Workforce Planning: Aging and
Employment
Module 4: The Employer Perspective
Barbara McIntosh, Ph.D., SPHR 2010
Module 4: Overview of the Employer
Perspective
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Labor supply issues.
Business case for older workers.
Best practices models.
Review organizational strategy.
Implications for HR policies and practices:
• HR audit/cost assessment.
• Retention and recruiting issues.
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Employer Perspective:
Demographics and Labor Supply
• More workers are age 55 and older. This
increases employer receptivity to older workers.
> In 2000, 13 percent of workers were age 55
and older. Those between the ages of 55 and
64 are the fastest-growing segment.
> By 2015, 20 percent of workers will be age 55
and older.
• Smaller number of cohorts are entering the labor
force.
• Critical labor shortages were predicted in
dominant, growing, skill-specific service sectors:
*Aerospace
*Transportation
*Nursing and health care
*Energy
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Demand and Aging Workers
High-Growth Industries
Proportion of Workers
Age 45 and Older
Aerospace
55%
Energy
52%
Transportation
47%
Advanced Manufacturing
43%
Health Care
43%
Automotive
39%
Financial Services
38%
Construction
34%
Retail
34%
Information Technology
33%
Hospitality
21%
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Employer View: Surplus or Shortage?
• Labor surplus:
> Recession means layoffs. Are there implications for
age distribution?
> Changing markets means shift in required skills mix.
• Labor shortage alternatives:
> Other labor market segments.
> Immigration:
• H-1B visas, set at 195,000 during tech boom,
were reduced to 65,000 for FY 2005; they were
gone on the first day of availability.
• Reduced flow of foreign students.
> Technology.
> Current aging workers and retirees.
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Business Case for Older Workers
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Experienced contributors.
Knowledge retention.
Reduced costs in retention vs. recruitment.
New product and service markets.
Customer sensitivity.
Employer of choice (competitive in labor market).
More attractive to investors if stable.
Greater efficiency.
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Award-Winning Companies
The top 10 2009 AARP Best Employers for Workers
age 50 and older are:
1. Cornell University (Ithaca, NY)
2. First Horizon National Corporation (Memphis, TN)
3. National Institutes of Health (Bethesda, MD)
4. The YMCA of Greater Rochester (Rochester, NY)
5. National Rural Electric Cooperative Association (Arlington,
VA)
6. S. C. Johnson & Son, Inc. (Racine, WI)
7. Massachusetts Institute of Technology (Boston, MA)
8. Stanley Consultants (Muscatine, IA)
9. Brevard Public Schools (Viera, Fla.)
10. George Mason University (Fairfax, VA)
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Why Are They Winners?
• For all the recognized organizations, the policies
for recruiting and retaining a mature workforce
set high standards for the workplace.
• Types of programs that win recognition:
> Flexible work arrangements to help workers
balance their professional and personal lives.
> On-site medical centers.
> On-site education programs that provide
college credits.
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Strategy Review: Start at the Top
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Organizational age audit (profile organization).
Mission, vision; diversity with clout.
Organizational culture.
Bottom line: cost assessment model.
Audit all HR policies and practices regarding the
effects of age.
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Human Resource Age Audit
• Most employers are unaware of the age
distribution in their organization except in general
estimates.
• Strategically, the organization should review:
> Age distribution by department and relative
expenditures.
> Cross tabulations:
• Age by turnover.
• Age by accident rate.
• Age by absenteeism.
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Organization Culture: Mission, Vision and
Diversity
An organization’s culture is a set of shared
assumptions, values and norms that identifies
what that organization considers important and
how employees and managers should behave
(Becker, 1982; Schein, 1985).
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Bottom Line: Replacement Cost Assessment
• Projected costs by department can be
estimated based on expected
turnover/organization exit.
• Examine the "green money," or actual costs of
turnover, and the "blue money," or indirect
(softer) costs of turnover (Alrichs, 2003).
• Replacing older workers who leave the
organization must include direct and indirect
costs.
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Actual and Soft Turnover Costs
Notice Period
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Vacancy Period
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Hiring and Orientation Period
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Hidden
_____________________________
Total Replacement Cost
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Turnover Costs: Notice Period
Green money (actual) costs
1. Last paycheck, accrued vacation, separation pay.
2. Increased unemployment tax.
3. Continued benefits.
Blue money costs (appropriate salary/hour x
time spent on each activity)
1. Administrative costs to process the separation: process
benefits; contact unemployment office, payroll and IS
departments; schedule exit interview; etc.
2. Lower productivity of employee, peers, supervisor,
subordinates.
3. Exit interview, transition meetings.
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Turnover Costs: Vacancy Period
Green money costs
1. Advertising and recruiter fees.
2. Interview expenses (meals, mileage or other).
3. Printing costs for marketing materials.
4. Assessments.
5. Criminal, reference and credit checks, etc.
6. Medical exams and drug tests.
7. Temporary/contract employee costs.
8. Overtime costs.
9. Relocation expenses and salary.
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Turnover Costs: Vacancy Period
Blue money costs
1. Lost productivity of peers, supervisor,
subordinates.
2. Advertising creation and placement.
3. Recruiter selection.
4. Administrative costs such as ordering forms
and copies of annual reports, scheduling and
scoring assessments, coordinating with hiring
manager and others, etc.
5. Resume screening.
6. Interviews: first, second, third.
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Turnover Costs: Hiring and Orientation
Green money costs
1. Orientation materials (handbook, video,
handouts, etc.).
2. Formal training programs (materials, course
fees).
3. Informal one-on-one training (materials, if any).
Blue money costs
1. Orientation participants’ salaries.
2. Lost productivity of peers, supervisor,
subordinates.
3. Administrative costs such as orientation setup,
ordering materials, etc.
4. Informal training and one-on-ones.
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Turnover Costs: Hidden Costs
1. Missed deadlines and shipments.
2. Loss of organizational knowledge.
3. Lower morale due to overwork.
4. Learning curve.
5. Client issues due to turnover.
6. Loss of client relationships.
7. Disrupted department operations.
8. Chain reaction turnover.
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HR-Specific Review and Strategies
• Staffing strategies
> Reduction-in-force (RIFs).
> Retention.
> Recruitment.
• To be discussed in Module 5:
Training and development.
Organizational learning and knowledge transfer.
> Continuous training for all employees.
> Stem brain-drain.
> Mentoring (non-age specific).
> Stimulating creativity.
> Career development (reinventing careers).
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Staffing: RIFs
Recession and downsizing: Age profile implications?
> Are older workers disproportionately affected?
> Is layoff pattern legally defensible?
> What is the effect on the organization’s culture?
> Do older workers leave with valuable tacit
knowledge?
> Are there knowledge transfer programs in place?
> Can older workers be kept active through
consulting relationships?
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Staffing: Retention Tools
• Supportive organizational culture.
• Flexible work arrangements:
> Flextime.
> Reduced time (part time, part year).
> Flexible leave (to help meet care-giving
obligations).
> Flex-careers (leaves, sabbaticals, rehearsal
retirement).
> Flex-place (telecommuting, snow-bird
programs).
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Retention Tools Continued
• Challenging work.
• Career transitions.
• Prorated health benefits.
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Recruiting Older Workers
• How does an employer establish hiring criteria?
Is a detailed job description used as a yardstick
to measure job candidates, or is it a “gut
feeling”?
• Do recruiting efforts include sources aimed at
more experienced workers?
• Do sources include college campuses and
professional associations?
• Are interviewers trained to avoid age bias?
• Are multiple interviewers used to avoid age
bias?
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Recruiting Sources
Do recruiting efforts include sources aimed at
more experienced workers?
> Are experienced workers asked to refer
friends?
> Do sources include college campuses and
professional associations?
> Are non-traditional sources tapped?
• Churches.
• Golf courses.
• Alumni associations.
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Selection: Screening and Interviewing
• Are gatekeepers (receptionists, assistants,
recruiters) trained to treat applicants equally?
• Are there issues with the application form?
Readability: 12 pt. type or larger.
Adequate space for recording experience.
• Are interviewers trained to avoid age bias?
• Are multiple interviewers used to avoid age
bias?
• Education versus experience (tradeoffs?)
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Employer Perspective Part 1 Summary
We have covered the following topics in this
module:
> Labor supply and demand pressures.
> The “business case” for recruiting and
retaining older workers.
> Models of best practices.
> Organizational strategy and valuing
employees.
> Implications for HR policies and practices:
• HR audits.
• Cost assessment of turnover.
• Staffing: RIFs, retention and recruiting
tactics.
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