Employers face many problems and issues as the workforce demographics increase in age diversity. Some of these issues include age discrimination, increased disability and healthcare cost, loss of expertise due to the inability of employers to retain the older employees and lack of proactive procedures and programs for older employees.
This paper focuses not only on these issues but also examines the benefits of a more age-diverse workforce and a competitive advantage employers may gain by proactively developing programs and policies to help retain and attract highly qualified older employees.
According to a Government Accountability Office (GAO) report issued in 2006, the number of workers over age 55 is projected to increase significantly over the next 20 years with this demographic group projected to comprise as much as one-fifth of the nation’s workforce by 2015 (Government Accountability Department, 2006). The unprecedented aging of the world’s population and the strong correlation between aging and disability challenges employers.
Observe the listed demographic changes in the workforce, any challenges and concerns employers have with an aging workforce, and some benefits of an older workforce. Find select academic and other related literature on employer strategies to prepare for an aging workforce and examples of successful retention initiatives.
Concerns Regarding the Aging Workforce
Employers have raised concerns on the workforce demographics and the challenges regarding the aging workforce. Some of the employers’ challenges include increased healthcare and disability, age discrimination, career development and advancements and the lack of employer programs to retain and transfer the expertise of the older workforce. This section also looks at the possible preparations for responding to the aging workforce.
The Demographic Landscape
Employment of people above 55 has increased to an all-time high of 40.4 percent (Bureau of labor statistics, 2010). Data from the U.S. Census Bureau suggest that, by 2016, one-third of the total U.S. workforce will be age 50 or older (U.S. Census Bureau, 2010). The growing number of older employees results in a shift in workforce demographics. A rise in the employment of older people results in a decline of the entry-level workforce, leading to an even larger shift in the demographics (Bureau of labor statistics, 2010).
Health Care and Increased Disability
Health care and increased disability concerns carry a major impact on the entire company. The University of Wisconsin has demonstrated that a strong correlation exists between age and disability (Engineering, 2001). The study shows the occurrence of disability among working Americans as the following statistics: 9.5 percent in the 18- to 24-year-old range, 21 percent in the 45- to 54-year-old range, 42 percent in the 65- to 75-year old range and 64 percent in the 75+ age range. The study has found that older people often face multiple and chronic disabling conditions.
The health of the workforce not only affects the effectiveness of the workforce but also impacts insurance rates. The insurance company offers an equal rate for every employee; these group rates are usually less than individual insurance plan rates. The company determines the rates by the average age and health of the group rather than by the individual. With an aging workforce, healthcare and life insurance premiums will increase due to an increased risk of morbidity and mortality of the entire workforce. An aging workforce tends to lead to an increase in short term and long term disability claims and the increase of a loss of a valuable employee. An employer can do little to avoid such losses, and most times the employer passes these losses onto the younger employees as higher premiums and increased workloads. The reduction of health has provided employers a unique benefit of helping to retain employees with better and more focused programs for healthcare and disabilities.
Evidence shows that ageism, stereotypes, and misinformation about older people persist across all segments of society, including the workplace. AARP identifies that most employees age 50 and older feel a discrimination of age in the workplace (AARP, 2013). Other AARP studies revealed that management has the following positive perceptions characteristic of older employees: experience, knowledge, work habits, attitudes, commitment to quality and even-temperedness. The same studies also reveal negative perceptions about older employees such as narrow-minded, unwillingness or inability to adapt to new technology, lack of ambition, resistance to change, and the presence of physical limitations. The studies also found that the negative qualities perceived by management carried more weight in the decision to retain or hire older employees.
In addition to these perceived qualities of older employees, employers cite higher wages, increased cost of health insurance and disability, and the expense required to train older workers in new technologies as obstacles to hiring and retaining older employees (Taskforce on the Aging of the American Workforce, 2008). Some employers also state that older workers lack current knowledge of required skill sets and only use dated skills. Another stereotype: Older employees show less willingness to relocate, travel or move to new job locations than younger workers because they have established family and friends and equity all tied up in home ownership.
Engagement and Advancement of Older Employees
Past employers have focused on the idea that older employees would likely enter early retirement rather than work beyond the retirement age. With the advances in medicine and healthcare, many older employees find themselves very capable of continuing to work just as effectively as their younger colleagues. Employers are faced with a unique challenge of retaining and engaging older employees as well as creating career advancement opportunities. The health of not just the national but the global economy illustrates yet another major factor why many older employees plan to retain or reenter the workforce. Survey research of older workers found that 60 percent of older workers wanted to carry on working after retirement age either in the same or different jobs because of financial reasons.
Major benefits exist for the employer to engage older employees. The Sloan Center on Aging and Work has documented that engaged employees of all age groups need less healthcare, take less sick days, use longer tenure, carry a more positive attitude, and provide better work quality and better customer service. This new perception about the aging workforce demographic leads to viewing this age cohort as a more productive and resourceful population than once perceived in the past (Pitt-Catsouphes M. &.-C., 2009). The traditional views of retirement as a total cessation of work has evolved to include employment opportunities for older adults who want to continue working or reenter the workforce. Overall, society has changed its perspective of older people by its use of new terms such as successful aging, resourceful aging, healthy aging, and positive aging rather than previous terms associated with decline.
Lack of Employer Response
The Society of Human Resource Management has found that employers have no special provisions, procedures or programs for older employees despite the wealth of knowledge on this subject (Collison, 2003). This lack of attention to the changes in the workforce demographics will dramatically affect business profitability, productivity, knowledge base of the company, and many customer service ties. The Sloan Center on Aging and Work has verified the research done by the Society of Human Resource Management (Pitt-Catsouphes M. S.-C., 2007). The study found that 25.8 percent of employers did not analyze their workforce demographics, while only 12 percent did an extensive analysis. The survey also showed that 36.7 percent had made no projections about retirement and only 9.7 percent had done so “to a great extent.” Less than one-third of the employers surveyed had adopted practices to recruit employees of diverse ages compared to 16.5 percent of employers that gave no effort to hire a diversity of ages. Based on these surveys, employers may face trouble to retain the knowledge and expertise of the older employees as well as legal liabilities for age discrimination.
Benefits of an Aging Workforce
While many down sides encompass an aging workforce, many benefits exist such as a more diverse workforce, better disability management, encouragement of better engagement and a healthier workforce, and retention of expertise. The health of the workforce improves when employers train both the older and younger employees as equals. Productivity and effectiveness therefore increase.
A large diversity in the age of employees resulting from an aging workforce benefits the company. The older employees can share many experiences both with young and middle added employees to teach their knowledge and expertise. Such diversity helps a company to service a wider range of customers. By matching the employee age group to the customer’s age group, the customer and employee relate better. This correlation leads to better customer service and overall better customer satisfaction.
Quality management of disabilities comes with an increase of aging employees. Studies over time have shown that disabilities occur more often in older employees. Using this knowledge, employers cooperate with older employees to help develop disability programs for not only the older generation but younger generations of employees with current or future disabilities, leading the employer to retain disabled employees that may still provide quality work but face a disability that limits them to perform the job functions in the same manner as other employees not facing disability. Accommodations may involve working from home or providing audio and visual aides to any acoustically or visually impaired employees. Providing accommodations for our soldiers both young and old who served us is the least the public and the employers of our country can do as thanks for their dangerous and difficult duties.
Employer Practices for the Aging Workforce
Organizations may use different practices and policies to respond to the issues of an aging workforce. These strategies include methods for conducting workforce assessments, disability management, retention, training, workplace flexibility, and reducing the likelihood of discrimination.
Work Force Assessment
For employers to understand the diversity, degree of discrimination, and the overall status of the workforce, the employer must first analyze and assess the workforce and discover what issues and underlining problems exist. Only after a thorough assessment of the workforce can an employer start to implement older employee programs and policies. The assessment must consider the number of retiring employees, the expertise and knowledge that the older employees have that would be lost if they retired, and develop programs to attract qualified people of all age groups.
To help control the problems of an aging workforce, employers should focus on the following business strategies as a top priority:
- Recruitment –Employers are suggested to take advantage of the opportunities to select individuals with specific talents, experiences, and perspectives from diverse age groups. According to the Sloan Center on Aging and Work’s National Study of Business Strategy and Workforce Development (Pitt-Catsouphes M. S.-C., 2007), less than one-third of businesses surveyed adopted practices that include age diversity recruitment strategies and 52 percent of companies that hire retirees do not have official procedures and programs for such purposes. Competitive benefits are an important component of any organization’s recruitment package. Employers have to cater different packages for older employees because they carry different values than younger employees.
- Engagement –Employee participation is essential to employee and workforce performance and efficiency. The Sloan Center study cites three critical engagement elements: employee participation in decision-making; opportunities for employees to advance and challenge themselves to develop new skills and competencies; and access to flexible work options such as partial hours and flexible hours (Pitt-Catsouphes M. S.-C., 2007). Allowing older workers to maybe work ten hour days for only four days a week is important for older employees that may not want to travel from home as often.
- Retention – Only one-third of the employers have strategies that encourage aging employees to continue working past the retirement age. An organization’s ability to recognize the strengths and weaknesses of a multi-generational workforce and the company’s ability to manage the dynamics that occur in a diverse work environment lead to a better retention rate of employees of all ages.
For companies to effectively utilize their human capital and resources, the company has to know and understand the status and conditions of the resources by caring and maintaining them to be effective and competitive. Proactively providing policies and programs to accommodate an aging workforce, a company may gain a distinctive advantage over its competition.
Workforce Training and Engagement
One of the most popular stereotypes of older employees is their inability to learn new technologies and resistance to changes. Employers need to embrace this stereotype and offer programs for older employees to learn computer skills, retrain existing skills, and offer multiple opportunities to gain new skills.
Employers are also encouraged to implement training program incentives in the recruitment procedures for older employees. This strategy will help build a highly qualified workforce as well as a workforce willing to work. By companies engaging and continuing to train employees of any age group, the employees may feel like an important asset and may work harder and more effectively. Creating a positive attitude with all employees and the whole workplace brings a more effective and healthier workforce with a reduced turnover of employees in any age group.
An employer should provide flexible policies capable of accommodating any situation. Flexible schedules, flexible work options, and flexible retirement options all help recruit experienced and highly qualified employees, retain and engage the employee by allowing them some control of their work environment, and encourage their desire to remain employed. Flexibility in the workplace is important for all employees regardless of age; however, flexibility is especially important to older employees who may have aging parents or grandchildren or many other reason that require some accommodations and flexibility to manage their work schedule and environment. Businesses willing to offer these flexible arrangements gain a competitive edge because of a happy, motivated, and engaged workforce.
While exploring the issues related to an aging workforce, one issue illustrates a large problem. Many employers show no proactive leadership in preparing for an increasingly older workforce, likely engulfed with more disabilities, more health problems, and a need for flexibility in the workplace.
Employers need to develop programs and policies to encourage the retention of older employees by offering flexibility in the workplace, encouraging training of new skills and retraining of old skills, engaging employees in challenging projects and developing career advancement opportunities. Proactive businesses will maintain and increase diversity in their age demographics and will gain a competitive edge by retention of expertise and knowledge.
- AARP. (2013). Staying ahead of the Curve 2013: AARP multicutural work and career study perception of age discrimination in the workplace age 45 to 74. Retrieved from AARP: http://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2013/Staying-Ahead-of-the-Curve-Age-Discrimination.pdf
- Bureau of labor statistics. (2010). Record unemployment among older workers does not keep them out of the job market. Retrieved from Bureau of Labor Statistics: http://www.bls.gov/opub/ils/pdf/opbils81.pdf
- Collison, J. (2003). Older Workers Survey. Retrieved from Society of Human Resource Management: http://www.shrm.org/Research/SurveyFindings/Documents/SHRM%20NOWCC%20CED%20Older%20Workers%20Survey.pdf
- Engineering, U. o. (2001). Disability as a function of age. Retrieved from Trace Center of Engineering: http://trace.wisc.edu/docs/function-aging/
- Government Accountability Department. (2006). Older workers: Labor can help employers and employees plan better for the future. Retrieved from Government Accountable Department website: http://www.gao.gov/highlights/d0680high.pdf
- Pitt-Catsouphes, M. &.-C. (2009). Engaging the 21st century multi-generational workforce: Findings from the Age and Generations Study. Boston: Sloan Center on Aging and Work.
- Pitt-Catsouphes, M. S.-C. (2007). National Study of Business Strategy and Workforce Development. Boston: Sloan Center .
- Smeaton D., V. S.-D. (2009). Working Better: The Over 50s, the New Work Generation. manchester, UK: Equality and Human Rights Commission.
- Taskforce on the Aging of the American Workforce. (2008, February ). Report of the Taskforce on the Aging of the American Workforce. Retrieved from http://www.aging.senate.gov/letters/agingworkforcetaskforcereport.pdf
- U.S. Census Bureau. (2010). U.S. Census Bureau. Retrieved from http://www.2010.census.gov