Workforce Planning: Aging and Employment

Module 4: The Employer Perspective

Barbara McIntosh, Ph.D., SPHR 2010

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Module 4: Overview of the Employer Perspective

• Labor supply issues.• Business case for older workers.• Best practices models.• Review organizational strategy.• Implications for HR policies and practices:

• HR audit/cost assessment.• Retention and recruiting issues.

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Employer Perspective:Demographics and Labor Supply

• More workers are age 55 and older. This increases employer receptivity to older workers.> In 2000, 13 percent of workers were age 55

and older. Those between the ages of 55 and 64 are the fastest-growing segment.

> By 2015, 20 percent of workers will be age 55 and older.

• Smaller number of cohorts are entering the labor force.

• Critical labor shortages were predicted in dominant, growing, skill-specific service sectors:

*Aerospace *Transportation

*Nursing and health care *Energy

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Demand and Aging Workers

High-Growth IndustriesProportion of Workers

Age 45 and Older

Aerospace 55%

Energy 52%

Transportation 47%

Advanced Manufacturing 43%

Health Care 43%

Automotive 39%

Financial Services 38%

Construction 34%

Retail 34%

Information Technology 33%

Hospitality 21%

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Employer View: Surplus or Shortage?

• Labor surplus:> Recession means layoffs. Are there implications for

age distribution?> Changing markets means shift in required skills mix.

• Labor shortage alternatives:> Other labor market segments.> Immigration:

• H-1B visas, set at 195,000 during tech boom, were reduced to 65,000 for FY 2005; they were gone on the first day of availability.

• Reduced flow of foreign students.

> Technology.> Current aging workers and retirees.

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Business Case for Older Workers

• Experienced contributors.• Knowledge retention.• Reduced costs in retention vs. recruitment.• New product and service markets.• Customer sensitivity.• Employer of choice (competitive in labor market).• More attractive to investors if stable.• Greater efficiency.

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Award-Winning Companies

The top 10 2009 AARP Best Employers for Workers age 50 and older are:

1. Cornell University (Ithaca, NY)2. First Horizon National Corporation (Memphis, TN)3. National Institutes of Health (Bethesda, MD)4. The YMCA of Greater Rochester (Rochester, NY)5. National Rural Electric Cooperative Association (Arlington,

VA)6. S. C. Johnson & Son, Inc. (Racine, WI)7. Massachusetts Institute of Technology (Boston, MA)8. Stanley Consultants (Muscatine, IA)9. Brevard Public Schools (Viera, Fla.)10. George Mason University (Fairfax, VA)

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Why Are They Winners?

• For all the recognized organizations, the policies for recruiting and retaining a mature workforce set high standards for the workplace.

• Types of programs that win recognition:> Flexible work arrangements to help workers

balance their professional and personal lives.> On-site medical centers.> On-site education programs that provide

college credits.

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Strategy Review: Start at the Top

• Organizational age audit (profile organization).• Mission, vision; diversity with clout.• Organizational culture.• Bottom line: cost assessment model.• Audit all HR policies and practices regarding the

effects of age.

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Human Resource Age Audit

• Most employers are unaware of the age distribution in their organization except in general estimates.

• Strategically, the organization should review:> Age distribution by department and relative

expenditures. > Cross tabulations:

• Age by turnover.• Age by accident rate.• Age by absenteeism.

 

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Organization Culture: Mission, Vision and Diversity

An organization’s culture is a set of shared assumptions, values and norms that identifies what that organization considers important and how employees and managers should behave (Becker, 1982; Schein, 1985).

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Bottom Line: Replacement Cost Assessment

• Projected costs by department can be estimated based on expected turnover/organization exit.

• Examine the "green money," or actual costs of turnover, and the "blue money," or indirect (softer) costs of turnover (Alrichs, 2003).

• Replacing older workers who leave the organization must include direct and indirect costs.

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Actual and Soft Turnover Costs

Notice Period

+

Vacancy Period

+

Hiring and Orientation Period

+

Hidden

_____________________________

Total Replacement Cost

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Turnover Costs: Notice Period

Green money (actual) costs1. Last paycheck, accrued vacation, separation pay.2. Increased unemployment tax.3. Continued benefits.

Blue money costs (appropriate salary/hour x time spent on each activity)

1. Administrative costs to process the separation: process benefits; contact unemployment office, payroll and IS departments; schedule exit interview; etc.

2. Lower productivity of employee, peers, supervisor, subordinates.

3. Exit interview, transition meetings.

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Turnover Costs: Vacancy Period

Green money costs1. Advertising and recruiter fees.2. Interview expenses (meals, mileage or other).3. Printing costs for marketing materials.4. Assessments.5. Criminal, reference and credit checks, etc.6. Medical exams and drug tests.7. Temporary/contract employee costs.8. Overtime costs.9. Relocation expenses and salary.

Turnover Costs: Vacancy Period

Blue money costs1. Lost productivity of peers, supervisor,

subordinates.2. Advertising creation and placement.3. Recruiter selection.4. Administrative costs such as ordering forms

and copies of annual reports, scheduling and scoring assessments, coordinating with hiring manager and others, etc.

5. Resume screening.6. Interviews: first, second, third.

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Turnover Costs: Hiring and Orientation

Green money costs1. Orientation materials (handbook, video,

handouts, etc.).2. Formal training programs (materials, course

fees).3. Informal one-on-one training (materials, if any).

Blue money costs1. Orientation participants’ salaries.2. Lost productivity of peers, supervisor,

subordinates.3. Administrative costs such as orientation setup,

ordering materials, etc.4. Informal training and one-on-ones.

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Turnover Costs: Hidden Costs

1. Missed deadlines and shipments.2. Loss of organizational knowledge.3. Lower morale due to overwork.4. Learning curve.5. Client issues due to turnover.6. Loss of client relationships.7. Disrupted department operations.8. Chain reaction turnover. 

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HR-Specific Review and Strategies

• Staffing strategies> Reduction-in-force (RIFs).> Retention.> Recruitment.

• To be discussed in Module 5:Training and development.Organizational learning and knowledge transfer.> Continuous training for all employees.> Stem brain-drain.> Mentoring (non-age specific).> Stimulating creativity.> Career development (reinventing careers).

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Staffing: RIFs

Recession and downsizing: Age profile implications?> Are older workers disproportionately affected?> Is layoff pattern legally defensible?> What is the effect on the organization’s culture?> Do older workers leave with valuable tacit

knowledge?> Are there knowledge transfer programs in place?> Can older workers be kept active through

consulting relationships?

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Staffing: Retention Tools

• Supportive organizational culture.• Flexible work arrangements:

> Flextime.> Reduced time (part time, part year).> Flexible leave (to help meet care-giving

obligations).> Flex-careers (leaves, sabbaticals, rehearsal

retirement).> Flex-place (telecommuting, snow-bird

programs).

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Retention Tools Continued

• Challenging work.• Career transitions.• Prorated health benefits.

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Recruiting Older Workers

• How does an employer establish hiring criteria?

Is a detailed job description used as a yardstick to measure job candidates, or is it a “gut feeling”?

• Do recruiting efforts include sources aimed at more experienced workers?

• Do sources include college campuses and professional associations?

• Are interviewers trained to avoid age bias?• Are multiple interviewers used to avoid age

bias?

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Recruiting Sources

Do recruiting efforts include sources aimed at more experienced workers?> Are experienced workers asked to refer

friends?> Do sources include college campuses and

professional associations? > Are non-traditional sources tapped?

• Churches.• Golf courses.• Alumni associations.

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Selection: Screening and Interviewing

• Are gatekeepers (receptionists, assistants, recruiters) trained to treat applicants equally?

• Are there issues with the application form?

Readability: 12 pt. type or larger.

Adequate space for recording experience.• Are interviewers trained to avoid age bias?• Are multiple interviewers used to avoid age

bias? • Education versus experience (tradeoffs?)

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Employer Perspective Part 1 Summary

We have covered the following topics in this module: > Labor supply and demand pressures.> The “business case” for recruiting and

retaining older workers. > Models of best practices.> Organizational strategy and valuing

employees.> Implications for HR policies and practices:

• HR audits.• Cost assessment of turnover.• Staffing: RIFs, retention and recruiting

tactics.