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Older workers represent a wealth of talent but may require increased flexibility from HR.
Career counselor Patricia Berg has met America’s future workforce—and it’s older than you might expect. The individuals she’s helped place in new jobs include:
Berg—general manager of career management services at Personnel Decisions International, in Minneapolis—has seen the trend in her personal life as well.
Her mother—Margaret Brick, a longtime teacher—retired in 1987, but not for long. Two years later she returned to the classroom as a substitute teacher, and later she landed a part-time position helping children before and after school at Carver Elementary in Maplewood, Minn. That was in 1996, and Brick is still on the job, working 30 hours a week.
She is 87.
Berg sees today what HR practitioners everywhere will see tomorrow: an older workforce, populated by employees who will stay on the job into their late 60s and beyond.
These older employees will pose new challenges for HR. Everything that passes through HR’s hands—including flexible work arrangements, benefits, training and compensation policies—will require updating, review and perhaps tailoring for older workers.
In particular, say experts, older workers value having time for individual development—as opposed to professional development. And while time off is valued by younger workers, it is of even greater importance to older workers.
Demographics and Economics
One reason HR professionals will see an increase in the number of older workers is simple demographics. As the nation’s 78 million baby boomers age, the number of older Americans will skyrocket.
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While the oldest baby boomers turn 56 this year—well within sight of traditional retirement years—many won’t be able to afford early or on-time retirement. Only 20 percent of baby boomers are very confident they’ll have enough money to retire, according to the Employee Benefit Research Institute, in Washington, D.C. Nearly two-thirds of older boomers—those age 48 to 56—are behind on planning and saving for retirement, and almost 25 percent have no retirement savings at all.
Those who’ve failed to salt away funds for retirement won’t get immediate help from Social Security, because the eligibility age for full benefits is increasing in steps and will reach 67 for those born in 1960 or later.
Little wonder, then, that 60 percent of older boomers—and nearly two-thirds of boomers now 38 to 47—expect to work during “retirement.”
Many plan to retire far later than 65, a decision driven perhaps in part by the fact that medical science has increased life expectancy in the past 50 years. As a result, retirees will need to fund more years of retirement than they may have anticipated.
“If a person retires at 55, they can face a retirement that is longer than their entire working careers,” says Diane S. Piktialis, product management director at Ceridian LifeWorks Services, a unit of Minneapolis-based Ceridian Corp., an HR services provider. A person who enters the workforce at 21, retires at 55 and dies at 89 will have spent 34 years at work and 34 more years in retirement.
“The idea and notion of leaving the workforce? This just doesn’t compute,” says Piktialis.
Fortunately, people are healthier in old age—and therefore may be better able to work—than previous generations. For example, the rate of disability among older Americans is declining, according to a study by Kenneth G. Manton and XiLiang Gu, of the Center for Demographic Studies, at Duke University. The rate dropped from 26.2 percent in 1982 to 19.7 percent in 1999.
The improvement, experts say, stems from better health care and the growing awareness of how diet, physical activity and habits such as smoking affect well-being.
Easing the Next Labor Shortage
The prospect of having more healthy older people in the job market is good news for employers. Although the recession has eased the labor shortage, the labor market will tighten again when the economy improves, says Tom Casey, principal of Buck Consulting in Boston. Again, the cause is demographics.
After the baby boom, the birth rate dropped sharply. This “baby bust” resulted in shortages of entry-level workers throughout the latter ’90s and will lead to similar shortages in mid-level talent and executive talent in the decades ahead.
“The battle to attract and retain people has become very ruthless,” Casey says. “It’s in hibernation right now because of the slowdown in the economy, but unless something cataclysmic happens, it will return.”
To attract and retain adequate numbers of employees, HR will have to include older individuals in the pool of candidates and will have to understand how older workers’ needs and motivations differ from those of younger workers.
Time Is of the Essence
A recent survey by
Drake Beam Morin (DBM), a strategic HR firm based in New York, discovered that definitions of career success change with age. Getting a raise is the main motivator for 11 percent of generation Xers (generally, those born in the 1960s and ’70s) and 7 percent of baby boomers—but just 1 percent of mature workers, defined as those over 65.
As a result, HR professionals may need to consider new performance incentives tailored to older workers, says Shari Fryer, director of worldwide public relations and research for DBM. Rather than cash, new incentives could include opportunities to add vacation time, change work schedules, assist in personal development and so forth.
Job flexibility is a high priority for older workers, agrees Sandra Timmermann, a gerontologist and director of the MetLife Mature Market Institute, in Westport, Conn. According to a recent poll conducted by the institute and research firm Zogby International, 71 percent of baby boomers who plan to work in retirement would prefer to do it part time. This means flexible work arrangements such as job sharing, flexible scheduling, part-time work, extended time off and sabbaticals will become more popular in the decades ahead—and HR may be called on to broaden the palette further.
That’s what’s happened at MITRE Corp., a 5,000-employee company that provides technology research and development centers for the Department of Defense, the Federal Aviation Administration and the Internal Revenue Service. MITRE, based in Bedford, Mass., and McLean, Va., has been proactive in considering the impact of an aging workforce, says Bill Albright, director of quality of work life and benefits, because the average age of MITRE’s employees is about 45—more than 10 years above the national median age.
MITRE enables older employees to stay in the workforce not only through phased retirement, part-time work and sabbaticals but also through its “Reserves at the Ready” program. The program allows employees with at least 10 years of company service to become part-time on-call employees staffing projects throughout the corporation. This enables older employees to mentor younger workers and pass along technical expertise and in-depth knowledge of agencies involved with MITRE. Reserves include those experienced in technical, administrative and secretarial positions.
The program was one of several benefits for elderly workers that MITRE cited when it entered the competition for an award that it received from AARP for exemplary practices toward older workers. But the company is reaping other rewards as well: Albright says MITRE finds its older workers to be creative and productive—“great contributors.”
Of course, while some older workers may want to lighten their workload, others will have no interest in downshifting in their later years. As a result, companies will need to avoid placing older people on a “Granny Track,” says Piktialis.
Some employers “don’t expect people to be ambitious about their careers when they’re 55,” she says. “Older workers are often passed over for promotions because they are not perceived as current and as ambitious as younger workers.”
It’s All About Benefits
Sometimes, a few tweaks to existing benefits can make a big difference to older workers, says Valerie A. Paganelli, a senior actuarial consultant in the Seattle office of Washington, D.C.-based Watson Wyatt Worldwide. Eventually, federal legislation also may make it possible for employees to have access to their pensions while they’re still working, which could provide an incentive for employees to stay in the workforce longer.
Another important consideration is health insurance, which is of prime importance to many older workers. Although older people are healthier than they used to be, certain chronic conditions become more common—and usually grow worse—with age.
As a result, any job that lacks health benefits probably won’t appeal to older workers.
One potential result? HR professionals who seek older workers to fill part-time and consulting positions—which often do not come with health care benefits—may need to consider adding health care to sweeten the pot. Of course, such an approach is likely to raise an organization’s health care costs.
In general, the aging workforce will contribute to the overall rise in companies’ health insurance costs, suggests research by Marjorie Honig, professor and chair of the economics department of Hunter College and co-director of research at the International Longevity Center, in New York. To trim these costs, some companies pay older workers 60 percent of their salary for 80 percent of their time, and use the difference to pay for health insurance, says Paganelli.
It’s especially important for older workers to keep their skills fresh through training, says Sara E. Rix, senior policy adviser at the AARP Public Policy Institute, in Washington, D.C. “Training throughout the lifecycle is critical,” she says. But older workers are less likely to participate in training programs than “prime age” workers, Rix says, which makes it harder for some older workers to stay employable over the course of a longer career.
In some cases, older workers may shy away from training; in others, employers do not encourage them to participate. Both situations may be prompted by the assumption that mastering new skills becomes more difficult with age.
However, this assumption isn’t correct. “Research shows that the ability to learn continues well into older age, and older workers can and do learn new technologies,” Rix says. Now and in the years to come, she says, HR must extend training opportunities to older workers and encourage them to attend. ·
But training may need to take into account the way older people learn, says gerontologist Timmermann of the Mature Market Institute. “People learn differently as they age,” she explains. “Because your reaction time is slower, it’s more difficult to learn things by rote memory.”
Nonetheless, she continues, older people, unlike those who are younger, have “crystallized intelligence.” It’s the product of many years of experience, she says, and helps older people put new information in context and make better judgments in new situations. The result: An older person will work better in a self-paced or self-directed, pressure-free learning environment.
Other ways to improve training for older workers include allowing employees to have input in training design, inviting older employees to share their experiences as part of the training program and grouping employees for training by experience and skill levels rather than strictly by age, according to research by policy analyst Cynthia Costello of the Radcliffe Public Policy Center, at Radcliffe College, in Cambridge, Mass.
It’s important to shed presumptions about older workers, such as “they aren’t as quick,” says counselor Berg. “It’s about tolerating and appreciating the different things that a person brings to a position ... and really trying to leverage that learning.”
On the Agenda Today
It’s clear that the approaching wave of older workers presents challenges for HR in the years ahead. But what about now? What should HR be doing to prepare for the age boom?
The first step is to analyze your current workforce. Companies should mine employee data to determine turnover patterns and retirement history, and to create projections for five, 10 and 20 years from now, says Paganelli. “In many of the organizations we work with,” says Paganelli, “as much as 20 percent of their workforce could be eligible for retirement over the next five to 10 years.”
It’s also important for companies to investigate the demographic mix of the community that supplies their workers. Find out if the population is growing or shrinking, aging or becoming younger, suggests Ron Elsdon, director of retention services at DBM in New York. He also suggests conducting qualitative and quantitative research with current older workers to learn how a company could improve its relationship with older workers.
The next step is education, says William J. Arnone, partner at Ernst & Young in New York. One of the best ways to persuade aging workers to stay on the job is to provide retirement education workshops, he says: “A lot of boomers retire prematurely because they don’t understand the economics of retirement. Many workers don’t even know how much they need for retirement, so if you sponsor a well-conducted retirement workshop, a lot of employees will look at their own numbers and say, ‘Guess what? There’s no way that we’re going to be able to retire.’ ”
Money isn’t always the main reason a person stays on a job through the later stages of a career, but the prospect of a downgrade in lifestyle upon retirement can strengthen the appeal of continued employment. And HR managers hoping to recruit and retain older workers should keep in mind that although such workers supposedly care less about the money than they once did, a paycheck usually remains a good incentive for getting a person to show up for work.
Alison Stein Wellner is a freelance business writer based in Derry, N.H.
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