Assessing the impact of an aging workforce across global organizations.
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Transcript of Assessing the impact of an aging workforce across global organizations.
Assessing the impact of an aging workforce across global organizations
30 April 2008 Presentation titlePage 2Page 2
Today’s discussion
► Assessing the aging world and aging workforce
► Ernst & Young’s study: 2007 Aging U.S. Workforce Survey: Challenges and Responses – An Ongoing Review► Survey methodology► Common themes► Key findings► Putting the pieces together
► Facing key issues on a global level ► Talent management and succession planning► Retirement
► Discussion: Understanding your global workforce
► Moving forward
30 April 2008 Presentation titlePage 3Page 3
An aging world – 2000
Source: U.S. Census Bureau
Under 5%
5% to 12.4%
12.5% to 20%Above 20%
Percent of Population Age 60+:
30 April 2008 Presentation titlePage 4Page 4
An aging world – 2025
Source: U.S. Census Bureau
Under 5%
5% to 12.4%
12.5% to 20%Above 20%
Percent of Population Age 60+:
30 April 2008 Presentation titlePage 5Page 5
Assessing the global aging workforce
► How we got here…► Declining global fertility rate over the past 4 decades
► Significant population declines in developed countries
► Population surpluses in less developed countries with unskilled and uneducated labor
► US Baby Boomer generation starting to retire► 43% of today’s workforce will be eligible to retire by 2018
► World’s population today 1 in 10 over 60…1 in 5 in 2050
30 April 2008 Presentation titlePage 6Page 6
Understanding financial implications of aging workforce
► By 2030, four Federal programs will consume all U.S. tax revenue without any spending:► Retirement of Federal employees, Medicaid, Medicare, and Social
Security (MW)
► By 2050, Medicare and Social Security will be 21% of GDP (4.3% in 2000) (CBO)
► Global Economies facing impending financial challenges in areas of talent management, retirement, healthcare and compensation costs ► Source: Ernst & Young LLP’s 2007 Aging U.S. Workforce Survey:
Challenges and Responses – An Ongoing Review
30 April 2008 Presentation titlePage 7Page 7
E&Y’s 2007 Aging Workforce Study
► Follow-up to Ernst & Young’s 2006 aging workforce study
► Surveyed Human Resources (HR) executives from Fortune 1000 companies
► Focused on financial and operational issues of the aging workforce
30 April 2008 Presentation titlePage 8Page 8
Common themes
► The aging workforce is a critical business risk, not just an HR risk, impacting all key business risk areas
► Organizations have been primarily reactive when it comes to managing the challenges brought on by this changing demographic
► Company-wide accountability exists when meeting the challenges of an aging workforce (Boards, C-suite executives, HR executives)
► Organizations that understand these concepts and start acting now will significantly benefit financially and non-financially in the future
30 April 2008 Presentation titlePage 9Page 9
Key findings► Potential loss of intellectual capital is imminent among survey
respondents ► 62% of respondents forecast retiring employees will cause a talent gap in
critical functions► Middle management will be where organizations feel the gap the most
► Employees are seeking opportunities to reduce work schedules as they age, but do not necessarily stop work completely
► Re-careering► Flexible work arrangements► Changing employers
30 April 2008 Presentation titlePage 10Page 10
Key findings► 40% of surveyed employers desire for senior management to stay at
least 2 years beyond their normal retirement age but with no formal program to address this issue
► Few employers have formal programs established to retain older workers ► Rules and administrative requirements for phased retirement programs
are so complex many organizations do not view them as a viable option ► Only 9% of respondents allowed employees to receive pension benefits while
still working for the organization
30 April 2008 Presentation titlePage 11Page 11
Putting the pieces together► Aging population will lead to businesses competing more for
younger workers► 37% of surveyed organizations considering changes to benefits
and compensation packages to attract and retain older workers► 20% considering increasing compensation► 29% considering a phased retirement program ► 33% considering implementing more “Baby Boomer Benefits” such as
financial education, retirement planning and long-term care benefits
► Employers must gain clear understanding of workforce demographics and employee needs to attract new and retain key employees
30 April 2008 Presentation titlePage 12Page 12
Facing talent management on a global level
► Global executives see HR risk as being among the top business risks facing an organization today► Talent management is the #1 HR risk overall
► Source: Ernst & Young LLP’s 2008 Global HR Risk Survey
► Effective global talent management programs are effective enterprise risk management programs► Developing the right person, with the right skills and competencies, in the right job
and the right time. ► Alignment to company business strategy ► Identification of positions, skills, competencies, experiences, etc. to drive
business strategy► Understanding of global and local country resources (needs and supply)► Established performance metrics and expected returns (financial and
nonfinancial) developed and monitored► Previous financial analysis conducted► Legal and regulatory issues addressed and monitored► Communications and change management processes put in place
30 April 2008 Presentation titlePage 13Page 13
“Must Haves” for talent management and succession planning
► Follow steps to ensure effective talent and succession planning program is put in place► Be strategic, not reactive
► Connect talent management to business strategy
► Understand employee demographics, needs, issues ► Focus on middle management► Understand issues that drive retention and facilitate transition of
traditional employment► Ensure you have effective, comprehensive governance with clear
accountability and measurement► Effective talent management is at the core of enterprise risk
management
30 April 2008 Presentation titlePage 14Page 14
Facing retirement programming on a global level Retirement is no longer the main event—it is a process Employers must help employees bridge the gap between their final
years on the job and the start of retirement► For two years in a row, more than 60% of executives admit retirement will
cause a “brain drain” or talent gap► Source: Ernst & Young LLP’s 2007 Aging U.S. Workforce Survey: Challenges and
Responses – An Ongoing Review
► Components of an effective retirement program that meets the needs of aging employees must consist of plans which allow employees to be “phased” into the retirement process► Employers do not appear to be implementing programs that will help
bridge employees into this next phase of their life► Absence of phased retirement plans and enticing compensation options
may lead to lack of desire to stay within a corporation at high level-positions
30 April 2008 Presentation titlePage 15Page 15
“Must Haves” for developing global retirement programs ► Follow steps to ensure effective retirement programs are put in place
that meet the needs of your employee demographics► Once again, be strategic, not reactive
► Connect retirement programs to the business strategy► Align with talent management plans to ensure the effective transfer of
knowledge across levels
► Increase dialogue across company divisions ► This will help to foster an understanding of the technical issues surrounding an
aging workforce and how retirement is seen among this demographic
► Understand employee demographics, needs, issues ► Review anticipated retirement projections within own company
30 April 2008 Presentation titlePage 16Page 16
Discussion: Understanding Your Global Workforce
► What pressures are you feeling from the operational, financial, strategic and compliance areas of your organization?
► If you could change one item in your current retirement program, what would that be and what impact do you think it would have on the organization?
► How well do you know your employee demographics (i.e. % retiring in the next 5-10 years) and what do you do with that information?
30 April 2008 Presentation titlePage 17Page 17
Moving forward in your organization
► Identify the human capital needs of your organization in 5 to 10 years
► Project population shifts with current workforce and culture and identify gaps
► Assess the needs and interests of the older workers► Assess the ability to employ older workers in a variety of
positions► Assess the organization’s talent management and employee
development programs and processes► Perform cost analyses of retaining older workers vs. attracting
new workers