Age and Retirement Benchmarks: Key Analytics that Drive Human Capital Management
Across virtually all industries, business leaders consistently point to the talent of their workers as a key business resource. Companies gain tremendous strategic insights when they analyze human capital management data to gather concrete/measurable information and score those against the industry benchmark, and compare to other organizations of similar size within the same industry.
The focus of this research is two key measurements: age and retirement. By leveraging actual anonymous and aggregate data representing multiple industries across all 50 states, the report presents a snapshot of the workforce and provides insights that may be applied in each industry. This report focuses on industries that represent more than 60% of the nation’s workforce: manufacturing, hospitality, education, health services and retail, and public administration.
Average age tells just part of the story
The average age across all industries was 41, but there was variation among the six industries studied. Employees in public administration were the oldest with an average age of 47. Hospitality employees were the youngest with an average age of 34. In manufacturing, 52% of workers were in the 40-59 age range.
Individual companies don’t always follow industry patterns
Individual companies did not necessarily follow the age distribution patterns of their respective industries. For example, in the hospitality sector, although the average age was 34, about 54% of the companies had a workforce with an average age lower than the industry average. These companies employed 60% of the workforce. On the other hand, in healthcare and education, a large number of companies had age distributions that closely aligned with the averages for their industries.
In 5 years, 18% of U.S. workforce may retire
In this research, we assumed the retirement age to be 61, and based on this assumption, nearly 18% of the 2012 workforce will reach retirement age in the next five years. Public administration can expect the highest retirement rate, with about 28% of the workforce reaching retirement age in the next five years. The retirement rate in education, health services and manufacturing sectors are also above 20%. On the other hand, the hospitality industry can expect to experience the lowest retirement rate, with 9% of the workforce reaching retirement age in the same period.
Using the data for business strategy
Although quantitative, a company’s age data reveals a wealth of qualitative information when benchmarked against other industries, other companies within the industry and regional trends. There may be a valid reason for a company’s average age to differ from the industry average. For example, it may be a retail company that caters to young shoppers, so its average age is below the industry norm. However, it could also indicate the company is not staying competitive with those that are aligned with the industry average. Such a company may need to adjust policies and practices for attracting and retaining employees in order to compete effectively in the marketplace.
Retirement data provide a critical glimpse into the future of a company’s workforce. Businesses will want to assess how their own workforce compares to the averages and consider strategies for recruitment and training in order to replace the significant loss of knowledge, experience and company culture.
*A complete list of sources and citations can be found in the full report.
About the Study: Conducted by ADP Research Institute®, a specialized group within ADP, this study is based on the 4th quarter of 2012 actual, aggregate and anonymous employee-level data from approximately 52,000 ADP clients. Though all states and industries are covered for averages and general results, the study concentrates on six selected industries: Education, Hospitality, Healthcare, Manufacturing, Retail, and Public Administration. Each of the companies in the study has 50 or more employees, including both full-time and part-time workers.