Longevity Rules: Editor: Stuart Greenbaum; Publisher: Eskaton 2010

OUR WORKFORCE IS AGING;GROW WITH IT

>-- David Baxter _

HoW can we create the necessary foundation for sustained eco-nomic growth and financial security as we emerge from ourcurrent recession? Just as new capital realities have required

a restructuring of the capital markets, new demographic realities willrequire a radical rethinking of both the value and role of older work-

ers and even of retirement itself.The current economic reckoning comes upon us at a unique

moment in time. The Boomer Generation - the largest generationin history - now stands at the threshold of traditional retirement.What happens when 77 million Boomers begin to retire? Can our

nation afford to support millions of new retirees? What happensto our productivity and innovation as some of the most skilled,

knowledgeable and hardworking employees permanently disappear

from the workforce?Earlier this year, Age Wave, a research and consulting firm

specializing in population aging and the age 50-plus marketplace,conducted a research study canvassing more than 2,000 Americans.The goal was to better understand the impact of the recent economic

David Baxter is a senior vice president at Age Wave, a research and consultinq firm spe-cializing in population aging and the age 50-plus marketplace. He has developed andmanaged numerous highly acclaimed national and global surveys, uncovering trends andunique market opportunities created by the growth of the over-50 population. He also iscoauthor of the Handbook of the New American Workforce, as well as a public speakeron cutting-edge research findings.

OUR WORKFORCE IS AGING; GROW WITH IT -, 55

crisis on their lives. We found that today's pre-retirees believe thatthey will now need to postpone their retirement 4.2 years on average,

which would be the firsttime in history that retirement age significantly

increased in America. And, 70 percent reported that they wanted tocontinue working in some form during their retirement. Americansare clearly beginning to re-vision both the

timing and purpose of retirement. But arepolicymakers, organizations and corporateleaders waking up to these new realities?

In the 1970s, Boomers began to enter theworkforce in Significant numbers, replacing

the much smaller cohort - born during theGreat Depression and World War II - thatpreceded them. The impact was both im-

mense and pervasive; the pool of availableworkers increased by 29 percent in a singledecade. Workforce growth remained strong inthe remaining decades of the 20th century as

the influx of younger Boomers continued tobuttress the numbers of workers.

Today, however, workforce growth is com-ing to a virtual standstill. From an increase of29 percent in the 1970s, America's workforcewill grow only 12 percent in the current de-cade and will increase a mere 4 percent in the

next decade. The collapse in workforce growth is the simple result ofdemographics. In the current decade, the population of adults age18-34will increase by just 7 percent. In the next decade (2010-2020),

the age 18-34 population will grow a mere 3 percent. The era of an

We found that

today's pre-retir

ees believe that

they will now

need to post-

pone their retire

ment 4.2 years

on average,

which would be

the first time

in history that

retirement age

significantly

increased in

America.

56

Longevity Rules: Editor: Stuart Greenbaum; Publisher: Eskaton 2010

DAVID BAXTER

unending supply of young workers is clearly over.We will need olderworkers to remain productive as a country.

Moreover, as the Boomer Generation enters into their retirement

years in greater and greater numbers, companies of all sizes will con-front a massive "brain drain" of skills, know-how among their mostexperienced workers, and experienced management. Nearly seven

million talented people in key managerial,professional and technical jobs may exit theworkforce in the next 10years.

Where will we find our workers in theyears ahead? The only population that willdemonstrate substantial growth in the nextdecade is those age 55-plus. Fueled by the ag-ing of the Baby Boom Generation, the num-ber of adults age 55 and older will increase 27percent between 2010 and 2020.

Yet, despite the increasing shortage ofyoung workers and unprecedented growthof available mature workers, organizationscontinue to focus their recruiting and devel-

opment efforts on the younger workforce.According to a survey by Manpower Inc., only 18percent of employ-ers in the United States have strategies in place to recruit older work-ers, and less than a third has implemented any retention strategiesfor their older workforce.

Some innovative thought-leaders and cutting-edge organizations

are beginning to recognize the need to shift their workforce policiesto fit the new demographic realities. Companies are increasingly

realizing the value of mature workers. In the "Future of RetirementStudy;' a global survey completed in 2006 on retirement and work,

Where will we

find our work-

ers in the years

ahead? The only

population that

will demonstrate

substantial

growth in the

next decade

is those age

55- plus.

OUR WORKFORCE IS AGING; GROW WITH IT 57

employers said that mature workers were just as productive andmotivated as younger workers, and were even more loyal and reliable.

Some leading-edge companies and organizations are beginning

to develop best practices for recruiting, engaging, motivating andretaining mature workers.

AgeWave identified fivekey best practices for creating aworkforceand organization to compete in the next decade.

First, organizations must become expert at forecasting keyworkforce aging and retirement trends and the potential risksto their business. According to the Society for Human ResourceManagement, less than a third ofhuman resources professionals havecharted their organization's demographic makeup. Companies thatdo not conduct this analysis can be blindsided by the rapid workforceaging and related talent shortages projected for the next decade.

Second, organizations must improve their capability to recruitmature workers. Review promotional language for jobs with implicit

or explicit references to employee age. Older workers are morelikely to be attracted to advertisements emphasizing "experience;'"knowledge" and "expertise" and to interpret those stressing "energy;'"willingness to learn" and "high ambition" as implicitly targeting

younger workers. Also, assess job promotion channels. Recruitingolder workers sometimes requires operating through nontraditionalchannels or creative partnerships with professional societies or othergroups with memberships that skew older.

Third, implement flex-retirement programs to attract, retainand motivate older workers. Organizations often can convincevalued older workers to delay retirement by offering them "flex-retirement options" that provide greater work style flexibility and

more control over their time. Examples include reduced hours orschedules, temporary work, consulting assignments, job sharing,

58Longevity Rules: Editor: Stuart Greenbaum; Publisher: Eskaton 2010

DAVID BAXTER

telecommuting, mentoring positions and other special positions andassignments that would be attractive to key mature employees. Theseprograms can help retain key valuable employees, provide access to

industry knowledge and expertise through mentoring programs, and

tap into highly experienced temporary talent pools of retirees.Fourth, design benefits strategies that are compatible with flex-

retirement programs. In August 2006, the U.S. Congress passed thePension Protection Act. Prior to this act, employees were unable to

receive distributions from defined pension plans before the pensionplan's normal retirement age if they continued to work for theorganization. Under the new law, employees age 62 and older mayreceive defined benefit plans while continuing to work, making theimplementation of flex-retirement programs far less cumbersome.After passage of this law, nearly half of employers re-evaluated theirflex-retirement options, according to a survey by Hewitt Associates,Inc. Although the Pension Protection Act facilitates the creation of

flex retirement programs, there remain key issues employers needto carefully consider. For example, health benefits can be strongincentives to keep an employee working; even if covered by Medicare,many older workers will work to continue to receive health coverage

for dependents.And finally, organizations must build management practices

and a culture to motivate an older workforce. Build a culture thatvalues experience. Companies that have been the most successfulin creating programs that leverage the skills of their older workershave a deep corporate culture that values older worker capabilities.

Include aging and generational issues as components of managerialand diversity training, and review human resources policies to make

sure they do not discriminate against older workers. Examine pro-motion policies, salary calculations, performance review procedures

,"

OUR WORKFORCE IS AGING; GROW WITH IT 59

and benefits to ensure they are not implicitly or explicitly biasedagainst older employees. Develop a culture of continuous careerdevelopment. Mature employees are more likely to stay loyal and

motivated if they feel they have room for advancement. And offercontinued learning and training opportunities. Mature workers oftenare overlooked for training and education because managers feelemployees nearing retirement age are not worth the investment ofadditional training resources. A recent U.S.Bureau of Labor Statistics

study found that workers 55 years and older receive half as much

training as younger workers - yet turnover among older workers isactually lower than that among younger workers.

The next decade will be a time of unprecedented challenge andopportunity for both policymakers and corporate leaders as we

begin to confront new workforce realities. As our economy beginsto normalize, organizations that continue to ignore demographicchanges in the workforce and maintain strategies and policiesoptimized for ayounger workforce will increasingly experience criticaltalent shortages and retention problems. Conversely) organizationsthat reshape their recruitment, engagement, work structures andcultures to attract and retain the new mature workforce will be well

positioned to capitalize on unprecedented growth opportunities in a

vast pool of experienced and valuable workers. ~