Sloan Center News
The Way We Were … And Still Are
responding to changing age demographics in the workforce
13 November 2009—Already at the beginning of this decade, demographics trends were clear – the workforce was aging. Data showed that in 2000 baby boomers (those born between 1946-1964) represented the largest portion (48%) of the U.S. labor force. And with an increasing number of retirees on the horizon, evidence suggested employers would be faced with new challenges managing and planning for their labor force.
By 2010, the baby boomers labor force participation was predicted to reduce to only 37%. According to a 2008 report by the Bureau of Labor Statistics1, the number of workers between the ages of 65-74 and those aged 75+ has been predicted to increase by more than 80% in the next 7 years. By 2016, workers aged 65+ are expected to constitute 6.1% of the total labor force, up sharply from their 2006 share of 3.6%.
In light of these trends, current and projected business needs, as well as the needs of older workers, are urging management to examine workplace strategies. Particularly, these major demographic shifts are highlighting concerns among human resource and workforce planning departments regarding:
- Retirement: With an increased proportion of older workers, many employers have become faced with significant talent shortages in key areas. This in turn could affect companies’ abilities to grow, compete, and achieve their strategic and financial goals.2 Nursing, engineering, and sales are among the occupations where talent shortages have been particularly salient. However, in a 2007 national survey, 39.9% of employers reported anticipated talent shortages in management skills, and 31.2% reported shortages in technical computer skills.3
- Knowledge Management: A labor shortage is not the only problem. HR and company managers face potentially significant challenges and costs in filling the knowledge gaps left by retiring workers. And while the recruitment and training of new workers has become an additional investment and concern, so has the management of effective communications across different groups of employees, many of whom may lack experience and company know-how. This problem has been compounded by another statistic: younger workers tend to value knowledge sharing less than older workers.4
- Labor Force Changes: Demographic changes are not all headed in the same direction. Many older workers expected to retire in greater numbers have desired to work beyond traditional retirement years. This has occurred while fewer workers have been entering the workforce overall. The result has been difficult-to-manage workforce imbalances and complicated HR scenarios. Depending on the company, having four generations of workers on staff has caused may have created unpredictable and precarious situations.
- Quality of Employment: With planning and foresight, demographic trends can be managed. However, it is not just numbers that must be considered. For example, much has been made of the benefits of flexible work environments, like the ability of workers to have choice over their work schedules. However, employers are still not generating effective programs for older workers, who highly value flexible working arrangements. A 2008 analysis of data by the Sloan Center for Aging and Work showed that younger employees (42.8%) were more likely than employees at midlife (34.0%) or older employees (36.5%)5 to report that they had access to more flexibility at work.
With the workplace undergoing a variety of age-related and cultural transformations, employers are called upon to reassess the subjective experiences of their older workers. Not only do 50+ workers want to continue working, older workers desire opportunities for training and new experiences in flexible, collaborative work situations. 6It could be that emerging trends in workforce management are already overlapping with the needs of older workers. Yet the benefits of such confluences remain undeveloped.
indifference and ambiguity
Age-related demographic patterns can be said to be one “objective” set of circumstances that all employers need to understand. These changes, however, are manifesting themselves inconsistently across organizations. Furthermore, with economic pressures now heavily influencing business strategy and workplace culture, it is complicated to know where workforce planning alone ranks as a priority. Has age-related workforce planning become relegated to secondary or even invisible status?
Then again, for many employers, age demographic awareness had never been actualized to begin with. The statistics are striking:
- A 2002 survey found that two-thirds of companies surveyed had not even developed an age profile of their workers, and almost half had not assessed their training and development needs;7
- According to a 2005 survey, 45% of HR professionals in private businesses felt that their workplaces were “just becoming aware” of issues related to the potential labor force shortages due to the retirement of baby boomers;8
- The Sloan Center’s 2007 National Study Report found that only 12% of organizations had analyzed their workforce demographics “to a great extent,” with almost 26% not having analyzed their workforce “at all”;9
- And still, in 2009, the Sloan Center’s Talent Management Study revealed that a majority of nearly 700 employers surveyed, representing 83% of employment and 85% of payrolls in the United States, have still not analyzed the demographics of their workforce.10
Understandably, in tough economic times organizations direct workforce-planning efforts toward addressing immediate financial concerns. But the lack of business preparation to confront the rising “Tsunami”11 of demographic change is extremely dangerous in the long-term.
early indicators of action
Indeed, some companies have been responding, and not just in terms of performing demographic assessments. Retention of 50+ workers is one example. In a 2006 survey of employers, 87% of the respondents indicated that they perceived “the retention of aging workforce to preserve knowledge” to be a very significant business advantage. In the same survey 74%of respondents reported that aging workers were perceived to be reliable and dedicated, from a business advantage perspective.12
Among notable workplace innovations, some businesses have explicitly linked flexible work options to the changing age diversity of their workforce. But beyond flexible hours and schedules, other emergent policies have centered on career leaves and contract work, which have been particularly attractive to 50+ workers.13 In addition, phased retirement and other programs have been implemented to lessen the effects of knowledge gaps and to capitalize on the talents of the older works before they leave.
Yet, while some attention has been directed toward the specific situations of older workers, many employers were considering the age-related composition of their workers and offering training and career counseling based on career stage. These kinds of career development strategies are often guided by concerns about employee engagement.14 Through an age-conscious perspective, fostering a “culture of engagement” in the workplace means not only increasing workers’ control over decision making, but also facilitating communication between workers and supervisors and across different age groups.
Thus, while there has been evidence of age-awareness among some companies, there has also been a discernable lag in exploring how demographic trends are affecting business and human resource strategy – and how these changes could be an enhancement to business development.
moving from awareness to action: what's stopping us?
Why does such a lag in business responsiveness remain?
While trends are evident, given economic pressures it is understandable that some employers might see age demographic changes as a distraction or low priority issue. Of course, each organization’s circumstances vary; and this is a large challenge because each must generate custom solutions for, and often by themselves.
Even for companies who have been proactive in taking action, significant questions regarding responses to demographic shifts remain:
- If employers do see older workers as valuable and dependable, how can employers integrate them explicitly in an employee recruitment and development strategy?
- Is some of the ambiguity around age due to its status within organizations? Whose issue this is? Is age understood mostly as a matter if diversity? Workforce Planning? Talent Management? Learning and development?
- Is age an uncomfortable subject? Are ageism and age-related stereotypes something to be concerned with in terms of seeing older workers as assets, or in terms of just not wanting to deal with things concerning older workers, beyond retirement planning?
Stay tuned for our next article: Leading Edge Strategic Adaptations: Business Responses to Changing Workforce Demographics
Authors, Fee, Dwight, Ph.D.; Lynch, Kathy; and Woodnick, Pamela
This article is the first in a four part series leading up to a special remote meeting (December 3, 2009: 10:00 – 11:30 ET) to discuss, “Changing Age Demographics: A Business Imperative or HR Distraction.” Future article in the series will discuss: Promising Practices from Early Adapters; Current State: What’s Changed?, and Keeping Age an Business Imperative in your Workplace.
3 Pitt-Catsouphes, M., Smyer, M. A., Matz-Costa, C., & Kane, K. (2007). The national study report: Phase II of the national study of business strategy and workforce development (Research Highlight No. 04). Chestnut Hill, MA: The Center on Aging & Work/Workplace Flexibility.
4 In a 2008 survey of over 2000 U.S. employees, 69% of baby boomers rate as important the trait "readily shares knowledge with co-workers" and 71% report that the trait describes them. In contrast, 53% of GenY employees rate that trait as important and 56% feel that it describes them. The rates for GenX employees are 62% and 63% respectively. Mature workers have the highest rates on this trait, with 69% rating it as important and 83% reporting that it describes them. (Ranstad Work Solutions, 2008, The world of work 2008. Rochester, NY: Harris Interactive, Inc.
12 Corporate Voices for Working Families, WorldatWork, & Buck Consultants. (2006). The real talent debate: Will aging boomers deplete the workforce? Washington, DC: Corporate Voices for Working Families.
14 The National Study, Sloan.