The US Bureau of Labor Statistics projects that by 2024, a quarter of the US workforce will be over 55 years, with one-third of them aged 65 or older. The UN projects that the world’s population in 2050 will be 9.8 billion. With 2 billion of them crossing 60, talent management may face the challenge of having five generations working together.
Advancements in technology and healthcare have increased life expectancies. While the increase in life expectancy is one of humanity’s greatest achievements, it brings challenges and opportunities. The challenge is how states and individuals handle their retirement, which is an added strain on their tax and welfare systems. For talent management in enterprises, it is about affording older workers.
With older generations like the baby boomers easing into retirement, the world could face talent shortages. There is also widespread concerns about automation and AI significantly reducing the need for human talent.
Despite the jobs becoming redundant, technology adds new ones that the older workers are unfamiliar with. Though they benefit only the new generations, herein lies the opportunity for the aging workforce.
Challenges of the Aging Workforce
The impact of an aging workforce on the talent management department is varied, depending on the industry, state of operation, and business size.
As employees get older, they may not update themselves on current technological trends and advances that assist them. They may not be as computer literate as their younger colleagues who grew up with the internet and smartphones.
The aging workforce may require additional training to learn new technology, which can drive costs. Talent management may find it challenging to place the aging workforce in roles where extensive training is necessary. The learning curve is likely to reduce productivity, at least in the short term.
Statistically, aging workers may require more medical attention and healthcare than their younger counterparts. Talent management must deal with increased insurance claims and high insurance coverage costs of an aging workforce.
The aging workforce will need special accommodations, ergonomically correct workstations, regular breaks, computer screens, and lighting. Considering age-related physical impairments and accessibility is a talent management cost for the company.
Emerging Implications of Talent Shortages with Aging Workforce
Beyond worker health costs and absenteeism, the aging workforce can aggravate the talent shortage problem. According to a survey, the manufacturing sector saw workforce shortage and an aging workforce as key risks. Half of the workers in manufacturing are aged 45 years or older. The industry may face 7.9 million workers lost by 2030.
The potential shortages are not unique to manufacturing. Financial and business services companies, for example, could face a global talent shortage of 3 million workers this year and 10.7 million by 2030. All this could have an accompanying significant economic impact.
- Retirement age is not keeping up with life expectancy. It is lower than it was in 1950; and
- Fewer people are entering the workforce today due to lower birth rates, and more young people are spending more time in university.
As a result, our workforce is shrinking. As time goes on, the employers’ access to a broader talent pool seems to get smaller.
Relooking the Aging Workforce Problem
Retiring employees take their wealth of knowledge and corporate experience with them, leaving the talent management department charged with recruiting, hiring, and training new employees to take the place of the aging workforce. Training new employees need time, money, and patience.
On the contrary, an older workforce brings valuable experience and knowledge of their industry or their company’s products and services, which can be shared with individuals taking the first tentative steps in their career.
Having workers from different age brackets offers a wider variety of views. This diversity provides diverse perspectives, a host of ideas, and problem-solving tactics that young workers may not provide.
The customer pool may consist of young and aging. Members of your workforce who understand and relate to the older groups in your target audience can assist your business by ensuring the firm remains relevant to older customers. They can provide empathy and insight into how you deliver service.
Capitalizing on the Aging Workforce Opportunity
The aging workforce will become critical and will provide benefits to the organization. So, talent management must manage the different needs of the aging workforce while developing inclusive strategies that link the impacts of the employees to the design of organizations’ facilities, operations, and health and benefits programs.
Many organizations are working to take advantage of the value the aging workforce brings. Several initiatives are undertaken to engage them. Let us look at some.
Organizations that incorporate relevant data into new and existing programs can overcome the complexities of an aging workforce and remain competitive in the face of demographic change. You can stay competitive by taking care of a few key business areas.
- Faster recruitment – The time-to-hire impacts whether you will snap up top talent or not. People may not just interview only with you. If your competitor has already offered them, you have lost the race. Talent management can streamline the recruitment process with insights into the talent market.
- Competitive offers – You are already at a disadvantage if you calculate how you can get away by paying your employees as little as possible. Although more money does not guarantee performance, talent acquisition could struggle with low pay.
- A strong culture – A strong culture makes your employees genuinely happy and engaged, and they will give you their all. Creating a strong culture is about flexibility, continuous training, and benefits than coffee and lunch.
Planning for Tomorrow
Therefore, ongoing opportunities to reskill and upskill are crucial for the aging workforce to keep updated with industry changes and adapt to rapidly changing work environments. While retailers invest in training older workers on using digital devices, multiple industries consider how best to enable the aging workforce to transfer their vast knowledge base to younger peers.
Firms like Arcadis and Arup have introduced reverse mentoring pilot schemes. Flexible working patterns could help to support such schemes. Employers could offer older workers wishing to work fewer hours consultancy-type roles.
Bulk recruitment could destabilize an organization. Flooding an organization with new staff could help when there is supervision, mentoring, and training that the aging workforce could provide. They could support and mentor when required from home.
Seizing the opportunity that the aging workforce presents is not just a responsibility of employers. Governments also must face the reality of the unfolding social revolution.
Draup’s analysis of the aging workforce market brought to light some of the demand-supply gaps in the future and how engaging the aging workforce optimally could make organizations efficient and derive value from them.
Draup is a talent intelligence platform that enables enterprises to help talent management hire quality talent faster. This analytics-driven platform also helps in developing the workforce for the future. Enterprises can use the Reskilling Navigator to reskill the aging workforce in emerging high-demand areas in sync with their skillsets and experience, helping them stay current.