The Value of Grey Labour

The critical factors in running a high-performance company include attracting, developing, and retaining the right talent. However, it’s no secret that an aging population coupled with a smaller pool of replacement talent will put tremendous pressure on a company’s ability to manage workforce needs. Furthermore, companies risk losing critical knowledge as their retiring workers take a careers worth of invaluable information with them.

The demographics present a worldwide challenge, exacerbated across much of Europe due to:

• Lower birthrates compared to the rest of the world

• A decrease of entrants with appropriate degrees in certain fields such as chemicals and engineering

• Long employee development cycles of up to five to ten years in certain sectors such as aerospace

• A range of government policies that provide substantial retirement benefits which may discourage older workers from staying in the workforce and retirees from re-entering it

• Lack of social programmes to adequately support and encourage older unemployed workers who want to get back to work

• Use of early retirement options to offset layoffs or redundancies

Estimates suggest that these factors will have a significant impact on Europe’s productivity by 2050. Europe’s population will by then have declined 8% overall, and those of working age participating in the labour market will have decreased from 127 million (as of 2005) to 100 million with critical decreases in France, Germany and Italy.

Furthermore, the population of 20- to 54-year-olds is already declining. This trend will accelerate between 2010 and 2030, perhaps by as much as 16%, while the number of those aged 55 and older will increase by 15.5%, before beginning to decline after 2030.

The workforce management implications of these estimates are immense; companies will increasingly need to rely on the skills, knowledge and abilities of their older workers. Steps should be taken to retain the knowledge and insight within the company before workers retire. At the same time, companies will need to recruit, develop and retain a younger workforce to replace retired staff.

There is no single solution to address the challenges these estimates suggest and avoid the risks associated with labour and knowledge shortages. However, overall critical factors will include proactively recruiting older workers and creating a work environment whereby they feel comfortable, supported and welcomed.

As companies implement their solutions, it will help them to know which aspects of the employee value proposition their older workers tend to value. The following points list key areas older workers tend to regard as important about their personal work circumstances:

• General sense of well-being and fairness associated with working for an company

• Flexible working arrangements

• Unique career opportunities

• Benefits that align closely with their career and lifecycle stages

These points suggests ways companies can make the work environment more welcoming to older employees, how the knowledge of older workers can be retained and considers the questions companies should ask as they prepare to manage an aging workforce.

BECOMING OLDER-WORKER FRIENDLY

Unfortunately, many myths and poor attitudes about older workers still exist today. Some assume older workers are inflexible, more costly, less committed and absent more often. Ironically, there is evidence to support the exact opposite. If a company allows these myths to perpetuate, it risks a bias against older workers that may cause managers to rule them out when making recruiting, hiring and promotion decisions.

Some companies also fail to recognise or accommodate the unique needs of older workers. For instance, older workers sometimes need help to effectively operate certain technology, or require a few hours off during the workday to deal with medical or elder care issues.

When attitudes and conditions like these exist, they can undermine the value an older worker places on working for a particular company. This can have serious implications ranging from older workers not applying to or joining a company, to those already employed choosing to leave the company, perhaps through early retirement.

Companies can take several actions to create a workplace that creates a sense of well-being for older workers and candidates. These include:

• Reviewing and, where necessary, revising HR policies to make them age neutral and discrimination free

• Incorporating age as a component in the diversity strategy

• Developing a campaign and training programme that educates employees on age discrimination issues, dispels ‘older worker’ myths and attitudes and reinforces behavioural change through incentives

• Using older workers as organisational ‘advisors’ who will help management better understand key issues important to older workers and craft recommendations that address them, and who will serve as ambassadors to advocate the company's inclusivity.

• Creating opportunities for multi-generational groups to work together (such as senior/junior mentoring). This can also help train, develop and transfer critical knowledge to younger workers

• Targeting recruiting and messaging toward older workers

• Adopting occupational health, safety and working standards that meet the needs of older workers

FLEXIBILITY AND TARGETED TRAINING

Many retired workers never re-enter the workforce. However, many other retirees clearly would prefer to stay engaged with work although not necessarily under conventional structures.

Flexibility around what work older workers do, and when and where they do it, can help companies keep their knowledge in-house longer. This flexibility can provide access to the knowledge base of former employees by engaging them as consultants on special projects and opening up access to retirees’ talent.

Some flexible work and training techniques that European companies have already successfully implemented include:

• Using flexible retirement arrangements as a transition from a full-time to reduced work schedule through vehicles such as job-sharing and part-time hours

• Increasing ability to work from home/vacation home

• Reducing the level of responsibility and/or physical demands of a job

• Providing opportunities to change to different and less demanding roles

• Allowing for extended leave/sabbaticals with the ability to return to the same or a similar role

• Using the retired employee base for short-term assignments ( holiday cover or consulting projects). This strategy also facilitates the retention of knowledge and experience within the company

• Targeting retired workers in situations where recruiting may have been targeted at younger workers for second career and/or entry-level positions;

• Considering older workers for overseas assignments

• Assessing training gaps of those retired workers who want to re-enter the market or shift careers despite their perceived lack of training

• Incorporating user training and development throughout employees’ entire working life

• Creating ways for older workers to train and pass knowledge on to others prior to retirement, such as senior/junior coaching teams, documenting experiences, and embedding lessons into learning material

MEETING OLDER WORKERS’ NEEDS

As workers get closer to retirement age, pensions and retirement benefits become a major concern. In planning for their retirement, employees work through a delicate balance of available financial resources and free time on one hand, and their level of desire to remain engaged in work on the other.

Additionally, this age group has typically gone through some lifestyle changes, such as becoming grandparents or purchasing a second home. Given this, here are some options companies can explore to make benefits and perquisites ‘mature worker’-friendly:

• Allow employees to work beyond retirement age and continue in pension schemes

• Assist employees with financial planning and decision-making in regard to different work decision scenarios and related work and government pension scheme implications

• Offer opportunities for employees to work part-time and top-off take-home pay by drawing from pension savings or other benefit accounts

• Provide flexibility in benefits that allow employees to choose things such as ‘grandparent or care leave’

• Put wellness programmes in place relevant to older age groups

ACTION ITEMS

To prepare for the possibilities of future labour shortages and knowledge loss caused by the retirement of older workers and shrinking replacement talent pool, companies must act now. To facilitate those preparations, companies should first ask themselves some key questions:

• Do you understand how your key roles will be affected by the shrinking labour market and have you adequately planned for this?

• How well has the age factor been incorporated into your diversity strategy?

• Does your recruiting strategy sufficiently target older workers?

• What types of flexible working arrangements do you have and how effective are they?

• How are you protecting the company against age discrimination risk and what are you doing to eradicate ageism?

• Does your training adequately address the needs of your older workers and is it delivered in an effective manner?

• How are you ensuring critical knowledge is retained in the company?

WORKING FOR YOUNG AND OLD

It should be noted that although these points apply to older workers, younger workers might also find some of the initiatives it outlines appealing. Furthermore, companies should note that eventually they will need younger workers to replace older workers, therefore they must take great care that the work environment also attracts, nurtures, and retains younger talent.