DIVERSIFICATION: IS THERE A N.E.E.T. · 2019. 3. 1. · Create a compelling value proposition to buy, build and retain the workforce needed. 2. ... Creating a compelling and authentic

H E A LT H W E A LT H C A R E E R

D I V E R S I F I C AT I O N : I S T H E R E A

M E R C E R W O R K F O R C E M O N I TO R ™December 2018 update

N . E . E .T.S O L U T I O N T O T H E W O R K F O R C E C R I S I S ?

Not in Employment Education and Training

M E R C E R W O R K F O R C E M O N I T O R ™

C O N T E N T S

I N T R O D U C T I O N 2

T H E W O R K F O R C E C R I S I S C O N T I N U E S 4

M E R C E R ’ S F I V E L I N E S O F D E F E N C E 1 0

D I V E R S I F Y I N G Y O U R TA L E N T P O O L 1 2

TA K E A C T I O N — T H E T I M E I S Y E S T E R D AY ! 1 8

W H AT D I F F E R E N C E W I L L A L L T H I S M A K E ? 2 4

C L O S I N G T H O U G H T S 2 4

M E R C E R W O R K F O R C E M O N I T O R ™ 2

L E A D I N G W I T H D I V E R S I T Y : C R E AT I N G A P O S I T I V E V I S I O N F O R B U S I N E S S S U C C E S S A N D S H A P I N G Y O U R R E S P O N S E T O T H E W O R K F O R C E C R I S I S

I N T R O D U C T I O N

In this report, we take a closer look at the second line of defence: diversifying your talent pool. This line of defence turns diversity on its head. It is not another workforce issue to add to the already-full plate of HR concerns. Instead, it is the core solution to the future of work and workforce shortages. A thriving workforce is one that is diverse and adaptable, where managers and teams work together to help everyone feel comfortable bringing their true selves to work and where unique backgrounds and experiences are celebrated. This line of defence blows up preconceived notions of the “minimum requirements of the job” and allows organisations to consider carefully how to create a deal, an environment and a job that meet the full range of different employees’ needs.

Specifically, we look at this through the lens of three key, untapped labour pools: female workers, people with disabilities and ageing workers. Of course, the potential to diversify your labour pool is much broader than this, and we look forward to the necessary and exciting dialogue on how to create a thriving workforce environment for all.

W E A R E H E R E T O H E L PContact us to find out more about how Mercer’s Thriving Workforce Plan helps you review and reset your people strategy to sustain growth and ensure your company is resilient to future workforce challenges by building a thriving organisation.

Our analysis will help you understand the skills and roles you will need in the future and how you can ensure you have the resources to fill that demand. Our process combines external and internal insights into your unique risks and opportunities and helps you cultivate specific workforce defence strategies to drive your growth plans.

1 For example, if the increase in workforce demand between 2015 and 2025 is the same as the increase of the previous 10 years, we estimate the UK will be 1.9 million people short of needs.

Brexit: one word today that guarantees an emotional reaction. We hear a familiar litany from many: uncertainty, promise, confusion, hope, apathy, boredom, inaction, indecision. Yet, since we launched the Mercer Workforce Monitor 18 months ago, our discussions with clients have quickly gravitated to the core workforce issue that cannot be swept under the carpet of uncertainty — regardless of Brexit (and in spite of automation), the UK is facing an unprecedented workforce shortage.1

Initially, we sought to examine the impact of Brexit on the UK population and workforce, and in our first report concluded that it was the ageing of the UK population that would drive more, potentially devastating, change. In our August 2017 report, we explored the dual impact of ageing and migration on industries and concluded that all industries and employers will be affected, although in different ways. In our March 2018 report, we looked at the regional impacts, with some surprising consequences for “young” regions, such as London.

However, not all is doom and gloom. These disruptions will put people at the heart of transformation, creating a positive vision for the workforce and shaping the human future of work. Organisations can embrace the need for action and nurture a thriving workforce through the five lines of defence:

1. Create a compelling value proposition to buy, build and retain the workforce needed.

2. Diversify your talent pool.

3. Invest in sustainable automation and productivity enhancements.

4. Move and relocate work.

5. Regroup and review your business strategy through the lens of people.

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Our services to help you respond to these challenges:

We are inviting leaders to reach out to our workforce experts today.

Email: [email protected] Visit: http://uk.mercer.com/workforcemonitor

Please note that due to rounding, tables and figures in this paper may not always add up precisely.

H O W W E W O R K W I T H C L I E N T S O U T C O M E S A C H I E V E D

People strategy: Based on the principles of strategic workforce planning, this combines an external perspective of the future of work with internal workforce analysis.

A future-focused people strategy that balances immediate and longer-term priorities to create a thriving workforce

Talent availability assessment: This research process identifies where specific talent pools/skills are located, both in the “here and now” and in the future. Focus is on the supply and demand for talent from both a volume and a quality/skills perspective.

Helps answer the talent scarcity challenges and support build, buy, borrow discussions as well as location strategies

Ageing workforce diagnostic and strategy An evidence-based workforce plan to tap into accessible and relevant talent pools

Diversity and inclusion diagnostic and strategy: Using a holistic diagnostic of factors contributing to the current state — reward, policies and programmes, health, engagement and workforce profile — we develop a longer-term strategy underpinned by concrete actions to ensure you are able to thrive in the future.

A pragmatic, focused and sustainable strategy to build diversity and increase innovation and productivity

Creating a compelling and authentic employee value proposition: Utilising four dimensions of insights — employer, employee, market and cost — we help unlock the unique value proposition and identify implications for HR programmes, communications and branding.

An authentic and relevant value proposition that is aligned to the needs of current and future employees

Mobility consulting and data services Pragmatic insights for dealing with mobile employees and competitive pay and benefits for the whole workforce


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T H E W O R K F O R C E C R I S I S C O N T I N U E S

It is harder than ever to fill jobs as the UK continues to see the significant impacts of an ageing workforce and reduction in net migration.

Source: Office of National Statistics, Mercer Analysis

Overall, the number of people in the workforce is increasing, primarily due to the demographic impact of the increased population after age 50 and workers remaining in the workforce past the current State Pension Age of 65. Despite this increase in supply, we continue to see signs of the workforce shortage. For example:

• The number of job vacancies is increasing. There were 845,000 job vacancies for the period from August to October 2018. This was 44,000 more than for a year earlier, the highest figure since comparable records began in 2001.

• The number of foreign-born workers has fallen. This is at the fastest rate since records began in 1997. The EU-born workforce has fallen by 93,000 and is at its lowest level since Q1 2016.

• The number of people looking for work is decreasing. The unemployment rate is currently 4.1%, down from 4.3% a year earlier, or 43,000 fewer people unemployed.

• The number of inactive workers in younger age groups is decreasing. The number of people of a working age (under 65) that are inactive decreased by 147,000 over the year.

• The number of jobs is increasing. In June 2018, there were 35.2 million workforce jobs, 133,000 more than a year earlier.

Figure 1. Employment Trends Q3 2017 to Q3 2018 July to September 2017 to the same period in 2018, not seasonally adjusted

+303,000 +427,000 -93,000 -38,000

Change in workforce UK-born workers EU-born workers Non-EU-born workers

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C H A N G E I N W O R K F O R C E B Y A G E U N E M P L O Y M E N T R AT E

16 to 24 -56,000 12.0% (up from 11.9%)

25 to 34 +28,000 3.8% (down from 3.9%)

35 to 49 +33,000 2.8% (unchanged)

50 to 64 +233,000 3.0% (unchanged)

65+ +68,000 1.2% (down from 1.8%)

5 - Y E A R AV E R A G E C H A N G E( 2 0 1 3 T O 2 0 1 8 )

1 0 - Y E A R AV E R AG E C H A N G E ( 2 0 0 8 T O 2 0 1 8 )

Population change -61,000 -31,000

Workforce change -62,000 -53,000

Change in full-time education rate +0.1% +0.5%



Figure 2. Workforce Age Trends 2017 to 2018 July to September 2017 to the same period in 2018, seasonally adjusted

Figure 3. Population Changes in Under-25 Workforce

Examining workforce and employment trends by age shows more indicators of the impact ageing is having today. There are fewer younger people in the workforce (even though unemployment rates are slightly up), and the number of workers in the 50–64 age group shows the sharpest increase.

R E F L E C T I O N S O F T H E U N D E R - 2 5 W O R K F O R C EOne aspect of the reduction of the under-25 workforce is the combination of a reduction in population in the ages 16–24 and an increase in the number of this age group in full-time education along with a consequent reduction of those in the workforce.

For example, over the last 10 years, the population in this age group has fallen by 31,000 per year on average, whereas the workforce has fallen by 53,000 per year, and the proportion in full-time education has increased by 0.5% per year. However, as the table below shows, over the last five years, the rate of population and workforce decline has accelerated, while the rate of increase for those staying in full-time education has flatlined.

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R E F L E C T I O N S O F T H E O V E R - 2 5 W O R K F O R C ESince 2008, the UK population has grown by 4.6 million, and the working-age population encompassing ages 25–64 has increased by 1.6 million (823,000 males and 815,000 females). A detailed breakdown of the average annual change in the workforce over the last 10 years is shown below:

A G E 5 - Y E A R A N N U A L C H A N G E( 2 0 1 3 T O 2 0 1 8 )

1 0 - Y E A R A N N U A L C H A N G E( 2 0 0 8 T O 2 0 1 8 )

Males Females Males Females

25 to 29 31,540 32,100 42,480 24,550

30 to 34 16,420 17,360 13,180 24,030

35 to 39 27,820 29,640 -14,740 -7,490

40 to 44 -42,960 -36,360 -22,660 -30,480

45 to 49 -13,800 -12,500 24,560 9,390

50 to 54 32,760 35,280 44,840 40,090

55 to 59 39,840 43,980 17,800 23,230

60 to 64 17,840 42,260 26,890 6,320

Total 109,460 151,760 132,350 89,640

Figure 4. Population Changes in Over-25 Workforce


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Figure 5. Migration Trends, June 2017 to June 2018

This clearly shows the accelerating rate of increase of females joining the workforce and the decelerating rate of males joining. However, patterns vary by age band:

The workforce between the ages of 25 and 40 has generally been increasing, and the growth of female workers outpaces men.

The workforce between ages 40 and 50 has generally been shrinking. The workforce changes between female and male is mixed.

The workforce over 50 has been increasing, and the growth of female workers outpaces men. In particular, the growth in the 60–64 age bracket has accelerated, which is due in large part to the raising of the State Pension Age for women.

1 2 3

The Mercer Workforce Model expects that the 50–64 age group will continue to increase until the early 2020s and start flatlining, but the over-65 workforce will increase.


273,000 128,000 145,000

47,000 higher net migration than for the year ending June 2017

UK-born people left the country, down 1,000 compared to the

year ending June 2017

EU-born people left the country, up 22,000 compared to

year-end June 2017

Increasingly, people from both the UK, and especially the EU, are leaving the country — the highest-ever emigration. Of particular note is the net emigration of citizens from the EU8. At the same time, the volume of EU citizens entering the country is decreasing. The numbers in the workforce from both the EU and non-EU have dropped, whereas the numbers migrating have slowed but not reversed. There has been an uptick in immigration from outside the UK, but this is mainly from Asia, and the majority of the overall increase is for formal study rather than work or other reasons. In addition, the vast bulk of inflows from the EU are now for formal study rather than work. These downward trends are in line with Mercer Workforce Monitor projections from early 2017. This natural slowdown, together with proposed restrictions in migration (see sidebar on page 9), means shortfalls in workforce demand need to be met with homegrown workers.

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Figure 6. Changes in UK Migration

Figure 7. Net Migration

P E O P L E E N T E R I N G U K Immigration

N E T M I G R AT I O N

P E O P L E L E AV I N G U KEmigration

U K B O R N

8 0 , 0 0 0

- 4 9 , 0 0 0 1 , 0 0 0

E U B O R N

+ 7 4 , 0 0 0 2 9 , 0 0 0

N O N - E U B O R N

+ 2 4 8 , 0 0 0 7 6 , 0 0 0

T O TA L

+ 2 7 3 , 0 0 0 4 7 , 0 0 0

1 , 0 0 0

E U B O R N

N O N - E U B O R N

2 1 9 , 0 0 0 7 , 0 0 0

3 2 6 , 0 0 0 6 4 , 0 0 0

T O TA L

6 2 5 , 0 0 0 5 9 , 0 0 0

U K B O R NU K B O R N

1 2 8 , 0 0 0 1 , 0 0 0

E U B O R N

N O N - E U B O R N

1 4 5 , 0 0 0 2 2 , 0 0 0

7 8 , 0 0 0 1 2 , 0 0 0

T O TA L

3 5 1 , 0 0 0 1 1 , 0 0 0

Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden

Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia

Bulgaria, Romania

E U 8 2 1 , 0 0 0

E U 2 6 , 0 0 0

E U 1 570%

-21%

51%

7 , 0 0 0

O F E U I M M I G R A T I O N

4 7 , 0 0 0


- 1 4 , 0 0 0


3 4 , 0 0 0

8



T H E M I G R AT I O N A D V I S O R Y C O M M I T T E E ( M A C ) S E P T E M B E R 2 0 1 8 R E P O R T A N D E M E R G I N G G O V E R N M E N T P O L I C Y

The MAC published its long-awaited report in September 2018, and at the time of compiling this report, indications are that the Government will follow its recommendations in formulating its post-Brexit migration policy.

The core recommendation is to treat EU and non-EU migrants the same, simplifying procedures, but allow only workers with a definite job on an expanded list of skilled occupations, with a minimum level of salary. Visa caps (currently in place for non-EU migrants) would be abolished. The report concludes that higher-paid, higher-skilled migrants contribute more and add to productivity compared to lower-skilled workers.

There is the implied assumption in these recommendations that the UK-born workforce will provide the future supply of unskilled workers; however, this assumption was not tested in the MAC analysis. For example, in a discussion on the needs of the social care sector, the MAC report implies the issue is one of funding, postulating that the more money that is available, the more this would attract the existing UK-born population to work in the sector. Again, there is no supply analysis to determine whether there are sufficient UK-born workers to meet the growing demands of this sector.

Finally, there is no analysis as to the numbers of likely new migrant workers or overall economic impact on supply of the proposed strategy beyond what has been beneficial in the past. It is not clear how the current proposals will play out in the post-Brexit UK economy nor where the money will be sourced from to attract the UK-born workers required (if indeed they exist).

It is instructive that the EU Exit — Long-term Economic Analysis published by the UK Treasury in November 2018 has put the long-term reduction in GDP due to a net-zero EU migration scenario at 1.9%, or roughly £40 billion in today’s terms. Given that net-EU migration has fallen in two years by 115,000 to 74,000, a long-term assumption of net-zero may well turn out to be optimistic, especially given the demographic situation in the rest of EU (see the “Great EU Re-migration” scenario in the Mercer Workforce Monitor of February 2017).

The Mercer Workforce Monitor analysis shows the UK is facing a very different future workforce, and we believe the promised Government white paper on post-Brexit migration needs to be much more strategic and evidence-based in order to address the expected shortfall in the UK workforce and the consequent economic costs.

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M E R C E R W O R K F O R C E M O N I T O R ™ 10

R E D U C E D

I M M I G R AT I O N

L A B O U R M A R K E T

T H I C K E N I N G

R E G R O U P M O V E W O R K I N V E S T I N

AU TO M AT I O N A N D

P R O D U C T I V I T Y

P E O P L E W I T H

D I S A B I L I T I E S

D I V E R S I F Y T H E

TA L E N T P O O L

W O M E N

E N H A N C E

Y O U R E V P

O L D E R W O R K E R S

S O C I E TA L

A G E I N G

M E R C E R ’ S F I V E L I N E S O F D E F E N C EMercer’s Five Lines of Defence provides a framework for this proactive action:

Consider when the people costs mean alternative business

investments and strategies are needed.

Move jobs and tasks to where people are, including the virtual

labour market.

Understand the ROI of automating tasks

and other productivity improvement.

Leverage technology and redesign work to support participation

in jobs previously inaccessable.

Find people from sources you may

not have considered before, including inactive workers.

Find pathways to encourage and

transition women into the workforce.

Look at traditional sourcing to

build and retain workforce needed.

Actively and specifically include

older worker in organisation resdesign

and workforce-for-the-future strategies.

FIV

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S O

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IVE

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IFY

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T

HE

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Source: Mercer Monitor™, The Emerging UK Workforce Crisis

Many companies have identified the need for employee transfers and identified alternative locations to the UK. We consider seven common issues if workers need to be relocated to the EU:

T Y P I C A L B E N E F I T P R O V I S I O N SAn employer’s benefits package may be completely appropriate within a specified jurisdiction but may represent a material benefits gap to individuals; good examples of this are employer-sponsored private medical plans in Germany and Luxembourg. These gaps should be explained to employees so that the local systems are understood.

R E WA R DWhat does the role pay? If it’s less than what the employee currently earns, will he or she accept?

B E N E F I T SAre the benefits more or less generous than current? For example, holiday pay, parental leave and pensions can be both barriers and incentives to mobility. In many continental European countries, many benefits are provided as part of social security, but there are often minimum contribution periods, meaning employees may miss out on benefits later in life if they aren’t in the country long enough.

M O B I L I T YAre there enough school placements, (affordable) properties, etc., to absorb an influx of employees from the UK? Is the firm going to help employees with selling their property or cancelling their leases in the UK?

A D E Q U A C Y O F L O C A L S U P P O R T S E R V I C E S A N D B E N E F I T S F I N A N C I N G M E T H O D SEmployers need to assess the adequacy of local support services and employee benefits in place. We have found that many alternate locations have lower headcounts, and, as such, the benefits and their methods of financing may not be appropriate to cover larger employee groups.

E M P L O Y E E C O M M U N I C AT I O N M AT E R I A L SMany locations that will accept UK employees may not have policy documentation or descriptions of benefits available in English, which will take time to put in place. Employee communications need to succinctly describe benefits in the new country and enable identification of benefits “gaps” compared to the UK to allow individual employees to make alternative arrangements (where their employer is not meeting those gaps) if they wish.

C O N T I N U I T Y O F S E R V I C EAllowing for and communicating to employees the terms of leave, service awards and general entitlement to benefits is clearly important. However, equally important is the potential impact on other provisions, such as termination or retirement indemnities in some locations (and therefore funding of the indemnities, where relevant).

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D I V E R S I F Y I N G Y O U R TA L E N T P O O L

Businesses cannot rely on traditional talent pools alone to fill all workforce needs.

We need new and innovative ways to engage non-traditional talent pools and economically under-represented or inactive groups, such as:

• Women

• Ethnic minorities

• People with disabilities

• Older citizens

• Individuals on long-term sick leave

• Carers

• Individuals not in education, employment or training (NEET)

Recognising and embracing diversity in all its facets are vital to accessing underutilised sources of talent.

G E N D E R D I V E R S I T Y : A G O O D S TA R T, B U T M O R E M U S T B E D O N ETraditional diversity efforts have focused on gender diversity. The ratio of working women to men is currently 85:100. Our analysis calculates that reaching the Nordic ratio of 93:100 would add one million more female workers by 2025, and if we could reach parity, we could add 2.3 million workers, assuming no change in the projected male workforce.

This requires increasing the participation rate of females across all age bands, except 16–19 years.

16 to 1930

40

50

60

70

80

90

100

20 to 24 25 to 29 30 to 34

A G E

PA

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ICIP

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%)

35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64

FemalesMales

Figure 8. Participation Rates by Age and Gender


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16 to 19

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35 to 39 40 to 44 45 to 49 50 to 54 55 to 59 60 to 64

1 year ago10 years ago

We have started to make progress: Female participation has increased from 60% to 66% over the last 10 years. Figure 9 clearly shows how the differences have been narrowing, particularly below 25 and above 55 years of age. The participation rate between 25 and 50 has increased by 2.5% to 79.2%.

Although participation rates have increased, more is needed.

Figure 9. Difference Between Male and Female Participation Rates


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W H AT I S T H E P R O F I L E O F I N A C T I V E W O M E N ?This raises an interesting and complex question — who are the inactive females above age 20, and how best can we entice them into the workforce? Are they educated and skilled women who have left the workforce for care responsibilities, and is the key to engaging them offering compelling jobs and flexible work environments? Or are these women who have never been in the workforce and therefore need to be developed and provided with appropriate and accelerated pathways to employment?

Our analysis concludes:

1. The main reason the UK workforce has fewer females than males is that they appear not to be entering the workforce at all. If females do not join the workforce at a younger age, they stay out of the workforce altogether.

2. There is little difference between males and females participating in full-time education, and this has not changed much over the last 25 years.

3. The main stated reason for inactivity of females between the ages of 25 and 50 is that they are sick or have disabilities, or they are looking after family:

• More than two million females are looking after family, compared with just under 300,000 males.

• However, around 500,000 of this group want some form of work.

4. Despite this, tertiary education, rather than having children, drives the biggest difference in female participation:

• Females with a graduate degree and without children have a 90% participation rate — this drops to 85% of females with a graduate degree and with a dependent child.

• However, females without a graduate degree have a participation rate of 78% and 68%, respectively.

5. There are currently 425,000 inactive graduate females (age 21–64) with children but more than 1.3 million non-graduate inactive females with children (totalling 1.8 million). There are also more than 1.2 million non-graduate females without children who are inactive compared with 370,000 graduate inactives. So we can conclude that a large proportion of females looking after family and who are sick or have disabilities are non-graduates and are not in full-time education.

Targeting the relatively large pool of inactive women who have not been in full-time education or employment in the age range of 25–50 and aiming to push participation over the 10 years to 2025 by 3% would add an additional 400,000 workers.

G E N E R AT I O N A L D I V E R S I T YAccording to the Mercer Workforce Monitor, the number of over-50s in the workforce will increase by 14% between 2015 and 2030. At the same time, the proportion of under-30s will decline from 25% to 23%.

Retaining and attracting older workers will therefore be key to reducing the workforce gap. But to do this effectively, we also need to consider the question of upskilling and reskilling, as the future of work requires different skill sets.

If we could raise participation to the following levels (stretch targets) we could add an additional 900,000 workers to the UK workforce by 2025:

• 55–60 years: increased by 8% (around 4 percentage points)

• 60–65 years: increased by 20% (about 10 percentage points, on average)

The following graphics show the progression of participation rates over the last 10 years for both genders, demonstrating that the larger increases in female participation are expected to remain stable until 2025, whereas the lower increase in male participation continues. The stretch 2025 targets are a particular challenge for males, but given the majority of retirees before age 65 are men, this is a bigger pool to target. The stretch targets would result in an additional 400,000 females and 500,000 males staying in the workforce.

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050 to 54 55 to 59 60 to 64 65+

50 to 54 55 to 59 60 to 64 65+

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Figure 10. Older-age Participation Rates — Males

Figure 11. Older-age Participation Rates — Females



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P E O P L E W I T H D I S A B I L I T I E SThe final labour pool we consider is those who are classed as long-term sick or disabled.

The following table looks at activity levels for people with disabilities in 2013 and 2018.

Figure 12. Activity for People With Disabilities (Harmonised Standard Definition Disabled)

Total In employment UnemployedEconomically active

Participation rate

2013 total 6,639 2,897 453 3,349 50.5%

Male 2,985 1,367 234 1,602 53.7%

Female 3,654 1,529 218 1,748 47.8%

% female 55.0% 52.8% 48.2% 52.2%

2018 total 7,491 3,798 368 4,166 55.6%

Male 3,321 1,684 210 1,894 57.0%

Female 4,170 2,114 158 2,272 54.5%

% female 55.7% 55.7% 43.0% 54.5%


Over the five-year period, the proportion of people with disabilities in the workforce has increased by 817,000, or 5%, from 50.5% to 55.6%, with female participation increasing faster than males from 47.8% to 54.5%. These levels still lag the proportion of people who do not have disabilities. We know that around 400,000–500,000 people who are classed as long-term sick (a proportion of whom will also be classed as disabled) would like some form of work. Increasing participation at a similar pace by 2025 by another 6.4% percentage points to 62.0% could add around 475,000 more individuals to the workforce.

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TA K E A C T I O N — T H E T I M E I S Y E S T E R D AY !

For many organisations, the second line of defence (diversifying the talent pool) will be one of the key strategies to overcoming the workforce crisis. However, this is difficult to achieve through ad hoc initiatives. Instead, an overall change in mindset is needed to create a truly inclusive culture where all employees (existing and new) can bring their whole selves to work.

Below, we offer some ideas based on our research and client experience.

FA C I L I TAT I N G E N T R Y

Increase information sharing and accessibility: If those who are out of the workforce never get in, organisations should consider how they can raise awareness of the different types of roles. Wider collaboration across industries and government bodies may provide the most long-term impact. The Diversity Project,2 for example, is a cross-company initiative championing a more-inclusive culture within the savings and investment profession, with more than 50 organisations working together on numerous initiatives to diversify their talent pipelines. As representatives of their industries, they work together to raise awareness among schools to entice students from a diverse range of backgrounds in their formative years as a longer-term way of building a diverse talent pipeline. Some companies have also been encouraging the participation of people with disabilities in the workforce. For example, Microsoft,3 SAP4 and Oliver Wyman5 have all established inclusive hiring policies, with the goal of attracting individuals on the autistic spectrum into roles that will tap into their talents, especially roles such as data scientists and software engineers. By tapping into the skillset of this group, which may typically be overlooked, these companies are finding ways to widen the talent pool for roles that are increasingly difficult to fill.

Revaluate entry criteria: Changing the entry criteria for roles may create opportunities for more people and attract a diverse range of employees. For example, EY removed the 2.1-degree classification from graduate roles.6 Further considerations would be to examine the wording of job descriptions — though one might think this is not progressive, it is surprising how many companies have yet to evaluate the inclusivity of their job descriptions and advertisements. To this point, realigning job requirements to reflect the true nature of the role without barriers of numerous years of experience could further attract a broader pool of applicants.

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2 The Diversity Project, available at https://diversityproject.com/.3 Microsoft. “Our Inclusive Hiring Programs,” available at https://www.microsoft.com/en-us/diversity/inside-microsoft/cross-disability/hiring.aspx.4 TriplePundit. “SAP’s ‘Autism at Work’ Initiative: An Insatiable Appetite for Improvement,” available at http://www.triplepundit.com/2014/04/sap-autism-at-

work/.5 Oliver Wyman. “Leveraging Unique Talents of People With Autism,” available at http://reports.weforum.org/disrupting-unemployment/leveraging-unique-

talents-of-people-with-autism/.6 EY. “EY Transforms Its Recruitment Selection Process for Graduates, Undergraduates and School Leavers,” available athttps://www.ey.com/uk/en/newsroom/news-releases/15-08-03---ey-transforms-its-recruitment-selection-process-for-graduates-undergraduates-and-school-leavers.

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Returner programmes: Offer support to a wider variety of people, including women, veterans, people out of prison and those on long-term sick leave, to make the transition back to work smoother. For example, Blackrock10 incorporates professional coaching, a dedicated mentor and ongoing business support into their programme. FDM’s Ex-Forces Programme11 is run by ex-service personnel and employs and trains ex-servicemen and women in IT and business specialities.

Confidence building: Shadowing and mentoring help give individuals who have been out of work the skills and confidence they need to come back into the workforce. This could be coupled with affiliate schemes to keep people up to date with company news after they leave the organisation. EY has such a scheme12 and hosts events for people to update them and allow networking even if they have moved on to other jobs.

Shift the default from entry-level education to learning at all stages of life: Employers need to ensure that vocational education, training schemes and other forms of education are applicable for all ages and experiences. This will allow individuals who return later in their careers to feel welcome to take part in learning opportunities. Currently, most programmes are aimed at younger employees and entry-level positions only.

Educate and retrain: This is particularly important for older workers, who find it more difficult to obtain new opportunities if they lose their jobs to automation.13 A steeper learning curve in required to remain productive, and firms should look to offer training in information communication technology skills. Only 10% of adults aged 55–65 are able to complete new multiple-step technological tasks, compared with 42% of adults aged 25–54,14 and there is a need for organisations to consider retraining cohorts.

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⁷ Department for Education. Apprenticeship and Levy Statistics, September 2018.8 Mercer. Age-Friendly Employer Research, 2015.9 Barclays. “Leading the Way in Supporting Older Workers,” available at https://home.barclays/news/2017/02/supporting-older-workers/.10 Women Returners Professional Network. “Blackrock Pilot Returner Programme,” available at http://wrpn.womenreturners.com/blackrock-returner-

programme-2018/.11 FDM Group. “Ex-Forces,” available at https://www.fdmgroup.com/careers/ex-forces/.12 EY.com, “Our Alumni: Connecting EY Alumni Around the World,” available at https://www.ey.com/uk/en/alumni.13 Mercer. Twin Threats of Automation, 2018.14 OECD. Skills for a Digital World, 2016.

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Improve foundational skills in workers of all ages: Companies can look to offer vocational education and training, combining qualifications such as National Vocational Qualifications with on-the-job training, as well as updating the workforce skills, including digital skills. Apprenticeships provide another way to train individuals on the job alongside a qualification. Despite the attractiveness of apprenticeships to help solve this issue, figures released in September 2018 show the number of new apprenticeships in the UK fell 28% to 341,700 in the year to June 2018.7 Promoting the use of apprenticeships across all ages would have a much greater impact, and we see huge opportunities for companies to introduce apprenticeships targeting all three groups: older workers, females that have never entered the workforce and people with disabilities. Mercer’s Age-Friendly Employer Research8 cited this as one of the two most impactful initiatives for improving generational diversity, and companies such as Barclays9 already actively recruit older workers this way.


F O S T E R I N G A T H R I V I N G W O R K F O R C E

Build an inclusive culture: Attracting a diverse population might help narrow the workforce gap in the short term; however, if people do not feel able to be their true selves, it is likely they will not stay. It is in each company’s interest to build a culture that is truly inclusive. This is often seen as tricky when considering people from different backgrounds or even people with disabilities. Companies such as SAP15 are leading in this space, focusing on individuals’ strengths rather than what people may see as impairments, raising awareness of differences and increasing accessibility of technology.

Personalise the employee value proposition (EVP): In previous reports, we have introduced the concept of the EVP. Companies are adding personalisation across their EVPs to ensure all employees feel catered to and included. Supporting this is the feeling of being able to choose their benefits based on their personal circumstances and drive their own careers while focusing on their mental and physical well-being and working towards a greater purpose.

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Develop technologies: This can support activating people with disabilities. One example is the use of exoskeletons in factory workers, not just for people with disabilities, to enable them to lift greater weights. Technology like this can support people with disabilities in participating in jobs that may previously have been inaccessible.

15 SAP. “Differently Abled People,” available at https://www.sap.com/corporate/en/company/diversity/differently-abled.html.

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16 Mercer. Adaptive Working: Five Dimensions for Success in Flexible Work Arrangements, 2017.17 Mercer. 2018 EMEA Compensation and Benefits Conference, Lisbon, 4–5 October 2018.

Adaptive working: This is important for younger workers, older workers, women and, in fact, all employees. Mercer’s 2018 Talent Trends highlights that the top six benefits valued by all employees are around flexibility. Eighty-one percent of employees would choose to work flexibly, and 63% have turned down a job because there was no flexible working. Although 80% of C-suite executives say workplace flexibility is a core part of their value proposition, only 19% have written documents in place, and more can be done in this space. The historical two-dimensional view of flexibility as “anytime/anywhere” needs to extend into a five-dimensional view of adaptive working as detailed below.16

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of employees would choose

to work flexibly

W H E Nwork is done

• Hours and timing

• Discretion to change

• Location and ability to vary

• Infrastructure

• Vary job content

• Ability to share or exchange

• Vary intensity

• Scale up or down

• Distributed beyond traditional workforce

• Automated

W H E R Ework is done

W H ATwork is done

H O Wwork is done

W H Odoes the work

of employees have turned down a job

because there was no flexible working

81% 63%

Mercer’s 2018 Talent Trends highlights

that the top six benefits valued by all

employees are around flexibility.

To get this right we need to:

i. Fully embrace the unbundling of jobs and tasks that is already happening.

ii. Appreciate the move to distributed teaming.

iii. Understand the culture shift required for this to work at scale.

Sanofi,17 for example, starts with the assumption that all roles can flex and has strong governance around this. Sanofi also has an approval process if a job is deemed to be made non-flexible, whereby the manager’s manager has to agree with the justification.


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Re-evaluate the policies and programmes in place: Linked to the EVP is the need for companies to review their existing policies and practices with inclusion in mind. A few are listed below:

i. Care support — This can provide employees with the ability to focus fully on work, with the assurance that their children or other dependents are cared for. For example, Goldman Sachs18 was one of the first to provide onsite childcare to all employees in offices in London, Tokyo and New York, supporting parents with free use of the nursery for four weeks to transition from parental leave and paid childcare for all others. There is an opportunity to widen support to the elderly, which might be an increased need given the ageing population we live among.

ii. Family leave — Consider how parental leave programmes and policies support women and men in playing a more equal role in caregiving so both parents can balance parental and work commitments. Three years ago, the Government introduced shared parental leave, giving couples the option of splitting 50 weeks of leave entitlement and 37 weeks of pay, but take-up is thought to be a low as 2%,19 with the barrier being financial support. With fewer females in top management, females are more likely to be the lower earner in households, and their careers are more likely to be the ones affected by caregiving responsibilities. Organisations are increasingly starting to offer equal parental leave coupled with more financially appealing offerings — Accenture20 and Aviva,21 for example, offer equal parental leave regardless of gender, allowing parents to take up to 30 and 26 weeks of paid leave, respectively. Organisations such as Sanofi22 are also starting to incorporate family leave to broaden their support to a wider pool of people, including those who adopt and those who have elder-care responsibilities.

18 Jenkin M. “Babies at Work: Will Onsite Childcare Become Standard in Offices?” The Guardian, 13 January 2016, available at https://www.theguardian.com/sustainable-business/2016/jan/13/babies-at-work-onsite-childcare-office-goldman-sachs-addison-lee.

19 Rice-Oxley M. “MPs Call for 12 Weeks of Paternity Leave to Address Gender Pay Gap,” The Guardian, 19 March 2018, available at https://www.theguardian.com/money/2018/mar/20/mps-call-for-12-weeks-of-paternity-leave-to-address-gender-pay-gap.

20 Scott K. “Accenture Equalises Parental Policies to Encourage Male Take Up,” Employee Benefits, 9 April 2018, available at https://www.employeebenefits.co.uk/issues/april-2018/accenture-shared-parental-leave/.

21 Aviva. “All UK Employees to Get 26 Weeks Leave on Full Basic Pay Following the Arrival of a New Child,” 2017, available at https://www.aviva.com/newsroom/news-releases/2017/11/Aviva-announces-equal-paid-parental-leave/.

22 Mercer. 2018 EMEA Compensation and Benefits Conference, Lisbon, 4–5 October 2018.

iii. Health and well-being — With a decreasing workforce and increasing dependent population, there is likely to be higher pressure placed on workers. Britain’s Healthiest Workplace Survey23 in 2016 revealed that high stress and lack of physical activity are causing industries to lose up to 27 days of productive time per employee each year. Consequently, considering health in terms of financial, physical and mental health might reduce this impact, yet only 12% of organisations identify specific health needs for diverse populations.24 To improve employee mental health and well-being, support should be offered in the workplace, from increased awareness of differing mental health states to in-house counselling services that support employees through specific issues and ultimately help them to thrive. BMW25 also has in-house physiotherapists, dentists and online doctors to allow employees easy access to support.

iv. Reward — Compensation that is fair and equitable for equal-value jobs is imperative, and companies need to have processes in place to ensure this is being addressed. Similarly, practices that have outcomes related to pay should be examined; for example, performance grading equity checks from an age-band perspective was rated one of the top-five age-friendly practices.26 Similarly, companies should consider the suite of benefits on offer to employees. On the rise are those mostly related to well-being (telehealth, fitness, sleeping pods) and financial advice.

23 Vitality. Britain’s Healthiest Workplace Survey, 2016.24 Mercer. When Women Thrive, Businesses Thrive, 2018.25 BMW Group. “BMW Manufacturing Opens Onsite Family Health Center,” 2013, available at https://www.bmwusfactory.com/bmw_articles/bmw-

manufacturing-opens-onsite-family-health-center/.26 Mercer. Age-Friendly Employer Research, 2015.

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W H AT D I F F E R E N C E W I L L A L L T H I S M A K E ?

There are clear overlaps between these diverse groups: Some women with family responsibilities may also be classed as people with disabilities. Some of those retiring from the workforce may also be looking after older family members. However, by looking to minimise these overlaps, the workforce could be increased by just under 1.8 million by 2025 through the following actions:

• Increasing the number of women in the 20–50 age range who are or were NEETs so that participation increases at this age group by 5% would add 400,000 people to the workforce.

• Raising participation rates by another 6.4% for all those who have some form of long-term illness or disability and who want to work would add another 475,000 people to the workforce.

• Reducing retirement by increasing participation in the 55–60 age range by 5% and in the 60–65 age range by another 10% would add 900,000 people to the workforce.

All these approaches are challenging, but if organisations using these approaches become successful, the UK will experience broadly the same increase in workforce in the 10 years to 2025 that it enjoyed in the previous decade.

It is worth remembering that many of these additions to the workforce will be one-offs. Workforce growth after 2025 will be harder to attain, and these figures still require net migration, which will need to remain above 100,000 from the early 2020s.

Furthermore, this would increase overall participation of females in the workforce from a ratio of 85:100 in 2015 to almost 90:100 in 2025.

L E A R N M O R E

Mercer has worked with a number of clients across a range of industries to put in place strategies to help find and retain talent. Understanding your company’s and industry’s challenges is the first step in building a robust strategy to sustain your business’s growth plans.

We can help at any stage of your journey. Please get in touch to discuss what this means for your organisation: [email protected]

A U T H O R S

Gary Simmons, PartnerJulia Howes, PrincipalMichelle Sequeira, AssociateLauren Pindar, AssociateLawrence Ho, AnalystShruti Kumar, Principal

mailto:mercer.uk%40mercer.com?subject=


A B O U T M E R C E RMercer is a global consulting leader with more than 23,000 colleagues with a passion for enhancing the health, wealth and careers of 115 million people worldwide. We are united by a single idea: to make lives better tomorrow by actions we can take today.

IMPORTANT NOTICESThe content of this publication is for reference purposes only. It does not constitute advice and should not be relied on as such. Specific advice about your specific circumstances should always be sought separately before taking any action based on the information provided herein.

References to Mercer shall be construed to include Mercer LLC and/or its associated companies.

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DIVERSIFICATION: IS THERE A N.E.E.T. · 2019. 3. 1. · Create a compelling value proposition to buy, build and retain the workforce needed. 2. ... Creating a compelling and authentic

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