The HR challenges of an ageing workforce
Jenny Roper, February 16, 2016
A fascinating and fundamental issue that UK legislators will avoid as long as possible, then face up to eventually. I am no HR expert. I simply run a small business (with a hand-picked, dynamic ...
Read More Rory MccGwire
March 01, 2017 11:10
People are living (and working) for longer, which has implications for employers' age strategies beyond older workers
Imagine a particularly tough day at work. The phone hasn’t stopped ringing, you have back to back meetings, and the early starts and late finishes feel like a physical resilience challenge akin to being an SAS trooper. Now imagine this aged 100.
This is exactly what futurologist Rohit Talwar made headlines predicting in October 2015. He informed his audience at the Headmasters’ and Headmistresses’ Conference that many of today’s 10- and 11-year-olds will live to be 120, and that many of them may still be working at 100.
Talwar’s is not even the most astonishing future longevity prediction made in recent years. Back in 2011, biomedical gerontologist and chief scientist of the SENS Research Foundation Aubrey De Grey announced that the first person to live to 150 had – according to his model of how soon doctors will be able to effectively ‘cure’ ageing – already been born. He went on to theorise that the first person to live to 1,000 would be born in the next few decades.
The science of how long people will be supported to live in future is far from clear-cut. Yet what is clear is that ever increasing longevity of a more modest nature is already having a profound impact, and on developed economies such as the UK most imminently.
Appetite to work
The latest statistics on how long people are living and working certainly reflect this. The Office for National Statistics’ (ONS) latest life expectancy figures stand at 79.3 for males and 83 for females, with this rising to as high as 93.9 for males and 96.5 for females by 2039. The latest stats on average retirement age meanwhile show a steady rise, from 63.8 years to 64.6 years between 2004 and 2010 for men and from 61.2 years to 62.3 years for women (ONS). Aims to dramatically raise the state pension age will cause this to increase by much as six months every year.
“People are simply not old at 60 any more,” says the government’s business champion for older workers and pensions minister Ros Altmann, of an increasing appetite to work well past 65. “Even in their 70s people aren’t ‘past it’ anymore. They have good skills, good knowledge and good contributions to make to the workforce.”
Anna Dixon is chief executive of the Centre for Ageing Better, a new charitable foundation set up to explore what constitutes a good later life and what policy and best practice here might look like. She confirms this appetite to work for longer. Staying fit and maintaining social connection are reasons frequently cited, but financial considerations (particularly in light of recent pensions and retirement age changes) remain the most common motivator.
“We’re seeing people in their 50s who are pretty squeezed financially,” she says. “They’re having to support dependent children, they’ve got older parents with care needs, so they’re not really giving any attention to their own preparations for later life. And that generation won’t have such good pension provision.
“They, through financial necessity, will probably need to work through their 60s and even into their early 70s.”
In light of high employment rates and a focus on graduate and youth employment, the most pressing challenge for UK businesses might seem to be managing expectations, and helping people save enough to retire at a good age. Just because someone needs, financially, or is healthy enough to continue working, doesn’t mean that the employer deems them the best person for the job.
An ageing population
Yet this would be to overlook an arguably even more pressing age-related concern for employers and policy makers alike: that of an ageing population. Declining birth rates mean that an ever larger percentage of the population now sits in the older age bracket. By 2022 there will be 700,000 fewer people aged 16 to 49 in the UK, but 3.7 million more people aged between 50 and state pension age.
Seeing people’s expectations around working longer as a challenge of managing them out ignores the huge opportunity that longer working presents in plugging skills shortages, says Altmann. “You won’t get enough immigration to offset [the above figures]. So there’s a business reason to look for ways to retain your older staff,” she says.
Keeping older workers in their jobs for longer has become, and will increasingly become, a matter of survival agrees Rachael Saunders, Age At Work director for Business in the Community (BITC). BITC’s The Missing Million report on the ageing workforce found the UK is facing a “recruitment black hole of 7.5 million”, with more jobs opening up than there are younger people available to fill them. “It is dangerous for our economic sustainability to assume that young people alone make up the future workforce,” Saunders says.
This warning chimes with Department for Work and Pensions (DWP) statistics, which put a more positive spin on the opportunity that this largely untapped pool of workers presents. These figures reveal that if 1.2 million older workers who are currently unemployed or inactive and would like to work were to move into full-time employment, it could add up to £25 billion a year to GDP, and up to £9 billion if they worked part-time.
Retaining older workers also makes vital business sense in terms of reflecting and catering to the increasingly diverse markets organisations are competing in, says Ann Brown, HR director at Nationwide. “We’re keen to make sure local representation in all of our 700 branches matches the environment and the communities we’re working in,” she says. “We’re keen to ensure we’ve got a well balanced and representative workforce, and age is part of that.”
Slow burn awareness
It would be reasonable to expect ‘age’ to be right at the top of the HR agenda. And yet, looking across UK public and private sector enterprises, what’s alarmingly clear is that it is not.
The CIPD’s 2014 Managing an Age Diverse Workforce report proves this. It found that only a fifth of respondents either had some kind of age strategy agreed at board level or were developing a business case for such a strategy. Most organisations still deal with the issue in a very reactive way rather than planning for future demographics and potential skills shortages, it emerged. HR respondents were most likely to say that they deal with issues relating to the ageing population as they arise rather than having a strategy (31%), and 15% reported their organisation hadn’t even considered the topic.
Dianah Worman, diversity adviser at the CIPD, reports that the situation remains unchanged in 2016 despite rapidly escalating urgency. “We’re still at the stage where it’s a slow burn even though it’s a rising issue,” she says. “But we’re getting closer and closer to a tipping point. As the economy becomes more successful it will add to the problem.”
“Are corporations prepared for this? Absolutely not,” confirms Lynda Gratton, professor of management practice at London Business School and co-author of The 100 Year Life, out in June. “In a Future of Work masterclass we said ‘can you give us an example [of a company with exemplary ageing workforce policies and strategy]?’ and everyone said ‘BMW’. That’s the only example anyone can come up with. That’s a massive problem.”
This becomes particularly worrying, says Gratton, when you consider that an ageing workforce presents many challenges besides simply catering to the needs of older employees. For a start, people working longer creates the phenomenon of five generations working together, with all of the management and intergenerational conflict issues this might potentially bring. Increased life expectancy also radically alters the way in which all age groups want to live their lives, Gratton points out.
“The three stages of education, work and retirement become completely inflexible. A long life will have more stages than three,” she says. “[People]will want to experiment, build portfolios, then they’ll want to go back to work. They’ll go through a lot more transformations.”
These more flexible ways of working could potentially exacerbate intergenerational friction. “There can be a tendency for people to think younger staff just don’t know what time to get into work,” says the CIPD’s Worman. “They assume people aren’t working because they’re doing things they wouldn’t have done in their day.”
“I think some of the younger cohort have a confidence and belief that the organisation will adjust to them, which isn’t always realistic,” says Saunders. “That can create tension.”
Gratton adds broader societal trends towards more homogenous living generationally have exacerbated the issue: “One of the challenges is that we’ve had very little mixing of generations within our society. That’s quite a recent thing. People go to university at one age, then work at another and retire at another. I think that accentuates age [differences]”
What gets measured gets managed
UK organisations have a very real and pressing set of age-related concerns coming over the horizon. The question is: where to start in ensuring ‘age’ is escalated to the top of the agenda, and how to best tackle the multi-pronged challenge the country’s evolving age demographic presents?
The first practical step Altmann recommends is doing an age audit, “monitoring the age of your staff, the age of your intake, the age of people leaving you”. “What gets measured gets managed,” she adds. “If you don’t know you have a group all in their late 50s with particular skills about to leave in the next few years how can you plan for that?”
Companies should prepare themselves for something of a shock, she warns. Examining how many workers over the age of 50, for example, are hired or given development and promotion opportunities, will, she feels, typically uncover an alarming degree of age discrimination across UK business – a form of discrimination that has gone largely unchecked and unnoticed.
“Unconscious bias is happening in business. It’s this automatic assumption, this social and national perception that once you’re in your late 50s you’re on a downhill slope and you’ll soon be gone, so let’s focus on everyone else,” she says. “People of that age group get lumped in a box regardless of what their characteristics and skills are.”
Training and development is another area in which older workers are typically overlooked, with the 2014 CIPD report finding that a fifth of organisations (22%) have no provisions to ensure employees of all ages develop and keep their skills up to date.
Tackling such discriminatory practices will be a matter of challenging unconscious bias, entrenched both within much HR policy, and the way we think about age as a society at large, says Gratton. “It’s often the policies themselves that are ageist – particularly asking people to leave at a certain age,” she says. “Ask yourself ‘what is it we’re actually saying here?’ I think most companies have built ageist policies without realising it.”
Gratton cites the example of reward and remuneration. “One of the reasons people like to get rid of staff in their 60s is that they’re very highly paid, because you pay people for seniority,” she adds. “Obviously employers are going to have to look at those reward systems because it can become very expensive. We have to think about paying people more for the job and less for their seniority. We have to realise that somebody aged 70 might be prepared to take a cut in salary to do exciting work.”
Then it’s a case of training employees, particularly managers, on how rife unconscious age-related bias still is. “I think that’s a form of discrimination people probably haven’t thought about enough,” says Paul Deemer, head of diversity and inclusion at NHS Employers.
He adds: “We wouldn’t accept casual sexism and racism in the same way. Casual ageism is generally quite acceptable still within society and the workplace. I think it’s the next hurdle for employers to think about. The trick is to put systems in place that guard against it. Make sure recruitment panels are trained to recognise unconscious bias.”
Such training activities should educate on how much more pernicious age discrimination can be than other forms of bias, feels Katrina Pritchard, senior lecturer in organisation studies at the Open University Business School’s Department for People and Organisations, and author of the paper Baby Boomers and the Lost Generation: On the discursive construction of generations at work. She explains that the odd jokey comment or decision made unthinkingly on the basis of someone’s age seems much more innocent than if they were in relation to someone’s sex or race. This is because age is a characteristic that everyone can feel confident claiming some authority on.
“The difference with age is we change our categorisation,” explains Pritchard. “It makes it harder to see things because we constantly have a frame of reference from our own experience. People think ‘I know how I felt when I went to my first job at 21’. So it’s harder for us to shift our own frame of reference.”
This last comment throws into relief the fact that age discrimination works both ways – and might disadvantage younger generations as well as older. “The evidence is if you look at age it tends to be those who are older and younger on the age spectrum that miss out,” confirms Saunders. “So older people get pushed out of work, but also younger people find it hard to get a job and get established.”
However, such discussions of breaking down perceptions of age-related stereotypes could conflict with another form of training many are turning to in relation to the demographic challenge: training on managing and working within intergenerational teams.
Meg Horsburgh, head of diversity and inclusion at Sodexo, certainly feels there is merit in training to help people understand age-based differences. Sodexo runs many such activities, including a Generations Workstream and Generations Employee Network group. “[The latter] recognises different people from different generations will have had different life experiences and as a result they’ll want to work in different ways,” Horsburgh explains. “That might be around the expectations they have of the workplace, how they like to be managed, or how they do the work itself.”
But she qualifies that this must always involve exploration of how unhelpful stereotyping can be, and the ways people often defy their generational categorisation. “We have a generation-match game where staff come together and discuss generational characteristics; it’s a card game where you match different preferences to different generations,” she says. “But we ask participants to say where they are typical and where they’re not. That leads to some really interesting conversations.”
Pritchard explains that often generational labels are used to describe qualities that have always historically been associated with people of a certain age, allowing age discrimination to slip under the radar. “What happens is generational characteristics and age characteristics get conflated and people get confused,” she says. “There is concern about how age and generation labels are used. We have a particular concern that generational stereotypes allow people to get around age discrimination legislation. So when you say ‘Gen Y is lazy’ what you’re actually saying is ‘I believe all people aged 20 to 24 are lazy’, which is actually age discrimination.”
She adds: “What tends to happen is that people talk about millennials as the young people. So the labels are used carelessly and a generation stereotype is applied to young people. And actually we’ve always thought of young people as a bit more reckless, so are they actually any different to young people 50 years ago?”
Gratton agrees with Pritchard’s description of generations as something of a ‘fad’ – one that has lead us to “completely overestimate the challenges of intergenerational working”. “I think generations are perfectly capable of working with each other on tasks,” she says, adding that HR must simply “remove the barriers” of age stereotyping and explain to employees that “there are just as many differences within a generation as there are across all ages”.
Assistance to work
Which isn’t to say there aren’t certain age-specific needs arising from changes to population age demographics. Workers older than those who would typically have stayed working before are a category requiring careful attention, and augmentation of the working environment is an obvious place to start. This will bring benefits beyond helping just older workers manage the more physical aspects of their job, says Altmann.
“If we start off looking at the needs of older people it will end up benefiting all ages,” she says. Perhaps unsurprisingly given Gratton’s earlier comment, Altmann describes that oft-cited case study of German car firm BMW: “BMW recognised that those experienced engineers who were best equipped to know how to develop the new production lines, were potentially becoming too old physically to cope with some of the demands they’d been fine with before.
“So they introduced brighter lighting, seats so you didn’t have to stand all day, and rest rooms where you could go to be somewhere quiet. That was an enormous boost to productivity. They discovered it improved productivity for the younger ones too.”
Technology is another area where older workers may need more support, says the CIPD’s Worman. “The impact of technology differentiates the cohorts more than other things,” she says. “I’m not saying older people can’t cope with technology. But it’s perhaps less intuitive for them.”
A good way of providing employees with support for skills they feel less strong on, maybe because of their age, are cross-generational mentoring relationships, feels Sodexo’s Horsburgh. She adds that this is a great way to keep the age conversation, and discussion of whether stereotypes are useful or not, going beyond focus groups and unconscious bias training.
“[The Generations Employee Network] has led to some really interesting conversations, such as ‘could you show me how to use social media? I’ve never really understood the whole Twitter thing’,” she says. “And older employees can share the network of contacts they’ve built up over the years.”
Flexibility is key
Flexible working is another key area says The Centre for Ageing Better’s Dixon, particularly in relation to the ‘sandwich generation’ of people in their 60s who may otherwise feel they have to leave the workforce in order to care for an ageing parent. “We know that the number of unpaid carers in this age group is very high,” she says. “A key thing for this age is having really good policies around carers – carers’ leave and flexibility around that.”
“If your employer is helping you navigate the care system, helping you understand who to get help from or where the support groups are, that will go a long way,” adds Altmann.
She says that flexibility more generally is also vital. “What could be a real win for the individual, the firm and the economy is almost to invent a new phase of life – ‘part-tirement’ – where you haven’t stopped work, you’ve cut down.”
She continues: “Something Australia is good at is giving people a bit of leave. A lot of older people I’ve spoken to have done 40 or 50 years and just can’t wait to stop. But after three or four months they want to come back; they’re fed up. So what they actually needed was a break and to do something different for a while.”
Starting conversations early with employees about age, how long they see themselves working for, and the sorts of work they want to do in the future is the key to retaining older staff, says the NHS’s Deemer.
“We’re trying to get HR to promote the idea of a career conversation as early as possible,” he says. “The annual appraisal is always a good place to do that.”
He explains that starting such conversations early is crucial where a job is perhaps too physical to continue past a certain age. “Nursing is a very physical profession. There are lots of advances around technology but there is still a physical element. Do you want to be a 60-year-old paramedic wheeling people in and out of ambulances?
“We’ve got to think about how we use people’s skills and knowledge in a different way. We don’t want to lose the knowledge and experience of older paramedics; we just want to use them differently. We need to use them as mentors, as coaches and trainers for other people,” he says.
“It’s no good talking about all of this and career planning only at the later stages. We need to talk to people early about where they might be headed and what training they might need.”
In this way the focus can also be put on what workers of all ages may want out of their working lives, according to how long they’re now likely to be living and working. Regular conversations with employees about what they want from their current and future working lives are crucial because, as Gratton states, changes to life expectancy are radically altering how people shape their lives – the only constant being the need for employers to be flexible on an individual employee basis.
“It’s about options,” points out Gratton. “When you have a long life you want to be sure that you marry the right person, and that you’re in the right job. And to do that you’ve got to look at your options and be much more thoughtful about making choices and planning. We think employers should encourage people to do that.”
BITC’s Saunders points out that approaching needs according to age in a more holistic way, and on more of a case-by-case basis, should ensure the middle generation (Gen X) don’t get left out of the equation. Implementing support for older and younger workers and training to ensure these groups won’t be discriminated against is all very well, she points out, but this could risk overlooking anyone who sits in the middle.
“Gen X are in a lot of leadership positions or coming through into the next generation of leaders, so it’s important they are fully engaged,” she says. “While the evidence suggests the real challenges are at each end of the age spectrum, don’t miss out the middle because they’re probably the core people in your organisation right now.”
A complex challenge
It’s clear the challenge around age is much more complex than simply realising that people now want to work ever later into life, and that employers need to harness and accommodate this. Certainly this will be crucial to the survival of most organisations. And there is an increasingly urgent imperative for boards and HR departments alike to become aware of this issue, and ensure unthinking ageism isn’t keeping older talent from their doors.
But starting the conversation around age should be a much more wide-ranging endeavour. It needs to be one that goes right to the heart of an organisation’s diversity and inclusion and talent strategies, so that similarly to gender and ethnicity, a person’s age – no matter what this is – never leads them to be discriminated against.
There are certainly plenty who would advocate being aware of generational cohorts – particularly now teams are more likely than ever to be comprised of several generations all working alongside each other. Yet there are many more who would advise a heavy dose of caution alongside this awareness.
We are witnessing a radical shake-up of the ‘three stage’ working life, caused not just by demographic shifts, but by all manner of other sociological and technological changes. Flexible working, sabbaticals and ‘part-tirement’ are all likely to be staple elements of the average working life in future, and may be requested at any age. So to keep up and help their organisations stay competitive, it is imperative for HR leaders to realise that now more than ever, age really is just a number.