The New Agenda for an Older Workforce

A Manpower White Paper

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About Manpower Inc.Manpower Inc. (NYSE: MAN) is a world leader in the employment services industry; creating and deliveringservices that enable its clients to win in the changing world of work. The $18 billion company offers employers arange of services for the entire employment and business cycle including permanent, temporary and contractrecruitment; employee assessment and selection; training; outplacement; outsourcing and consulting. Manpower’sworldwide network of 4,400 offices in 73 countries and territories enables the company to meet the needs of its400,000 clients per year, including small and medium size enterprises in all industry sectors, as well as the world’slargest multinational corporations. The focus of Manpower’s work is on raising productivity through improvedquality, efficiency and cost-reduction across their total workforce, enabling clients to concentrate on their corebusiness activities. Manpower Inc. operates under five brands: Manpower, Manpower Professional, Elan, JeffersonWells and Right Management. More information on Manpower Inc. is available at www.manpower.com.

About Right ManagementRight Management (www.right.com) is the world’s leading provider of integrated consulting solutions across theemployment lifecycle. Right Management helps clients maximize the return on their human capital investments whileassisting individuals to achieve their full potential. Right Management is a wholly owned subsidiary of Manpower Inc.,a world leader in the employment services industry, creating and delivering services that enable its clients to win in thechanging world of work.

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Contents

Executive Summary 2

Introduction: The New Agenda for an Older Workforce 3

Winning the War for Talent and the War for Engagement 4Forecasting and Planning for Future Talent Deficits

Optimizing Talent Flow

Understanding and Engaging Older Workers

Finding and Keeping the People You Need

Helping Older Employees to Choose the Right Life Options

Managing the Talent Pipeline

Defining Government’s Pivotal Role in Workand Retirement 16Managing the Cost of an Aging Society

Inspiring Change

Driving Sustainable Economic Growth Through Labor Market Strategy

Conclusion 24

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What percentage of your workforce is planning to retirein the next five to 10 years and what impact will it haveon your organization? This is a key question that shouldbe on the agenda for discussion at managementmeetings worldwide, as talent shortages worsen andreplacements for those exiting the workforce becomemore difficult to find. The potential loss of productivityand intellectual capital could have a devastating impacton many businesses that are currently unprepared toadapt to the new realities of the aging workforce. Andthe conundrum on the horizon is that many of thepeople who have the talent that companies most needto retain, are those who have the financial flexibility andemployment options to retire or downshift to a moreflexible work arrangement.

In the short-term, employers will need to focus mainlyon slowing the exodus of older workers whose skillsand knowledge are most valued by the company, whileat the same time, preparing successors to perform incritical roles and learn as much as possible beforethese expert resources leave the workplace. Attractingand retaining older workers will gain importance on thecorporate agenda as it becomes clear that the largestavailable untapped workforce segment is older adults,most of whom are still healthy and able to contributelong after they retire. The best way to do this is toprovide the kind of jobs that mature adults want, and tokeep them engaged by continuing to treat them asvalued members of the team. One size will not fit allolder adults, so a “plug and play” view of employmentoptions for the aging population will not be successful.

Both the employer and the older employee will find thefuture world of work to be a rather difficult transitionbecause both are still thinking very traditionally aboutthe latter years of employment. Even more concerning,employers still tend to look at upcoming retirements as cost-saving opportunities – this is dangerous andshort-sighted.

Longer term, employers will need to improve talentutilization throughout every employee’s tenure with theircompanies, through a continuous improvement-styleapproach that involves periodic skill and career interestassessments, training, and alignment of the individual’s

interests and abilities to the needs of the organization sothat they remain relevant and engaged. There will be noroom for wasted talent in tomorrow’s nimble and talent-poor organizations so there can be no one whose skillsor knowledge are allowed to become obsolete.Consequently, more sophisticated solutions will berequired to manage the talent demands of business.

This new approach to talent management will alsoextend to individuals’ preparation for retirement, as theemployer takes a greater role in defining what retirementmeans to older employees. In order to remain relevant inthe post-retirement-age world of older workers, it will beimportant for employers to provide the professionalresources necessary to assist those who are planningfor transition to develop effective plans for the secondhalf of their lives. These plans will need to be realisticand achievable, given a host of possible work-lifebalance options and a variety of potential financialimpacts from both the individuals’ choices and theirpersonal situations.

Meanwhile, in order to avoid major fiscal crises causedby unsustainable numbers of older citizens receivingpensions and social security payments, governmentswill need to inspire change from both employers andindividuals toward getting the aging population employedfor a longer working life. Some governments are alreadymaking progress in this area, and demonstrating that itis, indeed, possible to find win-win solutions to theaging workforce conundrum.

What percentage of your workforce

is planning to retire in the next five to

10 years and what impact will it have

on your organization?

Executive Summary

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Employers today are facing a very real and complexthreat to their ability to compete. This threat is aboutthe draining of skills and knowledge that occurs everytime an experienced older worker retires with no oneready to succeed him due, in part, to lack of planningby employers and lack of available talent to replace thevast numbers of baby boomers who are moving intothe twilight years of their careers.

According to the Organization for Economic Co-operationand Development (OECD), between 2025 and 2030, 12 million people a year will be exiting the globalworkforce. The countries that face the biggest threat arethose with the oldest populations, particularly Japan, Italyand Germany. In the next few years, one million Japaneseworkers will be retiring, leaving management strugglingto fill job vacancies. Coupled with the talent shortagesthat are already becoming pervasive in many countries,the retirement exodus could have a crippling effect onmany national economies, as a disproportionate numberof workers are left to support those in retirement. Thisscenario is similar across the world today – populationsare aging rapidly and birth rates are declining, which isleaving employers wondering: where exactly will theworkers come from in the future?

But yet, even armed with this knowledge, few employersare finding any long-term solutions to prevent the obvioustalent shortages and brain drain that are clearly emerging.Could it be that employers are hoping that productivityimprovements, technology and globalization will reducethe need for workers? Or, are companies being stymiedin their efforts because the methods they have used to solve talent issues in the past are not working for this problem?

Similarly, individuals have heard for years about the needto take responsibility for their futures and prepare financiallyfor retirement, and there have been many signals thattheir government- or company-paid retirement incomecould be reduced or eliminated. Yet, despite theselooming threats of financial insecurity and the potentialof living longer than their money will take them, relativelyfew older adults worldwide are seeking jobs in their later

years or attempting to extend their current jobs beyondtheir government’s formal retirement age. Although thepercentage of older adults who are working longer isgrowing in some countries, most would still prefer toleave the workforce as early as their financial situationwill allow. And although there is ample evidence that alarge proportion of the older population is still capableof working and contributing, most are not doing so.Why not? What are the obstacles to working longer?

The issues are complex and the challenges are many, butthe answers, most likely, are non-traditional steps thatboth business and government must take to ensure thatolder adults willingly remain in the workforce longer; transfercritical knowledge to coworkers prior to retirement; andcontinue to contribute to both their company’s successand their nation’s economy. However, for this to occurboth employers and governments must make theseissues part of their formal agendas, and they must do it soon if they are to win the war for talent and the warfor engagement of the older worker population.

According to the Organization for

Economic Co-operation and

Development (OECD), between 2025

and 2030, 12 million people a year

will be exiting the global workforce.

Introduction:The New Agenda for an Older Workforce

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The challenge presented by an aging workforce andpervasive talent shortages is complex and multi-faceted,which is why employers are still struggling to determinehow best to plan ahead and gain a strategic advantage.It is not just a question of how to get older workers toremain relevant and continue contributing to the workforce;it is also about how to get the most out of the youngergenerations, whose numbers are too small to fully replacethose who have gone before them, and how to do thisin a way that is consistent with the company’s culture.

Over the past decade, expanding globalization andever-evolving technological advances have resulted inimmense increases in productivity and a global talentmarketplace, which have partially masked the impact ofa growing worldwide talent shortage. These factors maybe creating a false illusion that has made employerscomplacent in planning ahead for the mass retirementsanticipated in the coming years, as many are just hopingthat labor shortages will continue to largely take care of themselves.

There may be a false sense of security emerging fromthe productivity advances that is making it easier foremployers to focus on other, more immediate concerns,in the hope that others will solve the problem before itbecomes a bigger issue in their own realm of reality.This is a dangerous posture to hold.

Employers have been focusing much of their attentionon reducing their demand for employees and increasingsupply through a variety of means such as outsourcingnon-core activities and offshoring facilities to other countrieswhere talent is in more ample supply. They have alsocontinued to improve the efficiency of their operations inorder to avoid the need to hire more employees. However,the growing talent shortage is moving to a point wheremore sophisticated solutions will be necessary in orderto successfully manage their businesses as it becomesmore difficult to find employees to fill critical roles andfurther improve productivity.

Winning the War for Talent and the War for Engagement

By 2050 (in Europe) there will be only one person inemployment for every person in retirement.Source: Bruno Tobback, Chair’s conclusions, OECD Forumon Aging, 18 October 2005

The loss of a skilled and experienced labor force,particularly in those sectors with a high proportion ofolder employees, might cause a decline in economicgrowth. In view of Europe’s diminishing youngerpopulation, companies will have to increasingly rely onolder workers or otherwise run the risk of losingbusiness opportunities due to labor shortages.Source: European Foundation for the Improvement of Livingand Working Conditions, “Age and employment in the newMember States,” 2006

Japan expects its workforce to shrink by 16% (some10 million people) over the next 25 years.Source: The Economist, “How to manage an agingworkforce,” 18 February 2006

According to official figures, some 2.8 million peopleover the age of 45 are without paid work in the UK.Source: BBC News, Julian Knight, “How UK ‘turned its back’on older workers,” 24 September 2006

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Forecasting and Planning for FutureTalent DeficitsA more sophisticated approach to workforce planning(see Figure 1) must begin by reviewing the demographicsof the current workforce and identifying the employeeswho are approaching retirement, as well as those whowill be in this age range in the near future. By forecastingpotential attrition via retirement over the next decade,employers can identify the likely talent deficiencies theywill experience, begin to plan ahead and think through thebusiness implications of these deficiencies.

“Although aging employees and shortages of skilledworkers are major demographic concerns, only 33 percent of HR professionals have charted theirorganization’s demographic makeup, and only 31 percent have determined future retirement rates,”according to Workplace Forecast, a 2006 survey of 1,232 HR professionals by the Society of HumanResource Management. Clearly, if two-thirds ofemployers have not yet begun to plan for futureretirement waves, there is not yet adequateunderstanding of the potential business impact thatretirements could have in just a few short years.

A careful review of the company’s long-term businessplans, growth trends and other drivers of workforce supplyand demand will provide the basis for forecasting futuretalent requirements of the organization. This informationcan then be utilized, along with the employee retirementforecast, to analyze the potential talent deficits that thecompany is likely to experience in the future.

Segmentation of all jobs across the organizationaccording to the degree to which each position iscritical to the business’ ability to meet its performancegoals is another important step toward understandingthe potential impact of future retirements in key roles.From this information, it is possible to map the potentialretiree forecast to the high-demand roles in whichpotential employee retirements would represent criticaldeficiencies for the organization.

Strategic plans to attract critical talent to the organizationand retain the near-retirement population in key roleswill become a key focus at this point, as it is now clearwhere the organization should be dedicating resourcesto ensure a steady supply of key talent. At the sametime, the organization will need to identify and develophigh-potential employees to replace those exiting dueto retirement. This cycle of demographic forecastingand workforce planning will become an integralcomponent of the business planning process as talentshortages worsen toward 2010 and beyond.

Review currentworkforcedemographics

Review long-termbusiness plansand growth trends

Forecast potentialattrition over next10 years due toretirements Map potential

retirees tosegmentationof high- and low-demand roles toidentify criticaldeficiencies

Develop strategicplans to recruit,retain and developemployees to fillcritical roles

Forecast futurejob/skill requirementsdue to planned orpotential businesschanges

Figure 1: Forecasting and Planning for Future Retirement-Related Talent Deficits

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Optimizing Talent FlowThe next stage in the continual quest for productivityimprovement will require a focus on getting the mostfrom each individual throughout his career. A strong,vital economy can no longer afford to have individualsgetting an education with no clear career path aftergraduation, or to allow individuals’ skills to becomeobsolete without a path to transition them into a new,productive role for which they are qualified. There mustbe much more attention given to the mix of skills,interests and lifestyle priorities of each individual,

and matching these to the talent requirements of theorganization. Lifelong learning needs to become a moreintegral part of the national culture in every country of the world, beginning with basic education andcontinuing through retirement. Assessments of anindividual’s skills, attitudes and attributes must be usedat regular intervals throughout a person’s lifetime tocreate a clearer picture of one’s own potential (or lackthereof). These assessments would be used by boththe individual and the employer in order to find the bestfitting role for the individual in the organization at eachstage of her career.

Pre-employmentoutreach

Entry-level

Mid-career

– Engage with schools to encourage alignment with employer needs.– Scholarships for education leading to in-demand careers with direct path to employment.– Internships.

– Assess job-readiness, skills and interests; place in most appropriate roles.– Career development plan aligned with individual and company needs.– Development and training.

Rebalancing Skills to Match Needs of Employer and Interests/Aptitudes of Individual(ongoing process throughout mid-career)– Assessment.– Career choices.– Continuing education to build relevant and in-demand skills.– Retraining to avoid skill obsolescence.

Near-retirementcareer pathing

High demand – Active retention efforts.– Job design, incentives or flexibility to encourage continuing full-time work.– Part-time, contractor, consulting, sabbatical or telecommute options as part of phased retirement.– Retraining to higher demand roles.– Outplacement to consultancy or staffing firm for project work on as needed basis.– Retirement on time.– Early retirement incentives.

– Identify high-demand employees.– Determine their retirement plans.

Low demand

Figure 2: Optimizing Talent FlowStrategically assessing, developing and redeploying individuals over the course of their careers where they aremost needed and where they can be most successful.

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As shown in Figure 2, to optimize the talent flow in theorganization, the employer must begin by strategicallyattracting the most in-demand individuals – for bothlow-skill and high-skill positions – directly from schoolsand universities. As these new recruits are brought intothe organization, the process should begin by immediatelyassessing their skills, matching them to the right roleswithin the organization and creating career developmentplans that help advance their abilities to ensure theycontinue to have relevant capabilities in the future, andthat these capabilities are aligned with the talent needsof the employer.

At regular intervals throughout the individual’s career,assessments should be undertaken to evaluate whereshe fits into the organization’s future talent needs. At this point, management must determine:

• Should her career development plan be adjusted toimprove competencies?

• Is reskilling necessary because her skills are likely tobecome obsolete with the advent of new technologyor shifting business plans? Or,

• Are her abilities and aptitudes in such high demandthat she should be engaged in a fast-track trainingand development program to enable her to make agreater contribution to the organization more rapidly?

The mid-career assessments would also enable her toexpress her desire to shift her career path into anotherarea of interest, and for discussions to take place todetermine whether or not her wishes can beaccommodated within the organization’s talent portfolio.

In the later years of the individual’s career, the key elementsof assessment, training and career development remainjust as relevant as before, although there are new factorsto consider. As a member of the most senior employeegroup, she is likely to hold considerable levels ofexperience and knowledge, and there is an increasedrisk of brain drain if she should choose to leave theorganization for other opportunities or to retire early. It is, therefore, necessary to consider a wider variety ofalternative paths for the individual and the company. Forexample, there will be some senior employees whopossess a high amount of valuable intellectual capital, andothers who perform low-skill roles their entire career thatare not in high demand for the company, and as a result,their intellectual capital is also of lower value. It is

reasonable, therefore, to expect that varying optionswould be available for those individuals who possessthe highest and lowest value to the organization.

An employer may want to offer incentives to retain asenior employee longer in a full-time role, such as jobdesign changes that make the role more attractive to theindividual, like flexible work hours or work-at-homeoptions. If she is seeking to phase into retirement, itmay be possible to offer a sabbatical that gives her aneeded break from work, or provide a formal transition tocontracting, consulting or part-time work arrangementsthat allow more flexible schedules and a lighterworkload. Alternatively, she could be outplaced to aconsultancy or employment services firm if she is onlyinterested in working on an “as needed” basis. Ofcourse, other individuals will retire on time, or acceptearly retirement incentives, if they are offered, becausethey are truly ready to begin the second phase of theirlives. All of these alternatives, of course, are subject tolabor laws, which vary widely around the world, andshould be carefully vetted before implementing a talentutilization model such as the one explained in thispaper. Employers may also want to work with theirgovernments to adjust labor laws if they are too restrictiveand outdated for today’s labor market challenges.

An employer may want to offer

incentives to retain a senior employee

longer in a full-time role, such as

changes to job design that make it more

attractive to the individual, like flexible

work hours or work-at-home options.

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Understanding and Engaging OlderWorkers One of the key reasons that employers are not doing moreto try and recruit or retain older workers as part of theirtalent management strategy is simply that they do not yetunderstand how to do so effectively. While employershave done much in recent years to provide better work-life balance for working parents, they have not yet gaineda full understanding of what work-life balance means tothe older worker. As employees move past the child-rearing years and transition to the next stage, they beginto look at life differently and their priorities change.Many are caring for aging parents in ill health, or helpingtheir adult children to care for their growing families.Many are also exploring the world through travel andother activities that they were unable to enjoy duringtheir younger years. These active adults are not thestereotypical aging adults of prior generations.

While employers have done much in

recent years to provide better work-life

balance for working parents, they have

not yet gained a full understanding of

what work-life balance means to the

older worker.

Rather, this generation’s older adults are much more likelyto feel empowered to make life-changing decisions likeleaving their long-term jobs for other opportunities suchas starting a business or going back to school, whichmay have seemed unachievable to previous generations.Much has been written about the large percentages ofwomen in the U.S. who are opting to leave the corporateworld in their 40s or 50s to start their own businesses,rather than stay on the corporate career track. This is asimilar situation, in that the corporate world has not beenpaying enough attention to engaging older workers in away that will ensure they remain active members of theorganization through to retirement.

It is well-documented that older workers tend to bemore reliable, more dedicated and more loyal to theiremployers than their younger counterparts, andtherefore, they should be viewed as key retentiontargets, but this is not necessarily the case. Why?

Part of the explanation lies in the fact that there are alsoother older workers who fulfill the age-old stereotype ofthe aging adult whose skills are lagging his peers, attitudeis somewhat cynical, and health is waning, which causesabsenteeism and – in the case of countries like the U.S.where the employer pays for his health care – moreexpensive to have on the payroll. These employees are inthe minority, but their presence creates a bigger impression,albeit negative, on those around them because it is sopronounced. Active, capable older adults tend to beviewed not by their age, as much as by their contributions,and therefore, they make less of an impression on theircolleagues as representatives of the older workforce.

The key to engagement of the older adult in theworkforce is to focus on the same issues that areimportant to other age groups:

• Performance-based compensation: Sending a clearmessage about the value of the individual rather thanjust paying more due to job tenure allows the olderworker to know how he is performing compared tohis peers. Failing to do this leaves the individualwondering if he has reached the point of being paidmore than his perceived value just because he hasworked for the company for a longer period of time.

• Being treated with respect: It is important for bothmanagement and younger peers to treat the olderworker with respect and dignity, just as it is with otheremployees. Thoughtless jokes about an individual’sage, for example, can be viewed as disrespectful andde-valuing the individual.

• Having a clear understanding of what is expected:Don’t assume that an older employee knows what isexpected of her just because of her tenure. Newmanagement and a rapidly changing business worldcan leave an older worker uncertain of her priorities;just as it can her younger peer.

• Having a sense of belonging: As the demographiccomposition of work groups evolves, care should betaken to ensure everyone is included in team-buildingactivities and informal communication channels.

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• Being treated equally: Disparate behavior towardolder workers can happen in subtle ways such asplanning team-building activities that the older workercannot relate to, or giving all of the new learningopportunities to the younger members of the team.Supervisors need to be vigilant in recognizing thediversity of their team and making decisions thatprovide equal treatment to everyone.

• Access to tools, resources and information toperform: As with all other employees, the olderworker needs the same level of tools, resources andinformation to perform effectively in her role.

• Receiving the training that is needed to perform inthe role: Just because an individual is older and quitecapable in her role, it does not mean that she is nolonger interested in receiving training, or that thetraining is no longer necessary. All training necessaryto perform a role must be offered equally. Companiesthat create a culture of continuous learning for allemployees will be more successful in engaging theirworkforces than their counterparts that do not.

• Open and honest two-way feedback: Often, theolder worker whose skills have faded is unaware thatshe is falling behind because supervisors and peersdo not want to hurt her feelings, out of respect for herage and stature. This is a disservice to the individual,who continues to require honest feedback in order toaddress performance issues adequately. Conversely, if the older worker does not have a two-waycommunication channel with her supervisor, she mayfeel unable to express her wishes to adjust her workrelationship due to changing priorities in her life. As aresult, the supervisor misses the opportunity to retainthe employee in a modified role and instead, loses herto retirement prematurely.

• Strong teamwork: As with all employees, a strongsense of teamwork results in greater productivity forthe team members, and this remains true throughoutan individual’s career, regardless of his full-time orpart-time status.

• Recognition: It is never a mistake to recognize a job welldone. The need to provide recognition of employeesacross all age groups and levels is often overlooked bymanagement, especially during the extremely busyperiods when recognition matters most.

• Opportunities for career advancement: Careerdevelopment and advancement opportunities should remain available to all employees throughoutthe duration of their careers. It is a mistake to assumethat an individual is “coasting to retirement” and nolonger needs this fuel to enhance his performance,just because he is approaching the end of his working years.

• Understanding how the role contributes to thesuccess of the business: As business continues toevolve at a rapid pace, it continues to be importantfor all employees to have a clear understanding ofhow they are contributing to the company’s overallgoals. This is particularly important when roles anddepartments are changing around the older worker.

• Security: In many organizations, particularly those that have downsized in the past several years, theolder worker with a higher salary can becomeparanoid that he is too costly to keep. Providing asense of security is key to the retention andproductivity of the older worker.

Clearly, some of these factors matter more than othersto the older worker, and there may be other importantfactors as well, such as the physical work environment,which may need to be adjusted to accommodate someof the minor physical aspects of aging, in order to makeit easy for the individual to work more comfortably. Forexample, there are a variety of office equipment optionsthat make it easier for arthritic hands to be morecomfortable when working, including larger-diameterpens and other writing instruments, padded keyboardand mouse pads, calculators and telephones withlarger buttons, etc. There are also uncomplicated waysto make print larger on computer screens that will makeit easier for aging eyes to read them. By making theseoptions available as part of the normal course ofbusiness (e.g. just another alternative to choose fromthe office supply vendor, or part of the normalinstructions on new software) rather than requiring theindividual to call special attention to their physicallimitations, the employee will feel more respected andvalued within the organization.

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Finding and Keeping the People You NeedOne of the biggest mistakes that employers commonlymake, which alienates their age 50+ employees, is toassume they are no longer interested in training andcareer development. If a senior executive who is overage 50 is considered to be wise and seasoned enoughto make a quality CEO, and someone younger may beconsidered too young for such a high-caliber job, thenwhy is it assumed that those who are in middlemanagement are disinterested in challenging work atthe very same age? And if a former CEO is still qualifiedto serve as a member of a Fortune 500 firm’s board ofdirectors in his 70s, then why wouldn’t a middlemanagement person be just as capable of serving inanother capacity at the same age? And why would oneassume that all older workers are qualified only to servein roles with low responsibility such as volunteering at ahospital or non-governmental organization, or servingas a “greeter” at a retail establishment? Here lies part of the challenge for employers – how to recognize thechanging priorities of older workers and find innovativeways to keep them engaged in the business longerterm, in roles that are of value to both the organizationand the individual.

As medical advances have enabled the average lifespanto extend decades beyond where it stood in the 1950s,and most jobs are much less physically demandingthan in years past, it is perfectly reasonable to expectthat older employees still have quite a lot to contributeto the workplace. Of course, there are many examples ofolder workers who have allowed their skills to becomeobsolete – partly due to their own lack of awarenessand responsibility for continuing to stay on top of thelatest skills – and partly due to failure of their employerto instill a philosophy of lifelong learning and ensure thatits employees remain current in their competencies.However, this lax learning attitude is not universal inevery organization, nor is it true of every individual.

There are also considerable differences regarding theinterests, long-term plans, financial well-being, relativehealth and longevity expectations among the individualswho comprise the group of employees who are overage 50. These variables make a huge difference in theexpectations that individuals have regarding their abilityand willingness to remain a viable part of the workforce

for the next five, 10 or 20 years of their lives. Careshould be taken to avoid assuming that all employeesare aiming to exit the workforce as soon as they arefinancially able, as there is a growing proportion of thispopulation that may be quite willing and able tocontinue contributing for years to come, provided theyare engaged and encouraged to do so.

According to the U.S.-based American Association forRetired Persons (AARP), nearly 70 percent of workerswho have not yet retired say that they plan to work intotheir retirement years or never fully retire. Through itsresearch, AARP has found that with the expectation ofworking later in life comes the individual’s expectationthat he will be working differently. For example, flexibilityis very important to older workers and they want to beable to set their own hours, take time off to care forrelatives or attend to other life priorities, and work areduced schedule prior to full retirement.

This directly contradicts most employers’ idea ofextending one’s working life. To date, the typicalAmerican corporation’s answer has been to offer theindividual more money to simply stay and perform thesame full-time job for an extended period of time, when in reality, the individual wants to work in somepart-time arrangement. In fact, in a recent AARP survey,older workers were asked about the essential parts ofthe ideal job. Fifty-three percent indicated working part-time and 41 percent listed working from home asessential elements. Adequate paid time off and a flexiblework schedule topped the list at 86 and 76 percent,respectively (The AARP Work and Career Study, 2002).

Long working hours are suspected to be a factorpushing older workers into retirement and OECDresearch indicates this is particularly prevalent in Japan,Australia, the U.S., Canada, Switzerland and the U.K.,where the proportion of older male employees whowork 50 hours or more per week is much higher than inother countries (“Live Longer, Work Longer,” OECD,2006, p.79).

After years of advancing early-retirement schemes (to avoid redundancies and higher unemployment),many OECD governments are now looking atpersuading people to stay in work until they are older.Source: Willi Leibfritz, “Retiring later makes sense,” OECDObserver, January 2003

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Today, there are too few desirable employment optionsavailable for individuals who wish to remain with theircurrent employer but would like to change the nature ofthe working relationship as they transition towardretirement. This is a big reason why employers are notsucceeding in retaining older employees longer andinstead are losing them to self-employment.

An employer that determines how to offer flexible,contemporary work options to both older and youngeremployees is likely to find a distinct competitiveadvantage in recruiting and retaining employees as thebalance of power in the employer-employee relationshipcontinues to cater more toward the employee in thetalent-poor future. It stands to reason that employeeswho are allowed to explore contemporary workalternatives to achieve improved work-life balance, suchas attending a grandchild’s school play or caring for an illparent or spouse, are more likely to have a higher levelof loyalty and remain employed with the organization.Companies should take great strides to offer a wide varietyof job design options including job sharing, downsizingworkloads, working on a project basis, etc. Paidsabbaticals for mature workers are also a good way toretain key skill sets and give your company experts away to “recharge their batteries,” especially if they havebeen with the organization for a number of years.

An employer that determines how to

offer flexible, contemporary work options

to both older and younger employees is

likely to find a distinct competitive

advantage in recruiting and retaining

employees as the balance of power in

the employer-employee relationship

continues to cater more toward the

employee in the talent-poor future.

But how can an employer create contemporary workoptions that are less than full-time job commitments,without losing productivity, quality and continuity of thework product that is produced by employees in theseroles? The answer lies in taking a holistic view of theworkforce and re-defining jobs according to tasks and

competencies. It will then be possible to determinelogical ways to divide full-time roles into new roles thatcan be effectively performed in new ways. It also requiresthe employer to gain a better understanding of theinterdependencies of the new job with other roles in theorganization and determine how to ensure continuity ofinformation flows among the affected work teams. Trainingsupervisors on ways to set up and manage alternative,contemporary work arrangements, and developingappropriate success measures to ensure high-qualitywork and high productivity are also critically importantfor the newly-defined work arrangements to succeed.

Rather than put all of the responsibility for the above onthe human resources department, we recommend thatemployers share some of the responsibility with employeeswho wish to work in such arrangements, and set up thesituation as a pilot program that can serve as a modelto the rest of the organization. Past experience with jobsharing and other options designed to improve work-lifebalance for working mothers has proven that theindividuals who are best suited to find the right way tostructure the jobs are those who have the greatestpersonal investment in making it work. The sameshould hold true for older workers who wish to try analternative work arrangement.

A pilot project would also enable the company to move forward more quickly with contemporary workarrangements and demonstrate to its older employeesthat the company is committed to meeting their needs.This level of demonstrated commitment is criticallyimportant to having a credible employer brand for theolder worker segment. And a strong employer brand,combined with jobs that are attractive to older workers,are the most important elements when attempting torecruit older workers to fill open positions.

It is important to note that most employers will likelyrequire a few more years before they determine how toeffectively offer the part-time roles that mature adultswould prefer. Until that time, older workers must realizethat finding a challenging job with a fixed and consistentpart-time schedule could be difficult to obtain. Instead, it may be necessary to compromise in some ways, suchas working on a project basis, with full-time hours for a few weeks followed by time off when the project is completed.

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One of the biggest challenges for employers wishing torecruit older workers is actually finding them. While thebest way to attract older workers is to have jobs theywant, there are some good emerging resources to findolder adults who are seeking work:

• Hire recruitment specialists experienced in sourcingand hiring older workers: Older job candidates will have a much different set of work objectives and personal priorities than do their youngercounterparts, and recruiters must understand these differences if they are to compete for talent in this critical age segment.

• Partner with a national or local association forolder persons: A formal recruitment partnership withan organization that promotes the well-being of olderpeople can provide access to a great number ofpeople looking for a variety of work arrangements,including full-time, part-time or project work.

• Search out industry associations to addressspecific talent gaps: To fill a specific talent shortage,such as engineers, it may be wise to approach anational engineering society that has a network ofretired engineers who would be interested in comingback to work on either a permanent, temporary orcontract basis.

• Partner with a respected employment servicesfirm: Because older workers often desire the flexibilitythat contingent work assignments offer, employmentservices firms typically have a network of qualified,reliable workers of all ages and demographics that areavailable for immediate employment.

• Develop an alumni organization: Maintaining a connection with employees who have left theorganization, especially those with critical skills, maymake it possible to hire them back in the future forpart-time or consulting work, even after they haveentered retirement. The firm’s retirees may also beinterested in mentoring younger employees.

• Ensure recruitment advertising conveys thediversity of your organization: If your employmentadvertising does not reflect a multi-generationalworkforce, it could convey that your organization isnot friendly to older workers.

• Strategically fill talent shortages by recruitingolder workers: A recent Manpower survey of nearly37,000 employers in 27 countries and territories(Manpower Talent Shortage Survey, 2007) showedthat the 10 most difficult to fill positions globally were:

By specifically recruiting older adults to fill some ofthese jobs where critical talent shortages exist, it maybe possible to fill open positions more quickly thancompetitors, particularly if the jobs are designed in amanner that is attractive to mature adults.

• Redeploy workers upon retirement: Whenemployees choose to “downshift” their careers toenjoy semi-retirement, it may be possible to outplacethem to an employment services firm where they canwork for other companies, and also remain availablefor your organization to engage them for project work.Note that to ensure legal compliance, local labor lawswill need to be carefully vetted regarding the transitionof an employee to an employment services firm.

• Avoid age discrimination: In the labor markets ofmost developed countries, legislation protects olderworkers from age discrimination; however, the extentof this protection varies from country to country. In order to protect your employer brand and ensureyour organization maintains an attractive image topotential older workers, it is critically important tocomply with both the letter and the spirit of agediscrimination laws and guidelines.

1. Sales Representatives 2. Skilled Manual Trades (primarily carpenters, welders and plumbers) 3. Technicians (primarily production/operations, engineering and maintenance) 4. Engineers 5. Accountants 6. Laborers 7. Production Operators 8. Drivers 9. Management/Executives10. Machinists/OperatorsSource: Manpower Talent Shortage Survey, 2007

2007 Hot Jobs Worldwide

13

Helping Older Employees to Choosethe Right Life OptionsOlder workers are faced with a dizzying array ofoptions, concerns and potential risks when they beginto consider retirement, which can be very stressful. Addto this the fact that retirement is not defined the sameway now as it was a generation ago and, therefore,most of us have no real frame of reference to knowwhether we are making the right choices. Consideringthat in a recent survey of those age 55 and over, only22 percent viewed retirement as “winding down” or“extended vacation” (“Revisioning Retirement,” KenDychtwald), it is clear that things have changed. Whenmost government retirement or pension programs weredevised several decades ago, the life expectancy wasfar shorter than it is currently, which means thatindividuals have to plan their retirement assuming thatthey could be determining their future for a period of 20to 30 years, or more. In addition, most older adults arenot doing the kind of hard, physical labor that theirpredecessors were doing until retirement and, therefore,can work much longer, if they so choose, due to thelesser physical strain.

With all of these factors to consider, it seems apparent thatthe planning process for the second half of life should bemanaged just as carefully as the first half, if not more.Retirement can now be defined as the freedom to plan anew life including new work options, rather than necessarilywithdrawing or giving up work. Many employers willsuggest that it is not their place to become involved insuch personal decision processes of employees,however, we disagree. If the employer is to be arelevant and credible potential part of the individual’sfuture plans for continued employment in any form, itshould play at least a minor role in helping the individualto understand their work options, their skills andattributes, and the degree to which the company iswilling to work with them to find an acceptable way forthe two parties to remain engaged in the future.

The employer should consider providing a pre-retirementdecision process for employees as part of the company’scareer development or employee assistance services. This process, typically delivered via a qualifiedconsultant, will assist employees in deciding if theypossess the personal motivation to continue working,as well as gauge their financial, psychological andphysical readiness to retire. As part of this process, theemployee will need to explore questions such as:• Have I been taking advantage of training opportunities

in order to ensure my skills are up to date so that Iremain relevant to my employer?

• If I continue working, do I want to continue in thesame role or try something new?

• If I retire now, do I have the financial means tosupport myself and my dependents through my (andtheir) potential remaining lifespan?

• If, at some point in the future, something changesand my government- or employer-paid retirementincome is reduced or eliminated, can I still pay mybills or would I need to get a job?

• If I retire completely and then run out of money, willmy skills still be sufficient to enable me to findemployment 10 or 20 years from now?

If the employee is ready to retire (within a few months tofive years), it is advisable to provide him with the resourcesto develop an effective personal transition plan. Thisplanning process helps retiring employees to prioritizehow they want to spend their time (e.g. time spent withfamily and friends, community service activities, spirituality,education, leisure and wellness activities); determinewhere they want to live; define the financial implicationsof retirement; and explore continued work options.

The employer should consider providing

a pre-retirement decision process for

employees as part of the company’s

career development or employee

assistance services.

14

Individual Transition

Identify pool of highpotential successors

Identify keyfuture retirees

Transition to part-time role

Retire or leave for second career

Training anddevelopment

Continue working full-time

longer, then retire

Job redesign

Assistance with thepre-retirement

career decision process

Knowledge transfer plan to retain intellectual capital

Talent Needs Analysis

Exit Cycle of Retirees

Development Cycle of Successors

Figure 3: Managing the Talent Pipeline

Managing the Talent PipelineLong before the exodus of key older employees fromthe organization, it is necessary for the company todevelop its own transition plans to ease the changeprocess, including a knowledge transfer plan, to ensurethat as much intellectual capital as possible can beretained within the organization.

As shown in Figure 3, the first step is for the companyto conduct a Talent Needs Analysis to determine whichroles in the organization are at the highest risk of braindrain if an older employee decides to retire. The roles ofthe organization can be segmented in order to prioritizeaccording to the importance and risk to the organizationso that supervisors and human resources staff can focustheir efforts on succession planning for these roles first.

The next stages of the process are focused onsuccession planning, as high-potential candidates areidentified to possibly replace the individuals who are thehighest priority for business continuity following theirretirement. These high-potential successors must bedeveloped and prepared for their next potential roles inan efficient process to ensure that their developmentcycle is aligned with the exit cycle of the key individualswho are moving toward retirement.

Next, there must be a clear process to ensure knowledgetransfer occurs between the retiring employee and hissuccessor. Typically, a key retiring employee identifiedthrough this process will have a longer tenure with theemployer and, therefore, greater institutional andindustry knowledge that is at risk of leaving the firmwhen the individual exits the organization.

15

It will not be possible to transition all of this knowledge,but it is entirely possible to:• identify critical knowledge and projects to

be transferred,• document important information, processes

and contacts, and• create a mentoring program where the departing

employee is able to coach his successor and impart knowledge through on-the-job activities.

Other options to help retain intellectual capital includecreating communities of practice where companywidegroups meet in person and online to share information.These communities of practice can include recentlyretired managers to engage in the community directly,as well as teach a variety of seminars. They can also bedesigned to provide new employees with opportunities to“shadow” more senior colleagues as part of a mentoringprocess designed to accelerate the learning process.

Employers can also develop a pool of retired employeeswho are available to work on a variety of projects inorder to preserve institutional knowledge. This providesretirees with the freedom to plan their schedules anddevote time to other life activities, while maintainingtheir skills and continuing to do challenging work on aperiodic basis. Partnering a full-time employee with anexperienced retiree can also be an effective way totransfer intellectual capital.

Individual transition planning is the last part of thetransition process, and this occurs directly with theretiring individual and his supervisor. It involves mainlythe alignment of the timeline for retirement, the actionsteps and success measures required for completingthe transition.

A qualified consulting firm can advise organizations onsome or all of these steps to transfer intellectual capitalwithin an organization.

Long before the exodus of key older

employees from the organization, it is

necessary for the company to develop

its own transition plans to ease the

change process, including a knowledge

transfer plan, to ensure that as much

intellectual capital as possible can be

retained within the organization.

Managing the Cost of an Aging SocietyMost governments around the world are struggling todetermine the best strategy to overcome a majorsocietal and financial hurdle caused by the largeproportion of individuals expecting the government toprovide for them throughout their retirement years. Thereality is that many national governments’ funding forpension and social security programs is going to fallshort of the financial requirements. There simply will betoo many people receiving funds from the governmentprograms and too few actively engaged in theworkforce paying for these programs through theirpayroll taxes.

The projected population that will be age 50 or older by2025 in the EU-15 Countries, Japan and the UnitedStates (See Figure 4) reveals how large the proportionof non-working adults will grow in the near future, how daunting the challenge will be for the youngergenerations to support those who have come beforethem and for governments to determine how to bridgethe funding gap.

The U.S. Social Security program provides a fittingexample of why governments are in such apredicament. When this program was instituted in1935, financial benefits began to be accessible forretirees at age 65, but the average life expectancy atthe time was only 61. Today, with early retirements andgreater longevity, the retirement life stage can last 20years or more, whereas in 1935 the average person didnot live long enough to receive his benefits. Currentbudget projections are a significantly larger financialburden than the 1935 government ever envisioned,which is why the system is in danger of going into adeficit situation by 2017 and running out of funds by2040 if actions are not taken in the near future tocorrect the situation. This is a rather chilling scenario fortoday’s 30-year-olds who will be approaching retirementwhen the funds are due to run out.

16

Defining Government’s Pivotal Role in Work & Retirement

Figure 4: Percent of Population Aged 50+ (EU-15 Countries, Japan, United States – 2005 vs. 2025 Projected)

0

5

10

15

20

25

30

35

40

45

50

Austri

a

Belgium

Denm

ark

Finlan

d

Fran

ce

Germ

any

Greec

e

Irelan

dIta

ly

Luxe

mbur

g

Nethe

rland

s

Portu

gal

Spain

Sweden UK

Japan US

2005 2025Source: U.S. Census Bureau, International Database, Accessed January 2007.

17

The French government is already in a deficit situationwith the shortfall expected to reach €3.5 billion (US$4.5 billion) in 2007, compared to a €2.4 billionshortfall in 2006, according to a 11 January 2007 report from the French Orientation Council on Pensions(COR) to Prime Minister Dominique de Villepin, whichdescribed “an urgent need for reform.”

A large part of the challenge in France is that 62.2percent of the country’s 55 – 64-year-olds are notemployed. This is due, in part, to a relatively lowstatutory retirement age of 60, when individuals canbegin receiving government benefits, as well as a highunemployment rate for the overall workforce.

The pension reform test is one that governments must address soon and aggressively if they are toensure the financial future of their people. It willcontinue to be a very difficult battle to push through the reforms that are necessary because the people will not easily accept many of the sacrifices that willlikely have to be made, which may include higher taxes, reduced benefits and longer working lives.However, there are some countries that aredemonstrating that change can happen.

For example, the pension model in Sweden hasattracted attention from many countries that areseeking other options, and Brazil, Russia and Polandhave adopted some elements of Sweden’s plan. Thisupdated model ties public pensions to individualearnings and life-expectancy rates. It compares toconventional pension models in the sense that currentworkers support current retirees. However, bycalculating benefits according to individual’s salariesand demographic projections, the government isprovided extra flexibility to account for population andrevenue shifts. Should the country’s economyexperience a downturn, future benefits would decrease.Similarly, the longer people in a particular age grouplive, the smaller their payments would become. It isimportant to note that this model has only been in placesince 1999 and the Swedish economy has beenhealthy, therefore, it has not yet been tested in anenvironment where individuals begin to receive less dueto economic or longevity factors. However, forgovernments that need to act before their pensions gobust, the Swedish approach to pension reform, orcertain elements of it, may provide some viable options

for other national governments to consider. (“PensionsGoing Swedish,” The Wall Street Journal-Europe, 5March 2007).

There’s no magic solution to

the pension problem. But

governments worldwide are looking

at Sweden. It’s starting to be seen

as the best among what are now

seen to be imperfect options.

Kent Weaver, Georgetown University, interview in The Wall Street

Journal-Europe, 5 March 2007

Governments play the largest role in ensuring olderworkers remain in the workforce and continue tocontribute to their country’s economy, as they areresponsible for setting the employment and socialbenefits rules to which both employers and individualsmust adhere. In the past, the majority of governmentprograms targeted toward older adults were designedto facilitate older workers’ exit from the labor force tomake way for younger workers. However, with today’sissues, governments are now shifting their thinking 180degrees. They are beginning to provide incentives forolder workers to remain in the workforce as long asthey are able to contribute to meaningful work, and theyare also providing incentives for employers to recruitand retain older workers.

18

Inspiring ChangeIn a recent Manpower survey of over 28,000 employersin 25 countries and territories, only 14 percent ofrespondents reported that they have specific strategiesin place that are designed to recruit older adults intotheir workforces to help fill open positions, and only 21percent of employers reported that they have strategiesin place to retain their older workers (See Figure 5).

However, the study also found that employers in somecountries and territories are well ahead of the others onboth recruiting and retention strategies for older workerscompared to their international colleagues (See Figure6). For example, in Singapore, 48 percent of employerscited having an older worker recruitment strategy and 53 percent have a retention strategy in place.

The high positive response rate from Singapore’semployers is due, in part, to the lead role that theSingaporean government is taking to enhance theemployability of the mature workforce by offeringincentives to business. The Singapore WorkforceDevelopment Agency (WDA) has implemented anincentive program called the Advantage! program that encourages companies to employ workers over age 40, or re-employ workers beyond age 62.

Figure 5: Percentage of Employers in 25 Countries and Territories with Recruiting and Retention Strategies forOlder Workers in Place Today

80%No

72%No

7%

21%Yes14%

Yes

6%Don’t Know

Don’t Know

Recruiting strategy Retention strategy

The program is comprised of four components – jobredesign grants, training grants, job placement servicesand re-employment support – and employers can earnup to S$300,000 (US$200,000) based on their level ofinvolvement in the program.

We also see a similar situation in Japan, where 83percent of employers have developed retentionstrategies to ensure they are able to avoid losing theirexperienced employees. This is particularly important,as one million Japanese workers will be eligible to retirewithin the next three years. To help stem the tide ofpeople exiting the Japanese workforce, governmentofficials recently amended the Law ConcerningStabilization of Employment of Older Persons that wasoriginally established in 1971. The general purpose ofthis law is to promote the welfare and job security ofolder persons, as well as to stabilize the labor marketfor the future. Over a 13-year period beginning in Aprilof 2006, this law provides that the retirement age beincrementally raised to age 65 and encouragesemployers to continue employment if individuals arewilling and able to work productively.

Source: Manpower survey of more than 28,000 emplyers across 25 countries and territories, October 2006.

19

Source: Manpower survey of more than 28,000 emplyers across 25 countries and territories, October 2006.

Figure 6:Prevalence of Recruiting and Retention Strategy for Older Workers

20% 40%

Retention strategyRecruiting strategy

0% 60% 80% 100%

Global

Argentina

Australia

Austria

Belgium

Canada

China

France

Germany

Hong Kong

India

Ireland

Italy

Japan

Netherlands

New Zealand

Norway

Peru

Singapore

South Africa

Spain

Sweden

Switzerland

Taiwan

United Kingdom

United States

20

Japanese legislators have also strengthened protectionsagainst age discrimination as part of this amended law,with measures including an employer's obligation toprovide a work reference for an older person'sapplication to a new job, and the obligation for a hiringcompany to inform an older jobseeker of the reasonsfor setting an age limit for entry into a specific job.Continuous employment programs were alsoimplemented to retain older workers should theychoose to continue to extend their work life.

This step toward stronger anti-age discriminationlegislation is particularly important because in nearly all OECD countries, the incidence of long-termunemployment is higher for older persons who areunemployed than for the unemployed who are aged 25-49. In addition, older adults who lose their jobstypically suffer substantially greater wage reductionswhen re-employed, in comparison to their previous job.(“Live Longer, Work Longer,” OECD, 2006, p. 35).Although most developed nations now have anti-agediscrimination laws in place, there is much more thatgovernments can do to help older workers to overcomethe obstacles to employment.

In the previous Japanese example, it is clear that agovernment initiative has been the catalyst for businessto take proactive employee retention measures, which isevidenced by the fact that while 83 percent of Japaneseemployers indicate having older worker retentionstrategies, just 12 percent have implementedrecruitment strategies (see Figure 6). In short, employershave not taken action on the recruitment side of theequation because action is not yet compulsory.

The extent to which employers have addressed therecruitment and retention of older workers to easetalent shortages depends upon a variety of complexfactors. However, the major variables appear to be:

• the size of the national labor pool;

• the demographic profile of the labor pool;

• the degree to which talent shortages are beingexperienced at present; and

• government legislation or programs that eitherpromote or discourage labor force participation by older workers.

If a government is seeking to expand employment ofolder adults within its population, part of the answerappears to lie in its willingness to be an agent ofchange and require employers to take action to addressthe issue through new incentives and strongerrequirements.

Other ways in which governments can act to enablechange is to improve the flexibility of legislation andpolicies that currently serve as deterrents to older adultsremaining in the workforce longer. In addition to thestrategies described above that Singapore and Japanhave implemented to resolve the older workerconundrum, other countries are also exploringcombinations of raising or removing the statutoryretirement age at which financial benefits begin, andproviding other incentives for employers to hire andretain older workers.

Beyond these initial steps, governments will need toconsider enacting policies that make working longermore financially rewarding for the individual. In manycountries, tax and social benefit programs can actuallyencourage early retirement and discourage people fromworking at all, as they will not be able to receivedistributions from pension plans if they are still working,or earning too much money from their jobs. In someinstances, if taxes are high and incremental pensionbenefits for people staying on the job are slim, it makesmore sense to take early retirement, rather thancontinue working. To reverse these trends, it will benecessary to remove the disincentives toward workinglonger, and consider offering financial rewards such asproviding older workers with tax credits for continuingto contribute to the workforce.

As an example of such an overhaul of legislation, inNovember 2006, the German government approvedincreasing the retirement age to 67, when it alsounveiled a drive to get more workers over the age of 50back to work. As part of this newly launched "50 plus"initiative (July 2006), German employers will be offered“integration subsidies” as incentives to take on olderworkers, while people who accept a job which is lower-paid than their previous position can receive “acombination wage,” which is a supplemental incomeprovided by the government to help compensate forshortfalls in their new salaries.

21

The 50 plus initiative consists of both governmentmeasures and efforts to work together with labor andmanagement organizations in pursuit of four specificobjectives:

• Increasing the employment rate to 55 percent forpersons above the age of 50 by 2010;

• Significantly lowering the rate of early retirementamong persons 55 and older;

• Improving the reemployment rate for olderunemployed workers via wage subsidies; and

• Significantly increasing enrollment in supplementarytraining programs to help people develop the skillsthey need to meet the growing requirements to qualifyfor new jobs.

Like Germany, other governments will also need to do abetter job of creating national education and trainingprograms to improve participation rates of olderworkers and instilling a continuous learning mindset.Training initiatives cannot be left to employers alone. By investing in development and training programs thatallow older workers, who may have been out of theworkforce for a period, to gain proficiency on morerecent technologies and work processes, governmentswill improve employability of the lower-skilled individualsin the older worker segment of the population. Theseprograms can be ideal options for individuals who mustre-enter the workforce after being retired for a numberof years, as well as those who worked in physicallydemanding jobs that they are no longer able to perform,or those who want to transition to a different form ofwork for other reasons.

It is important to note that these government-sponsored training initiatives are a significantopportunity for governments to strategically align trainingwith the areas where their countries are experiencingthe greatest talent shortages. For example, suppose acountry like India has determined that it does not haveenough individuals in its national labor force with thecorrect skills to fulfill the need for data networkingsupport technicians in the rapidly expanding IT-enabledServices (ITeS) industry. This would be an opportunityfor the government to develop training designedspecifically for older workers who are re-entering theworkforce to fill this talent shortage.

By anticipating future talent needs and designingtraining programs to meet these needs, countries cancreate a clear competitive advantage in the globalmarketplace.

If a government is seeking to expand

employment of older adults within its

population, part of the answer appears

to lie in its willingness to be an agent of

change and require employers to take

action to address the issue through new

incentives and stronger requirements.

22

Driving Sustainable Economic GrowthThrough Labor Market Strategy

In the borderless global labor market that drives grossdomestic product (GDP) potential for nationaleconomies, many countries may find they are at acompetitive disadvantage if they cannot provideadequate skilled labor to enable businesses to succeedin their markets. Older workers are only one segment ofa healthy labor pool, and ensuring their engagementwith the workforce for a longer period of time is onlyone area where national governments need to focustheir attention if they want to have a competitive labormarket strategy that will help to strengthen thecountry’s economy for the future.

It will become necessary for national governments to bemore proficient at analyzing their total workforces anddetermining how to leverage their strengths for competitivegain, particularly in the international competition toattract foreign direct investment (FDI). As shown inFigure 7 below, the first step is to assess the country’savailable talent pool and the future talent pipeline, andmeasure this against the talent requirements of currentand future employers. From this data, it is possible to

identify the economic growth opportunities that may beavailable for further development, based on the talentpools which are in abundant supply, as well as identifypotential economic risks that could be caused byinadequate supply of individuals with the skills neededby certain sectors of the national labor market.

The creative strategies that some governments arebeginning to use in order to induce older adults toremain in, or re-enter, the workforce are good startingpoints for developing a sustainable labor marketstrategy, but more needs to be done to optimize the full potential of tomorrow’s workforce.

By aligning labor market strategy with the economicrisks and opportunities of the country’s economy, aclearer path emerges from which to create theeducation and training initiatives required to build ahigh-caliber talent pool for the future. In addition,aligning education systems for youth, the unemployedand underemployed, as well as older adults, with theeconomic requirements of the country, will mitigate thethreats posed by emerging talent shortages, whileexpanding the available talent pools in areas where thecountry is capable of attracting FDI.

Figure 7: Sustainable Economic Growth Through Labor Market Strategy

Amplefuturetalentsupply

Moderatefuturetalentsupply

Talentshortages

Assess talent

availability versus talent

needs of current and

future employers

– Target FDI attraction efforts to align business growth with talent supply.– Align lifelong education initiatives with economic requirements to increase targeted talent supply.– Encourage older workers and retirees with needed skills to continue contributing to the workforce.– Create incentives for expatriates with needed skills to return home.– Adjust immigration policies to encourage entry by individuals who possess talent in key growth and risk areas.– Align education systems for youth, unemployed and underemployed to increase the talent supply where needed.

Economic growth

opportunities

based on

talent availability

Economic risks

due to

talent shortages

23

For example, the Mexican government benefited formany years from the country’s reputation for having anabundant source of inexpensive, low-skilled workerswith a strong work ethic. As the world discovered thesame was true for China and other Asian countries, thegrowth of the Mexican factories, or maquiladoras,slowed dramatically due to the increased internationalcompetition. Now, the country is grappling with thechallenge of creating an effective labor market strategythat will enable the attraction of new FDI frommultinationals based not just in the U.S., but all over theworld. The question is, with a weak education systemand widespread poverty can Mexico develop a talentniche that will drive the economic prosperity of futuregenerations? Only time will tell if they are able tosucceed in this strategic endeavor.

Migration policies and programs are another area wheregovernments can make great strides in enhancing theiravailable talent pools, both by adjusting immigrationpolicies to attract individuals with the skills that areneeded, and by creating incentives for expatriates andstudents studying abroad to return to work in theirhome country.

China and the Philippines are currently working toreverse the brain drain that has occurred as largenumbers of their best and brightest workers have leftthe country to pursue education, in China’s case, andwork, in the Philippines’ case. Now, both countries aresuffering from talent shortages in some of the veryareas where these expatriates are qualified and capableof filling the gaps, so it has become a priority to try andlure them back to their home countries to contribute totheir own society’s future.

A sustainable and growing economy will not bepossible in the talent-poor future without a strong andvibrant labor market that includes older workers andother groups that are currently under-represented intoday’s workforce. The challenge for nationalgovernments is to determine how to align the interestsand abilities of mature adults with the interests andrequirements of employers, and to do this before thepension bubble bursts, wreaking havoc on other areasof society.

The challenge for national governments

is to determine how to align the

interests and abilities of mature adults

with the interests and requirements of

employers, and to do this before the

pension bubble bursts, wreaking havoc

on other areas of society.

24

The first priority of today’s employers should beforecasting and workforce planning for the future, whenmuch of today’s key talent will retire and there will be fewavailable candidates to replace them. Without suchcritical analysis and planning, it is likely that manycompanies will find they are incapable of growing theirbusinesses and meeting customer needs because ofunexpected and pervasive talent shortages in criticalroles. Two of the key reasons that employers are notdoing more to try and recruit or retain older workers aspart of their talent management strategies are simply thatthey neither understand how to do so effectively, norgrasp why this should be a high priority for them now.

While employers have done much in recent years toprovide better work-life balance for working parents, theyhave not yet made sense of what work-life balancemeans to the older worker; namely that these individualsexpect to work differently in flexible work arrangementswhere they can work more on their own terms, not theemployer’s. There is a growing proportion of thispopulation that may be quite willing and able to continuecontributing for years to come, if they are engaged andencouraged to do so. The best way to attract olderworkers is to have jobs they want, and they tend to wantpart-time jobs. The employer who wins the competitivewar for talent will be the one who determines how tomake plenty of part-time jobs available to attract olderworkers, and how to redesign existing jobs into part-timeroles in order to retain current staff a few years longer.

As talent becomes more difficult to find and retain, it willbe essential for employers to optimize talent flow byensuring alignment of employees’ skills with the needs ofthe business over the course of each individual’s career.This requires strategic recruitment; ongoing assessmentof skills, interests and abilities at regular intervals;alignment of abilities with the current and future needs ofthe business; and making lifelong learning a high priority.

The conundrum of the older workforce lies in the factthat the most in-demand individuals with the strongestskills are also those who have the greatest financialflexibility to retire early or explore other optionsthroughout their careers, and particularly as they growolder. This means that the people who are most neededare also those most likely to leave, taking their skills,

knowledge and experience with them. Savvy employerswill develop innovative ways of retaining these criticallyimportant contributors as long as possible.

Nonetheless, it is inevitable that even the most engagedemployees will eventually retire. Managing the talentpipeline to ensure that high potential employees areidentified as potential successors and developed at thesame rate as the older workers who are exiting will bean important aspect of workforce management in thefuture. An effective knowledge transfer plan that isproperly executed can make an enormous difference inan employer’s ability to retain critical intellectual capitaland sustain consistent performance levels in thetransition from retiree to successor.

Meanwhile, many national governments’ funding forpension and social security programs is projected to fallshort of the financial requirements because there simplywill be too many people receiving funds from thegovernment programs and too few actively engaged inthe workforce paying for these programs through theirpayroll taxes. If a government is seeking to expandemployment of older adults within its population toreduce the pension burden, part of the answer appearsto lie in its willingness to be an instrument of changeand require employers to take action to address therecruitment and retention of older workers through newincentives and stronger requirements.

A sustainable and growing economy will not bepossible in the talent-poor future without a strong andvibrant labor market that includes older workers andother groups that are currently under-represented intoday’s workforce. National governments need to focustheir attention on talent development and utilizationstrategy if they want to have a competitive labor marketthat will help to strengthen the country’s economy forthe future. The challenge for national governments is todetermine how to align the interests and abilities ofmature adults with the interests and requirements ofemployers, and to do this before the pension bubblebursts, wreaking havoc on other areas of society.Solving this puzzle should be high priority on theagenda of today’s government leaders.

Conclusion

25

Manpower Inc.5301 N. Ironwood Rd., Milwaukee, WI 53217Tel: +1 414 961 1000www.manpower.com

GC-13 (04/07) © 2007 Manpower Inc. All rights reserved.