People are living and working for longer, with scientists even predicting that we could live up to 150 years old. But while reaching this ripe old age may not be in our immediate future, we do already have an increasingly large ageing workforce, and this poses a number of challenges which I’ll explore further below.
According to recent ONS data (September 2022), UK employment rates of people over the age of 65 have reached a record high of almost 1.5 million - and it’s set to increase over the next decade as we become healthier, live longer and the pension age keeps rising.
So, what does this really mean for organisations - what is the impact on both your workforce and your business of having an ageing population, what measures can you take to ensure a stable workforce and how can you take advantage of the opportunities that having older employees presents?
5 challenges of an ageing workforce
There are a few potential challenges of an ageing population in your workforce, not least the challenge of discussing retirement when this is something that you have to wait for an individual to raise (although it’s a good idea to check the notice period you have in place for individuals of near-retirement age).
Other challenges include:
1. How to manage multigenerational workforces
When your workforce potentially spans the ages of 18 to 67 or beyond, how do you manage different ways of working, different levels of experience and different perspectives and opinions?
2. How to manage your talent pipeline
The world is an uncertain place right now, and you may find that people who are near retirement age want to stay in their position, which is a logical decision for them. But the knock-on effect of this could be that younger talent and those in your succession pipeline plans leave your organisation as a way to progress their careers in the near- to short-term.
3. How your Executives are keeping pace of change
The modern workplace has changed considerably in the past 3 years and looks and feels very different to the world of work that older workers have experienced within their career. Even in the last couple of years, we’ve seen the advancements in the use of technology across all aspects of the business, the advent of widespread flexible working and organisations utilising new ways to attract talent and maintain an engaged workforce, whether that’s through wellbeing benefits or building a positive culture.
4. The pace of change slows down
If senior level executives only have three years until retirement, they may not want to make significant changes, and if this is the case, how will your organisation move forward? Will you stick with what currently works rather than being open to change? This could have a demotivating effect on your workforce and leave your organisation behind when it comes to adapting to a changing environment.
5. Senior executives are on a similar timeline
With the average age of a CEO 55.6yrs and 91% of boards averaging over 50 years old. It may be the case that the senior executives in your organisation are all within a couple of years of each other when it comes to retirement age. The impact of that could be felt throughout the business, as people with deep expertise and knowledge leave at around the same time.
From an executive’s point of view, one of the main challenges is how you manage your path into retirement and maximise your legacy on your organisation. Rather than an immediate stop to your working life, you might want to think about a non-executive directorship, moving into private equity or investing in businesses so you have a gentler ease into retirement and can still offer your expertise.
How to plan for an ageing workforce
There are, of course, solutions to each of the challenges I’ve outlined above. It takes some planning and forward-thinking, but the ultimate result will be a smooth transition of talent, shared knowledge and robust succession plans.
Here’s what to think about, plus opportunities:
Transition programmes and clear plans to help retiring individuals think about what their run-up to retirement (say five years) would ideally look like and how that could be put in place for both the benefit of them and of your business
Robust succession planning with younger talent coming up through your organisation
How to take advantage of knowledge and experience - there is a real opportunity for younger workers to learn new skills, and knowledge transfer is incredibly important. You could facilitate this through mentor (reverse mentoring) programmes, coaching sessions and group workshops
Having an ageing workforce may feel like a challenge, but there’s also a real opportunity. Forward-planning (i.e. by a matter of five years or so) will help you maximise an individual’s legacy and facilitate a smooth transition so both they and your organisation can successfully transition.
At Hanover, we have been supporting leaders and businesses at this critical career moment for three decades, ensuring all parties involved are supported and the business is left in a better and stronger position.
If you’d like to put a transition programme in place, contact us and let’s set up time for a call.
