Companies need to prepare for an ageing workforce by challenging their assumptions to benefit from loyal, experienced colleagues who don't want to retire.
According to Eurostat, by 1 January 2030, in most European countries at least 25% of the population will be 65 or over, and the same goes for Singapore. By 2050, in Korea, Taiwan, Hong-Kong and Japan, the old-age dependency ratio (the percentage of people over 65, compared to people aged 15 to 64) will be above 60%, whereas it was below 20% in 2010 (35% for Japan).
According to a Pew Research Centre Study, every day until 2030 in the US, about 10,000 Baby Boomers will reach 65 - the official retirement age. By 2030, 18% of Americans will have at least that particular age related milestone and this trend is mirrored all around Western Europe.
Is your company ready to deal with Baby Boomers retiring “en masse”?
Depending on the proportion of your workforce aged over 55, the issue might be more or less pressing in your company. However HR departments would do well to know exactly how vulnerable they are to this trend, as it turns out that many companies are under-prepared. A 2014 survey by the Society for Human Resource Management discovered that one-third of organisations “fear that the potential loss of older-worker talent could be a problem for their industry or organisation”. Worryingly, the survey found that only 20% of companies had done in-depth assessments about how the retirement of their older employees would affect them.
As more and more employees reach retirement age, companies might be faced with gaping voids where there used to be institutional memory, tacit knowledge and invaluable experience.
To make matters worse, according to Peter Cappelli, George W. Taylor Professor of Management at The Wharton School, age discrimination is real and damaging: 67% of workers over 50 say they have experienced it on the job, and 25% of employers admit to being reluctant to hire older workers.
Companies need more, not less, older workers
This is confirmed by the Society for Human Resource Management survey: over 50% of organisations surveyed said they didn't actively recruit older workers.
In fact, this mindset actively hampers their own progress; older workers are exactly what companies say they need:
- They stay longer in jobs, as opposed to the somewhat job-hopping characteristic of younger generations. 58% of older workers can boast 10 or more years working for the same company, compared to 37% of people in their forties (Bureau of Labour Statistics). Higher loyalty means lower turnover costs. More experienced employees also have fewer accidents and are absent less often.
- More experience implies more honed skills. In certain areas, this could mean that mature workers don't need as much training as those who newly face a professional setting, and their productivity remains high in a given job.
- This age group tends to have more rounded social skills, maturity and professionalism than younger employees. These qualities were actually quoted as being a characteristic of older workers by the same employers who say they don't actively recruit those workers...
Yes, but what good is experience if it is going to retire shortly?
As it turns out, the “silver tsunami” is real, and it isn't taking place on golf courses; it's happening in the workplace. Baby Boomers might be reaching retirement age in droves, but that does not mean they are actually retiring, or even that they want to.
This decision could of course be due in part to the latest recession: Baby Boomers are the most likely generation to say that their household finances have worsened, and that they are postponing retirement as a result.
More importantly, increases in life expectancy and advances in healthcare mean that people are able to work longer than in previous generations – and that they are happy to do so. In fact, when asked why they continue to work, older Americans overwhelmingly stated “wanting to” as the reason.
In Europe, the official retirement age keeps increasing as state-funded pension schemes are under pressure to reform and need to balance sustainability with adequacy. Allianz introduced its Pension Sustainability Index to measure this, and revealed that most European countries as well as many Asian countries will face sustainability problems, with Thailand and Japan having the least sustainable pension schemes due to an ageing population as well as a shrinking workforce. As a result, the rise in post-retirement informal work arrangements has sparked talks of the “uberization” of pensions.
In similar fashion to US trends, the Survey of Health, Ageing and Retirement in Europe showed that life satisfaction didn't necessarily improve after early retirement and in some cases worsened - people want to, and feel able to, work longer.
More and more career resources are aimed at the older generation who have embraced technology and the digital revolution with the “Unretirement” podcast as a prime example.
Baby Boomers are also looking for flexible working arrangements
Baby Boomers are happy to enjoy a more relaxed lifestyle. They are open to working part-time or remotely. In fact, flexible and remote working arrangements allow older workers to progressively work towards a more typical retirement lifestyle: Spending winter in warmer climates, moving to be closer to children and grandchildren, but also closer to ageing and ailing parents, as Baby Boomers might be the first generation to retire when their parents are still alive.
As a result, the door is open to negotiating mutually beneficial agreements, in which older workers who would like a lighter and more flexible workload can become consultants or contractors for their former full-time employer. Baby Boomers are also embracing the “gig economy”. A study conducted by Uber reveals that the start-up has more drivers over 50 than below 30. The digital connectedness necessary for working remotely doesn't faze Boomers either - they have been closing the digital gap apace for a decade now.
Everything is in place, then, for older workers to fully contribute to their company. Their deep knowledge and experience, as well as their superior work ethic, are exactly what employers need and would be remiss to overlook.
So how do you make the most of your staff's “golden years”?
1. Emphasise succession planning
Even if older workers plan to continue working, it doesn't mean they will work on forever. Now is the time to make sure that solid mentoring programmes are in place, so that precious knowledge isn't lost when Boomers finally retire.
2. Be aware of anti-discrimination laws and offer a wide spectrum of possibilities
Asking an employee point-blank what are their plans for retirement is fraught with difficulties. A better option is to make it widely known that options are open for staff over a certain age threshold: Working full-time then retiring, working part-time, having more flexibility, or becoming a consultant or contractor, even in retirement.
3. Keep in touch with retired colleagues
Don't hesitate to contact them for mission-specific tasks. Their expertise is precious to your organisation and encourage them to document their processes and procedures to preserve tacit knowledge. It would be even better to place a more junior member of staff with them as they’re carrying out the task to bring a fresh perspective on the method of execution in typical reverse mentoring style.
4. Emphasise better inter-generational communication
Baby Boomers and Millennials might be at different ends of a demographic spectrum but they have complementary qualities and characteristics. Consider their different approaches to knowledge; as Jeanne C Meister points out, the amount of knowledge that you need to retain in your mind to perform well on the job has dramatically decreased as resources became available on the web. From about 75% in 1986, it has plummeted to around 10% today.
This means Millennials don’t have any problem looking up knowledge as they are not afraid of being perceived as incompetent for this. If you put in place a system of instant messaging that becomes a repository of inside knowledge, younger recruits will be able to ask questions from more experienced colleagues, who will in turn be able to answer the questions remotely, from the comfort of their own home.
Companies will need to ensure that different generations are on the same wavelength when it comes to communicating with grace and clarity, but this seems like a small price to pay for a quick and effective way to transfer tacit knowledge, not to mention the tremendous benefits to be gained from the contribution of experienced, loyal employees who can and want to continue working long beyond any official “retirement age”.