Retaining Mature Age Talent in the Workforce

1
Retaining Mature Age Talent in the
Workforce Professor Louise RollandFaculty of
Business Enterprise Swinburne University of
Technology
2
Overview

• A view on age
• An overview of demographic trends (again)
• Risks and opportunities for business
• A framework to meet or offset labour demand
• Boomers retirement intentions
• Unpacking the retention of older workers

3
The Australian Financial Review, 13 14 March
2007
4

• Fertility is decreasing from a peak average
  of 3.4 births in 1960-62, the fertility rate
  plunged to 1.8 births in 1980-82, dropping
  further to 1.6 in 2005.
• Further declines are projected.
• Life expectancy is increasing on average, we
  are living almost 20 years longer than we were
  in 1920.
• In 1960-61 the growth of younger people entering
  the labour market was 21/2 times that of today.
• In that period the age group 15 24 grew by
  67,000. Between 2000 2001 it grew by 25,000 and
  in 40 years it will grow by 11,000.
• For every new young person entering the labour
  market today there are seven workers over the age
  of 45 years available.
• ABS Cat32222.0Economy Jan 2001

5
Implications of an Ageing Australia, Productivity
Commission April 2005
6

• The working age population grew by 170,000
  people in 2001
• But trends already in place will see the working
  age population grow by just 175,000 for the
  entire decade of the 2020s.
• Access Economics 2001 15-64 years
• The Australian government projects a shortfall of
  workers of up to 170,000 by 2010.
• Department of Employment and Workplace Relations
  2005
• The Bureau of Labour Statistics projects a
  shortfall of 10 million workers in the United
  States in 2010, and in countries where the birth
  rate is well below the population replacement
  level, (particularly in western Europe), the
  shortage will hit sooner, be more severe and
  remain chronic.
• Ken Dychtwald Harvard Business Review March 2004

7
Implications of an Ageing Australia, Productivity
Commission April 2005
8
ABS 2005 Labour force participation
9

• Attracting adequate levels of labour as labour
  market growth diminishes.
• Attracting and retaining relevant skill and
  capability.
• Increased attrition amongst younger workers
  driving up costs and management pressure.
• Wage pressures.
• Concentrated loss of people as the baby boomer
  generations retires.
• Loss of difficult to replace organisational,
  technical and management knowledge and skills.
• Increasing occupational heath and safety risk in
  some areas.
• These risks combine to present the overarching
  risk of lost productivity and competitive
  position.

10
(No Transcript)
11

• Options available to organisations to optimise
  labour supply include
• Optimising competitive position in attracting
  traditional labour pool.
• Improving rates of retention, including delaying
  the retirement of older workers.
• Attracting workers from non traditional labour
  pools, including older workers.
• Increasing the attraction of migrant workers.
• At face value technology provides the opportunity
  to maximise productivity and offset demand for
  labour. However labour demand has exponentially
  increased over the last two decades a period
  when technology has revolutionised the business
  environment.
• The experience is that technology changes the
  nature of demand rather than reducing overall
  demand.
• The other options available are off shoring
  and/or outsourcing.

12

• The BWA Work and retirement survey has resulted
  in a sample of more than 13,000 people across
  Australia sharing their intentions and
  preferences about work and retirement.
• From this data BWA has developed a retention
  model that identifies the elements that
  contribute to the retirement decision for those
  aged 45 years and over.

13

• The average age at which respondents expected to
  retire was 61 years.
• Almost one quarter of respondents reported
  feeling internal organisational pressure to
  retire before the age of 65 years.
• Over 65 of respondents were interested in a
  flexible pathway to retirement.
• Of these, over 60 would take a flexible option
  if they could work in the same job for fewer
  hours.
• There is a strong desire amongst 47 of people
  (who had an identified retirement age) to
  continue to work in some capacity beyond the age
  of 65 years (ABS 6238.0 2005)

14

• The average age at which respondents expected to
  retire was 61 years.
• Almost one quarter of respondents reported
  feeling internal organisational pressure to
  retire before the age of 65 years.
• Over 65 of respondents were interested in a
  flexible pathway to retirement.
• Of these, over 60 would take a flexible option
  if they could work in the same job for fewer
  hours.
• There is a strong desire amongst 47 of people
  (who had an identified retirement age) to
  continue to work in some capacity beyond the age
  of 65 years (ABS 6238.0 2005)

15

• Over half of the respondents planned to work
  during their retirement.
• Of those intending to work after retirement, at
  least 60 planned to work on a part-time or
  casual basis.
• Many people also intended to work in a volunteer
  capacity after retirement.

16

• However the reality was quite different for many
  retirees
• This group retired about five years earlier
• Around 30 were in paid employment
• The highest number were in full time work

17

• Responses provide insight to the work motivations
  of the group
• More than half are driven by the desire to stay
  active and involved
• However the retirees who were working were doing
  so for the money.

18

• Common reasons respondents would delay the timing
  of their retirement were
• Health status
• Better work/life balance
• Being sure work would not impact adversely on
  their superannuation entitlement
• A greater sense of belonging at work
• Greater access to learning and development
  opportunities
• The ABS 2005 Retirement Intentions survey found
  that health or physical abilities was the highest
  reported influence on retirement.
• 26 had retired due to sickness, injury or ill
  health.

19

• A majority of people will retire with inadequate
  financial and life plans.
• 33 of respondents had a limited or no financial
  plan, highlighting serious gaps in retirement
  planning for two thirds of people
• This suggests that current approaches to planning
  support are not effective

20
(No Transcript)
21

• As a checklist for strategy development to ensure
  that all elements that impact on the retention of
  mature workers are considered.
• As an instrument to measure the current position
  of the agency in relation to each of the elements
  of retention.
• As a consultation tool to gather insight from
  others about the agencies performance against
  each of the elements and the opportunities and
  barriers presenting against each.
• As a priority evaluation tool to identify which
  elements have the most immediate impact
  indicating high levels of immediate priority.
• As a tool to support the business case for
  investing in an integrated approach to retention.

22

• Recruitment and training costs are readily
  established using national benchmarks however
  there are a range of less tangible costs for
  employers to consider which are potentially more
  costly.
• These include
• Loss of corporate knowledge and experience.
• Productivity impact
• Customer impact
• Lost time including
• Management time on recruitment induction
• Lag time in filling vacancy overtime
  contingency staffing costs, pressure on existing
  teams, lost productivity

23

• Years to retirement was taken from RIS (average
  retirement age, 59 can be used as a proxy)
• The retirement rate per period was then
  calculated
• This was extrapolated across the entire workforce
  to identify the number who would retire in each
  period.
• An arbitrary and low retention rate of 25 for
  one year was applied.
• From this the number of people retained in each
  period was calculated.
• This number was then multiplied by 2791 the
  InfoHRM average national benchmark cost for
  recruitment and training.
• It must be remembered that these are scenarios
  actual loss and retention should be monitored
  over the period and the scenarios adjusted
  accordingly.

24
Admin more then .5m cost benefit to 2015
25
Total business cost benefit to 2015 9.8m
26

• Demographic trends will play out over the next
  decade and act to reduce overall labour supply.
• The level of competition for people and skills
  will increase.
• Organisations that plan for these trends and
  build their ability to compete for labour and
  skills now will have a significant competitive
  advantage.
• All organisations face an increasing proportion
  of older people in their workforce.
• Increasing the participation rate of older people
  in work will help to offset labour and skill
  shortages and the impact of ageing on the
  national economy.
• There is a real opportunity to extend the working
  life of the current group of workers aged 45
  years and over.
• However, significant change in the way work is
  structured and offered to people in later working
  life will be necessary.

27
Thankyou www.businessworkageing.org lrolland_at_s
win.edu.au