Dr Rovel Shackleford The Aging Workforce

SIRF National Forum on Electrical Maintenance & Safety September 2006 How to manage an ageing workforceGovernments, employers and workers all need to change to keep baby-boomers on thejobOne of the side-effects of the second world war was the most momentous social change ofthe past half-century. As men marched off to fight, women put aside their groomingmagazines and gardening gloves and took their husbands’ places in factories and on thefarms. They never looked back. Many people worry about the impact on family life of theirentry into the labour force, but most now take it for granted that women have as much tooffer at work as men do.Another change as large as that one is now under way. In a further half-century it willseem just as absurd that western societies today are content to press another potentiallyproductive set of workers to stay at home sipping tea and potting begonias-and to paythem for it, to boot.The question of how to deal with the growing number of retired people has recently beenseen as chiefly a financial puzzle: how to pay for the leisure of those ageing layabouts.When pensions were first introduced, they kicked in at the age of 70, about 20 years morethan the typical life span. Nowadays state and company pension schemes kick in at orbefore 65, almost 20 years less. But the issue is more than just a financial one: it raisessocial as well as economic questions, and its resolution will involve governments,employers and people.The baby-boom generation, which started to turn 60 this year, contains the largest numberof people ever voluntarily to give up work in such a short time. Because it is far larger thanthe generation that follows it-or any that preceded it this casts a shadow over thecompanies it is set to leave behind. Japan expects its workforce to shrink by 16% (some10 million people) over the next 25 years. Europe will see the number of workers nearingretirement grow by a quarter. Some companies are already complaining of a shortage ofskills, even before they have started to dole out carriage clocks and fountain pens by thebarrow-load.There are several ways of dealing with a falling supply of labour: work might be shiftedoffshore, to take advantage of abundant cheaper workers in poorer countries; laxerimmigration rules might allow in more skilled labour from abroad; new equipment couldenhance the productivity of a better educated workforce. But one of the readiest sources ofskilled labour is closer to hand.If staying on at work were up to older employees alone, many would jump at the chance.That is partly because they will no longer be able to retire in the style that they have beenled to expect. Corporate pension schemes and health benefits are becoming ever lessgenerous. Last week General Motors joined the line of revisionists with an announcementthat it will cap health-care spending by its retired workers. That will not be the last cut.Baby-boomers say they want to stay in the workforce for more than money. Many alsowant to carry on working beyond the standard retirement age for the mental stimulation (trythat on the next bored-looking 20-year-old you meet in the lift). Their productivity maydecline as they get older-although people gain in experience, their capacity for sharpthinking falls off-but the traditional pattern of retirement, in which one day an employee isin a bustling office busy as a bee and the next he is good only for the potting shed and thefireside chair does not make sense for the economy, for companies or for people.If baby-boomers want to work longer and companies want more skilled workers, what’s theproblem? Part of the answer is that labour markets work particularly badly for olderPresented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006

SIRF National Forum on Electrical Maintenance & Safety September 2006workers. Pensions need to be unhooked from final salaries, so that workers are not heavilypenalised if they take pay cuts to stay in employment. That is already happening, with thedecline of companies’ defined-benefit schemes. State and private pensions shouldencourage workers to postpone retirement. That is already happening in Sweden andSwitzerland, which both have relatively high labour-participation rates among older people.Pensions should be designed so that they allow part-time workers to continue to contributeeven after their official retirement age.Since governments benefit if people work longer (because they pay more in tax and costless in benefits) they should be eagerly enacting such measures. But instead of freeing uplabour markets to help older people work, governments are focusing on legislating to bandiscrimination on grounds of age. European Union member countries and Australia areintroducing such laws, even though experience in America, where they are already in force,suggests that making older people hard to fire discourages companies from hiring them.Companies, as well as governments, need to be flexible.That’s beginning to happen, partly because employers are keen to attract more women,and the part-time jobs that often appeal to them are attractive to the old as well. Big, well-managed companies tend to offer that sort of flexibility; others will have to learn.Older workers need to adapt. In many cultures, age is related to seniority, and therefore topay. The older the worker, the more expensive he/she is. Boomers will find work only ifthey accept that their wages will be based on what they are worth to the company-ratherthan their salary at the top of their career. Although a shortage of skills might well push upwages for all workers, older workers may nevertheless have to accept a relative decline insalary and status.Baby-boomers have been changing the world since the 1960s. They’re about to do it againby turning the world of work upside down. This social upheaval may be quieter than thelast one they were responsible for, but its consequences will be more profound and longer-lasting.Older workers want to retire later; companies fear they will soon be short of skills. Whycan’t the two get together?LAST month the first baby-boomers turned 60. The bulky generation born between 1946and 1964 is heading towards retirement. The looming “demographic cliff” will see vastnumbers of skilled workers dispatched from the labour force. In a forthcoming book(“Workforce Crisis” by Ken Dychtwald, Tamara Erickson and Robert Morison) the authorspaint a gloomy picture of a shortage of skills and a cut in the supply of labour that are“already threatening the performance of many corporations”.The workforce is ageing across the Western world. Within the EU the number of workersaged between 50 and 64 will increase by 25% over the next two decades, while thoseaged 20-29 will decrease by 20%. In Japan almost 20% of the population is already over65, the highest share in the world. And in the United States the number of workers aged55-64 will have increased by more than half in this decade, at the same time as the 35- to44-year-olds decline by 10%.Given that most societies are geared to retirement at around 65, companies have alooming problem of knowledge management, of making sure that the boomers do notleave before they have handed over their expertise along with the office keys and their e-mail address. A survey of human-resources directors by IBM last year concluded: “Whenthe baby-boomer generation retires, many companies will find out too late that a career’sworth of experience has walked out the door, leaving insufficient talent to fill the void.”Some also face a shortage of expertise.Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 2

SIRF National Forum on Electrical Maintenance & Safety September 2006In aerospace and defence, for example, as much as 40% of the workforce in somecompanies will be eligible to retire within the next five years. At the same time, the numberof engineering graduates in developed countries is in steep decline.A few companies are so squeezed that they are already taking exceptional measures.Earlier this year the Los Angeles Times interviewed an enterprising Australian who wasstaying in Beverly Hills while he tried to persuade locals to emigrate to Toowoomba,Queensland, to work for his engineering company there. Toowoomba today; the rest of thedeveloped world tomorrow?If you look hard enough, you can find companies that have begun to adapt the workplaceto older workers. The AARP, an American association for the over-50S, produces anannual list of the best employers of its members. Health-care firms invariably come nearthe top because they are one of the industries most in need of skilled labour. Other sectorssimilarly affected, says the Conference Board, include oil, gas, energy and government.More than a decade, Toyota, arguably the world’s most advanced manufacturer, hasadapted its workstations to older workers. The shortage of skilled labour available to theautomotive industry (those engineers again) has made it unusually keen to recruit olderworkers. BMW recently set up a factory in Leipzig that expressly set out to employ peopleover the age of 45.Other firms are polishing their networks. IBM uses its network to recruit retired people forparticular projects. Ernst Young, a professional-services firm, has about 30,000 registeredpast employees, and about 25% of its “experienced” new recruits are boomerangs (formeremployees who return after an absence). Helen Walsh, director of the firm’s network (andherself a boomerang), says it is particularly helpful in attracting women back into theworkforce.But such examples are unusual. A recent survey in Australia found that “althoughcorporate Australia foresees a significant workforce shortage as boomers retire, it is notdealing with the issue.” Almost three-quarters of the 1,400 global companies questionedby Deloitte last year said they expected a shortage of salaried staff over the next three tofive years. Yet few of them are looking to older workers to fill that shortage; and evenfewer are looking to them to fill another gap that has already appeared. Many firmscomplain that they struggle to find qualified directors for their boards-this when the pool ofretired talent from those very same firms is growing by leaps and bounds.Why are firms not working harder to keep old employees? Part of the reason is that thecrunch has been beyond the horizon of most managers. Nor is hanging on to olderworkers the only way to cope with a falling supply of labour. The participation ofdeveloping countries in the world economy has increased the overall supply-whatever thelocal effect of demographics in the rich countries. A vast amount of work is being sentoffshore to such places as China and India and more will go in future. Some countries,such as Australia, are relaxing their immigration policies to allow much needed skills tocome in from abroad. Others will avoid the need for workers by spending money onmachinery and automation.Yet older workers are an obvious source of labour, partly because they have good reasonto continue working. In a widely quoted article (“Will There Really Be a Labour Shortage?”)Peter Cappelli, of the Wharton business school in Philadelphia, argues that “baby-boomworkers simply will not be retiring from work in the numbers that many people expect”.One reason is that their pensions will not be as generous as they believed-a succession ofbig firms, such as IBM, General Motors and, in Britain, the Co-operative Society and theNationwide building society, have announced that they are to trim retirement benefits.Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 3

SIRF National Forum on Electrical Maintenance & Safety September 2006In some businesses early retirement is institutionalised. At professional-service companies,such as law and accounting firms, partners are encouraged to move out at an early age,often as young as 55, so as to encourage juniors with the promise of becoming a partner.At Deloitte, one of the world’s biggest accounting firms, the official retirement age forpartners - 60 - is written into the partnership agreement.Change the reward system and the age profile changes too. Although British law firmshave a “lock-step” reward system, giving partners more or less equal shares of the profits,partners in American firms tend to “eat what they kill”. The American system enables olderpartners to stay on, because they are not an unfair burden. When Jerome Shestackapproached the mandatory partners’ retirement age (of 68) at his law firm in Philadelphia,he joined another without that condition. He retired from Wolf, Block, Schorr and Solis-Cohen earlier this month at 82. At 74 he was president of the American Bar Association.The government has a big part to play.In some countries the tax system works against older workers. Britain will not let ataxpayer receive a pension and a salary from the same employer. In America pensionschemes will often withhold benefits from a retired person if he is rehired or works for morethan 40 hours a month. Companies wishing to hire their pensioners have to find waysround the rules. Japanese companies such as Mazda rehire them on one-year renewablecontracts.Many older workers must still overcome hostile attitudes at work. Many people assumethat older employees are less motivated, take more sick leave and cost more. Theevidence is that many people over 65 have plenty to offer even if they are no longer attheir peak. Some studies show that the over-40s are less likely to be off sick, and are morehighly motivated and productive (except where great physical effort is required).The best thing managers can do is to make work flexible. Much of this accords with whatwomen and younger workers say they want. IBM believes that one of the reasons peoplecome to work for it “is because we take workplace flexibility seriously”. Flexibility appealsto all ages.The encouragement for older workers to stay is often a by-product of other initiatives.Many companies are cultivating a more diverse workforce, partly because legislation insome countries decrees it, partly because they believe it can help them. Although diversitymeans chiefly recruiting more women and ethnic minorities, it (almost by default) helpsolder workers, too. Measures, such as flexible work schedules, designed to encouragemothers to return to the workforce can also encourage older workers to stay.Oddly enough, older workers stand to gain from efforts to recruit younger workers. SabriChallah, the head of Deloitte’s human-capital practice, says that companies are makinggreat efforts to recruit (and retain) the youngest cohort of workers, the “Generation y”.These 20-something’s (who are entering the workforce later and staying for a shorter timewith each employer) have very different attitudes to work, life and careers than theirparents did. In trying to design flexible working lives for them, companies may beaccommodating grey hair as well.In the longer run, though, firms need to talk seriously to employers about their plans forretirement. Many have no demographic profile of their workforce and little idea about howmuch of it is retiring when. Mr Chillah says many are embarrassed to ask senioremployees about taking less pay for less work. In America employers are also often afraidto discuss retirement plans for fear of lawsuits under age-discrimination legislation.That is a pity. A report last year by Merrill Lynch, a large financial-services firm, arguedthat “baby-boomers fundamentally will reinvent retirement”. They will, said the report,Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 4

SIRF National Forum on Electrical Maintenance & Safety September 2006“cycle” between periods of work and leisure well beyond the age of 65. While many arefocused on making extra money, many more say they will do it for the “mental stimulationand challenge”. As the Conference Board, an American association of businessmen, put itlast year: “working in retirement, once considered an oxymoron, is now the new reality”References: BibliographyThese articles are among those reviewed in developing this presentation. 1. “2003 Spherion® Emerging Workforce® Study,” Spherion Pacific Enterprises LLC,2002-2003. 2. “A New Call to Service for an Age of Savvy Altruism: Public Attitudes about Government and Government Workers,” Partnership for Public Service, August 2004. 3. “A Systems Approach: Maximizing Individual Career Potential and Organizational Success,” Linda M. Kutilek, Gail J. Gunderson, Nikki L. Conklin, Journal of Extension, April 2002. 4. “A Work Experience Second to None: Impelling the Best to Serve,” National Academy of Public Administration, September 2001. 5. The Bulletin August 2006 6. “Acceptance of Telework Expands Labor Pool,” Rebecca R. Hastings, Society for Human Resource Management, February 2006. 7. “Age Wave: Adapting to Older Workers,” Workforce Management, March 2006. 8. “Aging, Adult Development, And Work Motivation,” Ruth Kanfer, Phillip L. Ackerman, Academy Of Management Review, 2004. 9. “An Employer’s Guide to Older Workers: How to Win Them Back and Convince Them to Stay,” Barbara McIntosh, Ph.D., U.S. Department of Labor, 2001. 10. “Asking the Wrong Questions: A Look at How the Federal Government Assesses and Selects Its Workforce,” Partnership for Public Service, October 2004. 11. “Attracting and Keeping The Best and the Brightest: Survey Results From Council for Excellence in Government Principals on How to Get, Develop and Retain Excellent People in Government Service,” Council for Excellence in Government, 2002. 12. “Attracting and Retaining the Mature Workforce,” Barbara McIntosh, Ph.D., Society for Human Resource Management, November 2005. 13. “Building an Employment “Brand - A Compilation of Articles,” Dr John Sullivan, Employment Branding Whitepaper, 2004. 14. “Building and Boosting the Employer Brand,” Carla Joinson, Society For Human Resource Management, Summer 2002. 15. “Career Development of Free Agent Workers,” Susan Imel, ERIC Clearinghouse on Adult Career and Vocational Education, 2001. 16. “Career Development of Older Adults,” Susan Imel, ERIC Clearinghouse on Adult Career and Vocational Education, 2001. 17. “Creativity Is Key to Meeting Multigenerational Workforce Needs,” Theresa Minton- Eversole, Society for Human Resource Management, 2005. 18. “Employee Engagement Report,” Blessing White, Inc., 2005. 19. “Employers Exploring Ways To Retain Older Workers,” Pamela Babcock, October 2005. 20. “Finding the Civil Service’s Hidden Sex Appeal: Why The Brightest Young People Shy Away From Government,” Nicholas Thompson, The Washington Monthly, November 2000. 21. “Flexible Work Arrangements: The Demand Will Only Strengthen,” Donna J. Bear, Human Resource Institute, September 2004.Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 5

SIRF National Forum on Electrical Maintenance & Safety September 2006 22. “Generational Differences: Survey Report,” Society for Human Resource Management, August 2004. 23. “Generations at Work” Human Resource Institute, Judy London, June 2005. 24. “Graying of Society: Increasing Life Spans and Low Fertility Rates Are Combining to Create Population Imbalance,” Judy London, Human Resource Institute-HRI, March 2004. 25. “How To Attract Scientists,” Celia M. Henry, Employment, October 2001. 26. “Business Case for Workers 50+: Planning for Tomorrow’s Talent Needs in Today’s Competitive Environment,” A Report for AARP Prepared by Towers Perrin, December 2005. 27. “Increasing the Odds of Success with Outside Experienced Hires: A Case Study of Competency-based Assessment and Selection,” Hay Group, 2003. 28. “Insights on the Federal Government’s Human Capital Crisis: Reflections of Generation X,” Amit Bordia and Tony Cheesebrough, Partnership for Public Service, 2002. 29. “Job Compensation/Pay Survey Report” Society for Human Resource Management/CNNfn, Evren Esen, January 2004. 30. “Job Satisfaction Survey Report 2004,” Evren Esen, Society for Human Resource Management, April 2004. 31. “Leadership Styles: Generational Differences,” Nancy R. Lockwood, SPHR, GPHR, HR Content Expert, Society for Human Resource Management, 2004. 32. “Leadership: The Key Factor in HR Strategic Management,” Nancy R. Lockwood, SPHR, GPHR, HR Content Expert, Society for Human Resource Management, December 2004. 33. “Mid-Career Hiring In The Federal Government: A Strategy For Change,” The Partnership for Public Service, February 2002. 34. “Mid-Career Hiring: Revisiting the Search for Seasoned Talent in the Federal Government,” Partnership for Public Service, September 2004. 35. “PRB Reports on America: The Career Quandary,” Phyllis Moen, Population Reference Bureau, February 2001. 36. “Public Opinion on Public Service,” Partnership for Public Service, May 2005. 37. “Putting Aging Workforce on Employment Planning Radar: Results from an AARP/Florida Trend Survey,” Rachelle Cummins, AARP, October 2005. 38. “Retention, Engagement Highest Among Companies with Most Effective Communication Strategies,” Theresa Minton-Eversole, Society for Human Resource Management, February 2006. 39. “SHRM Human Capital Benchmarking Study,” Society for Human Resource Management 2005. 40. “Six Ways to Mine Teen Talent,” Andrea C. Poe, Society for Human Resource Management, March 2001. 41. “Staying Ahead of the Curve 2004: Employer Best Practices for Mature Workers,” Study Conducted for AARP by Mercer Human Resource Consulting, September 2004. 42. The Economist February 2006 43. “Strategies for Recruiting Workers Over Age 50,” Society for Human Resource Management, Cathy Fyock, December 2005. 44. “Taking Action Against the Quiet Crisis in Recruitment and Retention,” AFT Public Employees, AFL-CIO. 45. “Talent Management: Employee Engagement: Talent Management Series Part III,” Nancy R. Lockwood, SPHR, GPHR, Society for Human Resource Management, July 2005.Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 6

SIRF National Forum on Electrical Maintenance & Safety September 2006 46. “Talent Management: Leadership Development: Talent Management Series Part II,” Nancy R. Lockwood, SPHR, GPHR, Society for Human Resource Management, July 2005. 47. “Talent Management: Overview: Talent Management Series Part I,” Nancy R. Lockwood, SPHR, GPHR, Society for Human Resource Management, July 2005. 48. “Talent Management,” Shawn Fegley and Nancy Lockwood, SPHR, GPHR, Society for Human Resource Management, January 2006. 49. “Tapping America’s Potential: Expanding Student Employment and Internship Opportunities in the Federal Government,” Partnership for Public Service, July 2002. 50. “Telework: Shifting Into Gear,” CDW-G, March 2006. 51. “The Aging Workforce: The Reality of the Impact of Older Workers and Eldercare in the Workplace,” Nancy R. Lockwood, Society for Human Resource Management, December 2003. 52. “The Blended Workforce: Maximizing Agility through Nonstandard Work Arrangements,” IBM Center for the Business of Government, April 2005. 53. “The Business Case for Workers Age 50+: Planning for Tomorrow’s Talent Needs,” Towers Perrin, AARP, December 2005. 54. “The Capability Within: The Global Human Capital Study 2005,” Randy McDonald and Mary Sue Rogers, IBM Business Consulting Services, 2005. 55. “The Chained Gang-Human Capital Management: The Human Capital Challenge,” Mark A. Abramson, Ruby Butler Demesme, and Nicole Willenz Gardner, The Journal of Public Inquiry, Spring/Summer 2002. 56. “The Compelling Offer A Quantitative Analysis of the Career Preferences and Decisions of High Value Employees,” Corporate Leadership Council, 1999. 57. “The Employment Brand: Building Competitive Advantage in the Labor Market,” Corporate Leadership Council, 1999. 58. “The Quiet Crisis: Recruitment and Retention in the Public Sector,” Federation of Public Employees/AFT. 59. “The Recruiting Challenge: What Do You Know About Older Workers?” Katherine L. Y. Green, Ph.D. and Andrea Hodson, SPHR, Society for Human Resource Management, October 2005. 60. “They Want You! - U.S. government has difficulty attracting high quality job candidates - Brief Article - Statistical Data Included,” American Demographics, January 2002. 61. “Twenty-Something Job Candidates Expect Speed: Online Networks Help Recruiters Keep Up With Millennials,” Mollie Ziegler, Federal Times, April 2006. 62. “Update On The Older Worker: 2004,” AARP, April 2005. 63. “Using A Systems Approach to Maximize Human Potential or Individual and Organizational Success,” Nikki L. Conklin and Linda M. Kutilek, AIAEE 2003 Proceedings of the 19th Annual Conference, 2003. 64. “Voluntary Employee Benefits Series Part I: Voluntary Benefits & Job Satisfaction,” Leslie A. Weatherly, SPHR, HR Content Expert, Society for Human Resource Management, December 2005. 65. “Winning the Best and Brightest: Increasing the Attraction of Public Service,” Carol Chetkovich, The PricewaterhouseCoopers Endowment for The Business of Government, July 2001. 66. 64. “Women in the Workforce,” Carol Morrison, Human Resource Institute, June 2005. 67. “Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage,” Nancy R. Lockwood, SPHR, GPHR, Society for Human Resource Management, April 2006.Presented by Dr. Rovel Shackleford Phone: 0438383836 r.shackleford@arrinaglobal.com Sept 2006 7

Dr Rovel Shackleford The Aging Workforce

by Dr Rovel Shackleford on Jun 21, 2011

Accessibility

Upload Details

Usage Rights

Statistics

Dr Rovel Shackleford The Aging Workforce Document Transcript