Keeping older employees will help maintain success

Aging Your Work Force, by Jeffrey Joerres
Keeping older employees will help maintain success.
WSJ, Apr 09, 2009

It's too soon to tell how the current global recession will affect the one of the greatest challenges facing corporate leaders over the next decade: the coming explosion in the number of workers at retirement age, and the inadequate pool of younger workers to fill those roles. Companies that haven't started planning for this transition have some catching up to do.

The loss of productivity and intellectual capital as baby boomers leave the work force could devastate some businesses. Europe's work force will begin shrinking in the coming years and is expected to become 15% smaller within five decades, according to the Organization for Economic Cooperation and Development. The countries that face the biggest threat are those with the oldest populations, particularly Germany and Italy.

Yet most firms seem woefully unprepared for this development. A 2007 Manpower survey of more than 28,000 employers across 25 countries and territories revealed that only 14% have strategies in place to recruit older workers, and only 21% have retention strategies to keep these workers on board.

More troubling, employers still seem to view coming retirements as cost-saving opportunities. This view is dangerous and shortsighted. Employers will need to shift their mindset and, in the short term, take steps to slow the exodus of older workers whose skills and knowledge are most valued. The conundrum is that the people with the skills that companies most need to retain are those who have the greatest financial flexibility to retire.

Part of the problem is that employers assume that all employees want to exit the work force as soon as they are financially able. However, especially given the current economic climate, a growing number of employees may be willing to work for years to come. Even in countries with state-funded pensions, which traditionally have encouraged earlier retirement, retirees may struggle in the future. Many national governments project pension-funding shortfalls as too few active workers pay for retirement programs with their payroll taxes.

The best way to stem the flow of older workers is to provide the type of employment they seek, and to keep them engaged by emphasizing their place as valued members of the team.

One of the biggest mistakes companies make is to alienate employees aged 50 and older by assuming they are no longer interested in training and career development. CEOs and other senior executives tend to be in their 50s or 60s, yet it is regularly assumed that middle managers of the same age are no longer interested in challenging work and development. If a former CEO is qualified to serve on a Fortune 500 firm's board of directors in his 70s, why wouldn't a manager at a comparable skill and experience level be just as capable of working in another capacity at the same age? Employers should not assume that retirement-age workers are only qualified for, or interested in, roles with low responsibility, such as volunteering at a hospital or serving as a "greeter" at a store.

The key to retaining older workers is to recognize that their priorities are changing, and to find roles that are of value to both them and the organization. Today, there are too few options available for individuals who wish to remain with their current employer, but in a modified working relationship as they transition toward retirement. This is a key reason why employers are losing older workers to self-employment. To date, the typical corporation's answer has been to offer the individual more money to stay and perform the same full-time job for an extended period of time, when he might prefer to work in a part-time arrangement.

An employer that offers flexible work options to both older and younger employees may find a distinct competitive advantage in recruiting and retaining employees. As the talent shortage grows, the balance of power in the employer-employee relationship continues to shift toward employees. They may be more likely to stay with their companies if they can improve their work-life balance, perhaps by having the flexibility to attend a grandchild's school play or care for an ill spouse.

At the same time, employers need to prepare successors to perform in critical roles and learn as much as possible before these expert resources leave the workplace. Long before key older employees leave, firms should develop transition and knowledge-transfer plans to ensure that they retain as much intellectual capital as possible. This should involve determining which roles are at highest risk of "brain drain," identifying high-potential candidates to succeed retirees, and ensuring their development is aligned with the retirees' exit cycle.

Developing a plan to preserve critical information, processes and contacts is vital. This can be done through mentoring programs or by building companywide groups that meet in person and online to share information. Another option is to develop a pool of retired employees to work as needed on specific projects, enabling the company to tap into their collective experience and retain this knowledge longer.

Longer term, employers will need to better use the talent of each employee throughout his career. Companies might do this by offering periodic skill and career-interest assessments and training programs, and by aligning individuals' interests and abilities to the needs of the organization so that they remain relevant and engaged. There will be no room for wasted talent in tomorrow's streamlined and talent-poor organizations.

This new approach to talent management will affect how individuals prepare for retirement. The second half of life must be planned just as carefully as the first half, particularly given changes in life expectancy and in some state pensions. To remain relevant to retirement-age workers, employers might offer to help them plan for the transition to the next phase of their lives. Such programs could address a host of possible work-life balance options, and a variety of potential financial impacts from both the individuals' choices and their personal situations.

There is also a clear need for national governments to focus their attention on these issues if they want a competitive labor market that will strengthen the country's future economy.

Some governments are already developing initiatives and incentives for companies to employ older workers, which in turn promote those workers' welfare and job security. The challenge for national governments is to align the interests and abilities of mature adults with the interests and requirements of employers -- and to do this before the pension bubble bursts, wreaking havoc on other areas of society.

Sustainable and growing economies will not be possible in the future without strong and vibrant labor markets, including those workers who helped contribute to growth in the past.

Mr. Joerres is chairman and CEO of Manpower Inc.