Disarming the demographic time-bomb
The ageing population isn’t a new revelation; the fact that there are now more people aged over 60 years than those aged 18 or under is concerning, but not new information for most. In terms of workforce management it is of particular concern to industries such as education, health and social care, and manufacturing, as recent reports show that these sectors have the highest proportion of workers likely to retire in the coming years. Should this occur without a strategy being put in place beforehand, companies will be left with a severe skills gap and bereft of the knowledge and expertise held by their older employees. But it’s not just those aged 60+ that employers need to focus on, a recent report from the CIPD also showed that in certain industries there is a concentration of workers aged between 53 and 67 years that are choosing to leave in order to enjoy their retirement. This scenario was found to be particularly prevalent in the financial sector, with many companies experiencing unexpected departures within this group that they hadn’t prepared for.
But while many companies are waxing lyrical about the challenges this change in workplace demographics will present; there still seems to be very little in the way of proactive efforts to address the issue and prevent the expected fallout. Raising awareness of the problem is certainly important, and continued discussion around the topic and the implications it may have is needed, but so too is the development of action plans within organisations to ensure the problem can be managed.
What can businesses do about it?
There are a number of ways in which organisations can plan and prepare for the expected exodus of the older generation of workers, and depending on the extent of the problem, the solutions will range from simple changes in processes to complete organisational redesign. However no matter the exact situation of the company one thing will be universally true; it’s not a problem that can be solved by any one department alone. While HR, L&D or senior leadership teams may shoulder the majority of the burden, it’s a challenge that will require all hands on deck to solve, including frontline employees and those on the precipice of retirement.
Once you have the commitment and input of all the key individuals it will make the processes of managing the problem far simpler. But in order to do so, there will be a few essential steps to take to ensure the agreed upon objectives can be met. The most important of these is to determine what’s needed. Without fully understanding the scope of the problem and assessing the potential impact, it will be impossible to design and implement an effective plan. To ensure you are able to diagnose the problem some of the typical things you might consider may include:
- Estimating the extent of the problem
You can’t make any proactive plans to address the problem, unless you know the extent of it, so one of the first things to do is assess the current population of your workforce. Without this information there is a risk of being blindsided in the future, but equally there’s a risk of assuming it’s a problem needing to be fixed when it might not be. Due to the media focus on the demographic time-bomb a lot of organisations have taken this as a cue to start discussing plans to address the problem without properly exploring whether it exists in their business. Before deciding on the best strategy to manage the issue, first find out if it really is a problem in your workforce, and how big a problem it is. This information should be reasonably simple to ascertain depending on the set up of your HR processes; most organisations keep track of employees’ ages and length of service as standard so these will be key indicators as to whether you are facing a demographic time-bomb or not. In addition to using existing HR data, it’s also advisable to take proactive steps to gather the information you need to formulate an effective plan. This may include surveying existing workers to understand whether they have any intention of moving on in the near future, or seeking to uncover any existing skills gaps that need addressing.
- Consider how the industry may change in coming years
In addition to assessing whether it’s an active problem for your business another thing to consider is whether it will still be a problem by the time it happens. This one is much harder to determine, but is important to explore. The nature of business is that it changes, and in certain industries the rate of change is so fast that what is relevant today may not be relevant in even a year’s time, so having a comprehensive understanding of your industry and the changes it’s likely to witness will also be important. For example, it may be that the roles your seasoned workers currently hold will be obsolete in a few years, and hence the need for knowledge transfer will be less prevalent in that area. Being aware of the potential changes will be essential in how you develop your strategy to address the problem.
- Use your business strategy to determine your succession strategy
Similar to understanding the future progress of your industry, another key thing to do is to fully articulate where you want to go in the future as a business. If you know where you want to go and how you will get there, you can then assess whether it will involve the need for knowledge transfer between the different generations. Or will it require bringing in experts in new fields? If you are planning for drastic changes within your business then the decline in the number of workers used to working in the old ways may not have as significant an impact. Conversely in some industries the existing knowledge held within a business may be absolutely fundamental to on-going success and as such should be fiercely guarded and shared between the workforces as needed.
Understanding the problem is the first step to being able to do something about it, but what are some of the practical things businesses can do to help ensure there’s not a drastic loss of knowledge should their older workers choose to leave? Below are some of the steps employers can take to help limit the impact if you think the demographic time-bomb is about to detonate.
- Find ways to support older workers to remain in employment
Where organisations are taking action to address their workforce imbalance, many are focussing on how to ensure the new generation are able to learn the skills possessed by the older generation; finding ways to pass the torch. While this is absolutely vital to ensure a smooth succession plan, it does downplay a key consideration that also needs to be addressed: how to support older workers to stay in work.
While passing knowledge over to new recruits is important, it becomes less urgent if organisations also make the effort to support their older workers to remain in work. This is something many businesses may not have even considered, instead assuming that all of their workers approaching ‘retirement age’ will inevitably want to take this option. However as there is no longer an ‘official’ retirement age, individuals are free to work as long as they choose, and for many this is something they actually want to do; and finding a way to support this will be extremely beneficial for the individual and the business. However what often prevents people from doing this is the inflexibility of the business. While individuals may want to remain working, they may not want to do so full time, or they may have health conditions that prevent them from doing the same role as they did previously. This change in personal circumstances doesn’t have to mean the loss of experienced employees; if the business responds proactively and collaborates with the individual to find an appropriate solution (e.g. offering flexible working, occupational health support, or a change in role), they will be able to retain the highly seasoned workers who hold a great deal of knowledge and expertise. Even if this isn’t being applied in the same way as in the past, at least by keeping it in the business, it ensures the knowledge can still be transferred to new employees, but without the sense of urgency that often occurs when an employee does choose to leave work. Of course it’s important to remember that this will not be an appropriate solution for every individual. Some will indeed desire the opportunity to retire from work completely, but offering active support to stay in work demonstrates to employees that retirement isn’t their only option and that they are not being ‘forced’ out of work due to their age.
- Encourage rotations and knowledge sharing
Finding ways to share internal knowledge between your staff is often far more complex than it sounds. Despite people working in the same company, department or even team, it is hard to extract the knowledge that one person has and transfer it to another; especially if you don’t know exactly what knowledge needs to be shared. But tricky as it may be, it is vital that organisations try and find ways to help promote knowledge sharing within their business, as it is this lack of transparency that makes the demographic time-bomb so dangerous. Strategies to help encourage this may include using rotations within your business so people in different areas are able to see how they fit together within the business. This is something that will generally help collaboration and inter-departmental working regardless of any concerns around an ageing workforce. But it also helps address this challenge too as it’s likely that people from different areas of the business will have less understanding and hence will ask more questions during the rotation. People who work in the same area will typically think they already know a lot of the information and may not ask the insightful questions that outsiders will. By asking people from across the business to come together, more diverse knowledge can be shared, and when it comes to needing that knowledge down the line should an employee retire, it’s more likely that at least one person will be able to help as a result. How this transfer of knowledge is achieved will depend on the business and rotations may not be suitable for all situations, but other opportunities such as ‘lunch and learns’, departmental drop in sessions or formal knowledge sharing event should be considered. Once the dialogue is open it makes it much easier for a wide variety of knowledge to be distributed, reducing the chance that should employees leave, there will be no one to fill the knowledge gap.
- Document existing knowledge
If existing knowledge is at risk of being lost due to older workers opting to retire, then it is absolutely vital that where possible the knowledge they possess is documented. This will be easier in some instances than other; things like organisational processes, for example, are far easier to document than how a particular sales person achieved their unparalleled success. However when a business takes time to document what it can it helps create a more robust arsenal of information that can always be referred back to. The information may change over time or may become entirely obsolete, but by having it clearly documented it can be referred back to where needed and there is less risk of it being lost entirely. The best way to do this will be determined by the processes and procedures within a business, but it is a key step in protecting the information that ensures a business is able to run without the necessity of having particular individuals in post.
By taking active steps to assess and plan for the potential demographic time-bomb within your organisation it is possible to ensure relatively few ill effects as a result of a retiring workforce. However while the strategies above do focus on the age imbalance in the UK’s working population, in actuality they are all steps that organisations should already be taking to ensure effective workforce planning, regardless of the demographic of their staff. Making sure you are able to keep your business running to maximum efficiency no matter the make-up of your staff should be a top priority for all business every day, not just when the 2035 demographic time-bomb goes off.