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End of career management _KBC bank solution
- 1. Joshua McLoughlin Olivier Schelstraete Miguel Van Asch Piyush Virmani GSCM - PMGC End of Career Management
- 2. Introduction to End of Career Management “An aging problem or an aging opportunity”
- 3. Table of content Introduction Macroeconomic Impact Microeconomic Impact Belgium KBC’s Approach Overview 5 points Results Our point of view What we think Our Recommendation Conclusion
- 4. The Impact of an Aging Workforce Macroeconomic approach Japan Italy Germany
- 5. The Impact of an Aging Workforce Dependency Ratio Burden of supporting aging population falls upon shrinking workforce Governement Spending Increase costs of health care and pensions Taxation on Working Population Higher taxes on working population discourages investment Changing Sectors Increase in demand for services and goods associated with older people Reduced Capital Investment Society putting money into pensions takes away from productive investments Shortage of Workers Macroeconomic Approach – Societal Perspective
- 6. The Impact of an Aging Workforce Microeconomic approach
- 7. The Impact of an Aging Workforce Compensation Higher usage and associated costs of healthcare Incidence of Disabilities Higher wages Training and recruitment Lower return on investment in training Shorter anticipated employement tenure Legal Implications Age descrimiation law suits Related to hiring, promotion, retraining, firing and mandatory retirement Microeconomic Approach - Employers perspective
- 8. The Impact of an Aging Workforce Situation in Belgium
- 9. An Aging Workforce in Belgium 30.5 32 32.2 32.5 34.1 34.6 34.7 36.9 36.9 37.4 37.5 38.1 39.3 39.6 40.6 0 5 10 15 20 25 30 35 40 45 Average Career length in 2012 One of the worst in the european class…
- 10. An Aging Workforce in Belgium Government Date Legal Pension age Legal early retirement Minimum age Minimum Age Minimum career length Di Rupo 1 1/01/2012 65 60 5 1/01/2016 65 62 40 Michel 1 1/01/2018 65 63 41 1/01/2030 67 63 42 Government measures
- 11. Responses to the issue Common practices on this topic
- 12. Responses to the issue 0% 1% 2% 3% 4% 5% 6% 7% 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 Intel Layoffs, by age group Age Group 1. Lay offs
- 13. Respones to the issue 2. “The window seat tribe” Sharp, NEC: Voluntary retirement programs Boredom Expensive Demoralised Underachievement
- 14. Responses to the issue More friendly More efficiënt In full transparence In convenience with all Parties As a strategic asset 3. But, there are better ways.. Pro-active end of Career Management
- 15. End of Career Management – Application on KBC
- 16. End of Career Management - Application on KBC - Positive way of thinking instead of Exit Policy -> Creation of Minerva Policy 10% 45% 45% Employee age at KBC > 55 > 45 Rest
- 17. Work stays the same Work less Work lighter Work less as wel as lighter Extramural employment End of Career Management - Application on KBC Minerva Policy - Named after the blue-eyed daughter of Zeus, Minerva - Godess of wisdom - 5 Options
- 18. End of Career Management - Application on KBC Option 1: Work stays the same - Reality check - Employee willingly chooses this option - Procrastinating is prohibited
- 19. End of Career Management - Application on KBC - Working part time - Only when possible to integrate in organization model - Employee must be aware of implications on salary and environment Option 2: Work less
- 20. End of Career Management - Application on KBC Only when possible to integrate in organization model Need for good agreements with the employee about the decrease of function levels Employee is able to calculate remunaration changes by consulting a tool Option 3: Work lighter
- 21. End of Career Management - Application on KBC - Employee stays in the same entity - Decrease in responsibilities - Tool for salary impact Option 4: Work less as wel as lighter
- 22. End of Career Management - Application on KBC - Sending the employee to another social profit or profit organisation - Consultancy - Only on mutual agreement of the employee and the management - Has to be in line with: CSR Policy Commercial policy Development capabilities of the employee Option 5: Extramurale employment
- 23. End of Career Management - Application on KBC About 1,800 employees are able to use the Minerva policy. - Most popular option: ‘ Work stays the same “ - Only 10 employees in option 5 ( First phase ) - Goal of KBC -> Employees have to find a balance between what they like to do and what they are good at - No extra options planned, but there is room for improvement Results
- 24. Our point of view
- 25. What we think… Working for longer has become a necessity. Early retirement can lead to lower self image. Minerva Plan is a meaningful way to give fresh impetus to the closing stages of a working career. Employees get a better insight into their realistic choices. Plan the final stages of their career themselves, taking account of several factors. Encourages people to look at the alternatives. Offers clear added value.
- 26. Recommendations… Older employees be given mentoring and coaching jobs where they can use their experience. Develop skill transition plans, based on industry, that will facilitate the transfer of knowledge from older to younger workers. Develop and offer appropriate options like flexible work hours and accommodations that will encourage continued employment of skilled, older workers.
- 27. Conclusion
- 28. Conclusion Problem gets bigger Companies need to recognize and adapt KBC’s solution Our recommendations
- 29. Special Thanks to… Mister Bart Melaert For his help and his answers to all our questions
Editor's Notes
- Several studies have found that a majority of older workers indicate that they plan to work past the traditional retirement age. This trend can be attributed, in part, to the reduced value of retirement portfolios/income and improved health/consequent increased life expectancy, and is expected to continue (Administration on Aging, 2007). But older workers also work because they want to — because they are highly engaged in their work, Page 4 Employer Strategies for Responding to an Aging Workforce satisfied with their jobs, and committed to their organizations (Galinsky, 2007). Pitt-Catsouphes and Matz-Costa (2009) define “engagement” as “a positive, enthusiastic, and affective connection with work that motivates an employee to invest in getting the job done, not just ‘well’ but ‘with excellence’ because the work energizes the person” (p. 7), and find that older workers have consistently higher levels of engagement. Engaged employees use less health care, take fewer sick days, are more productive, have longer tenure, and create stronger customer relationships (Pitt-Catsouphes and Matz-Costa, 2009).
- Before one can understand the approach company’s are taking in end-of-career management, it is important to understand the broader issue of an aging work force and the associated consequences. The countries with the top 3 oldest populations are…. Japan Median Age: 46.5 years (2015 est.) Germany Median Age: 46.5 years (2015 est) Italy Median Age : 45.9 years (2015 est.)
- 1. Increase in the dependency ratio. If the retirement age remains fixed, and the life expectancy increases, there will be relatively more people claiming pension benefits and less people working and paying income taxes. The fear is that it will require high tax rates on the current, shrinking workforce. 2. Increased government spending on health care and pensions. Also, those in retirement tend to pay lower income taxes because they are not working. This combination of higher spending commitments and lower tax revenue is a source of concern for Western governments – especially those with existing debt issues and unfunded pension schemes. 3. Those in work may have to pay higher taxes. This could create disincentives to work and disincentives for firms to invest, therefore there could be a fall in productivity and growth. 4. Shortage of workers. An ageing population could lead to a shortage of workers and hence push up wages causing wage inflation. Alternatively, firms may have to respond by encouraging more people to enter the workforce, through offering flexible working practices. 5. Changing sectors within the economy. An increase in the numbers of retired people will create a bigger market for goods and services linked to older people (e.g. retirement homes) 6. Higher savings for pensions may reduce capital investment. If society is putting a higher % of income into pension funds, it could reduce the amount of savings available for more productive investment, leading to lower rates of economic growth.
- With a vast set of challenges facing developed nations with aging populations, the key to solving these issues may lie within the aging worker population… People are working longer than every before and the traditional age of retirement has been extended significantly (some may argue that it may not be relative at all anymore because many workers choose to phase out their employement from full time to part time). Employers are looking to accomidate an aging workforce while also utilizing them. In the majority of developed countries such as the United States, Germany, Japan and Italy.. The percentage of the population entering the work force has decreased while the average ago of people remaining in the work force has been increasing Employers are looking to accomidate an aging workforce and change perseptions. Older people are a valuable and productive economic resource. Increasing employment opportunities among older workers is essential to ensure that the labor market and workforce adapt to meet the needs of an aging population Employment among people aged 55 and older has increased to an all-time high of 40.4 percent (Bureau of Labor Statistics, 2010). Data from the U.S. Census Bureau suggest that, by 2016, one-third of the total U.S. workforce will be age 50 or older, and will increase to 115 million by 2020 (U.S. Census Bureau, 2010)
- There are many perceptions that company’s hold concerning aging employees…. Higher compensation: *As the workforce ages, the incidence of disability rises (Bruyère, 2006; Kampfe, Wadsworth, Mamboleo, & Schonbrun, 2008). The strong correlation between age and disability is clearly demonstrated in the findings of a University of Wisconsin, Trace Center study (2001) that shows that the incidence of disability among workingage Americans is: 9.5 percent for workers in the 18- to 24-year-old range, 20+ percent for workers in the 45- to 54-year-old range, and approximately 42 percent for workers in the 65+ age range. Older people are also more likely to have multiple disabling conditions and to have chronic disabling conditions (Kampfe et al., 2008). Training and recruitment: A frequent accusation against older applicants is that they are less mentally flexible and less physically active than their youthful competitors. Employers judge older workers to be in poor health, resistant to change, uncreative, prone to accidents, disinterested in technological change, and hard to train. These perceptions combine to make employers less likely to invest in training older workers Legal implications: Company’s lack of preparation for an aging workforce, when combined with the negative perceptions held by younger workers about their older co-workers, can greatly influence workplace dynamics and may contribute to an increase in age-related discrimination lawsuits (Bjelland, Bruyere, von Schrader, Houtenville, Ruiz-Quintanilla and Webber, 2010).
- With a vast set of challenges facing developed nations with aging populations, the key to solving these issues may lie within the aging worker population… People are working longer than every before and the traditional age of retirement has been extended significantly (some may argue that it may not be relative at all anymore because many workers choose to phase out their employement from full time to part time). Employers are looking to accomidate an aging workforce while also utilizing them. In the majority of developed countries such as the United States, Germany, Japan and Italy.. The percentage of the population entering the work force has decreased while the average ago of people remaining in the work force has been increasing Employers are looking to accomidate an aging workforce and change perseptions. Older people are a valuable and productive economic resource. Increasing employment opportunities among older workers is essential to ensure that the labor market and workforce adapt to meet the needs of an aging population Employment among people aged 55 and older has increased to an all-time high of 40.4 percent (Bureau of Labor Statistics, 2010). Data from the U.S. Census Bureau suggest that, by 2016, one-third of the total U.S. workforce will be age 50 or older, and will increase to 115 million by 2020 (U.S. Census Bureau, 2010)
- Japanese companies like Sharp and NEC work with voluntary retirement programs. They look for their older employees to leave the company but this often results in putting people in a window seat tribe, which basically means that they keep them in their current position in a big chair by the window but don’t give them anything to do. This results in a hard core of expensive, demoralised underachievers eventually leaving the company “voluntarily”
- However a lot of companies show that there are a lot of best practices as well. The previous slides already motivated that the problem is becoming larger and larger. Therefore it has become an important HR practice for a lot of companies. They see it of great importance to work towards a solution that is more friendly, more efficiënt. They aim to be fully transparant towards their employees and look for an answer that is good for every party, the employees themselves but also the company and the labor unions. The final step and maybe the most important one is to use the policy such that it becomes a strategic asset for the company.
- When we look at the employees of KBC we can see that 10 procent is older than 55 and 45 % of the employees of KBC is older than 45. This means that end of career management is very actual and important for KBC. KBC uses a positive way of thinking about older employees, they don’t want them to go on early retirement. For this reason they developed the Minerva Policy.
- The Minerva policy is named after Minerva, the blue eyed daughter of Zeus. She is the godess of wisdom. The Minerva policy consists of 5 options. Work stays the same Work less Work lighter Work less as wel as lighter Extramunural employement
- The first option ‘ work stays the same’ means that they don’t change anything about the employees’ work. In order for this to work the management has to do a reality check every period of time to make sure that employee is capable of maintaining his responsibilites. The employee willingly chooses this option, therefore procrastinating is prohibited
- Option two ‘Work less’ means that the employee will change from a full time job to a part time job. This is only possible when there is a job available in the organization. The employee must be aware of the changes that the part time job will make on his salary and environment.
- Option three work lighter means that the responsibilities of the employee wil decrease. The management has to make sure that there are solid and clear agreements with the employee about the decrease of function levels. The employee will be able to measure his changes in remuneration by consulting a tool.
- Work less as wel as lighter means that the employee stays in the same entity of the company. The employee’s responsibilities will be decreased, depending on the choices of the employee. He will be able to calculate the salary impact because of his choice.
- The most recent option is the extramurale employement. This consists of sending the employee to another social profit or profit organisation. Most of the time this will be in consultancy. This is only possible on a mutual agreement of the employee and the management. The new employment has to be in line with some key aspects of KBC itself, such as CSR policy, commercial policy and development capabilities of the employee.
- About 1,800 employees are able to use the Minerva policy. Most popular option: ‘ Work stays the same “ Only 10 employees in option 5 ( First phase ) Goal of KBC -> Employees have to find a balance between what they like to do and what they are good at No extra options planned, but there is room for improvement
- Working for longer has become a necessity to keep the funding of pension, health care and unemployment costs under control. 2) In many cases early retirement is a way too sudden rupture in someone’s curriculum and it leads to a lower self-image. In that way a lot of expertise and knowledge gets lost. Finally it is a very big cost for both society as well as for the company lost 5)What makes this approach unique is that employees can plan the final stages of their career themselves, taking account of several factors, specifically their personal interests and talents , their job level, the desired employment percentage, and the length of their remaining career. With the Minerva Plan, we are therefore inviting our employees to pause and think carefully about the final years of their career. 6) Above all, the fact that KBC is presenting these options as equally valuable will encourage people to look at the alternatives, rather than letting things get on top of them. So the Minerva project offers clear added value,
- Not only will this meet employees expectations more effectively, it will also enable the organisation to benefit fully from their talents and hence to keep them motivated.
- Not only will this meet employees expectations more effectively, it will also enable the organisation to benefit fully from their talents and hence to keep them motivated.