“The question isn’t at what age I want to retire, it’s at what income” – George Foreman
Nothing captures the sentiment of the retiree population in the US today better than this. As America greys, its aging population is only becoming more steadfast in pursuing their aspirations. They are not willing to settle down for the idyllic post-retirement life.
And as macroeconomic, including labor market, developments indicate, neither can employers afford to ignore their retired employees.
What are the dynamics behind this change?
Let’s start with some striking statistics that indicate America’s population is aging:
According to latest data, the fertility rate in the US stands at 1.7 in 2022, down significantly from 3.5 in 1960 (nearly the same as in the UK but above that in Japan at 1.3). The average life span is increasing, implying people are living longer. It is estimated that by 2030, Americans above 65 years of age will constitute nearly 20% of the country’s population. Furthermore, according to the US Bureau of Labor Statistics (BLS)’s projections for the labor force for 2016-26, workers aging 75 and older are expected to have the fastest rate of growth in the labor force, followed by workers in the 65- to 74-year-old group.
But an aging America is just one end of the spectrum.
At the other end is confusion about the labor market amid mixed signals – is there a shortage or not? Is the US headed toward a recession or not? According to the latest data by the US Chamber of Commerce, there are more than 10 million job openings in the country but just around 6 million unemployed workers. A study by Manpower Group also shows that close to 70% of employers are finding it difficult to fill positions.
The recent yo-yoing of the unemployment rate, coupled with the labor market shortage, has baffled those in the hot seat – CEOs and CHROs.
With the country at the crossroads, is there a way out?
According to Josh Bersin, President and Founder of Bersin & Associates, an industry research and advisory firm in enterprise learning and talent management, this is the perfect time for the top leadership to globalize talent and mobility as part of their recruitment strategy; a key step in this is to re-engage with the older workers – people in their 50s and above. This group of people is not just keen to take on new roles, but are also willing to reskill and extend their careers. Studies show that they are highly productive with minimal stress levels.
In other words, it is time to welcome back retirees.
So, how are retirees today different from their earlier counterparts?
It is a question of both needs and aspirations.
As per data provided by the BLS, almost 29% of those in part-time jobs are 55 and above. Retirees are increasingly looking for short-term jobs that will keep the mentally engaged, socially occupied, and be financially remunerative, contributing to their overall wellbeing.
Given the soaring inflation, retirees are at maximum risk, as they live on a fixed income. Plus, with stock markets down, income from investments and other sources has also taken a hit. Financial security is, therefore, at the heart of the issue.
Several other factors are working to pull retirees.
Shielded by vaccination and as the fear of Covid subsides, many are ready to venture out again. High vaccination rate is, therefore, providing the security they need to re-live their life.
Added to this is the appeal of attractive wages, as being offered by several organizations that are looking to recruit talent. As per a survey by global insurance advisor Willis Towers Watson, companies plan to hike salaries by 3.0% in 2022 across teams: management, executives, professional employees, and support staff. Retirees who feel that they have the potential to perform are attracted by this. Moreover, employers are more likely to fill positions with retirees as they look to man vacancies and build a full staff.
What do retirees bring?
To put it succinctly, this group is an “asset”.Quoted in an article on the Society for Human Resource Management (SHRM)platform, Damien Birkel, Founder and Executive Director of Professionals in Transition Support Group, believes retirees bring significant value because they are mature, reliable, have high work ethics; are self-sufficient, socially connected and networked, and curious; and can survive in the corporate setup, given their years of experience.
Some of them also bring insights that can help in guiding the younger employees. (One such character is well brought out in The Intern – where Robert De Niro epitomizes the role of a senior employee who discreetly guides his 30-something CEO and is also quite in touch with his younger co-workers!)
Most important, they bring a different perspective. According to research by Forbes, age diversity is crucial to improving the performance of an organization, besides improving productivity.
What must organizations do to tap the potential of older employees?
Revisit hiring and recruitment strategy: To attract older employees and ensure age diversity, organizations first need to change their mindset and approach, and accordingly, their recruitment strategy. This would includes canning social media platforms, researching and visiting sites older employees frequent; and other organizations and communities that retirees are usually part of.
Address challenges: One of the key barriers to hiring older workers is the skillset required. If they don’t meet the criteria for the open positions, organizations can come up with training and upskilling programs; or create roles and positions keeping older employees in mind. For instance, in industries such as retail or hospitality, where the requirement of part-time and hourly employees is high, the scope for adding retirees is more. They can be used to man understaffed operations.
Misconceptions and stigma too are barriers to age diversity. Older employees, it is often assumed, are not technology-savvy. While they may face some difficulty or could struggle with technology initially, but with the right training and support, this can be turned into their strength.
If there is any resistance to change, which could present a barrier, you could have one-to-one sessions to address their concerns and put things in a clear perspective.
Above all, it is very important for leadership – top executives, board, and the management – to send out the right message and ensure it filters through to the junior-most level in the organization. For instance, when choosing the CEO or any departmental head, old age should not be the criterion for ruling out. Sometimes, for an interim position, it may help when the job risk is high or the firm is in financial distress – older employees, given their wisdom and experience, bring valuable foresight. Warren Buffet, Frederick Smith or Michael Bloomberg are brilliant examples in this regard.
Provide flexibility: The pandemic has driven transformation in operating models across industries. The most burning example is remote working and Flexi hours. Nothing appeals to older employees more. They are very comfortable with gigs, or project-based assignments. According to a report by Legion, schedule flexibility is important to 85% of all hourly workers. Besides schedules, the payment model could also be made flexible for instant gratification of needs.
Offer incentives: One way of doing this could be to offer a package of benefits as per their requirement, instead of taking a one-size-fits-all approach. This could include an increased component for insurance pertaining to conditions that are more typical of old age, such as dental- or vision-related.
The productive contribution of each segment of the demography to the economy matters. It is interesting indeed how the scene is unfolding for different economies, developing and developed, in the context of their changing demographics and population growth amid increase in life expectancy and decline in fertility rates.
Developing nations such as India, or Ireland, a knowledge-based economy, or regions like West Asia and Africa, are reportedly either witnessing or transitioning to a demographic dividend. This implies there is still some time before aging sets in and there is potential to reap the dividend. However, tapping the benefits of the demographic dividend is not easy. It requires proper framework of progressive policies aimed at empowering the youth with regard to education, health and wellbeing, and employment opportunities. Here, countries such as South Korea, or Singapore, or Taiwan have led by example, showing how with the help of incisive and favorable policies, the potential of demographic dividend can be tapped.
On the other hand, are developed economies, such as the US, where the population is aging. But this does not mean there is any less prospect for the older population to contribute, especially given the changing dynamics today.
Demographic dividend, or the lack of it, both have the potential to contribute to economic growth. It depends on how we tap the ‘asset’.
With regard to retirees, present-day economics and socio-economic commitments necessitate employers shift their focus on this group. Evolving labor market conditions show that basing assumptions on age is not advisable. Rather building relationships with older employees as well as welcoming back retirees as part of recruitment strategy can pay as much dividend as can investing in a younger, fresh recruit.
Lastly, in an environment where reputation is integral to the success of a business, there is no better way to build a brand ambassador than by treating people, irrespective of their age, with dignity, and valuing their contribution. (For incisive insights and guidance on recruitment and talent acquisition, connect with Rajesh Khanna, President at VBeyond Corporation.)