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Summary
      Will your company be ready to manage the coming “brain drain?” What can you do to manage the seismic shift of an aging workforce? With two thirds of the workers going out the door, you should (1) Identify potential gaps and knowledge transfer needs; (2) offer benefits of interest to mature workers; (3) create flexible work schedules; (4) instill knowledge sharing relationships; and (5) become an employer for all generations.



References
1. “Americas Aging Workforce Posing New Opportunities and Challenges for Companies,” September 19, 2005, The Conference Board.

2. Searching for the Silver Bullet, A New Study from the Metlife Mature Market Institute Provides Innovative Aging Workforce Strategies for Employers
November 14, 2007.

3. “An Aging Workforce’s Effect on U.S. Employers,” Scott Reeves, Forbes, September 29, 2005.

4. See Footnote (2)

5. See Footnote (1)

6. See Footnote (2)

7. “Not Ready to Quit,” William Underhill et als, Newsweek, November 26, 2007.

8. “Branding Your Company as Age-Diverse,” AARP Publications, 2007.

9. “Benefits and Drawbacks of Phased Retirement,” John Rossheim, Monster Career Advice

10. “Not Quite Ready to Retire,” Time, February 27, 2006.

11. See Footnote (8)

12. “The Aging Workforce: Challenge or Opportunity,” Roselyn R. Feinsod and Thomas O. Davenport, Towers Perrin, WorldatWork, 2006.



About the Author
Caela Farren, Ph.D., is President of MasteryWorks, Inc. in Falls Church, VA. She has been a consultant, entrepreneur, and educator for over 30 years, Caela has worked with hundreds of thousands of people worldwide to get them on their mastery path. Caela’s practice and company builds strong links between changing trends in industries, changing strategies of organizations and the talents and aspirations of individuals. People who work with her company discover their passion, their mastery path, and bring renewed contribution and high performance to their organizations.

Caela is known internationally for her expertise in developing talent management products and services. Her solutions are user-friendly systems that serve the needs of both organizations and individuals. She is frequently quoted in the media regarding her thoughts and advice on changing careers and work patterns in the nation. Hundreds of organizations have implemented talent management solutions from MasteryWorks, Inc. — consulting, workshops, assessment instruments and web-based talent management portals.
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OUR AGING WORKFORCE – Strategize Now or Stumble Later
by Caela Farren, Ph.D., MasteryWorks, Inc.
photo
Introduction
     Have you considered the massive wave of retirements that are expected to hit our workforce in the next few years? By the end of this decade, a tsunami is coming. Forty percent of the U.S. labor force, 64 million workers will become eligible for retirement. Are you ready to meet one of the most dramatic challenges managers and leaders will face? The knowledge gap left by a “brain drain?” Can you manage the seismic shift in workforce displacement and ride out the expected aftershocks? This is a case where you better have a strategy!


Statistics of People Reaching Retirement Age
   The Bureau of Statistics predicted a dramatic shift of age demographics in the workforce. They reported that between 2004 and 2014, the percentage of individuals in the workforce ages 55-64 was expected to grow 42%, compared to a 5% increase in workers age 45-54 and an 8% decline in workers age 35-44. At the same time, the percentage of workers 65 and older is expected to grow 74%.[1]

   In studies conducted by The Conference Board, researchers anticipate that during the five years between 2006-2010, the pool of 35-44 years-olds will decline by 10%, the number of U.S. workers 45-54 will grow by 21%, and the number of 55-64 year-olds will increase by 52%.[2]

   About 76 million baby boomers, born between 1946 and 1964, will have reached retirement age by the end of the decade. Boomers make up about 40% of the U.S. workforce and there simply aren’t enough younger workers to replace them. The graying of the workforce is not limited to the U.S. Other industrial nations face a similar crisis. For example, with respect to workers age 35-44, Germany reportedly faces a 27% decline, the U.K. a 19% loss, with losses of approximately 10% in Italy and Japan, and 8% in China.[3]

Statistics on the Lack of Readiness
     Anticipated labor shortages will force a radical rethinking of recruitment and engagement strategies. Instead of focusing on the burdens placed on pension and healthcare costs, managers and leaders need to think about retirement plans and strategic programs designed to attract and retain workers who are 55 years of age or older.

     The maturing workforce presents both a dramatic challenge and new opportunities. Organizations that take the time now to create employment policies that address the loss of an aging and experienced workforce will have a competitive edge in the near future. However, surveys consistently report a majority of companies are unprepared to create innovative programs for their aging workforce.[4]

Why an Aging Workforce Is Important to Your Organization
   The knowledge many older workers possess is invaluable. “The maturing workforce is often seen as an issue to be dealt with instead of a great opportunity to be leveraged,” says Lorrie Foster, Director of Research Working Groups at The Conference Board and co-author of the report with management consultant Lynne Morton and author Jeri Sedlar, Senior Advisor to The Conference Board on mature workforce issues. “The skills and knowledge mature workers possess can be utilized to great advantage by a company that knows itself well and can identify its weak areas that can be bolstered by the right mature workers.”

   “Organizations that fail to understand the complexities or recognize the opportunities associated with an aging workforce may risk their ability to stay competitive,” says Sedlar. “…, those not planning ahead and leveraging their mature workforce will be scrambling.”[5]

   The Conference Board reported that half of companies they interviewed recognized that the attrition of the aging workforce presented a potential knowledge drain. They reported that “One-half of companies interviewed feel that the departure of mature workers presents potential knowledge vulnerabilities. About one-third have conducted workforce planning studies and identified potential knowledge areas where they could be vulnerable…. Certain industries are more concerned with the impending “brain drain” stemming from the withdrawal of some mature workers from the workforce. The technology and pharmaceuticals industries generally express worries about the development of new products and services and anticipate a drain in experienced engineers, key account sales representatives, and senior managers.”[6]

   Traditionally, older workers have transferred their knowledge and experience to younger workers through informal mentoring and on-the-job training. Through their experience and reputation, they provide invaluable networks and connections to other critical resources. They possess the “know-how” to cut time and costs in the competitive global marketplace. Their value to the bottom line should not be ignored.

Know What Older Workers Want
  • An environment in which their opinions are valued and in which they can gain new skills and experiences
  • The ability to choose their hours, take time off to care for relatives and work from home
  • An organization that allows people aged 50 and older to remain employed for as long as they want to continue working
  • The opportunity to have new experiences and learn new skills
  • Access to good health benefits.[12]

Strategies to Attract, Develop, and Retain an Aging Workforce
    The need to attract and retain older workers is especially strong in high tech, health care, pharmaceutical, bio-sciences, federal and state government, and energy industries. Some organizations have responded with initiatives to the changing demographics. They may be used as templates for other industries and organizations. The five most common strategies employed are:
1) Implementing Flexible Work Arrangements
2) Creating Knowledge Sharing Relationships
3) Creating a Multi-Generational Workforce and Culture
4) Phased Retirements and Retirement Planning Workshops
5) Strategies for Recruiting Retirees

1) Implementing Flexible Work Arrangements

Retaining workers beyond retirement age requires shifting working arrangements to suit lifestyle changes. Innovative organizations offer flexible work programs to employees as part of their retirement programs. Short term projects, customized work schedules, attractive work assignments and compensation packages are all aimed to attract and maintain the mature workforce. Consider benefits of interest to older workers, such as long-term care insurance, health and wellness programs, comprehensive medical coverage, and part time employment. Some organizations have created outplacement agencies. For example, in 2003, P&G and Eli Lilly founded “YourEncore,” an employment agency specializing in matching retired and older scientists and engineers to a list of jobs in fields throughout the world. Other companies have engaged former employees as contractors for short periods of time. IBM has been a leader in providing their older and retired workers with strategic programs for work and life balance in order to maintain an on-demand workforce to meet market conditions. Scripps Hospitals in San Diego California retains 40% of its employees who are 50 or older by offering them customized work schedules and choices between higher pay and greater benefits.[7]

Newsweek reported that “In Europe, there’s a new vogue for ‘interim management’ – employing former bosses on short term projects. These people can just move in for three or six months, use their expertise and then –bang – move on to somewhere else…”[7]

Organization may face legal and regulatory issues when they create flexible work arrangements for mature workers. Federal and state agencies may view special offers made to a class of older workers as discriminatory and affecting retirement and medical benefits. Flexible work arrangements, whether work assignments, choice of location of work, limited work hours, compensation, benefits and retirement packages, etc., must not violate three rather complex laws – the Employee Retirement Income Security Act, the Age Discrimination in Employment Act and Federal State Tax Codes. Review pension plans to determine if they are outdated and need to be amended to meet the current shift in demographics.

2) Creating Knowledge Sharing Relationships
Long before retirements affect the collective experience and “know-how” of organizations, leaders and managers should identify potential gaps and assess the transfer needs caused by potential knowledge vacuums. Companies such as Hoffman-La Roche, Cigna, Mitre, and Aerospace have created retiree temp pools aimed at filling the “brain drain” and providing temporary assistance when needed.[7]

Leaders and managers need to reassess workforce job descriptions and work missions within an organization to broaden succession planning and establish effective knowledge sharing between older mentors and younger workers. There is a need to create and maintain communication mechanisms for intergenerational information transfer such as workshops to train mentors and to build focus groups for younger employees. Organizations can also create retiree networks that enable and promote intergenerational exchange.

“Northrop Grumman has established several ‘communities of practice’ to facilitate knowledge sharing. Community sessions take place via online and regular in-person meetings. The communities often cut across disciplines and divisions to encourage participants to think beyond organizational lines.”[12]

As traditional lines between retirement and work begin to blur, retired workers can mentor younger workers from within their retirement homes. Organizations need to bring older workers into mentoring programs. "This will require new techniques to keep older, experienced workers engaged," notes Business Week opinion columnist Paul Horn. "Technologically, it might mean the development of still-new tools for broader collaboration outside the physical organization." Solutions for organizational productivity, portals and collaboration promote team efficiency facilitated by virtual team rooms, e-mail, instant messaging, calendaring, learning and presence awareness. Data and information management solutions can help pull together information in many formats and from disparate sources to improve productivity. Equipped with these tools, remote office situations can be beneficial for retention and for meeting the needs of a changing workforce.

3) Creating a Multi-Generational Workforce
Attracting a multi-generational workforce may require changes to meet the needs of mature workers. Job descriptions, traditional work rules, and eight hour workdays can be revisited and redesigned with the older worker in mind. Pay special attention to making specific results and deadlines within the reach of older worker’s abilities and experience. Many older workers seek short-term goals. Others favor consulting and mentoring opportunities. Promotion should be age neutral. If warranted, always consider older workers for promotion, financial bonuses and other rewards. Provide older workers with special projects and give them recognition within the organization for jobs done well. Organize intergenerational staff meetings. Give special praise to experience and knowledge. Encourage your team to acknowledge experienced workers for their leadership and foster respect and appreciation for their years of service. Organizations that integrate mature workers into their workforce by recognizing their accomplishments build loyalty and cooperation.

Key Equipment Finance in Superior, Colorado organized an advisory committee to explore avenues to integrate its workforce. To meet the diverse needs of all employees, the company formed several focus groups, each consisting of approximately 35 employees from different age groups to seek ways of becoming a more cohesive and effective workforce. Jeremy Eaves, human resources director at Key Equipment Finance said, "After we collected their opinions, we developed an advisory committee that has been very integral to making recommendations about what [we] need to do in our workforce."[8]

With thirty percent of their workforce currently over 50 year-old, The Dow Chemical Company has to be prepared to fill key positions. The company is building online programs for late stage career planning giving retiring employees resources to identify jobs for extended service. “The company is creating ‘bridge’ positions that attract and retain mature workers by enabling them to decelerate between full time work and retirement,” says Kevin Small, Workforce Planning Leader at Dow in Midland, Michigan. Dow loans senior executives to universities, clients and other organizations for short-term sabbaticals that older workers select. The company is also reviewing its compensation and benefits program to address the needs of mature workers. Dow posts jobs for retirees through Kelly Services on a Dow web page. "We need to modify what we're doing and how we're doing it to meet [retirees and older workers’] needs," says Small. "The amount of expertise that is leaving cannot be replaced very easily."[8]

4) Phased Retirements and Company Sponsored Retirement Planning Workshops

John Rossheim of Monster.com writes that, “…you may not want to leap from a permanent position behind a desk to a permanent slouch on a lawn chair -- literally overnight…. Thanks to an emerging trend called phased retirement, you might be able to choose a middle path that allows reduced work hours, more flextime and maybe even collecting retirement benefits -- all in exchange for a substantially smaller paycheck.”[9]

"I don't consider just slowing down to be a comprehensive phased-retirement program," says Larry Anderson, president of the National Older Worker Career Center. "People will need access to retirement benefits in a phased way, such as partial Social Security payments that would extend the life of those funds." However most companies do not have formal phased retirement plans. For example, Lincoln Financial Group is a leader in phased retirement as a tool for retention and the transfer of knowledge from experienced workers to younger ones. "We don't have a specific program for phased retirement," says Karen Fowler-Williams, Vice President of Employee Relations and Diversity at Lincoln Financial. "It's all within our regular flex program." Employees can retain full benefits if they work a minimum of 20 hours per week. She says that those on a path to retirement usually remain in the part-time phase for a period of months; occasionally a worker stays in the program for two years.[9]

IBM launched a $2 million program that will pay for tuition, licensing and interim salaries for employees who want a bridge to new careers as math and science teachers. Kathy Kelly, 58, plans to cross over. In her 36 years with IBM, she has stuck with the company through 18 different job titles and assignments in China and Chicago...Teaching middle-school math will better match her schedule to her children/s while fulfilling an old dream and giving me new challenges.”[10]

The reasons companies have traditionally avoided phased retirement plans are the knotty legal and practical problems littering the path to phased retirement programs. For example, the federal government has failed to end the uncertainty about how employers must treat defined-benefit pensions and retiree medical coverage under phased retirement. Pension rules in the past barred employers from paying partial retirement benefits to workers who want to cut their hours before retirement age. Furthermore, there's an issue that employees must go directly to full time retirement to avoid losing their medical benefits. Under a pending Internal Revenue Service proposal, employees in phased retirement would have their pension benefits prorated in proportion to their part-time hours. Regulations need to be made more flexible for part time employment. Until new regulations address the phased retirement benefit problems, employers and older workers should think twice about phased retirements.

MasteryWorks, Inc. has developed a pre-retirement guide, LifeScapes®, which helps employees think about and design a life map for the next ten years of their lives. The guide provides resources, websites, reflective questions, and exercises to help pre-retirees focus on the twelve basic needs that make up their lives. A quick quiz, The LifeMastery Builder, enables individuals to assess where they need to take action to have an energetic life. Over 50,000 pre-retirees claim a new lease on life that goes well beyond financial planning. They were grateful to have an easy way to look at all the factors that will impact their future lives.

12 Basic Needs Model

Twelve Basic Needs Model
© 2008 MasteryWorks, Inc.

5) Strategies for Recruiting and Rehiring Retirees
According to the Conference Board, an increasing number of workers approaching retirement age want to remain in their jobs. More than half the employees interviewed wanted to continue working because they enjoy their work, or for financial need or health benefits. However, while some organizations are seeing four generations working together for the first time in history, others are seeking strategies for hiring or rehiring retirees

Is your organization “age-friendly?” Retired workers join organizations that do more than apply “age-friendly” strategies at a job fair. “Age friendly” cultures do not happen magically. The process needs to be instilled throughout a company’s culture - from factory floors to executive suites. Hiring and maintaining a bank of experienced workers requires a culture that is age-diverse. If a company places experience and ability above age, the organization will become multi-generational.

Train interviewers and recruiters to assess skills, education and experience without allowing age to get in the way. Many older people accept jobs because of recruiters’ age neutral attitudes. They set the tone for the organization to attract older job candidates. Feature older workers in videos in your lobby, brochures in the waiting rooms, websites and annual reports. Place your age neutral culture out front.

Set up workshops for recruiters to engage in practices that will attract older employees. For example, an employment ad for a job should specifically refer to “a great opportunity for retirees” or a “perfect part-time position” rather than simply expressing that “we are an equal opportunity employer.” Recruitment should explicitly be aimed at opportunities for retirees. If a candidate is not hired, always keep a carefully written record of the reasons and always explain the reasons to the candidate to avoid a claim of age discrimination.[11]

Companies that prize experience are strategic in recruiting and retaining a multi-generational workforce. These organizations are best poised to stop the “brain drain.”

Summary...

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