The Aging Workforce: Challenge or Opportunity?
Roselyn R. Feinsod
uch has been written about the aging of the working population and the potential implications this trend holds for employers, financial markets and the overall economy. The possible workforce
scenarios predicted to play out during the next five to 10 years range from demographic doomsday (i.e., severe labor shortages because of baby boomer retirements) to a soft landing (i.e., minimal workforce disruptions as the boomers continue working past traditional retirement age). Many organizations are beginning to recognize their longer-term business strategies could be compromised by a shortage of available talent if baby
Thomas O. Davenport
boomers do, in fact, retire en masse. Thus far, the reported worker shortages have emerged in fields like nursing, engineering (e.g., in the energy industry) and even long-haul trucking. For just about every industry, however, today’s demographic realities raise important issues about what it will take to meet critical business needs for workers, skills and knowledge in the future. Recognizing the importance of these talent-management issues, Towers Perrin analyzed the business case for enhanced organizational focus on hiring and retaining workers aged 50 and older. The research, done for AARP, highlights the need for employers to consider the full range of economic implications associated with the aging of the workforce, taking into account both cost and productivity factors. This paper summarizes the findings of the
WorldatWork Journal third quarter 2006
Towers Perrin analysis. Stated briefly, the research suggests organizations that adhere to the conventional wisdom about older workers — specifically, the notion that older workers are more expensive and less productive than younger groups — may miss a critical opportunity to maximize their talent base. In the authors’ view, the key to turning today’s demographic challenge into a business opportunity lies in a two-pronged strategy: careful workplace planning and developing targeted talent and reward strategies that align with key business goals while effectively managing labor costs and risks.
This phenomenon emerges across a variety of industries (See Figure 2 on page 16). Towers Perrin’s research into the drivers and effects of employee attitudes and behaviors indicates that motivation (the energy behind employees’ workplace contribution) is directly related to engagement (the degree to which employees are emotionally and intellectually attached to their organizations and their work). It comes as no surprise, then, that employee engagement also varies somewhat by age. The Towers Perrin 2005 survey of approximately 60,000 U.S. workers revealed that workers in general demonstrate relatively low engagement levels. However, as the data in Figure 3 (on page 16) indicate, older workers are somewhat less likely to be disengaged (and a bit more likely to be moderately or highly engaged) than younger groups. Some of industry’s findings are even more dramatic in certain U.S. industry segments and in the global industry analysis. As an example, in the analysis of results for the U.S. energy industry, workers aged 55 and older are 22 percent highly engaged, versus workers age 29 and younger who are 8 percent highly engaged. Because disengaged workers are more inclined to leave their employers, these workers pose added retention risk. Given the high cost of turnover, this risk brings the threat of higher cost to the organization.
Employee Engagement and...