Why Aren't Firms Planning for an Aging Workforce?
Few are preparing for the effects of this sea change, a study shows
(This article previously appeared on Encore.org.)
I’m generally a glass-half-full kind of guy, but the latest research on planning for an aging workforce has me scratching my head.
Jennifer Schramm, the manager of Workplace Trends and Forecasting for the Society of Human Resource Management (SHRM), wrote about the new SHRM survey in a post on the AGEnda blog of the Sloan Center on Aging and Work at Boston College. SHRM, the largest association of human resource professionals in the world, asked their members how their organizations were preparing for the potential loss of experienced talent as waves of workers approach retirement.
The 'Prediction' That Has Arrived
This demographic shift is nothing new here at Encore.org — or in academia. It hasn’t suddenly been discovered, but has been a subject of research for decades. Today this “prediction” is no longer a distant scenario but here, right in front of our eyes.
But few organizations are actually, actively preparing for the effects of this sea change.
Only half of the organizations SHRM surveyed even tracked the percentage of their workforce that is eligible to retire in the next two years. And a mere 20 percent, or one in five of the organizations surveyed, say they try to project the attrition of talent over time, six years or more out into the future.
If HR professionals and the companies they serve don’t gather or analyze data on their own workforce, it follows that few recognize this workforce evolution as a real problem — or do anything to address it.
The Workforce Survey Says...
A little more than a third of the survey respondents (36 percent) told SHRM that they are “beginning to examine internal policies and management practices to address this change.” About one in five said they were becoming aware of the issue. One in ten (10 percent) said they were, until the survey, altogether unaware.
Like Kerry, I wasn’t terribly surprised, but I am disappointed.
Over the 25+ years that I’ve tracked the American business world’s response to aging, focus on the issues raised by the SHRM survey generally rises and falls with the economy. When the economy is growing and older workers see options other than sticking with long-term jobs, companies seem to awaken to the implications of a wave of retirements. When the economy is in the tank, workers of all ages don’t think of leaving. Companies want to cut back, not retain their talent, and the discussion grinds to a halt.
Demographics, Not Economics
What’s different now?
One big factor may portend an end to the wash-rinse-repeat cycle: Rising waves of experienced talent exiting the mainstream workforce are no longer a prediction but a fact, and will remain so for years to come.
Last October, The Conference Board published a sobering wake-up call to businesses. Titled Not Enough Workers: What Retiring Baby Boomers and the Coming Labor Shortage Mean for Your Company, the report made the case that the retirement of boomers represents an imminent danger to the bottom lines of companies that don’t prepare — quickly — for the potential loss of talent.
The authors stated: “Starting within the next few years, that tightness [in the labor market] will lead to higher wages and lower profits for the next two decades.”
Undervaluing Older Workers
Historically and today, our society typically undervalues the contributions of older workers. We could slow the exodus of experienced talent if workers’ contributions were more valued — both by for-profit and nonprofit companies.
Creating pathways to social-purpose encores could redirect much of that talent flow from old, limited choices — decades of leisure in traditional retirement — to options that permit people to translate their talent and experience in ways that benefit society.
As I wrote not long ago, a few forward-thinking companies are doing more. They aren’t just planning for theoretical change; they are designing practical programs to assure employee loyalty and proactively manage change. This includes implementing programs to help retirement-eligible employees transition to encores with social impact. (For some other examples, listen to this story on NPR.)
Whether we like it or not, demography has its own inexorable logic; it doesn’t care about the economic cycle in the least. Savvy, forward-facing companies would be well served to face the emerging demographic reality before it wallops them.