Perennials, not millennials, will trigger the next wave of talent retention efforts

Thousands of older customers of the US pharmacy chain CVS spend the colder months of the year in warmer climes, migrating from homes in, say, Minnesota to winter pads in sunny Arizona or Florida. In the mid-2000s, CVS realized that many of its older pharmacy employees wanted to do the same thing.

Rather than force older and more experienced workers to choose between retiring early to pursue the snowbird lifestyle or working through the winters in a place physically difficult to navigate, CVS started a program that allows them to transfer temporarily to stores in warmer states during the winter. It’s a win all around: stores that see a spike in snowbird customers in the winter get more staff during their busy season, customers get the service they need, and employees get jobs that accommodate their lifestyles.

Headlines in recent years have trumpeted workplace changes demanded by millennials, from nap pods to flexible scheduling to student-loan repayment. But there is another fundamental shift in workforce demographics that initiatives like CVS’ snowbird scheduling are just beginning to address.

Older workers—or “perennials,” as this cohort has sometimes been called—are now the fastest-growing population of workers, with twice as many seniors as teenagers currently employed in the US.

In the 30-year span from 1994 to 2024, workers aged 55 and older will go from being the smallest segment of the US working population to the largest, according to the US Bureau of Labor Statistics. Other industrialized nations are seeing similar trends; in Japan and South Korea, the workforce is aging even faster.

When BMW realized how many workers with job protection at one German plant were aging, the automaker retooled its production facility to accommodate older workers, installing ergonomic seating and softer floors, enlarging the type on the computers, and supplying more supportive work boots. Productivity rose, and absenteeism plummeted. US companies reluctant to lose the institutional knowledge of older workers have done the same, with manufacturers installing ergonomic seats in trucks and redesigning assembly lines to avoid repetitive motion injuries.

A changing age
The aging of the workforce is in part driven by employees who want to keep working—or at least, to keep earning—well into their 70s and even 80s.

Increased life expectancy across the industrialized world means that more people have more years of healthy life than ever before. Women who deferred careers while raising children may only be hitting their professional stride in their later 50s; men and women who spent decades in engaging roles may be reluctant to abandon the social and intellectual stimulation of work for decades of leisure time.

Meanwhile, the corporate shift from defined-benefit retirement plans, which guaranteed a steady income, to defined-contribution plans, which place the onus of saving on workers, has left many older people financially unable to quit work without a substantial drop in their standard of living.

Nearly half of current retirees surveyed in 2014 said they were still doing some paid work in retirement. But even the subset of these workers who are continuing to work past retirement out of choice rather than necessity often desire some kind of transition by the time they reach their mid-60s. That may mean part-time work, to allow for more free time with family, or less time at a job that’s become more physically taxing, or flexibility to accommodate other lifestyle changes.

Employers are seeing returns, too. As age diversity on work teams goes up, so does productivity and performance. Research from the Milken Institute’s Center for the Future of Aging and the Stanford Center on Longevity found that older employees took fewer sick days, showed stronger problem-solving skills, and were more likely to be highly satisfied at work than younger colleagues.

And the benefits of having more healthy, productive people in older cohorts helps the economy overall, says Paul Irving, chairman of the Milken Institute Center for the Future of Aging and distinguished scholar in residence at the University of Southern California Davis School of Gerontology. Americans above the age of 50 already spend $7.6 trillion per year. By 2020, spending power of those aged 60 and older is expected to be $15 trillion annually.

“Keeping older people working means they remain taxpayers. With their increased financial resources and confidence and ongoing engagement, they are likely to continue to consume,” Irving said. “The more people are actively engaged in the economy, the more likely the economy is to grow. That’s good for everyone.”

Where millennials meet perennials
In 2011 and 2012, the consulting firm PWC surveyed 44,000 of its workers around the world to understand what younger workers wanted. Millennial employees, the firm discovered, highly valued work-life balance—but so did their older colleagues.

Virtually identical percentages of millennial employees and non-millennial workers told PWC they would prefer flexible schedules to accommodate both their personal and professional obligations. Younger employees were more willing to ask for such changes, but older ones valued them just as much.

PWC subsequently rolled out a flexibility policy that allowed workers of any age to adjust their schedules to fit with personal priorities. This might mean a mid-afternoon break to pick up a child or grandchild from school, with hours made up at a different time of day; or the flexibility to work from home on days when it isn’t necessary to commute into the office.

By adding flexible options, PWC was able to accommodate both older and younger workers, just as BMW was able to reduce physical stress for older workers with decades of labor behind them—but also for younger workers, who likely have decades more ahead. This is a theme with many of the workplace changes that demographic and technological changes have wrought: They create more sustainable jobs for everyone.

That’s important because working longer will be a financial necessity for many people over the coming decades. London Business School professors Lynda Gratton and Andrew Scott, who co-authored The 100-Year-Life: Living and Working in an Age of Longevity, have calculated that a worker who lives to be 100—as most children born by the end of this century will—who saves roughly 10% of her income and wants to retire on 50% of her final salary will need to work into her 80s.

The prospect of stretching full-time, full-on work another few decades is daunting at best for many workers, and physically impossible for many others. Psychologist Laura Carstensen, founding director of the Stanford Center on Longevity, has long argued for replacing the current standard of intense, full-time careers that end abruptly in a worker’s mid-60s, with longer arcs that include more frequent breaks.

The current model “doesn’t work, because it fails to recognize all the other demands on our time,” Carstensen told Quartz At Work. “People are working full-time at the same time they’re raising children. You never get a break. You never get to step out. You never get to refresh . . . There is no real reason why we need to work this way.”

Leaning out
One of the benefits that companies have been slowest to roll out is one that most older people want: phased retirement. Rather than stopping work completely, many people of so-called retirement age would prefer instead to cut back on hours.

Only 19% of US companies offered some form of phased retirement to workers in 2017, according to the Society of Human Resource Management, and less than a third of those companies offered the option through formal programs. More commonly, it’s a perk given only to the highest performers. But addressing employees’ requests this way, on a case-by-case basis, opens the door to charges of age discrimination and can lead to valuable employees leaving altogether.

Phased out or not, the retirement of baby boomers threatens a mass exodus of talent—a threat that some companies, like CVS, are responding to with new investments in the retention of older workers. In a way they are getting ahead of a rather short curve.

Of course, there are still plenty of employers that are reluctant to rethink approaches to benefits, pensions, and hours for older workers. But eventually, the labor market is going to force them to do so.

Author: Corinne Purtill
Source: qz.com