Leveraging the Aging Workforce

• 1. Leveraging the Aging Workforce By: P.A. Neena Gupta [email protected] (519) 575.7501Twitter: @cdn_employer

2. Old Paradigm Retirement age first set at 70 in 1884 in Germany U.S. Social Security set age 65 in 1935 Life expectancy around 63 in 1930s CPP set age 65 in 1965 Average life expectancy about 68 Retirement would be short and individuals would be frail and die within 3 years or so2 3. Life Expectancy of a 65 year old todayMale 83.2 Female 86.6 Average: 20.2 Effectively, we have 17 more years than was expected at the time Canada established age 65 as retirement.3 4. Takeaway #1We are all getting older! Its better than the alternative4 5. Patterns of Work have changed 80% of Americans over age 65 expect to work high-end People take pensions and then consult Sometimes take pension and then forced to go to another workplace, where pension offsets lower wage mid-end Work part-time/flex-time/project worklow-end Hourly service workers (McDonalds) 5 6. Introduction Why should employers be adapting to the aging workforce? The demographics are clear: The average age of the working age population is increasing Participation rates of older workers have been climbing steadily The average actual retirement age has risen to approximately 63 today and projected to be 666 7. Challenges Wages increase with seniority Productivity does not necessarily increase with seniority Age-related physical and mental decline Younger employees uncomfortable managing workers older than they are (perhaps even old enough to be a parent or grandparent!) Difficult to have performance conversations with long-service, loyal and previously-productive employee7 8. 8 9. Challenges Skills need to be continuously upgradedOlder workers may be uncomfortable with new technologies and methodologiesAttitudinal barriers to trainingEmployers may be reluctant to train older workers on the theory that the return on investment will be less than investing in younger workerYounger workers often trained in cuttingedge methods and technology 9 10. Myth number 1Its not worth training/promoting older workers. They are going to retire anyway and leave us in the lurch. We really need to focus on younger hires the next generation.10 11. Myth number 1 Average length of service for worker 25 to 34? 2.2 years 3.2 years 4.2 years 5.2 years Answer: 3.2 years, Source: Bureau of Labor Statistics, U.S. Quoted by Jacqueline James, Huffpost, When Older Workers are overlooked, Its Employers who miss out April 8, 2013 11 12. Workforce Loyalty Assumption that not worth training or insisting on training for older workers not born out by factsYounger workers far less loyal and more mobileWorkers 45 and up much more likely to remain with the firm for 5 years or more12 13. Case Study number 1 Monique Lebrun was a long-service employee at Radio-Canada in advertising sales; Due to restructuring, demoted Some employees not demoted, because RadioCanada favouring the next generation. Lebrun applies for a promotion. Although qualified, she is told, you have indicated your interest; we have decided to focus on the next generation.13 14. Case Study Number 1 Employee was psychologically harassed Demotion was discriminatory Refusal to hire for promotion Arbitrator Flynn reserved her decision on quantum Judicial review sought and settled out of Court14 15. Worried about employee quitting/retiring? Create consistent practice of asking employees what their plans are Ask about career aspirations and goals (2 to 5 years) Ask about education and training wishes (2 to 5 years) All employees, not just employees 55+15 16. Case Study no 2 Una Clennon was the Manager, Family Birth Centre of the Toronto East General Hospital Hired in May 2002 360 degree assessment identified significant performance issues Many written complaints about her management style The complaints/performance issue itself not discriminatory16 17. Case Study No 2 Performance review and 360 review presented to Clennon in late May 2004No specific follow up or coaching plan implemented, but there was some monitoring in spring/early summer 2004Hospital practice is to develop a detailed planSome vague discussions/questions regarding retirementTerminated in July 2005 because of performance, but not for cause 17 18. Case Study 2 Tribunal also found that employee would have been terminated anyway evidence of psychiatric distress due to termination $20,000 on top of normal severance package Message: Hospital should have put her on the same PIP that a younger employee would have received 18 19. Case Study 2 Employee was 59 years of age and eligible for generous HOOP pension Arguably, Toronto East General Hospital reluctant to put her on PIP or coach her, because she was reaching end of career Attitudinal barriers: You cant teach old dog new tricks Why be unkind to experienced employee who is a hard worker? Let employee retire in dignity19 20. Moral of the story Need to performance manage all employees Dont assume that older worker unable to be coached Dont assume that retirement will solve the issue of an older worker who is unproductive Need to train your managers to have difficult conversations with all employees, including employees who are older than they are DO NOT PULL PUNCHES JUST BECAUSE EMPLOYEE IS WELL-LIKED OR OLDER20 21. Case Study 2 Not discriminatory to consider demographics in workforce planning Tribunal noted that Toronto East General Hospital kept list of employees 55 and up who are eligible for retirement Developing pool of talent to promote/recruit for inevitable retirements21 22. Mandatory Retirement is gone now what do I do?22 23. Introduction The legal rules have changed dramatically: Mandatory retirement is no longer legal These amendments ban any kind of discrimination against older workers Human Rights Tribunals apply the ban broadly to: partners in professional firms contractors This ban is subject to narrow exceptions: Bona fide occupational requirement Part of a bona fide pension or benefit plan 23 24. Voluntary Retirement Incentives Appropriate to incentivize employees to leave Can have broad based voluntary retirement incentive plans that are targeted by: Age alone Age and service factor Department Employer reserves the right to decline or pick and choose who gets a package24 25. Case Study 3 Kovacs, age 47, worked with ArcelorMittal (or predecessors) for 27 years and wants his early retirement plan Does not meet any of the factors He is not over age 50 He does not have 30 years of service Does not have blend (55 plus 15) or (52 plus 25) Kovacs wants his buy-out25 26. Voluntary retirement incentive As long as the package does not violate the requirements of the Pension Benefits Act (PBA), an employer can create an early incentive plan. Tribunal recognizes that plan provides superior benefits to older, long-service employees; individuals who may experience greater difficulty in obtaining alternative employment if permanently laid off. Kovacs does not get his buy-out -- not old enough26 27. Leveraging the Aging Workforce: Whats good for older workers is good for the entire workforce27 28. Flexible Work Arrangements The 40-hour plus week over 52 weeks a year does not work for many Parents (mostly women) with younger children Workers who wish to continue their education Older workers who might need flexibility (health, leisure, grandchildren) Employees dealing with elder-care issues28 29. Training Everyones training/education becomes obsolete Depending on your workplace, a recent graduates education becomes obsolete between 2 to 5 years Change of technology Soft skills (management, harassment, coaching, OHS) Skills not taught in school Culture that emphasizes training avoids obsolescence of older workers 29 30. BMW Case Study BMW aware of aging workforce on its assembly line Reduced physical abilities/stamina Poorer eyesight Increased repetitive stress injury Experimented with an older assembly line (average age 47) Made 70 improvements (chairs, stretching areas, magnifying glasses, ergonomic tools)30 31. Results of BMW Case Study Errors/defects dropped to zero Attendance and sickness reduced Total cost: $50,000 More than made up in reduced errors/absences http://www.cbsnews.com/video/watch/?id=6837608n&t ag=related;photovideo31 32. Compensation Traditional compensation practices envisions normal increases with seniority Experience/seniority becomes proxy for productivity Depending on industry, this assumption may not be correct Difficult to change in unionized environment, where seniority the keystone In non-unionized workplace, can easily create bonus or productivity incentives32 33. Bonus plans Appropriate to have a fairly narrow variation on base Create bonus criteria, where appropriate, to reward performance Get away from age = productivity = higher wage All employees in same category should be eligible: Productivity Training Consider reducing automatic increases based on years of service33 34. Leveraging An Aging WorkforceLife expectancy has gained 12 years during the last 40 years those 12 additional years after age 65 present an extraordinary potential. The Honourable Claude Castonguay, 2011 Canadas Aging Workforce: A National Conference on Maximizing Employment Opportunities for Mature Workers 34 35. Further Reading Economic and Fiscal Implications of Canadas Aging Population (Department of Finance, 2012) William B.P. Robson, Aging Populations and the Workforce: Challenges for Employers ( British-North America Committee) acknowledged as source for slide number 8 graph. The National Seniors Council, Report on Labour Force Participation of Seniors and Near Seniors, and Intergenerational Relations (October 2011), Government of Canada 35 36. Thank You P.A. Neena Gupta Twitter: @cdn_employer Tel:(416) 862.5700 (519) 575.7501Email: [email protected]#1285555montralottawatorontohamiltonwaterloo regioncalgaryvancouverbeijingmoscowlondon