who have been promoted know nothing
about management. They struggle as managers and end up leaving their companies.
To solve these problems, managers in both US
and Asia should eliminate age discrimination. Managers in US need to treat
employees equally regardless of their ages. When US companies, like Microsoft,
Dell and IBM, expand their business to Asia, they should stress on long term
benefits and pay more attention to employees’ experience and professional
skills. In addition, more scientific management systems which can help promoted
technical staff to perform better at work should be built in Asian companies.
How MNC’s in the technology industry
manage its global workforce?
In this
section, we will have a closer look of the internal HR policies in the two
companies mentioned above and the purpose of such practice.
IBM: Globally integrated enterprise
According
to IBM’s CEO Samuel Palmisano, the vision of a globally integrated enterprise
is about doing the right tasks, with the right skills, in the right places.
This vision about IBM posed significant challenges for IBM’s human capital and
its approach to human resource management. The IBM case study by Boudreau
stated that IBM had to face with the problem of how to deploy its more
experienced and expensive workforce located in developing countries to projects
that increasingly were located in developing countries, while at the same time
up skill the developing-country workforce to offer IBM a long term cost and
effectiveness advantage.
In order
to solve this problem, in 2003, IBM projected a unique program calls workforce
management initiative (WMI) with a forecast cost of more than US$100 million
over the course of five years. By definition, WMI at its core is a series of
strategies, policies, processes and tools that enable optimal labor deployment,
built on a foundation of learning.
On the
figure posted below, we can see that the development team of WMI has thought
clearly about different challenges that IBM is dealing with and that they needed
to change in order to transform its HR management strategy to one’s of its
strength.
This
investment made by IBM was indeed a strategic decision in terms of
international HR management and the expected payoff is now a reality. IBM job’s
repertoire has shifted from a million individuals to only 331 roles. In some
cases, this achievement can give IBM analysts an understanding whether certain
qualifications and experiences are associated with improvement in sales quotas
or not. There is only one global application transaction thanks to the data
base system by WMI and this centralization is solving the talent supply
management issue. Using the same language to communicate (defined by the
Taxonomy) has improved capacity management by matching demand and supply more
accurately and efficiently. The number of idle workers is decreased and the
fill rates are improved to over 90% in global delivery.
This system helped IBM to move one step toward its CEO’s vision of a globally integrated enterprise. Over five years, IBM invested US $230 million in this project but received a large sum of US $1.5 billion benefits!
Microsoft: enable people and businesses throughout the world to realize their full potential.
Microsoft is considered by many as an ideal place to work, and the company has won several awards for its commitment to diversity and their flexible work arrangements in the past. Since 2005, Microsoft aimed to be an employee-driven organization by offering employees flexibility, work/life balance, flexible benefit plans. According to Priyadarshini, Microsoft has adopted the `` Performance Culture Model`` as the best approach to drive its success where all the critical people metrics are categorized and measured. There are up to nine different categories such as diversity, talent management, manager capability, etc. with many performance measures.
This system helped IBM to move one step toward its CEO’s vision of a globally integrated enterprise. Over five years, IBM invested US $230 million in this project but received a large sum of US $1.5 billion benefits!
Microsoft: enable people and businesses throughout the world to realize their full potential.
Microsoft is considered by many as an ideal place to work, and the company has won several awards for its commitment to diversity and their flexible work arrangements in the past. Since 2005, Microsoft aimed to be an employee-driven organization by offering employees flexibility, work/life balance, flexible benefit plans. According to Priyadarshini, Microsoft has adopted the `` Performance Culture Model`` as the best approach to drive its success where all the critical people metrics are categorized and measured. There are up to nine different categories such as diversity, talent management, manager capability, etc. with many performance measures.
Microsoft India
HR growth model
From the
beginning Gates said that his employees were the greatest assets of the
company: `` it’s the effectiveness of our developers that determines our
success`` and `` take our 20 best people away, and Microsoft will become an
unimportant company``. The Placement Offer data over the past few years has
confirmed that Microsoft is an aggressive recruiter and is often the first
company to offer jobs to elite graduates, as well as head hunting talents at
others companies. Microsoft values their employee’s creativity and analytics
abilities rather than their experience.
Hiring
the right people is very important for Microsoft, they adopted the ``n minus
1`` strategy which means less people are employed than are required. It is
crucial to hire the right people rather than just filing a position. Microsoft
also focus on motivating its workforce, the HR department invest in
understanding employee’s needs and give them the opportunities and environment
to allow self-development.
Microsoft
also adopted a consistent reward system where employees has two annual reviews
where they can discuss with their managers about their performance evaluation
and negotiate pay increases, bonus awards and stock options if an employee is
considered a long-term asset of the company. This system offers two rewards
paths available, allowing those with technical skills to advance as experts and
those with strong conceptual skills as managers.
Blog Extension
Thanks to all the comments which have let us gain further
insights into our blog's topic. Some readers thought our wording "aging
gap" means age distribution in China and America. We think it is necessary
to make it clear that we are comparing the differences between average age of
IT employees in China and that in America and investigating the reasons behind.
There is also a commenter thought that U.S held no more
importance in experience when it came to IT companies. In our blog, we
explained that there is age discrimination in IT industry of both two countries.
When we say that Americans value experience more, it doesn't mean that they
always put experience before age. They will consider more about experience when
hiring and laying off employees, while Chinese managers tend to hire fresh graduates.
As it is stated by another commenter, Americans value on experience and Chinese
value on certificates. Americans prefer employees with experience neither too
young nor too old. This can also be supported by the example in the same
comment that when young employees come in and take over, the first to go are
the order ones (beyond 50) and the completely inexperienced ones.
One of the commenter mentioned about the influence which
aging problems will bring on China IT industry in next 20 years. We believe
that this issue will affect the average age of Chinese IT employees. For example,
there will be more “old” employees in 2050 in IT industry than that in today.
But we should also consider other factors, such as new technology, changing perceptions
and new management systems. For instance, maybe in the future, more advanced
technology allows fewer people to do more tasks. There are fewer employees needed
in IT industry. So companies will lay off old employees and hire new and young
ones. In this situation, the average age of Chinese IT employees may still stay
low.
The comments also make some suggestions on improving the
blog's content. Many of them are also interested in why there is a bg
difference in the average age of employees in IBM China and Microsoft China. Maybe
we can have a deeper look into manage systems and recruitment process in IBM
China and Microsoft China and further discover the reasons behind in our future
study of international management.
References
Society
for
human resource management. (2012). Strategic Hr Management - Case
Study. Retrieved
February 22, 2012, from
http://www.shrm.org/Education/hreducation/Documents/Boudreau_IBM%20Case%20Study%20with%20Teaching%20Notes_FINAL.pdf
IBM
Global Business Services. (2012). Human Capital Management. Retrieved February
22, 2012, from http://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03071-usen-talentpart1.pdf
Scribd.
(2012). Microsoft's HR Strategy - An Analysis. Retrieved February 22, 2012,
from http://www.scribd.com/doc/13286642/HR-Planning-Strategy-at-Microsoft-Inc
CRI
Online. (2012). IT Young Graduate Employment Strategy. Retrieved February 22,
2012, from http://gb.cri.cn/2201/2005/04/11/1425@511316.htm
Sina Blog.
(2012). Age of employees in IT industry. Retrieved February 22, 2012, from http://blog.sina.com.cn/s/blog_5af292480100qjbd.html
Bricklin.
(2012). The Value of Experience. Retrieved Februar 22, 2012, from http://www.bricklin.com/experiencevalue.htm
Dear Observateurs, I think the indicator you chose is worth discussing. You did a very good job pointing out the differences in human resource management in IT industry, which is informative because I had not noticed them before. Your explanations on why Chinese IT employees are much younger than western employees make sense to me. One point I would like to add is that Chinese people tend to value the degree of education in a large extent. Hence in order to obtain a good position in a large company, fresh graduates of bachelor degree usually obtain their master degree, or even PhD. After finishing the degrees, they will be highly valued despite lacking of experience. The average age of university graduates are 22~23. After taking 2~3 years’ master and 3 years’ PhD program, they are still very young. After a few years’ work experience, they will have a high chance to be promoted as managers.
ReplyDeleteI also like to contribute to some reasons why there are high turnover in Chinese IT industry. Ever since China recognized IT industry was prosperous all over the world, many universities opened up the department offering related courses for IT majors. In a short period of time, the information technology has enhanced in an extremely large extent. In recent years, it is even hard to find a university that does not have IT related departments. There are huge amount of students choosing to IT related majors not because they are interested, but they think IT industry can give them a promising future. However, when they go to work and realize the competition is so fierce and the condition is not as what they imagine, they may think of leaving this industry.
Dear Observateurs, your topic is interesting, and you have done good analysis about the age gap in IT industry between the West and East. Just like the student above, this information is also new to me, and help me to develop more insights about the HRM practices in IT industry between different cultures.
ReplyDeleteHowever, I have some suggestions to improve this article. First, in your table 1, I think it's not easy to understand the meaning of the figures "45.6, 32, 44, 26.5" without any words indicating their meanings. I guess it means the average age of employees. If it does, maybe the title of the table can be changed to "two companies' average employee age in two regions", so as to make the table easy for readers to understand.
Second, as the topic is "age gap in IT industry", therefore, in the IBM and Microsoft HRM strategy part, you can find more information about whether there's different strategies regarding employees with different ages in these two companies? Or whether there's differences of human resource management between different regions? If there is, what's the reasons and whether there's insights of IT industry?
Third, in the part of experience vs talents, it is mentioned that in Asia, talents are preferred. But is there any evidences to support this argument? If there is, it's better to quote the evidence according to the reference format, so as to make this article more convincing and more reliable.
Thank you again for your interesting discussion!
Adeline
Age differences in industries differing by country are interesting, and it is not a topic I had thought about before.
ReplyDeleteOne point that I would like some clarification on is this: You have indicated the differences between the two countries and their employment styles, but do you have any data showing the differences in output or efficiency between the workforces, so we can better compare age as an indicator?
Another idea that you may consider is the average age of the population in these two countries, and whether that has any affect on these IT employment numbers. Currently China has a relatively young median age of 30 but, due to population control policies, it is aging faster than any developed country in history. By 2050 the median will be 45, and over the next 20 years the number of over 60's is expected to double (http://www.economist.com/node/13888069?story_id=13888069). Do you think this will have an affect on these employment trends? Or are these facts largely irrelevant to the point you are making?
Dear Observateurs,
ReplyDeleteUsing age gap in technology industry across countries as a global indicator is quite fresh and interesting. I have read through your blog, and I am a little bit confused about the idea, it would be great if you could let me know when I am wrong=)
From your paragraph, I understand that Americans tend to stay longer in the technological company when comparing to the Chinese, therefore the age distribution in US should be larger. (BTW, I can see the age distribution of Chinese worker in your blog, but I can’t find that of the US side, it would be great if you can put it into your blog as well!)What I am confused is that: is your global indicator “age gap” also referring to the age distribution? My first impression to the word “age gap” is something similar to “generation gap”, which means there is a significant age difference between two (groups of) people. In other words, when US has a bigger age gap, it means there are very young and very old workers working in the company, while missing the middle-age group in between. My suggestion is to change your indicator to “age distribution”, so longer age distribution means that people in different ages are working in this company as well. BTW, it is just the wording that makes me confused, but the content is very clear for me =)
I got inspired from your paragraph that the development of technology industry can be one of the indicators as well, as technology is an important factor to facilitate globalization. If a government puts emphasis on developing technology, it is a sign that the country is in pace with the global development.
Hello Observateurs,
ReplyDeleteAs stated by the other commenters, this is a very interesting and fresh topic. You did very well explaining it.
I have another way that this topic can be connected to globalization.
I believe that the reason it is very common to see a younger workforce in the IT industry is because they tend to understand technology better than older generations. Yes, older workers with experience can learn the technology, but for younger people, technology comes as second nature.
IT has rapidly improved and become more sophisticated over the years. A great deal of this can be attributed to the spread of knowledge, labor and technology due to globalization. Today you see 13 year olds with Facebooks or watch 6 year olds play games on an iPad. But at the same time, just yesterday I had to explain to my mother what the homepage on her internet browser was.
Therefore, in many cases it is more beneficial for a company to higher younger workers. They have talent and knowledge with IT and they have the potential to grow even further and gain experience with the company.
That is just another way to connect this age gap in the IT industry to globalization.
Thank you.
Thanks for your great job!
ReplyDeleteI am sorry that I do not agree with what you have mentioned “But in Asia, due to culture differences, the society looks down to technical staff, including IT technical employees”. In my opinion, IT staff is very important to our daily life. IT plays an important role in our life every day. We book flight tickets, check stock price, surfing internet every day. All is about IT. IT staff is the one who controls the systems, develops the systems, and does things which facilitate our daily life by using computer. I believe that we should thanks for their hard working.
In my opinion, working in IT industry is a trend. As we always mention that technology facilitate globalization, many companies would like to go online now . For example, we booked the flight tickets, hotels room and amusement park tickets from travel agency in the past. We would like to follow the travel plan which is created by travel agency. But now, we can plan and book all the things ourselves. We just click to the internet and using credit card to pay for it. It is easy and convenient. As the demand of e-shop increased, the demand of IT specialist will be increased. We need them to help us develop website and find the solution.
Lastly, if I am the manager, I would like to take the approach from Microsoft. Human is the important factors for the company success. In my opinion, sense of belonging is important for staff. If you love your company, you would like to put all your efforts to meet the target no matter you need to work overtime every day or you need to work during weekend. Therefore, I think that understanding employee’s needs and give them the opportunities and environment to allow self-development is good for employees.
Dear Observateurs,
ReplyDeleteThank you very much for your great job which brings me something I haven’t known before. Actually, I am not doing quite well in the disciplines of IT, but what I am learning does be related to human resource management. As a young adult, I also prefer the human resource management approach in Microsoft since it enables us to realize our full potential. But what I am confused is that, Microsoft values employee’s competences rather than experience and it is considered an ideal place to work, why the tenure rate is so low with only 3 (Actually I want to raise a question here. In Table 2 the employee tenure rate in IBM is 8 and Microsoft is 3. I am confused if the number 3 and 8 represent percentage or represent number of years. But anyway, based on my understanding, now I assume that the larger the number the better. ) Generally speaking, in my opinion, if a company treats me very well, gives me chances to put forward my own ideas, and allows me to have negotiation with upper-level managers, just as what Microsoft is doing, I will be very loyal to this company and will not easily leave it. However, the situation is the opposite according to the data you provided in this blog.
Another question raised here is that, IBM and Microsoft adopt different human resource management approaches, but the age differences between these two companies are different in USA and China. What I mean is that in USA, IBM and Microsoft almost have the same average age; while in China, the age difference is significantly large with almost 6 years. You have mentioned some reasons of why there is a difference of average age between USA and China, but I am wondering that in China, why there is also a large age difference between these two IT companies.
The global indicator here is the age gap in the technology industry, so the age differences among companies and among countries make sense. I think you have done a good job in illustrating this global indicator, but if you can add a conclusion in the end of the blog, you can make this blog more completed. Thank you.
Observateurs, I did enjoy your interesting topic, good job!
ReplyDeleteYou have raised a question that is why IT employees are much younger in East younger than the employees in West. Yes, it is a good question. And then you have analyzed the difference of the management styles between the East and the West.
I think it is because Chinese focus more on the certifications, but the Western focus more on the employees’ experience. In IT industry, most of the Asian employers value the fresh graduate employees because they think they are so pure to learn new technology and knowledge. Moreover, they think young graduates will be more creative and innovative. That’s why the employee who is aged 26-30 being a biggest part in the pie chart of age distribution of IT employees in China. It is easy to understand that why American employer not prefer to employ the fresh graduates. Most of them value the experienced employees. They think experienced employees have enough different experiences to deal with daily tasks and solve different challenges. These are not easy for the young graduates, so the company can save much time and money to train these unskillful employees.
Moreover, I agree that manage experienced versus talented workers is a major issue in the technology industry nowadays. As all of us know, hiring the right people is very important for every company. I think no matter we hire the fresh graduates or the experienced one, we need to know what the needs of the employees are. For example, we need to offer suitable training for the young graduates and offer enough welfare to the experienced workers. Let them to have more authority to make a decision. I think it should be the best way to retain the talented in the company.
Hey guys!
ReplyDeleteThis is a really interesting topic and I think it was a very creative way to tackle your global indicator. However I think there are some holes in your argument where you have no taken social and cultural context into account. IT courses are only relatively new in China which is the result of the IT field being an extremely prosperous market across the world. This can indicate why most IT professionals are younger as older employees would have never studied IT at a university level, thus those with a university qualification are more attractive employees over those without.
Also I feel that table 1 is a bit ambiguous and hard to understand, further explanation on it would be appreciated.
Great work again!
This article points out some interesting aspects of the modern workplace. It is interesting how management culture can be so different within the same industry, as there must be some kind of universal driver of excellence, or at least some common factors. It does not seem to be the case that these companies leverage the constitution of their workforce to find a niche within the market, as these companies produce roughly the same services. So how can these companies have such utterly different views and perspectives on what constitutes an efficient workforce?
ReplyDeleteWhen will this young industry be forced to mature, grow up and treat their employees with dignity and respect? The working conditions described in the article would certainly not be accepted in other more mature industries with a healthy tradition of workers unions. To say that someone is old when they are 45, or even 30, is quite utterly absurd. Seen in the context of an increasing average age of the population and later retirements, these attitudes need to change. The question is if these changes will lead to a greater competition in attracting a talented workforce, and thus creating a more attractive workplace for employees, or if these companies will fail adapt to these new conditions and thus driving away potential employees to other sectors or industries. If this is the case, the industry face a real problem in retaining their speed of development and growth, which would be truly disastrous for society as a whole.
You present a very interesting blog post, pointing out interesting and provocative points about the difference in management cultures between different companies and countries. Good job!
It is very interesting to compare the preference of staffing in China and America, as well as discuss the high turnover problem in the industry. However, the over-reliance of recruiting young employees to fill positions have significant drawback. For example, there is high turnover rate in young employees during their career exploration stage. Key players in growing industry finds hard to tolerate the high turnover rate when they are expanding their business in emerging market like China. Apart from the cost incurred in replacement and training, considerable time and resources are devoted to get the new employee familiar with corporate value, culture, understand and accept the business practice and work process. The losses from recruiting fresh graduates outweigh the benefits. I recommend observateurs could discuss the managerial implication to the organization and how to cope with this problem.
ReplyDeleteBesides, observateurs could further evaluate the staffing practice in America. They could consider whether company should bear the social responsibility to nurture the new generation by providing job opportunities for them learn and grow as IT expert. In the long run, the employees grow and flourish within the organization. They are more connected, committed and engaged to the company.
Hello Observateurs :]
ReplyDeleteYour topic is definitely an interesting one but I have to admit that I'm a bit confused. In the beginning, you mention that the global indicator that you are discussing is age gap; in particular the age gap betwen IT companies in the East and the West. However I feel that although China is a good example to use for the East, China is still growing in terms of their technology. I feel that along with China, you can maybe touch upon Japan or South Korea as examples. They are more known for their technological innovations than China is.
I also disagree with the fact that the U.S. holds more importance in experience when it comes to IT companies. I feel that they may hold more of a focus in experience than China IT companies, but technology is vastly growing and it makes a lot of sense that the U.S. along with Chinese companies would keep more of their younger employees over the older ones. I'm from the U.S. myself and know several people who have been "convinced" to step down or resign due to younger employees coming in and taking over, especially in the past few years during the recession. The first to go were usually the older ones (beyond 50s and nearing retirement in 5-10 years) and the completely inexpereinced ones.
I also really liked the points you brought up in the latter part of your entry, but I don't really see a clear connection to the first part and your topic as a whole. I understand that you are taking a closer look at the internal HR policies of Microsoft and IBM but I feel that if you have a small transition into the next major topic the whole thing would flow a lot better.