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Rapid changes across a wide range of segments, from economic to technical to demographic, are creating enormous challenges for telco managers. Human resources is being viewed as increasingly important to organizational success, and many telcos have come to realize that it is the people who provide a competitive advantage for the company Experts agree that the most prevalent human resource challenges faced by telecommunications managers are:

* Economic and technological changes

* Work force availability and quality concerns

* Demographics and diversity issues

Technological Growth Shapes Economy

Several economic changes have altered employment and occupational patterns in the United States, not the least of which has been the shift of jobs from manufacturing and agriculture to service industries and telecommunications. Projections of growth in some jobs and a decline in others illustrate the economic and employment swings taking place.

Today, more than 80% of U.S. jobs are in the service industries, a trend that is expected to continue; most new jobs created through 2008 will be in this sector. By that year, manufacturing will represent only 12% to 15% of all U.S. jobs, according to the U.S. Bureau of Labor. (In fact, according to the Labor Bureau, the occupation projected to have the greatest decline in employment from 1998-2008 will be farming, resulting in a loss of 170,000 farmers. Additionally, the number of farm workers is expected to drop by 60,000, and, overall, some 250,000 fewer people will consider farming their primary source of income by 2008.)

A number of advancing areas have replaced the loss of manufacturing jobs, including telecommunications information technology, financial services, health care and retail services.(Data on employment projections can be found at the Labor Bureau's Web site at

Most of the fastest-growing occupations are related to information technology or health care (Figure 1). The dramatic rise in technology jobs has been driven by the rapid growth of communications and information technology, such as databases, system design and analysis, and desktop publishing. The growth in health care jobs is attributable to the aging of the U.S. population and work force.

Finding the Host Employees

In many parts of the United States, significant work force shortages exist due to an inadequate supply of workers with the skills needed to perform the jobs being added. In the last several years, news reports have regularly described tight labor markets with unemployment rates below 3% in a growing number of locations across the country. Industries and companies also are consistently reporting shortages of qualified, experienced workers. In the telecommunications industry, smaller firms are finding it increasingly difficult to attract and retain network and central office specialists, information systems and Internet specialists, and competitive marketing talent.

The gap also is widening between the knowledge and skills needed for many jobs today and those possessed by employees and applicants. Several studies point to the likelihood that employers in many industries will have difficulties obtaining sufficiently educated and trained workers. That definitely will be true for firms in the telecommunications industry.

Demographics and Diversity

The U.S. work force has undergone significant change. It is more diverse racially, women are in the labor force in much greater numbers then ever before, and the average age of the work force is considerably older. As a result, management has had to adapt to a more varied labor force, both externally and internally. Among the most prominent dimensions of the demographic changes affecting organizations are:

* Aging Population: The United States, like many other developed countries, is experiencing an aging of its population, and the median age of the work force now is over 40. As older workers with a lifetime of experience and skills retire, telecommunications firms will face significant challenges in replacing them with workers who have the capabilities and work ethic common in older workers. To illustrate the challenge facing NTCA members, Figure 2 shows the ages of active general managers/CEOs. Of the 414 managers in the NTCA benefits program, more than 60% are over age 50, and 40% are over age 55.

* Population Diversity: The 2000 U.S. census showed that there has been rapid growth in the number of Hispanic/Americans, and they now outnumber African/Americans. Each group makes up about 12.5% of the U.S. population. The census also found that 2.4% of the U.S. population is multiracial.

Adapting to the New 'HR World'

Shifts in the external arena, along with changes in the telecommunications industry have resulted in businesses having to deal with a far different "HR world" than in the past. As Figure 3 indicates, the old regulated world consisted of a work force made up of narrowly defined jobs, with the primary emphasis being on operations. Jobs rarely changed and pay grew evenly across the board.

In the "new world" of competition, employees must be multiskilled, particularly in the network and systems areas. Pay for performance will be necessary to attract external talent and retain internal staff, particularly given the limited number of technically specialized and multitalented individuals prevalent in many telecommunications firms. Three HR activities are likely to grow in importance:

* Attraction and Retention of Key Employees: As the job market has tightened, demand for professional talent in the telecommunications field has expanded. The acceleration of employment at wireless and CLEC firms has added more than 200,000 jobs to the industry in the past decade, and projections show that this growth will only continue in the next decade. Consequently, smaller telecommunications employers in more rural areas will have to use creative approaches to attract professionals with hard-to-come-by skills. Smaller firms located near metropolitan areas will be competing with large employers, many of which have higher pay packages and offer stock or other attractive options. As the large pool of workers over 50 in the smaller telecommunications firms retire, replacing them will require significant recruiting efforts. Additionally efforts to keep talented employees, particularly those with advanced technical capabilities, will need to be an ongoing endeavor.

* Pay-for-Performance Programs: The use of "across-the-board" increases, longevity-based benefits and assurances of continued employment have been at the heart of many compensation programs in smaller telecommunications firms. However, in the new world, greater use of pay for performance will be seen. Rather than employees being "entitled" to raises, employers will be instituting pay-for-performance programs that provide different increases for individuals based on their performance accomplishments. Annual incentive programs also will be implemented more widely to link additional compensation with achieving organizational results.

A final part of the compensation plans in the next decade will be longer-term incentives for senior managers and executives. Even in cooperatives, use of supplemental-deferred compensation plans based on organizational growth are being seen as essential to attracting and retaining key managers in nonregulated lines of businesses.

* Work-force Development through Training: The new world of telecommunications requires continual training for all employees. This is especially necessary to "up tech" the current work force to handle the myriad of changes in the industry It is important to realize that training and development expenditures are investments in the future advancement of employee competencies and skills, not additional costs. Developing succession plans also will be crucial for organizations of all sizes to prepare for the opening of numerous jobs due to future growth and retirements. Organizations also will do well to support leadership development activities for key employees below the top-level executive.

Changes facing small and medium-sized firms in communications technology are constant and relentless. To keep up with these volatile dynamics, boards of directors, managers and employees will have to take a hard look at their telco's "people environment" to ensure they are ready for the new world.

Robert L. Mathis, Ph.D., is professor of management at the University of Nebraska at Omaha.

[Graph omitted]
Fastest Growing Occupations, 1998-2008
Occupation Change in Change in
 Numbers Percent
Computer engineers 323,000 108
Computer support specialists 439,000 102
Systems analysts 577,000 94
Database administrators 67,000 77
Desktop publishing specialists 19,000 73
Paralegals & legal assistants 84,000 62
Personal care & home health aides 433,000 58
Medical assistants 146,000 58
Social & human service assistants 141,000 53
Physician assistants 32,000 48
Source: U.S. Department of Labor, Bureau of Labor Statistics, 2001

Human Resource Issues in the Telco World


* Narrowly defined jobs

* Craft/operations

* Jobs for life

* Entitlement pay

* Functional management

* Internally managed & developed

* Broad work force availability


* Multifunction specialists

* Network/systems

* Performance now

* Pay for performance

* Holding company--SBUs

* Greater use of external talent

* Limited specialized/management talent
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Publication:Rural Telecommunications
Date:May 1, 2001
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