MGMT255 GlobalAging Aging_workforce 代写

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uch has been written about the aging of the working population

and the potential implications this trend holds for employers,

financial markets and the overall economy. The possible workforce

scenarios predicted to play out during the next five to 10 years range from

demographic doomsday (i.e., severe labor shortages because of baby boomer

retirements) to a soft landing (i.e., minimal workforce disruptions as the

boomers continue working past traditional retirement age).

Many organizations are beginning to recognize their longer-term business

strategies could be compromised by a shortage of available talent if baby

boomers do, in fact, retire en masse. Thus far, the reported worker shortages

have emerged in fields like nursing, engineering (e.g., in the energy industry)

and even long-haul trucking. For just about every industry, however, today’s

demographic realities raise important issues about what it will take to meet

critical business needs for workers, skills and knowledge in the future.

Recognizing the importance of these talent-management issues, Towers

Perrin analyzed the business case for enhanced organizational focus on

hiring and retaining workers aged 50 and older. The research, done for AARP,

highlights the need for employers to consider the full range of economic

implications associated with the aging of the workforce, taking into account

both cost and productivity factors. This paper summarizes the findings of the

The Aging Workforce:

Challenge or Opportunity?

Roselyn R. Feinsod

Towers Perrin

WorldatWork Journal third quarter 2006

Thomas O. Davenport

Towers Perrin

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Towers Perrin analysis. Stated briefly, the research

suggests organizations that adhere to the conventional

wisdom about older workers — specifically, the notion

that older workers are more expensive and less

productive than younger groups — may miss a critical

opportunity to maximize their talent base.

In the authors’ view, the key to turning today’s

demographic challenge into a business opportunity lies

in a two-pronged strategy: careful workplace planning

and developing targeted talent and reward strategies

that align with key business goals while effectively

managing labor costs and risks.

Employee Engagement and Motivation

The analysis began by considering if a long-tenured,

experienced workforce exhibits productivity differences

that can generate financial benefits for organizations.

This part of the business case analysis required an

evaluation of the assumption that older workers are

less productive than younger groups. To test this belief,

the Towers Perrin study for AARP focused in part on

Towers Perrin’s research into the factors that shape

employee behavior and, specifically, employee

engagement. As Figure 1 shows, the broad 2003 U.S.

workforce survey data suggest that motivation tends to

increase with age.

This phenomenon emerges across a variety of

industries (See Figure 2 on page 16).

Towers Perrin’s research into the drivers and effects

of employee attitudes and behaviors indicates that

motivation (the energy behind employees’ workplace

contribution) is directly related to engagement (the

degree to which employees are emotionally and

intellectually attached to their organizations and their

work). It comes as no surprise, then, that employee

engagement also varies somewhat by age. The Towers

Perrin 2005 survey of approximately 60,000 U.S. workers

revealed that workers in general demonstrate relatively

low engagement levels. However, as the data in Figure 3

(on page 16) indicate, older workers are somewhat less

likely to be disengaged (and a bit more likely to be

moderately or highly engaged) than younger groups.

Some of industry’s findings are even more dramatic in

certain U.S. industry segments and in the global

industry analysis. As an example, in the analysis of

results for the U.S. energy industry, workers aged 55 and

older are 22 percent highly engaged, versus workers age

29 and younger who are 8 percent highly engaged.

Because disengaged workers are more inclined to leave

their employers, these workers pose added retention

risk. Given the high cost of turnover, this risk brings the

threat of higher cost to the organization.

WorldatWork Journal third quarter 2006

FIGURE 1 Employee Motivation in All Industries, by Age

Average Motivation Score*

0 20 40 60 80 100

Age 18-29

71.2

Age 30-44

74.8

Age 45-54

75.8

Age 55 and older

78.4

All ages

74.8

*Tower Perrin’s motivation score is based on a 100-point scale.

Source: “2003 Towers Perrin Talent Report,” based on a random survey of more than 35,000

employees working for large U.S. companies (i.e. Fortune 1000 companies and equivalents)

In addition to correlating with retention, engagement

also affects employees’ view of their ability to contribute

to organizational success. Specifically, the Towers Perrin

2005 workforce survey found that more highly engaged

employees said they are far more likely to feel they can

make a difference in business-critical areas such as

quality and customer service. They also believe they can

influence key financial outcomes like cost, profitability

and revenue growth. Figure 4 on page 17 indicates how

engagement affects employee views of their contributions

to the business.

Of course, engagement is only one factor influencing

worker productivity. A rich academic archive on the

direct relationship between productivity and aging exists.

WorldatWork Journal third quarter 2006

FIGURE 2 Employee Motivation, by Industry and Age

Average Motivation Score*

0% 20 40 60 80 100%

Energy

71.9

74.0

75.3

*Tower Perrin’s motivation score is based on a 100-point scale.

Source: “2003 Towers Perrin Talent Report,” based on a random survey of more than 35,000 employees working for large U.S. companies (i.e. Fortune 1000 companies and equivalents)

77.4

74.7

Financial services

72.5

74.9

77.6

77.8

75.3

Health care

70.2

77.4

78.2

80.8

77.1

Retail

69.5

75.9

76.7

73.3

74.4

Age 18-29 Age 30-44 Age 45-54 Age 55 and older All ages

FIGURE 3 Engagement Across Age Groups

0% 20 40 60 80 100%

Ages 18-29

Source: “Riding the Wave of Growth and Restructuring: Optimizing the ‘Deal’ for Today’s Workforce,” 2005 Towers Perrin Global Workforce Study U.S. Report, based on a random survey of

Ages 30-44

Disengaged Moderately engaged Highly engaged

Ages 45-55

Ages 55 and older

Some studies, mainly those focusing on manual dexterity

and work-and-motion observations, suggest worker

productivity begins to decline between the ages of 30

and 40. Others find no significant relationship between

productivity and age, as measured by work output and

supervisory ratings. Researcher Neil Charness, for example,

studied the tradeoffs between acquired knowledge and

mental efficiency and concluded, “Knowledge can

compensate, at least partially, for age-related declines in

cognitive efficiency. It does so more successfully when

the task is one for which fact retrieval can substitute for

computation of answers. A knowledgeable older adult

will outperform a computationally swift but less

knowledgeable young adult” (Charness 2000).

Ultimately, researchers have concluded, in a wide

range of fields, experience in a domain (which is built

over time and therefore increases with age) tends to

offset the cognitive declines that may occur with age.

Even when it comes to fast-paced jobs that require

speed of execution, advancing age may not be a

significant disadvantage because communication and

decision-making skills can often more than make up for

any decline in manual dexterity.

Understanding the Cost Dynamic

Having assessed the value side of the equation, the

researchers turned attention to the cost side. A key

element of the cost analysis was examination of the

assumption that older workers cost far more than

younger workers (chiefly companies believe, because

of higher wage and benefit expense). The analysis for

AARP (Towers Perrin 2005) suggests this assumption

may contain more myth than fact in many cases.

To assess the cost of older versus younger workers,

four components were examined. The components

make up 97 percent of total compensation cost,

according to Towers Perrin’s data.

0 Cash compensation, including bonuses, were typical

for the position. While average pay tends to increase

initially with service and age, this increase in pay can

also result from gains in employee competence or

movement up the career ladder in an organization.

0 Employer-paid health-benefits costs (primarily

medical coverage representing the vast bulk of these

costs). On the one hand, it is true that health-care claims

costs tend to be higher for older workers (1.4 to 2.2

times that for younger workers), as Figure 5 indicates.

WorldatWork Journal third quarter 2006

FIGURE 4 How Engagement Affects Employee Views of Their Contributions to the Business

Positively impact quality

Source: “Riding the Wave of Growth and Restructuring: Optimizing the Deal for Today’s Workforce,” 2005 Towers Perrin Global Workforce Study U.S. Report, based on a random survey of

Positively impact cost

Disengaged Moderately engaged Highly engaged

Positively impact customer service

Positively impact profitability

Percentage of employees agreeing with statement

0 20 40 60 80 100

Positively impact revenue growth

On the other hand, actual costs also vary widely

among individuals, even people within the same age

group, because of factors such as health risks and

health-care utilization. In fact, the University of

Michigan Health Management Research Center studies

found that age may be less important than the

incidence of specific health risks in driving up health-

care costs. Common risk factors examined in one study

found that annual medical claim costs for individuals

with five or more risk factors (such as high blood

pressure, obesity, high cholesterol, smoking and alcohol

use) were typically at least double the costs incurred by

healthier individuals with two or fewer risk factors at

virtually all age levels examined (Edington 2001).

0 Retirement benefits represent another significant

component of total compensation cost in major U.S.

companies. Plan design heavily drives variation in

retirement costs. Plan design can be structured in

various ways to achieve HR goals such as rewarding

long-service or career employees. For example,

traditional pension plans (which are declining in

prevalence) provide strong incentives for employees to

stay with the company until key age and service

requirements are met. Defined-contribution plans

(the more common plan type these days) tend to be

more cost-neutral with regard to age and are more

portable. Many employers also have limited their

retiree medical benefits by freezing eligibility or

scaling back these benefits by capping the maximum

annual cost the company will cover or reducing the

company-paid percentage.

0 Employer-paid work-life benefits costs (specifically,

paid time off) represent about 8 percent of total

compensation cost. Paid time off (e.g., vacation,

holidays, personal days) depends on length of service

in major companies.

To ensure employers have a complete picture of

the cost of workers aged 50 and older, the study’s

business case analysis also looked at key one-time,

turnover-related costs that are typically incurred

when employees leave or join an organization:

0 The cost of departure, including exit cost (time

associated with exit interviewing and expense

of processing terminations); departing employee

WorldatWork Journal third quarter 2006

FIGURE 5 Annual Aggregate Medical Claim Costs for Employees and Dependents, by Age of Employee

$0 2,000 4,000 6,000 8,000

Age 25-29

$2,148

Age 30-34

$3,206

Age 35-39

$3,759

Age 40-44

$4,130

Age 45-49

$4,789

Source: 2003 Towers Perrin Talent Report, based on a random survey of more than 35,000 employees working for large U.S. companies (i.e. Fortune 1000 companies and equivalents)

Age 50-54

$5,685

Age 55-59

$6,617

Age 60-64

$7,622

inefficiency (reduced productivity of departing

employees in their final months of service with

an organization); out-of-pocket costs for finding

replacements (search fees, for instance); and

vacancy costs (lost productivity during the average

time required to fill the position).

0 New employee costs, including the cost of hiring

(e.g., recruiting, advertising, travel for job interviews

and relocation costs), orientation costs (initial

training and onboarding) and incoming employee

inefficiency (e.g., reduced productivity until a new

employee gains proficiency in the job).

Analysis was completed by examining separately

the cost impact of doubling the retention and attraction

of workers aged 50 and older (from 20 percent to

40 percent of the pool of employees to be hired or

retained). The results of these comparisons show that

the cost impact of hiring and retaining more older

workers can be quite modest:

0 Less than 3 percent for increasing retention of

workers aged 50 and older in selected positions

in the four industries studied

0 Only about 1 percent for increasing attraction of

workers aged 50 and older in these positions.

What’s more, because turnover costs can be as

much as 50 percent or more of annual pay for many

positions, the analysis concluded that the benefits

of a stable workforce and avoiding turnover cost can

often exceed the incremental compensation and benefit

cost for workers aged 50 and older.

To develop meaningful cost comparisons, cost

analysis was focused on specific positions in four key

industries. These four were selected because of their

size, importance to the economy and their wide range

of workforce demographics and talent needs:

0 Energy

0 Financial services

0 Health care

0 Retail.

Balancing Value and Cost

Summary findings for positions in the four target

industries appear in Figure 6 (on page 20).

Bottom line: Retaining or hiring additional older

workers may not cost much more than retaining or

hiring younger group, and these workers can offer

important performance advantages in the right roles as

a result of their enhanced skills, experience, maturity

and engagement.

Seizing the Opportunity

How can organizations make the most of their

experienced talent and turn the challenge of the aging

workforce into an opportunity? From their experience

consulting to leading organizations, the authors believe

the answer lies in understanding the current, and future,

workforce composition and offering the right package

of rewards and other programs to attract, retain and

engage the people an organization needs. The opportunity

also exists to align employee and customer demographics

and to become a chosen employer for the multiple

generations represented in today’s workforce.

WorldatWork Journal third quarter 2006

The cost impact

of hiring and

retaining more

older workers can

be quite modest.

For example, some companies may be able to escape

the anticipated talent crunch entirely if today’s 50-and-

older workers do, in fact, stay in the workforce longer

than previous generations. The trend toward earlier

retirement seems to be reversing. However, whether any

organization will be successful in retaining its baby

boomer talent will depend on offering rewards that

effectively meet the needs of older workers. The research

shows these include competitive health-care and

retirement benefits as well as important intangibles like

work-schedule and work-location flexibility and respect

for employee contributions.

Health-care and retirement benefits top the list of what

50-and-older workers at large companies look for in

deciding whether to stay with an organization, although

intangibles like work-life balance, the opportunity to work

with high-caliber colleagues and on-the-job recognition

also play significant roles (See Figure 7 on page 21).

To compete successfully for talent as the coming

demographic shift unfolds, employers will need to create

a work environment that is welcoming and stimulating

for employees of all ages. And they will need to offer the

kinds of flexible job opportunities that respond to a broad

range of employee preferences and needs.

AARP’s 2003 survey of more than 2,000 workers aged

50-70 sheds light on specific attributes workers 50 and

older are looking for in the workplace (See Figure 8 on

page 21). Among those interested in working in

retirement, the most important aspects include:

0An environment in which their opinions are valued

and in which they can gain new skills and experiences

0The ability to choose their hours, take time off to care

for relatives and work from home

0 An organization that allows people aged 50 and older

to remain employed for as long as they want to

continue working

0The opportunity to have new experiences and learn

new skills

0 Access to good health benefits.

Organizations that offer the right mix of rewards and

WorldatWork Journal third quarter 2006

Key value differentiators

0 Higher motivation

0 Skilled talent shortages

0 Experience and

knowledge premium

0 Knowledge transfer

0 Higher motivation

0 Lower turnover

0 Experience and

knowledge premium

0 Alignment with

customer base

0 Higher motivation

0 Skilled talent shortages

0 Experience and

knowledge premium

0 Alignment with

customer base

0 Lower turnover

0 Alignment with

customer base

0 Scheduling flexibility

MGMT255 GlobalAging Aging_workforce 代写

One-time turnover cost as

percent of total annual

compensation cost

38% 33% 29% 39%

Estimated difference in

average per-employee total

compensation costs

associated with doubling the

retention of workers age 55

with 20 years of service from

20% to 40%

3% 1% 2% 2%

Estimated difference in

average per-employee total

compensation costs

associated with doubling the

percentage of new hires age

55 from 20% to 40%

1% <1% 1% 1%

FIGURE 6 Value and Cost Comparisons - Summary of Analysis of Focused Retention and Attraction

Source: 2003 Towers Perrin data for large U.S. employers (i.e., Fortune 1000 companies and equivalents) and analysis of data from the Saratoga Institute and other resources. For more data,

Position (Industry)

Engineer (Energy)

Sales Manager

(Financial Services)

Nurse (Health Care) Store Manager (Retail)

can structure or redesign jobs to match what 50-and-

older workers are looking for will likely have a large,

and growing, pool of talent available to them as

demographic forces take hold.

How Employers Are Responding

How are major employers responding to the emerging

talent challenges and opportunities posed by shifting

demographics? Figure 9 on page 22 shows the most

WorldatWork Journal third quarter 2006

FIGURE 7 Top Five Factors Employees 50+ in Large Companies Consider in Deciding to Stay With a Company

0% 20 40 60 80 100%

Competitive health-care benefits package

Competitive retirement benefits package

Work-life balance

The caliber of people with whom I work

Recognition for work

Source: 2005 Towers Perrin online survey of approximately 1,500 randomly selected employees age 50-plus working for large U.S. companies (i.e. Fortune 1000 companies and equivalents)

FIGURE 8 Importance of Selected Benefits and Employer Characteristics in Retirement Work

0% 20 40 60 80 100%

Working in an environment where employee opinions are valued

Being able to take time off to care for grandchildren, parents or other relatives

Being able to set your own hours

Working for a company that lets its older employees remain employed for as long as they wish to work

Having new experiences

Source: “Staying Ahead of the Curve 2003: The AARP Working in Retirement Study,” an AARP telephone survey of 2,001 workers ages 50-70; table is based on the 1,020 workers who expected to

Being able to learn new skills

Working for a company that offers employment opportunities to retirees

Working for a company that offers good health benefits

Working for a company that offers health benefits to retirees

Being able to work a reduced schedule for a period of time before retiring completely

Working for a company that offers a good pension plan

Being able to work from home

Working for yourself or starting your own business

Very Important Somewhat Important Not Important

common approaches in use among U.S. employers,

according to a Society for Human Resource Management

(SHRM) survey of more than 400 HR executives. Although

the majority are taking some action, almost one-third of

these employers are not yet addressing the issue.

Because of the regulatory impediments to formal

phased retirement programs, a growing number of

companies are implementing innovative strategies for

bringing recent retirees with needed skills back into the

workplace. Examples that have been profiled recently in

various news reports include the following:

0 Monsanto offers part-time re-employment

opportunities to workers who have been retired from

the company at least six months. Workers who take

the offer suffer no loss of retiree benefits.

0 SSM Health Care, a large Catholic hospital system, is

addressing its nursing shortage by offering retired

workers the opportunity to return to work with full

pension benefits. They can come back to the

organization as soon as one day after they retire.

Workers can retire as early as age 60 and continue to

work in the system under this program, which has

received an exemption from the IRS.

0 A program called YourEncore helps organizations hire

highly skilled retirees such as scientists, engineers and

product developers on a contract basis. Proctor &

Gamble and Eli Lilly established the program in

2003, and it serves as an employment agency for

retirees with specialized skills. YourEncore functions

independently of the employers, contracting with

them and placing retirees on short-term assignments

with the participating companies.

Some companies are using increasingly innovative

mentoring and related programs to help retain a

portion of the tacit knowledge possessed by experienced

employees. Examples include the following:

0 Dow Chemical has had a formal mentoring program

in place for a decade. Mentors in the program meet

regularly with a small group of protégés to share

insights and experiences and check progress.

0 Northrop Grumman has established several

“communities of practice” to facilitate knowledge

WorldatWork Journal third quarter 2006

FIGURE 9 How Organizations are Preparing for the Possibility of a Shortage of Workers Due to the Retiring Baby Boomer Generation

0% 10 20 30 40 50%

Increased training

Succession plans/replacement charts

Flexible scheduling

Created bridge employment

Capture institutional memory/organizational knowledge

Increased recruiting

On radar screen

Phased/gradual retirement

Do nothing

sharing. Community sessions take place via online

and regular in-person meetings. The communities

often cut across disciplines and divisions to encourage

participants to think beyond organizational lines.

For organizations that are beginning to realize aging

workforce issues, here is a starting point to help a

company avoid a demographically driven talent

shortage in the not-too-distant future:

0 Look at workforce makeup. Although relatively few

companies thus far have taken a close look at how

current demographic trends are likely to affect their

future talent needs, more companies are starting to

focus on this issue. Consider factors such as the

numbers of employees in various age groups and the

percentage likely to retire in three to five years, and

use this information to plan recruiting, retention and

knowledge-transfer strategies.

0 Understand future talent requirements versus current

supply. Examine the company’s workforce makeup

and staffing trends (e.g., turnover, retirement patterns,

etc.) and define its future talent needs, based on a

careful analysis of the company’s business plans.

0 Explore best practices. Companies are already moving

aggressively to attract and keep 50-plus workers

through targeted recruitment and other programs.

Some innovative approaches already are taking shape;

a few are noted in this paper.

Our most important piece of advice is perhaps the

simplest: Start now. Companies that do so will be in

a better position to attract and retain talent as

workforce demographics shift. Moving quickly may

mean seizing the competitive high ground when it

comes to taking maximum advantage of the age 50 and

older workforce.

WorldatWork Journal third quarter 2006

Resources Plus

For more information related to this paper:

Go to www.worldatwork.org/advancedsearch and type in this key word

string on the search line:

• aging workforce or older employee or older workers

Go to www.worldatwork.org/certification for:

• W1: Introduction to Work-Life Effectiveness

Successful Work-Life Programs to Attract, Motivate

and Retain Employees

Understand the Impact of Work-Life Effectiveness.

Authors

Roselyn R. Feinsod, F.S.A., a principal in the Stamford office of Towers Perrin, and

Thomas O. Davenport, a principal in the firm’s San Francisco office, led the

research team that conducted the recent Towers Perrin study for AARP discussed in

this paper.Towers Perrin is a global professional services firm that helps

organizations around the world optimize performance through effective people, risk

and financial management.

References

Charness,Neil.(2000).“Can Acquired Knowledge Compensate for Age-Related

Declines in Cognitive Efficiency?” Psychology and the Aging Revolution: How We

Adapt to Longer Life (Editors:Qualls,Sarah Honn and Norman Abeles).Washington,

D.C.:American Psychological Association.

Edington,Dee W.(2001).University of Michigan Health Management Research Center

(2001). American Journal of Health Promotion

Towers Perrin.(2005).“The Business Case for Workers Age 50+:Planning for

Tomorrow’s Talent Needs in Today’s Competitive Environment.”A report for AARP.

www.aarp.org/employerresourcecenter.

Reprinted from WorldatWork Journal, third quarter

2006, with permission from WorldatWork, 14040

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Unauthorized reproduction or distribution is strictly

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MGMT255 GlobalAging Aging_workforce 代写