EXTENDING THE CAREER TRACK
Corporations are ignoring a threat that is every bit as real as inflation and the weakening U.S. dollar: the coming shortage of talented workers.
Over the next decade, as baby boomers—the 76 million people born between 1946 and 1964 who make up more than one-quarter of all Americans—hit their 60s and begin to retire, there will not be nearly enough young people entering the workforce to compensate for the exodus.
At issue is not just a lack of bodies. When the boomers walk out the door, skills, experience and relationships will go with them. Tacit knowledge will vanish slowly but surely from organizations, and those veteran workers most associated with leadership and key customer-facing positions will no longer be around.
The numbers tell the tale. The Bureau of Labor Statistics projects a shortfall of 10 million workers in the United States by 2010. The 25- to 34-year-old population segment is growing at only about 7%, and the workforce population between the ages of 35 and 44—prime executive-development years—is actually declining.
Yet most companies turn a blind eye to the problem. A recent survey from the Society for Human Resource Management reports that two-thirds of U.S. employers don’t actively recruit older workers. More than half do not actively attempt to retain key ones; 80% do not offer any special provisions, such as flexible work arrangements, to appeal to the concerns of mature workers; and 60% of CEOs say their companies don’t account for workforce aging in their long-term business plans.
Instead, relying on the mistaken assumption that a growing pool of talented, loyal young workers will move their companies forward in the years ahead, employers systemically offer older workers a retirement package and skim people from the labor force, starting with the oldest employees. That practice has to end.
Not Fade Away
The concept of retirement is outdated, and it’s time to put it out to pasture in favor of a more flexible approach. Sixty-five, after all, is an arbitrary marker of old age, selected more than a century ago by German Chancellor Otto von Bismarck, who crafted Europe’s first pension plan. Von Bismarck had to pick an age at which people would be considered too enfeebled to work and, therefore, eligible for state support and entitlement. He picked 65, but life expectancy in Europe and the United States was only 45 years at the time. If we were to craft a formula using a corresponding equation today, we would retire people at about 98, since life expectancy at birth has vaulted to 79 years for women and 73 years for men.
The fact is most boomers want to continue working. A recent AARP/Roper Report survey revealed that about 80% of boomer retirees expect to work at least part-time during their so-called retirement years. Certainly, many will need to for financial reasons. Living on a post-retirement fixed income for 15 to 20 years is simply not feasible for most people. A sizable segment of boomers—as many as one-third and a group disproportionately female—has virtually no savings, investments or pensions and, in all likelihood, will receive no inheritance windfall. These 25 million boomers have average household net assets of less than $1,000. Another third of boomers will be forced to extend their work lives at least five years beyond current expectations before being able to enjoy a satisfactory retirement. Only one-third of boomers are earning large salaries, have invested wisely and will benefit from their share of the $10 trillion in inheritances their parents will leave behind.
So the boomers are—and will continue to be—available for work. The challenge for employers is to find a way to connect with these older employees.
To win the hearts and minds of boomers, companies may need to modify the work environment itself. Human resource practices are often explicitly or implicitly biased against older workers, and these biases can find their way into the corporate culture in a way that makes older employees feel unwelcome. That means everything—from recruiting to training and development—must work to reassure older workers that their experience and capabilities are valued.
Even more important to older workers, however, is flexibility in terms of where and when work is performed, since many boomers likely will expect to work either fewer or unconventional hours as they age in order to pursue other interests.
The concept of flexible work is not new, of course, and many companies offer it in some form—job sharing, telecommuting, compressed workweeks and part-time schedules. But such programs are typically small in scale and often available only to those with family commitments.
Companies with successful flex programs not only make them easily accessible to older workers, but also structure them so that people who participate don’t feel they’re being sidelined. Companies without flex programs need to see the possibilities: Flex programs provide an elastic pool of staff on demand and an on-call team of experienced people who are available to work as needed.
A logical extension of the flexible work model is flexible retirement, which offers employees the opportunity to continue work life indefinitely. New legislation makes the implementation of flex retirement policies far easier. In August 2006, Congress passed the Pension Protection Act. Prior to this act, employees were unable to receive distributions from defined pension plans before the pension plan’s normal retirement age if they continued to work for the organization. This created a significant obstacle to employers seeking to implement flex retirement policies to retain workers who would otherwise retire and leave the company. Under the new law, however, employees age 62 and older may receive defined benefit plans while continuing to work.
Investing in high-potential—and typically young—employees has been the trend in business for years, creating programs that give that group the leadership experience needed to quickly climb the corporate ladder. Why not create a similar program aimed at older workers with the skills and experience most important to a company?
Sixty-five isn’t what it used to be. But then again, maybe it never was.
In an interview a number of years ago with Wired magazine, Lee Iacocca said, “I had people at Chrysler who were 40 but acted 80, and I had 80-year-olds who could do everything a 40-year-old can. You have to take a different view of age now. People are living longer. Age just gives experience. Besides, it takes you until about 50 to know what the hell is going on in the world.”
Ken Dychtwald, Ph.D., a gerontologist, psychologist, public speaker and bestselling author, is the founder of Age Wave, a firm that guides Fortune 500 companies and government groups in product/service development for baby boomers and mature adults. He has authored 15 books on aging-related issues, and his latest work is a children’s book, Gideon’s Dream: A Tale of New Beginnings.