Two recent studies characterize the value and strengths of older workers in the American economy — and decry their underuse in the American workplace.
In April, the Employee Benefit Research Institute (EBRI) released its 2015 Retirement Confidence Survey and found, among other things, that the percentage of people expecting to work past age 65 continues climbing, to an all-time peak.
Now, 36 percent say they expect to work beyond that age, with one in 10 planning never to retire. This is a threefold rise since 1991, when only 11 percent planned to work past 65. Today, a whopping 67 percent plan to work for pay in retirement. Yet the percentage of retirees actually working part-time continues to hover around 25 percent as it has since 1998; it was 23 percent this year.
(MORE: The 50+ Job Market)
The Work in Retirement Gap
That gap between people planning to work in retirement and those actually working is no mystery. As I told Anne Tergeson of The Wall Street Journal, employers have not yet embraced older adults with open arms.
AARP released a study reprising and updating its 2005 report on the business case for hiring the 50+ worker. A Business Case for Workers Age 50+: A Look at the Value of Experience, prepared by Aon Hewitt (a talent, retirement and health-solutions firm), showed that the arguments for hiring experienced workers have grown stronger in just about every way over the past decade.
When combined with the latest report from the Society for Human Resources Management, which indicated that only about a third of their members were weighing policies and practices related to an aging workforce, AARP’s new study should serve as a jangling wake-up call to employers.
AARP’s strongest arguments are twofold:
First, contrary to conventional wisdom, older workers do not cost their employers significantly more than younger workers. Adding more 50+ talent to a workforce “results in only minimal increases in … labor costs,” AARP said. The incremental total compensation costs of retaining and recruiting more 50+ workers turned out to be between less than 1 percent and 2 percent in four industries: engineering, financial services, health care and retail.
Changes in compensation practices — moving from tenure- to performance-based compensation schemes, the decades-long shift from defined benefit to defined compensation retirement plans like 401(k)s and a slowing in the rate of health care insurance costs — mean that these days older workers are not particularly more costly to employ than their younger colleagues.
What’s more, seasoned workers are far less likely to leave jobs and projects unexpectedly than younger ones. Aon Hewitt’s database revealed that nearly half of employees under 50 say they would consider another job offer or are actively looking. In contrast, fewer than three in ten workers over 50 say they’re job-hunting or open to offers.
With the cost of unplanned turnovers running between $7,400 and $31,400 per employee, depending on the industry, greater stability translates into bottom-line security for companies with a higher census of mature workers.
Second, data from Aon Hewitt and Gallup indicate that workers who are 55+ are more engaged and motivated than younger workers. According to Aon Hewitt, 65 percent of 55+ workers are engaged, compared to 60 percent of workers overall. (The study defines engagement as consistently speaking positively about the employer, having an intense desire to be part of the organization and exerting an extra effort to contribute to business success.)
The study connects the dots between these qualities and a direct effect on business success: A 5 percent difference in engagement translates into a 3 percent increase in revenue, it noted.
Higher levels of engagement among older workers correlate to the extra-monetary values they derive from their jobs, including pride in their work, seeing a job as an important part of personal identity, continued personal growth and a feeling that there is still a lot to accomplish in their work.
The Dilemma Businesses Face
Interestingly, but perhaps not surprisingly, these are precisely the same extra-monetary values that Encore.org has identified as most present in those people seeking encore careers — those who plan to contribute to the greater good in their communities when they leave their current jobs.
All this raises an interesting dilemma for businesses that invest in mature workers: How should companies retain this talent and keep their levels of engagement high when many of these workers appear to be drawn to a next career that would offer them the opportunity to give back?
I’d point to the experience of Intel, which a few years ago gave all of its U.S.-based retirement-eligible employees the opportunity for a fully paid Encore Fellowship upon retirement. (The fellowship lets them explore opportunities in the nonprofit sector for the next stage of their careers.) Intel has found that the Encore benefit has kept those nearing retirement more engaged.
By showing that it understands and values mature talent, Intel has positioned itself as an employer of choice — improving its attractiveness to younger employees, allowing the company to retain older talent and managing retirements in line with the firm’s strategic needs.
But pioneering can be lonely work. Intel and a few other corporate innovators are riding the cutting edge of the encore movement, integrating the needs and assets of older workers even as they move into new forms of employment. Other firms seem far less aware of the opportunities mature workers represent or of the rising tide of experienced workers who seek to continue working into their 60s and beyond.
There’s a lot of valuable data collected in AARP’s new report, enough to make a pretty unshakable case for harnessing the talent of mature workers in the marketplace — and plenty of food for thought for employers.
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