Despite the widespread clamor about the aging of the US workforce (sparked by millions of Baby Boomers approaching 65), few organizations are fully prepared for it. This is the major finding of a survey recently released by the Society for Human Resource Management (SHRM).
The survey entitled The Aging Workforce Survey is part of a SHRM’s three-year national Aging Workforce Initiative. This initiative is being carried out in conjunction with the SHRM Foundation and funded by the Alfred P. Sloan Foundation. The survey was carried out on HR professionals working in a total of 1,913 US-based employers.
The survey found out that the majority of US organizations are grossly unprepared for the challenges (as well as potential opportunities) which are presented by an aging workforce. Many are largely unaware of the aging within their own organizations, let alone their industry. Below are a few highlights of the survey’s major findings.
A Looming Crisis? Not Immediately
All the HR professionals surveyed agreed that an aging population has the potential to create talent loss within their industry or organization. The distinction came in their perception of the timing of any impact the talent loss on their industry or organization. About one-half thought that there would be no impact over the next two years. One- third thought that the talent loss would create a potential crisis or problem within the next 6 to 10 years.
In terms of the potential crisis in 6 to 10 years, the HR professionals are spot on. It is projected that 25% of the US workforce will be 55 by the year 2020. This will of course present serious challenges because organizations will have to figure out how to motivate and manage their aging employees. In some cases, they may have to recruit older workers to fill their vacancies. This will present its own set of challenges.
However, in terms of immediacy of the potential crisis, most HR professionals are mistaken. An aging population is a crisis which some industries are struggling with right now. The Power Engineering Magazine recently reported that 20% of the workforce in America’s electric and natural gas utilities is already eligible for retirement. In 5 years time, the total percentage of workers eligible for retirement will be 40%. This essentially means that 40% of America’s utilities workers are already 60 or older.
Looked Within? No Really
Just over a third of the HR professionals reported having examined organizational practices and policies to see if they are well-equipped to handle the demographic change. This basically means that a full two-thirds of US organizations aren’t even aware if their internal policies are designed to tackle the challenges of an aging population. They simply haven’t bothered to look within.
A rather curious fact is that 50% of the respondents said that they track employees who are set to retire within the next one to two years. When considered against the fact that only 33% have examined their organizational policies, it paints a rather interesting picture. If we are to assume that those 33% also track their aging employees, it leaves a rather curious 17% who track their aging employees, but apparently haven’t examined their internal employee aging policies and practices. This causes one to question what the purpose of the tracking is, if it isn’t carried out within a wider policy framework.
However, the most shocking statistic is that a full half of US organizations have no tracking mechanism for employees within one to two years of retirement. No wonder that many HR professionals reported that aging will cause no challenges to their organization within the next two years. If they are unaware of their own employees who are nearing retirement, then their false sense of security is understandable – however deplorable.
It is therefore no wonder that 40% HR professionals reported that the increased aging of their workforce hasn’t prompted any HR changes. Basically, their organizations haven’t changed their recruitment, retention or general management policies to tackle the increased aging of their own employees.
Facing The Challenge? With Pleasure
However, there are a few organizations that have not only a solid grasp of the aging workforce, but also actively tackling it. These organizations (many of which are thriving in the face of the demographic change) are shining examples of what can be accomplished when HRs step up to the challenge.
One approach which organizations are employing is a phased-out retirement. This is where aging employees gradually work for less hours, until they are finally retire. This provides a smooth transition for both the employee and the organization. In most cases, part of the arrangement involves imparting their knowledge and skills on the employee who being prepared to replace them.
Surprisingly, one employer who is introducing this system is the Federal Government (who’d have guessed?). Employees who take this arrangement will be able to work for 20 hours a week, and continue receiving half their pay and half their retirement annuity. As part of the arrangement, they’ll have to devote 20% of their time to mentor their potential replacement.
Not all employers are actually phasing their aging employees into retirement. Many are helping them to transition into new, less demanding careers (possibly with non-profits). One such an employer is the tech giant Intel. Through its Intel Encore Career Fellowship, the company pays a one-year stipend of $25,000 to help retiring employees transition into careers with non-profit organizations.
Rather than simply phasing out older employees, some organizations are maximizing their vast experience. For instance, 61% of the HR professionals interviewed in the SHRM survey reported that their organization had tried to improve their recruitment and retention practices by capitalizing on the experience of older workers.
Ultimately, the rapid aging of the US workforce doesn’t have to become a massive crisis. As some organizations have clearly demonstrated, it is resource which can at best be harnessed to mentor the next generation of workers. At worst, it is a potential challenge can be phased out in a simple, effective and non-disruptive manner.
The only organizations which will suffer as a result of an aging workforce are those which are ill-prepared to deal with it. For such organizations, the aging workforce will present a loss of talent which will be disruptive, tumultuous and difficult to replace. Therefore, if yours is one of those organizations which isn’t prepared to handle an aging workforce, then the SHRM survey should be the perfect wake-up call. Begin to get your act together right away, and you’ll avoid some unnecessary troubles down the road.
