The rapidly aging global workforce – caused mainly by the number of retirement-eligible employees continuing to work – is both a challenge and major opportunity for corporations, according to a recent report by The Conference Board. Some 64 million baby boomers (over 40% of the U.S. labor force) are poised to retire in large numbers by the end of this decade.
In industries already facing labor 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 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 Jeri Sedlar, senior advisor to The Conference Board on mature workforce issues. “The skills and knowledge mature workers possess can be utilized 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 currently feeling the greatest pain in terms of skills shortages are oil, gas, energy, health care, and government. Leading companies in these sectors are turning to mature workers to ensure future growth and productivity. These companies recognize that a maturing workforce can positively impact customer satisfaction and profitability, but not without effective initiatives designed to make it easier for different generations 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 organizations that fail to understand the complexities or recognize 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.”
More older workers want to remain in their jobs for both personal fulfillment and financial reasons. In a related forthcoming study from The Conference Board, more than half (55%) of older employees surveyed said they were not planning to retire because they find their jobs interesting. Significantly, 74% also cited not having sufficient financial resources as a reason they were continuing to work, and 60% cited the need for medical benefits.
Working in retirement, once considered an oxymoron, is the new reality, according to The Conference Board 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 multiethnic 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 customized 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 capitalize 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.”
By 2010, the number of 35-44 year olds, those normally expected to move into senior management ranks, will actually decline by 10%. Also by 2010, the number of U.S. workers 45-54 will grow by 21%, while the number of 55-64 year olds will expand by 52%.
One-half of companies interviewed feel 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 more concerned with the impending “brain drain” stemming from the withdrawal of some 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.
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;
· Capitalize 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
Source: Managing the Mature Workforce, Report #1369-05-RR, The Conference Board