Understanding impact of aging workforce april, 2011 paullin

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Discusses retention of older workers and the factors that influence an older worker's decision to retire

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Understanding impact of aging workforce april, 2011 paullin

  1. 1. Retirement Decision Making andStrategies for Retaining Older WorkersCheryl PaullinHumRROIn J.W. Hedge (Chair). Understanding the impact of an aging workforce onemployees/organizations. Panel discussion conducted at the 26th Annual Conferenceof the Society for Industrial and Organizational Psychology, Chicago, IL1
  2. 2. Question• As employees approach retirement eligibility, whatare some of the issues that affect their retirementdecision?2
  3. 3. Context• Many people at or near the age of retirementeligibility (at least by current social norms)– But will they? And when?– 36% expect to retire after age 65EBRI 2011 Retirement Confidence Survey; N=1,000 U.S. adults age 25+• Key Qs for many I-O’s– How do we entice key/productive older workers tocontinue working for our organization?3
  4. 4. Theories of Retirement• To retain older workers, we must understand and addressthe factors that motivate them to stay versus leave• American Psychologist (April 2011, Vol 66)– Retirement theories from Psychology and other fields– I-O Psychology has contributed by examining impact of work andorganizational practices on retirement decisions 4
  5. 5. Retirement is a Process• Unfolds over time• Not an all-or-none decision– Phased retirement– Bridge employment– Re-employment– Volunteer work• Not an entirely rational decision• Impacted by factors beyond individual or employer control– Health of self or loved ones– The economy and job market– Changes in laws or government regulations5
  6. 6. The Retirement Decision• Am I able to continue working (physically, mentally, emotionally)?– Average retirement age is low-mid 60’s, even lower in some European countries– Average life expectancy in developed countries is mid-70’s• Do I want or expect to continue working?– 18% - 74% say “yes,” depending on country and survey2007 AARP-sponsored study conducted by Towers Perrin of 8,200 workers of all ages in 7 developed countries; 2008 AARPsurvey of 1,500 U.S. workers age 45-74; 2011 EBRI Retirement Confidence Survey of 1,000 U.S. adults age 25+– Full time? About half of those who want to continue working say “no”2008 AARP survey of 1,500 U.S. workers age 45-74 ; 2000 Cornell University longitudinal survey of 600+ workersage 54-72 in upstate New York– For this employer?• Are there strong external reasons to retire?– To provide care for loved ones• Elder care as well as dependent care, more often for women than men– To join a significant other upon his/her retirement• Many two-earner couples plan or hope to retire at about the same time– To pursue a dream6
  7. 7. The Retirement Decision (cont.)• Is it possible for me to continue working?– Without incurring financial penalties?• Reduction in benefits for working beyond retirement eligibility or a particular age– Do I have skills/accreditations that an employer needs?• Both younger and older workers believe skills decline with age and that olderpeople can’t learn well– Some skills do decline, but may be offset by advantages in other areas(e.g., accumulated knowledge)– Older workers are very capable of learning, though some accommodation inthe speed or type of training may by required• Older workers are more likely to stay with their employing organization thanyounger workers, so training ROI may be higher for older workers• Can I afford to retire?– Do I have sufficient retirement savings or other sources of income to maintain areasonable standard of living and to cover rising medical costs?• Many people don’t, nor do they understand what it will take to support theirpreferred lifestyle during retirement– How would a downturn in the economy impact my savings?7
  8. 8. What Should an Organization Do?• Conduct workforce audits and track data over time (e.g.,employee age, key knowledge/skills, attitudes toward olderworkers)– Identify and address key vulnerabilities• Train managers– To think of retirement as a process that occurs over time– To work with older workers who want to stay but need someassistance to do so• Create an age-positive organizational climate– Ask older workers to stay; help them feel valued– Help younger workers understand that older workers provide value– Make good use of older worker’s talents and knowledge8
  9. 9. Questions• Have specific organizational strategies beenidentified as particularly effective for retainingolder employees?• Are there certain organizational policies that areparticularly detrimental to those same goals?9
  10. 10. Why Retain Older Workers?Benefits for older workers Accrual of greater lifetime income Potential increase in retirement benefitsupon retirement Access to employer-provided health carebenefits (in some cases) Enhanced physical and emotional well-being Opportunity to continue doing meaningfulworkBenefits for younger workers Access to senior employees’ institutionalknowledge and networks Assess to mentors More hands to do the work10Benefits for employers Fewer unfilled positions Continued access to key institutionalknowledge and contacts Workers who are motivated and engaged Workers who are productive and reliable Workers who can apply life and jobexperience Avoid the need to hire and trainreplacements (although older workers mayneed training to upgrade skills)Benefits for society Less extensive labor shortages More goods and services can be produced More taxable income available to supportgovernment-provided programs Larger pool of workers contributing togovernment-provided retirement programs;smaller pool drawing benefits Fewer people using government-providedhealth care benefits (if employers providecoverage)
  11. 11. Decision to Stay with Current Employer• Top 5 factors older workers considered– Competitive health care benefits package (61%)– Competitive retirement benefits package (54%)– Work/Life balance (35%)– Caliber of the people with whom I work (28%)– Recognition for work (27%)AARP-sponsored study conducted by Towers Perrin (2005), N=1,500 randomly selectedemployees 50+ currently working for large U.S. companies11
  12. 12. Decision to Stay with Current Employer (cont.)• Reasons workers in a phased retirement programcontinued working for their career employer– Enjoyed working (42%)– Needed the income (28%)– Needed medical benefits (15%)– Not yet eligible for pension benefits (5%)– Other reasons (9%)Watson Wyatt Worldwide (2004), N=330 U.S. workers age 50-70 currently in a phasedretirement program in several different organizations12
  13. 13. “Helpful” Retention Strategies13130102030405060WorkPart-TimeFlexibleWorkScheduleWorkfromHomeRetentionBonusTaskSabatticalCredittoPensionBenefitsCollectPartialPensionWorkasContractorTrainingandSkillDevelopmentWorkasaMentorRetention StrategiesPercentageofemployeesmentioningstrategyashelpfulN=8,200 workers of all ages in 7 developed countries. Given a list of practices, indicatedwhich ones would be helpful in convincing them to continue working.AARP. (2007). Perspectives of employers, workers and policymakers in the G7 countries on the new demographicrealities. Washington, DC: Author. Retrieved July 25, 2009, fromhttp://assets.aarp.org/rgcenter/econ/intl_older_worker.pdf
  14. 14. Management Practices Used to Retain Older Workers140102030405060TrainingandDevelopmentFlexibleWorkingPracticesRecruitimentHealthandWell-BeingErgonomics/JobDesignManagement PracticesPercentofEmployersInitial StudyFollow-up StudyN=117 organizations from 11 European Union member nations. Most were private-sector,had more than 500 employees, and in the manufacturing and service industries.From Taylor, P. (2006). Employment initiatives for an ageing workforce in the EU 15. Luxembourg: Office for OfficialPublications of the European Communities. Retrieved July 9, 2009, fromhttp://www.eurofound.europa.eu/publications/htmlfiles/ef0639.htm
  15. 15. Best Practices: Retention of Older Workers1. Create an age-positive organizational culture.2. Provide training to upgrade existing skills or learn new ones.3. Design or redesign work to make it easier for older workers.4. Allow for reductions in work hours (e.g., phased retirement).5. Provide flexibility in work schedules and location.6. Provide health and wellness programs.7. Provide health care benefits.8. Provide opportunities for career or personal growth.9. Address financial disincentives for continued employment (e.g., partialor deferred pension payments).10.Rehire retirees.15Compilation of strategies across sources. All are supported by more than onecommentator and by survey or research study data.
  16. 16. Particularly Effective Strategies• Ones that allow individual flexibility• Most are just as effective forattracting and retaining younger workers– Evidence that the organization values their contributions– Flexibility, flexibility, flexibility– Health insurance– Opportunity to do meaningful work and continue to grow– Less stress• Shift to a less stressful or less physically-demanding role, e.g.,trainer or coach• Work on meaningful special projects16
  17. 17. Detrimental Policies or Practices• Allowing or failing to address agediscrimination• Failing to value older workers– Putting them “out to pasture”– Discouraging them from participating in skills training– Making them feel their only role is to transfer theirknowledge to someone younger• Retirement plans with financial penalties forworking past retirement eligibility– Government laws and regulations may limit anorganization’s ability to revise or replace such plans• No health insurance 17
  18. 18. References• American Association of Retired Persons. (2004). Staying ahead of the curve 2004: Employer best practices for matureworkers. Washington, DC: Author. Retrieved February 19, 2009, fromhttp://assets.aarp.org/rgcenter/econ/multiwork_2004.pdf• American Association of Retired Persons. (2005). The business case for workers 50+. Washington, DC: Author.Retrieved June 24, 2009, from http://assets.aarp.org/rgcenter/econ/workers_fifty_plus.pdf• American Association of Retired Persons. (2007). Perspectives of employers, workers and policymakers in the G7countries on the new demographic realities. Washington, DC: Author. Retrieved July 25, 2009, fromhttp://assets.aarp.org/rgcenter/econ/intl_older_worker.pdf• American Association of Retired Persons. (2008). Staying ahead of the curve 2007: The AARP work and career study.Washington, DC: Author. Retrieved July 25, 2009, from http://assets.aarp.org/rgcenter/econ/work_career_08.pdf• American Psychologist (2011). Special Section on Retirement. Vol 66 (April).• Byham, W.C. (2007). 70: The new 50. Pittsburgh, PA: DDI Press.• Employee Benefit Research Organization. (2011). The 2011 Retirement Confidence Survey. Retrieved April 10, 2011,from ww.ebri.org/surveys/rcs• DeLong, D. W. (2004). Lost knowledge: Confronting the threat of an aging workforce. Oxford, England: OxfordUniversity Press.• Eyster, L., Johnson, R.W., & Toder, E. (2008, January). Current strategies to employ and retain older workers.Washington, DC: Urban Institute. Retrieved April 24, 2009, from http://www.urban.org/publications/411626.html• Hedge, J.W., Borman, W.C., & Lammlein, S.E. (2006). The aging workforce: Realities, myths, and implications fororganizations. Washington, DC: American Psychological Association.• Goldberg, B. (2000). Age works: What corporate America must do to survive the graying of the workforce. New York:The Free Press.18
  19. 19. References (continued)• Mermin, G.B.T., Johnson, R.W., & Toder, E.J. (2008, July). Will Employers Want Aging Boomers? (Discussion paper08-04). Washington, DC: Urban Institute. Retrieved April 24, 2009, from http://www.urban.org/publications/411705.html• Naegele, G., & Walker, A. (2006). A guide to good practice in age management. Luxembourg: Office for OfficialPublications of the European Communities. Retrieved July 9, 2009, fromhttp://www.eurofound.europa.eu/pubdocs/2005/137/en/1/ef05137en.pdf• Rappaport, A, Bancroft, E., & Okum, L. (2003). The aging workforce raises new talent management issues foremployers. Journal of Organizational Excellence (Winter), 55-66.• Shultz, K.S., & Adams, G.A. (Eds.) (2007). Aging and work in the 21st century. Mahwah, NJ: Lawrence Erlbaum &Associates.• Taylor, P. (2006). Employment initiatives for an ageing workforce in the EU 15. Luxembourg: Office for OfficialPublications of the European Communities. Retrieved July 9, 2009, fromhttp://www.eurofound.europa.eu/publications/htmlfiles/ef0639.htm• US General Accountability Office (2007). Older workers: Some best practices and strategies for engaging and retainingolder workers (Statement of David M. Walker, Comptroller General of the United States, Testimony before the U.S.Senate Special Committee on Aging; GAO-07-433T). Washington, DC: Author. Retrieved January 15, 2009, fromhttp://www.gao.gov/new.items/d07433t.pdf• US General Accounting Office. (2001). Older workers: Demographic trends pose challenges for employers and workers(Report to the Ranking Minority Member, Subcommittee on Employer-Employee Relations, Committee on Educationand the Workforce, House of Representatives; GAO Report No. GAO-02-85). Washington, DC: US GovernmentAccountability Office. Retrieved January 15, 2009, from http://www.gao.gov/new.items/d0285.pdf• US National Institute on Aging. (2007). Growing older in America: The Health & Retirement Study (NIH Publication No.07-5757). Washington, DC: Author. Retrieved July 25, 2009, from http://www.nia.nih.gov/ResearchInformation/ExtramuralPrograms/BehavioralAndSocialResearch/HRS.htm• Villosio, C, DiPierro, D., Giordanengo, A., Pasqua, P., & Richiardi, M. (2008). Working conditions of an ageingworkforce. Luxembourg: Office for Official Publications of the European Communities. Retrieved July 9, 2009,http://www.eurofound.europa.eu/pubdocs/2008/17/en/2/EF0817EN.pdf19

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