The rapidly aging global workforce is both a challenge and major opportunity for corporations. Craig Donaldson examines how organisations in the US are tackling the issue and even turning it to their advantage
The rapidly aging global workforce is both a challenge and major opportunity for corporations. Craig Donaldson examines how organisations in the US are tackling the issue and even turning it to their advantage
Some 64 million baby boomers (over 40 percent of the US labour force) are poised to retire in large numbers by the end of this decade. In industries already facing labour and skills shortages, forward-thinking companies are recruiting, retaining, and developing flexible work-time arrangements and/or phased retirement plans for these workers (55 years of age or older), many of whom have skills that are difficult to replace. Such actions are putting these companies ahead of competitors who view the aging workforce largely as a burden putting strains on pension plans and healthcare costs.
The Conference Board, a global non-profit research firm, recently released a report into managing the mature workforce, based on a working group comprising executives from a cross-section of industries, staff and line functions, and job titles. It includes such major companies as BP America, Ernst & Young LLP, Ford Motor Company, IBM, JP Morgan Chase, and Shell International.
“The maturing workforce is often seen as an issue to be dealt with instead of a great opportunity to be leveraged,” says Lorrie Foster, director of research working groups at The Conference Board and co-author of the report, with management consultant Lynne Morton and noted author Jeri Sedlar, senior advisor to The Conference Board on mature workforce issues. “The skills and knowledge mature workers possess can be utilised to great advantage by a company that knows itself well and can identify its weak areas that can be bolstered by the right mature workers.”
Industries in the US currently feeling the greatest pain in terms of skills shortages are oil, gas, energy, healthcare and government. Leading companies in these sectors are turning to mature workers to ensure future growth and productivity. These companies recognise that a maturing workforce can positively impact customer satisfaction and profitability, but not without effective initiatives designed to make it easier for different generations of workers to work better together. Companies that haven’t yet faced human capital shortages are not rushing to make institutional changes to accommodate workers nearing the traditional retirement age who are still in the workforce.
“But organisations that fail to understand the complexities or recognise the opportunities associated with an aging workforce may risk their ability to stay competitive,” says Sedlar. “As more companies feel the pain of knowledge losses caused by retirements in key businesses or functions, those not planning ahead and leveraging their mature workforce will be scrambling.”
Pursuing passions rather than pensions
More older workers want to remain in their jobs for both personal fulfilment and financial reasons. In a related forthcoming study from The Conference Board, 55 per cent of older employees surveyed said they were not planning to retire because they find their jobs interesting. Significantly, 74 per cent also cited not having sufficient financial resources as a reason they were continuing to work, and 60 per cent cited the need for medical benefits.
Working in retirement, once considered an oxymoron, is the new reality, according to the report. Besides wanting to continue doing what they love, reasons economic in nature are also keeping older Americans in the workforce. As a result, the increasingly multi-ethnic workforce will also become more multigenerational as mature workers want or need to continue to work.
Boomers also indicate that the historical linear life plan – where certain years are earmarked for education, work, and then leisure – is becoming obsolete. Boomers want to work on terms that are customised to their needs. The goal of many is to ‘ratchet back’and give up responsibility, yet stay involved and active in business. In addition, lifelong learning is not only desirable, but necessary to achieve their work goals.
“New work arrangements that capitalise on this desired work/project orientation have to be developed to meet the needs of the mature worker and the headcount concerns of the corporation,” says Sedlar. “The need to create a corporate culture as well as learning institutions welcoming to all generations is becoming more apparent.”
Knowledge loss and older workers
By 2010, the number of 35-44 year olds, those normally expected to move into senior management ranks, will actually decline by 10 percent. Also by 2010, the number of US workers 45-54 will grow by 21 percent, while the number of 55-64 year-olds will expand by 52 percent.
One half of companies interviewed feels that the departure of mature workers presents potential knowledge vulnerabilities. About one third have conducted workforce planning studies and identified potential knowledge areas where they could be vulnerable. One half of those interviewed have some form of mentoring program in place to share and transfer knowledge.
Certain industries are particularly concerned about the impending ‘brain drain’ stemming from the withdrawal of mature workers from the workforce. The technology and pharmaceuticals industries generally express worries about the development of new products and services and anticipate a drain in experienced engineers, key account sales representatives, and senior managers.
Flexible programs are generally present in industries that consider the maturing workforce to be a very significant issue. These companies have sometimes had to struggle with legal or regulatory constraints that restrict flexible work arrangements for mature workers. The majority of survey participants perceive a catch 22 – wanting to offer something special for mature workers but feeling unable to do so in a way that doesn’t seem discriminatory.
Tactics for strategic change
The report recommends a series of strategic ideas and actions to foster effective management of any ‘retirement risk’ to the business posed by a potential exit wave of mature workers. Among them:
• Identify potential gaps and knowledge transfer needs;
• Broaden succession planning thinking;
• Check communications mechanisms and messages for intergenerational approach;
• Review training history;
• Capitalise on affinity groups;
• Become an ‘employer of choice’ for all generations;
• Encourage better financial planning among employees;
• Build a retiree network; and
• Offer benefits of interest to mature workers such as long-term care insurance, pre-retirement planning, health and wellness programs, comprehensive medical coverage, including prescription drugs, health coverage for retirees and part-time workers, prorated benefits for employees on flexible work schedules.
Case studies: managing the mature workforce
Adecco
Headquarters: Zurich (Switzerland); Melville, NY (US)
Sales (FY2003): US$20,430 ($27,229) million
Employees: 678,081
Products/services: Temporary and permanent staffing, specialised staffing and consulting, outsourcing, project management, career services
Industry position: 359 in FT Global 500; Adecco (US) ranked 12th among AARP’s ‘Best Employers for Workers over 50’ (2004)
Adecco S.A. is the world’s largest staffing services organisation. In the United States, Adecco USA supplies temporary, temp-to-hire, and direct-hire workers to 70,000 companies, drawing upon a broadly diverse pool of over 500,000 workers. Many of its workers are mature workers.
Adecco USA, as with every division of Adecco, strives to recruit the best associates and colleagues to place at client companies. The company also wants to retain these individuals. Consequently, Adecco USA did a survey a couple of years ago, asking retirees what they would want in terms of benefits to return to work. The most important benefits to survey respondents were prescription coverage, as well as health, dental, and vision care. The company created recruiting materials that highlight the fact that Adecco offers those benefits, plus anniversary service bonuses, holiday pay, a 401(k) savings plan, life insurance and tuition reimbursement.
The company also offers ‘Xpert Online’ training, allowing temporary employees to take free training online anywhere, at their own convenience. These benefits provide a real sense of satisfaction among Adecco’s temporary employees. For full-time colleagues, the staff who find employment for temporary employees, Adecco also offers long-term care insurance, exercise facilities, lunch-time seminars on relevant topics (such as financial planning), CPR training, and other health-related services.Adecco makes special efforts to recruit older workers, since temp work is a great solution for phasing into retirement for those who want or need extra income. Because the company values the older individuals, it has thought about how best to communicate with and reach them. For example, Adecco had a ‘Renaissance Program’ used to recruit associates. Special materials are distributed at churches, shopping malls, and community centres – all of which are non-traditional outlets for recruiting candidates but are places frequented by mature individuals.
Once hired and placed into the system, there is no way for an Adecco staff member to know if the individual was recruited via Renaissance. In this way, Adecco recruiters ensure that they are age-neutral in placing the most qualified people.
The MITRE Corporation
Headquarters: Bedford, MA (with locations across the US and around the world)
Sales (FY2003): US$785 ($1,046) million
Employees: 5,900
Industry position: Ranked 53 in Fortune’s ‘100 Best Companies to Work for’; one of the top not-for-profit technology firms in the US.
Products/services: Information systems research and development, security, engineering, and integration; IT consulting; reconnaissance system design; and air traffic management
The MITRE Corporation is a not-for-profit organisation that works in the public interest to provide technical support to the government in systems engineering, research and development, and information technology. It operates federally funded research and development centres (FFRDCs) for the US Department of Defense, the Federal Aviation Administration, and the Internal Revenue Service. The organisation provides technical support to other agencies of the federal government as well.The MITRE Corporation is an organisation that has always depended upon very experienced mature workers because of the value they bring to its customers and their contributions to the mission of the organisation. They are highly valued for their expertise, productivity, creativity, and commitment. As of 2003, 71 percent of MITRE employees were 40 years of age or older. Workers with mature judgment, long tenure, and a unique combination of skills in systems engineering and information technology are essential to the FFRDCs. In addition to their education, knowledge, and experience in these highly technical fields, their loyalty, dedication and commitment to doing quality work is invaluable.
Older workers also compose a large part of MITRE’s institutional memory, greatly facilitating knowledge continuity in the knowledge-driven organisation. To ensure the continuation and enrichment of the organisational culture, one of MITRE’s diversity committees is looking at generational diversity issues, as well as at knowledge transfer issues. The company provides lots of opportunity for in-house moves and training. It offers over 350 courses a year, as well as an ‘Accelerated Graduate Degree Program’, which provides for a paid day off to let individuals focus on studies. MITRE also offers mentoring.
Lincoln Financial Services Company
Headquarters: Philadelphia, PA (US)
Sales (FY2004): US$5,371 ($7,156) million
Employees: 5,441
Industry position: 339 in Fortune 500; 491 in FT Global 500; ranked 9th among AARP’s ‘Best Employers for Workers over 50’ (2004)
Products/Services: Annuities and life insurance products, investment management, and financial advising.
Lincoln Financial was concerned enough about its maturing workforce that it launched a taskforce in 2004 to develop a strategic plan to address the issues of recruitment, retention, and knowledge transfer. It is also seeking ways to better integrate the mature workers in its workforce. Traditionally, Lincoln Financials’ customer service representatives, as in many companies and industries, are young workers. The company recognised, however, that many customers feel more comfortable discussing financial issues with a mature worker. So it is now finding ways to incorporate mature workers into the customer service workforce.
Lincoln Financial has created a paid time off bank, which offers more flexibility than a predetermined allocation of vacation, holiday, and sick time. This appeals to mature workers, who may need time off for medical reasons and/or elder care but want to maintain a certain level of privacy.Employee loyalty and engagement is also important to Lincoln Financial. In discussing how the company can fully engage its entire workforce, George Davis, senior vice president of HR, says: “We’ll have to rethink how we structure our work.” In Davis’ view (and that of many other business leaders), the traditional path up the career ladder is gone. In the future, a more creative and non-conventional view of careers will be needed. All this may lead to work redesign and more flexible benefits. Davis also notes that the generations must be able to work well together.
Source: The Conference Board: Managing the Mature Workforce
