Living For The Weekend

November 25th, 2013

Living For The Weekend

The UK has a rapidly ageing workforce that may be showing signs of neglect. With the removal of a set retirement age, for companies and individuals alike, the need for performance management is key to successful outcomes.

If we think of a person's life in terms of one week, by 2020, a third of workers will have reached, at 51-60, the Saturday of their lives. This stark analogy, used by one Leadership guru, brings home the changes happening within the workplace and society.

We can all hope it's a bank holiday weekend, but the point is, combined with the reducing value of pension provision and the UK government calling time on default retirement age, the increasingly wrinkled face of the workforce is changing.

More than half of workers currently over the age of 55 plan to work beyond the previous retirement age, according to Chartered Institute of Personnel and Development (CIPD). In addition, Britain needs our most experienced employees - it's predicted that UK employers will need to fill an estimated 13.5 million job vacancies in the next ten years, but only seven million young people will leave education over this period.

This situation poses not just economic challenges in terms of financing healthcare and retirement. It also poses dilemmas for organisations in talent management and succession planning, as well as for those older individual workers who are faced with uncharted life choices.

Heads in the sand?

Much has been written about the impending impact of a generation of retiring baby boomers. Despite this, there are plenty who suggest that British businesses will remain in denial as to the changes that are required.

"Organisations that respond appropriately to the challenges of an ageing workforce will gain a significant competitive edge, both in terms of recruiting and retaining talent, as well as through supporting the well-being and engagement of employees of all ages," says Dianah Worman, Diversity Adviser at CIPD.

Eager to find out for ourselves how employers were responding to the changes, we asked our guests at one of our recent roundtable events to share their views and experiences. There were some interesting responses, and concerns varied depending on the field or industry.

However without exception, the need to really manage performance in its true sense was paramount.

"This is not about ticking boxes in an appraisal form, but having genuine conversations about careers, feedback, skills, motivation and future plans," says Insight's Simon Wiltshire.

In terms of the 'ticking timebomb', the general consensus was that there's still some time left on the clock. There hasn't yet been a real problem with older workers staying on beyond their capabilities. Older workers - those in the labour market over 50 - are hugely diverse in attitudes, skills, aspirations, health, family duties and financial circumstances, reflecting wide variations in the capacity of different people to exercise choice over staying in work.

Signs of neglect

At our meetings there was a general feeling that older workers do not generally update their skills, although the culture of the organisation was considered to be an important factor in maintaining vibrancy at any age. If the organisation gives the impression that older workers are not worth investing in, this will not only have a knock-on effect on the outlook of older members of staff but their opportunites to undertake training will be diminished.

Older workers are simply not being treated the same as their younger counterparts. According to CIPD, 51 per cent of those aged over 65 who they surveyed in 2011 said they had received no training in the last three years, compared to the average of 32 per cent across all age groups.

The survey also found that 44 per cent of employees aged 65 and above had not had a formal performance appraisal in the last two years or ever, compared to a survey average of 27 per cent.

This certainly suggests that employers have not felt perhaps the need to spend a fair amount of time on this growing section of the workforce - something that needs to be remedied given their increasing numbers and the lack of defined retirement.

Affording to grow old

Three factors strongly affect rates of early withdrawal from the labour market: wealth, health and caring duties. For all but the wealthiest, falling annuity rates, the closure of generous defined benefit pension schemes and planned pension reforms will provide strong financial reasons against early retirement.

The comment was also made that many employees had taken for granted that they would be looked after in retirement by a final pension salary - even when there wasn't one provided. That this is increasingly not the case will impact on employees affordability to retire.

There was an acceptance that we are in transition with regard to pension provision. Employers thought that the aims of auto enrolment were good and experience suggests that drop out rates were low. However, the consensus is that current rates of contributions will not be sufficient to provide for individuals' retirements in the future and that rates will increase significantly in the years to come.

A work/life balance

Choice over working hours and maintaining a meaningful work/life balance becomes increasingly important to older workers, our research suggests. A range of personal and workplace factors influenced individual employees' employment needs and hopes.

These included caring responsibilities, possibly for grandchildren or ageing family members, financial obligations, considerations related to a partner's employment, or social relationships formed at work. The availability of part-time working and flexible working were essential to retain older workers in employment.

As the Department for Work and Pensions Age Positive argues, "Flexible, phased retirement helps businesses to prepare for the loss of employee skills. It allows employees to alter the balance of their working and personal lives and prepare for full retirement."

Among those organisations and individuals we spoke to, however, there was a suggestion that the removal of the default retirement age has made things more difficult for individuals, with some indicating that they would prefer to be told when to go rather than have to make the choice themselves.

Employers, some felt, could do more here to understand employee's aspirations and develop more flexible options. It was felt that there needs to be a greater acceptance of a 'career framework' rather than the traditional career (upwards) ladder. Recent innovations in flexible working across different sectors include remote working, annualised hours, flexitime sharing, phasing retirement, and pension drawdown.

It's clear that businesses are yet to adapt to the changing age demographics of the workforce and see flexible working practices as part of broader employment policies geared towards improving access and conditions for older workers.

Those who focus on the needs of their senior workforce will benefit, as will their employees, who may be approaching the weekend of their lives, but few are looking forward to being able to put their feet up.

Insight team

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