Organizations face several challenges in accommodating workers deciding between retirement and continuing in the workforce.
While the millennial generation continues to enter the workforce in ever growing numbers, employers are confronted with another workforce challenge from the other end of the employee spectrum: the "silver tsunami" – that wave of maturing associates either preparing to exit the workforce or making the decision to extend their careers.
This development is creating challenges for employers and employees alike. Employers are faced with helping employees retire without losing valuable institutional knowledge, as well as supporting and accommodating workers who choose to remain in the workforce. Employees who chose to extend their careers may want to continue to expand their skills or find ways to share their knowledge with younger colleagues.
According to the Bureau of Labor Statistics, by 2022 more than 25 percent of U.S. workers will be 55 years old or older, up from 14 percent in 2002. And according to AARP, nearly 10,000 Baby Boomers reach retirement age every day. Although the recession slowed down retirement plans for some, the recent slight economic upturn has made many employees more comfortable planning for their departure from the workforce. However, good healthcare plans, limited savings, and a number of other factors are contributing to the decision by many workers who are qualified to retire to remain in the workforce.
As a result, companies are faced with the task of finding out which employees plan to retire at a more "traditional" age and who are opting to stay on the job – and how to handle both scenarios.
Older workers have a wealth of information about their function and organization, much of it intangible and invaluable. These workers have in-depth knowledge of resources, operating procedures, company culture, and more. As large numbers of associates retire, this information walks out the door with them, making it difficult for businesses to acclimate to the gap it creates.
Eight in 10 employers said in a recent study that their organizations lose experience, institutional knowledge and leadership when an older worker leaves. However, companies that are paying close attention to the changing workforce landscape have identified several possible solutions.
For instance, partnering seasoned workers with recent hires in a mentoring relationship enables the transfer of organizational knowledge, and is a relationship that may be continued after the mentor has retired. This solution gives retirees an ongoing link with their former employer, minimizes the loss of organizational information, and provides younger employees with learning opportunities that will assist them in their careers.
According to a recent study from LIMRA Secure Retirement Institute, 70 percent of employers said they will look to their plan provider for guidance on how to transition workers into retirement. And 50% said they would depend on a plan advisor or consultant for this advice.
While retiring workers may take organizational wisdom with them, Baby Boomers who plan to stay in the workforce present another set of concerns that companies must address. Many workers remain employed to continue saving for retirement, because they enjoy the challenge, and to continue to have access to better health care options.
LIMRA has found that 92 percent of employers are taking specific action to help older workers stay on the job. Two thirds of employers in the study offer flexible hours while 42 percent offer other options, such as working from home, job training/re-skilling, and job sharing.
Employers that have a maturing workforce are finding they need to help those workers retain their skills and develop new ones, provide opportunities for them to share their knowledge with younger workers, and ensure that the company can accommodate their changing needs.
Interestingly, in addition to transitioning and retaining older workers, there's a third scenario – recruitment. Employers that develop a reputation for supporting workers of all ages can improve their standing in the candidate marketplace and give themselves a competitive edge. That's why designing a recruiting strategy capable of attracting those workers can be critical to an organization's success.
A recent Society for Human Resource Management and Sloan (SHRM) Foundation survey found that 66% of HR professionals said that their organization employs older workers who have retired from other organizations or careers. Of those older workers, HR leaders said that 58% reported enjoyment/occupying time was a factor in staying on the job, while 45% said the reason was healthcare benefits.
Targeted recruiting strategies that focus on areas where older workers are likely to be, such as traditional job boards, will enable an organization to make connections with a broader demographic of candidates.
A company can make itself more attractive to older workers in a number of ways, which – aren't surprisingly – are very similar to retention strategies. Reduced hours (48%); flexible scheduling, such as telework, alternative work schedules (37%), and providing training to upgrade skills (29%) were among the top steps taken to recruit and retain older workers, according to the SHRM study.
When it comes to an aging workforce, the majority of organizations are unprepared for their workers to retire, or for workers who plan to stay past typical retirement age. Very few organizations have implemented specific policies and management practices to deal with the fluctuations that the silver tsunami will cause, leaving the majority of companies at risk of losing decades of knowledge and expertise, failing to continue to develop the workers who remain or unable to recruit more mature employees.
Organizations that take the time to design a plan to manage the retirement, retention and recruitment of older workers will be better positioned to face the silver tsunami, and more prepared to implement the right strategies to support their workers through whatever decision they choose.
SIGN UP FOR THE SPARK NEWSLETTER