The ageing of the workforce is sneaking up on employers. For those who fail to act, believes Bob Critchley, the consequences will be dire
The ageing of the workforce is sneaking up on employers. For those who fail to act, believes Bob Critchley, the consequences will be dire
or the Baby Boomers in their 40s and 50s, the ‘R’word most often heard is retirement. What is retirement? Retiring from what? Life?
We are very fortunate to be living in a time when we have the potential to live a lot longer lives than our parents and grandparents. We are now living healthier lifestyles, eating better, exercising, experiencing great breakthroughs in medical technology, have more savings, and have more options for activities in our spare time. As a result, in 2003 our life expectancy had grown to 82.8 years for women and 77.8 years for men and it continues to increase.
Put simply, this is the first generation in the history of the world to reach their 50s largely unscathed by war, disease or famine. Even more amazing is that two-thirds of all people who have lived beyond 65 are alive today.
Yet, many organisation’s employment strategies are proving to be resistant to change and many employees are being encouraged to retire earlier. Our parents and grandparents worked until they were perhaps 65, and retired worn out, unhealthy, with very few, if any, savings and limited options on how to spend the possible five or ten years until they died.
Now we are seeing people retiring at 55, healthy and with savings, and potentially having a 25-plus year retirement period. If that person who retires has a partner, the other person also has to be considered. As one woman put it: “Retirement is about having twice as much husband and half as much money!”
Better to wear out than rust out?
Another concern is at the opposite end of the scale –fertility rates have fallen dramatically. In 1961, each Australian female had on average 3.7 children. Today, it is down to 1.75 children – well below the reproduction rate of 2.1 children.
What is happening to this world? What is the impact on our workforce needs? It means that at current levels more people will leave the workforce over the next five years than will join, unless we increase participation levels of 45-plus workers in the labour market and encourage these workers to stay in the workforce longer. (Australia’s participation rate for this age of workers is one of the lowest in the world.)
CEOs, senior executives and board members need to rethink many of their recruitment and retention policies. There will not be enough young people to fill all the roles.
Put simply, most of us have to work longer to ensure we make the most of this one window of opportunity we have on this earth. This leads to changing the thinking pattern of the majority of employers in this country who have focused on a ‘flight to youth’ and fixed employment arrangements, at the same time as it has become trendy for people to talk about retiring early. Sometimes this has come about after an involuntary lay-off of a person from a job, becoming increasingly frustrated at being constantly rejected when applying for jobs, and deciding to give up and leave the workforce. How sad!
Looking at statistics from the US, the impending challenge for employers is highlighted by the following: In 1980 there were 99 million jobs in the USA and 107 million workers in the labour force. By 2010 this is expected to have reversed to where there will be 168 million jobs and only 158 million workers to fill the roles: a 10 million shortfall of workers! Similar trends are occurring in Australia.
Companies that do not embrace these issues and address these concerns are condemning themselves to mediocrity. We are already seeing many examples of skills shortages in specific areas, and unless employment strategies are modified in many cases, companies’ performance and even survival may be at risk.
For employers, the message is clear:
• Recognise that most jobs are knowledge based and older workers are capable of filling most roles into their 60s and beyond.
• Older workers have many great attributes including reliability, experience, fewer sick days, and so on.
• Create a flexible workforce so people can work fewer hours and still make a very valuable contribution.
• Recognise there are many other potential employees capable of making great contributions, including people who have been out of the workforce for a long time, disabled people and older workers.
The fastest growing portion of the workforce over the next 10 years will be the 45-plus worker and within that, females are the main growth segment, some having been out of the permanent workforce for a long time and needing employers to be prepared to re-train them. Unfortunately, not many have the patience. The payback will be huge with a likely great work ethic, commitment and loyalty. After all, many of these women have been maintaining the business of raising a family, running a household and so on, without constant reinforcement of their self esteem. They needed to be multi-skilled and just had to do it!
Within this environment, we need to also recognise the significant skills shortages occurring in some industries, and ensure we do not stifle the careers of young people who will become frustrated (and who in many cases have a much healthier attitude to life and work than their parents). This is why within this changing environment, while some of the ‘oldies’ will continue to maintain their career path development and seniority, it is also important and possibly appealing that a section of this group will seek a less stressful and less intensive work environment and make way for the young.
For all of us, we need to think of our career as shaped like a bell curve where we may move up the corporate ladder (or left side of the bell) until your 40s or 50s and then move down the right side of the bell to a reduced role, part time, seasonal or job sharing role perhaps working 40 per cent to 80 per cent of the time until well into our 60s or beyond and having a great work/life balance.
The bi-product is we may become a nicer person to live with, have more fun, make a greater contribution to our employer, and probably live longer.
What can HR do?
Within this environment there are many areas and suggestions that need to be considered by HR professionals who will be increasingly coping with the challenge of retaining key people and ensuring they are ‘rewired’:
• Encourage employees to be responsible for their own careers and life planning. Employers can no longer guarantee their own futures, so how can they guarantee the careers of their employees.
• Look at ways to provide flexible career options.
• Look at ways to introduce flexible work practices.
• Consider ways to encourage experienced workers to explore an environment with fewer hours, less stress and less pay and be prepared to move down the right side of the bell curve.
• Following on from the above point, ensure younger workers’ careers are not stifled and they can seek good prospects for advancement within your organisation.
• Ensure you know how many of your employees are eligible to retire over the next five years. Have you developed succession plans for them?
• Is there a gap between the talent you need for the future and the talent currently available?
• Offer continuous training and development to ensure employees of all ages can achieve ‘sustainable’employability within your organisation or elsewhere in the workplace.
• Encourage employees approaching retirement to develop a ‘life plan’ (with their partner if applicable) at least five years before retirement date.
• Look closely at all sectors of the workforce for potential employees, including disadvantaged people, those with disabilities and people who have been out of the workforce for a long time.
Robert (Bob) Critchley is chairman or director of several publicly listed companies and author of Doing Nothing Is Not An Option – Facing The Imminent Labor Crisis.
