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Businesses Advised on Opportunities in Aging
Workforce
Boomers reaching senior citizen status but not
retiring pose challenges
Sept. 20, 2005 – As a clear sign that the aging
workforce is a focus of American business, The Conference Board, a
leading non-profit research organization for U.S. businesses, released a
report today on the challenges and major business opportunity they find
in the rapidly aging global workforce.
The workforce is aging, primarily, because
retirement-eligible employees are continuing to work, says the report.
Some 64 million baby boomers (over 40 percent of
the U.S. labor force) are poised to become senior citizens and retire in
large numbers by the end of this decade. In industries already facing
labor and skills shortages, forward-thinking companies are recruiting,
retaining, and developing flexible work-time arrangements and/or phased
retirement plans for these workers (55 years of age or older), many of
whom have skills that are difficult to replace. Such actions are putting
these companies ahead of competitors who view the aging workforce
largely as a burden putting strains on pension plans and healthcare
costs.
"The maturing workforce is often seen as an issue
to be dealt with instead of a great opportunity to be leveraged," says
Lorrie Foster, Director of Research Working Groups at The Conference
Board and co-author of the report with management consultant Lynne
Morton and noted author Jeri Sedlar, Senior Advisor to The Conference
Board on mature workforce issues. "The skills and knowledge mature
workers possess can be utilized to great advantage by a company that
knows itself well and can identify its weak areas that can be bolstered
by the right mature workers."
Industries currently feeling the greatest pain in
terms of skills shortages are oil, gas, energy, healthcare and
government. Leading companies in these sectors are turning to mature
workers to ensure future growth and productivity. These companies
recognize that a maturing workforce can positively impact customer
satisfaction and profitability, but not without effective initiatives
designed to make it easier for different generations of workers to work
better together.
Companies that haven't yet faced human capital
shortages are not rushing to make institutional changes to accommodate
workers nearing the traditional retirement age who are still in the
workforce.
"But organizations that fail to understand the
complexities or recognize the opportunities associated with an aging
workforce may risk their ability to stay competitive," says Sedlar. "As
more companies feel the pain of knowledge losses caused by retirements
in key businesses or functions, those not planning ahead and leveraging
their mature workforce will be scrambling."
This report is based on a "managing mature workers"
working group comprising executives from a cross-section of industries,
staff and line functions, and job titles. It includes such major
companies as BP America, Ernst & Young LLP, Ford Motor Company, IBM, JP
Morgan Chase, and Shell International. It's one of 10 current Research
Working Groups designed by The Conference Board to examine major issues
facing business.
Pursuing Passions Rather Than Pensions
More older workers want to remain in their jobs for
both personal fulfillment and financial reasons. In a related
forthcoming study from The Conference Board, more than half (55 percent)
of older employees surveyed said they were not planning to retire
because they find their jobs interesting. Significantly, 74 percent also
cited not having sufficient financial resources as a reason they were
continuing to work, and 60 percent cited the need for medical benefits.
Working in retirement, once considered an oxymoron,
is the new reality, according to The Conference Board report. Besides
wanting to continue doing what they love, reasons economic in nature are
also keeping older Americans in the workforce. As a result, the
increasingly multiethnic workforce will also become more
multigenerational as mature workers want or need to continue to work.
Boomers also indicate that the historical linear
life plan -- where certain years are earmarked for education, work, and
then leisure -- is becoming obsolete. Boomers want to work on terms that
are customized to their needs. The goal of many is to "ratchet back" and
give up responsibility, yet stay involved and active in business. In
addition, lifelong learning is not only desirable, but necessary to
achieve their work goals.
"New work arrangements that capitalize on this
desired work/project orientation have to be developed to meet the needs
of the mature worker and the headcount concerns of the corporation,"
says Sedlar. "The need to create a corporate culture as well as learning
institutions welcoming to all generations is becoming more apparent."
Knowledge Loss and Older Workers
By 2010, the number of 35-44 year olds, those
normally expected to move into senior management ranks, will actually
decline by 10 percent. Also by 2010, the number of U.S. workers 45-54
will grow by 21 percent, while the number of 55-64 year-olds will expand
by 52 percent.
One-half of companies interviewed feel that the
departure of mature workers presents potential knowledge
vulnerabilities. About one-third have conducted workforce planning
studies and identified potential knowledge areas where they could be
vulnerable. One-half of those interviewed have some form of mentoring
program in place to share and transfer knowledge.
Certain industries are more concerned with the
impending "brain drain" stemming from the withdrawal of some mature
workers from the workforce. The technology and pharmaceuticals
industries generally express worries about the development of new
products and services and anticipate a drain in experienced engineers,
key account sales representatives, and senior managers.
Flexible programs are generally present in
industries that consider the maturing workforce to be a very significant
issue. These companies have sometimes had to struggle with legal or
regulatory constraints that restrict flexible work arrangements for
mature workers. The majority of survey participants perceive a Catch-22
- wanting to offer something special for mature workers but feeling
unable to do so in a way that doesn't seem discriminatory.
Tactics for Strategic Change
The report recommends a series of strategic ideas
and actions to foster effective management of any "retirement risk" to
the business posed by a potential exit wave of mature workers. Among
them:
>> Identify potential gaps and knowledge transfer
needs
>> Broaden succession planning thinking
>> Check communications mechanisms and messages
for intergenerational
approach
>> Review training history
>> Capitalize on affinity groups
>> Become an "employer of choice" for all
generations
>> Encourage better financial planning among
employees
>> Build a retiree network
>> Offer benefits of interest to mature workers
such as
long-term care insurance,
pre-retirement planning,
health and wellness programs,
comprehensive medical coverage, including prescription drugs,
health coverage for retirees and part-time workers,
prorated benefits for employees on flexible work schedules
Source: Managing
the Mature Workforce, Report #1369-05-RR, The Conference Board
About The
Conference Board
Non-partisan and
not-for-profit, The Conference Board is one of the world's leading
business membership and research organizations. The Conference Board
produces The Consumer Confidence Index and the Leading Economic
Indicators for the U.S. and other major nations. These barometers can
have a major impact on the financial markets. The Conference Board also
produces a wide range of authoritative reports on corporate governance
and ethics, human resources and diversity, executive compensation,
outsourcing, profiting from a mature workforce, and corporate
citizenship. Our conference and council programs bring together more
than 10,000 senior executives each year to share insights and learn from
each other. Visit The Conference Board's award-winning website at
http://www.conference-board.org/.
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