The Perfect Organizational Storm – Trend 1- Aging Workforce

Ai Storm

Human Intelligent (HI) Workplace
Helping Leaders Help Themselves

September 27, 2014

The Perfect Storm

Human Capital Challenges & Opportunities in the 21 Century:

Implications for Organizations and Leaders

“Aging is not lost youth but a new stage of opportunity and strength.” Betty Friedan

There are several trends taking place at one time that set up organizations to face the perfect storm. The following is one of them.

Society is aging

Society is aging and this is not just in the U.S. or just in one industry. From a global perspective in the year 2000 only a small portion of the world’s population had over 20% over the age of 60, primarily in the European countries. By the year 2025 this will shift towards a larger portion of the world with only Latin America (in particular Mexico), India, and the African continent remaining with a younger society and in turn workforce. This in itself demonstrates that not only the U.S. but also the world is aging. This creates interesting challenges and opportunities not only for organizations but also for countries going forward when it comes to dealing with the aging population. How do the under-developed countries create infrastructure, processes, and opportunities in order to capitalize on their large but unprepared and undeveloped young workforce?

From a societal workplace perspective, an interesting number that countries and organizations need to be aware of further accentuates the point made above. The magic number for the workforce replacement rate as labor shortages continue to increase in the globe is 2.1. This number takes into consideration immigration, emigration, births, and deaths. The U.S. stands at 2.0 with Mexico and India at 2.8, while China is at 1.4, Japan at 1.3 and Spain at 1.1 among other countries in a similar situation.

These numbers obviously present some interesting challenges for some of these countries. If they are dramatically below the 2.1 number, then what can they do to turn this around? The alarming issue for these countries should be how do they replace their exiting workforce? How can they compete in the future if they don’t have a workforce to replace the existing and exiting one? Do they increase their recruitment efforts globally in order to attract potential employees from other countries? While this can definitely be one option, it cannot be the only option because other countries also have a shortage. What will be their creative response to this shortage? Can automatizing their work help and if so how much and how soon can they be ready? And even if they upgrade by using automatization, whom will they use to work in this new environment, when most of these countries do not have enough of an educated or talented workforce to work in this new environment? This definitely presents a challenge for these countries.

All of this is occurring everywhere in the world, but it appears to be more obvious for the U.S. where the Baby Boomers are beginning to either retire or move into a different phase of their life, possibly semi-retired. Today’s developed countries are leading the way into humanity’s graying future. China for one has realized this (not sure if in time) and has recently relaxed its “one-child” law. This is further compounded by the changing times as in the 1900s the average life expectancy was 47 and today it is 80. Which means not only will there be a brain drain but workforce drain with a large retired population. So how countries and organizations proactively prepare to address these challenges will be critical and imperative to their future.

In the U.S., over the next 20 years 80% of workforce growth will be over the age of 50 and over 70% expect to continue working after retirement. Increasingly more are “Working for a Purpose”. While most of us are use to reading about the Best Employer to Work for or for Women, Minorities, and to begin your career, the AARP also has a Best Employer List. These organizations are competitive in the areas of Employee development, Health benefits, Age of the workforce, Alternative work arrangements and time off, and Retirement benefits and pensions. At least three of these are relevant and applicable to employees of any age. In particular employee development, health benefits, and alternative work arrangements.

What is presently happening is that for every two experienced workers leaving the workforce, only one (relatively inexperienced) worker joins it. This means is that the future workforce is already born, finite, and shifting. How organizations adapt to this increasingly aging workforce will create changes globally, the U.S., and in the workplace. This will become increasingly relevant as we continue to evolve as a global society. What will this mean for countries, organizations, and society in general? How will organizations of today adapt to this aging workforce in the future? What will the next 20 or 30 years force countries and organizations to do in order to adapt to meet this potential older society and workforce? What will these changes create for society and for things that exist and do not yet exist today?

As society ages there are business and social opportunities increasingly being created. For example there is an increasing demand for the care of the aging population. In addition there are more baby boomers that are not only raising their children but also caring for their parents. There are the increasing health care concerns of the aging population with illnesses such as Alzheimer’s and others. Some of these diseases are those that some countries have not yet figured how to address or are culturally uncomfortable addressing, such as China. These changes not only create challenges but opportunities to be addressed as our society continues to gray.

I mentioned earlier the possible automatization of work. While this is a possible approach to handle the aging and shortage of the workforce, this will not serve as the silver bullet for organizations going forward in this area. Not all work will be automatized. Additionally there will still be the need for higher level, critical, problem-solving, and analytical thinking that organizations will need to address problems and issues that we have not yet even thought of. So while there are a lot of futuristic Hollywood movies of a possible future where technology will be the norm, to a large extent that exists today. Yet this will not be the only alternative society and organizations will need to consider when addressing the future of work and the potential shortage of a workforce. Especially with the limited educated workforce (more to come on this later).

I see competition increasing at a global level for the limited, skilled, and/or educated workforce. It will be interesting to see how organizations adapt to their new “real world order” and “new normal” of a limited skilled workforce. While some futurist say water for the world is our future shortage (and I agree), I also believe a limited, highly sought after skilled and/or educated demographic will be our future shortage (I hope I’m wrong).

So what can or should an organization do?

The following are some considerations and recommendations:

For starters an organization should create an environment, culture, and practices where knowledge is shared. Knowledge Management and sharing is not something that most organizations do or do well. As baby boomers get ready to retire organizations should consider establishing systems, processes, practices, enabled by reward and accountability so they are motivated to capture and share their knowledge. In the same vain, the younger generation should be enabled, held accountable, and rewarded to not only learn from the older generations but to also share what they know.

Creating an environment that allows everyone to collaborate, learn, and share can enable an organization to create an exciting and vibrating culture. To become an organization that can position it to outperform its competition by creating a learning organization. To create an organization that is constantly reinventing itself by sharing knowledge and information and positioning it for the future by enabling its future workforce.

In addition to creating an engaging, sharing, and collaborative environment, the organization should create activities that enable the organization to thrive by creating practices and processes that serve what motivates the different generations in the organization. To ensure it provides on-going development specific to the generations and to the needs of the evolving organizational needs.

Another area an organization should consider is some HR policy that enables older soon to be retired employees to work through some form of part time arrangement. This allows those that might not immediately retire a creative opportunity to continue to contribute and minimize an organization the pain of an excessive exit of a valuable portion of their workforce.

And last there are other ideas I’m sure an organization can create and use to maximize these four (soon to be five) generations in the workforce. It’s a matter of putting its creative organizational brainpower to work on it.

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