Workforce Planning: Aging and Employment Module 4: The Employer Perspective

1. Workforce Planning: Aging and EmploymentModule 4: The Employer Perspective Barbara McIntosh, Ph.D.

2. Employer Overview Discussion Labor supply pressures. Business case. Best practices models. Organization strategy review. Implications for human resource policies and practices: HR audit/cost assessment. Staffing: retention and recruiting.

3. Employer Perspective: Demographics as a Driver More workers are 55 years of age or older. This increases employer receptivity to older workers. In 2000, 13 percent of workers were 55 years of age or older. Those between the ages of 55-64 are the fastest growing. By 2015, 20 percent of workers will be 55 years of age or older. Smaller number of cohorts are entering the labor force. Critical labor shortages in dominant, growing, skill-specific service sectors: Aerospace. Energy. Transportation. Nursing and health care.

4. Labor Demand and Aging Workers

5. Employer View: Labor Shortage--Market? Existing? Alternatives? Immigration? (H-1B visas were capped at 195,000 during the tech boom and were reduced to 65,000 for FY 2005. They were gone the first day of availability. Reduce flow in education. Technology? Current aging workers and retirees? Age Discrimination in Employment (ADEA): Still prevalent. More than 19,000 cases filed with EEOC in 2002 (a 14 percent increase over 2001). 67 percent of respondents report age discrimination (AARP, 2002).

6. The Business Case for Older Workers Reduced costs, increased profit. New product/service markets. Customer sensitivity. Employer of choice (competitive in labor market). More attractive to investors if stable. Greater efficiency.

7. Award Winning Companies The Top Ten 2007 AARP Best Employers for Workers Over 50: 1. SC Johnson, Racine, Wis.2. Mercy Health System, Janesville, Wis.3. First Horizon National Corporation, Memphis, Tenn.4. Scripps Health, San Diego, Calif.5. Stanley Consultants, Muscatine, Iowa6. Lee Memorial Health System, Fort Myers, Fla.7. Leesburg Regional Medical Center and The Villages Regional Hospital, Leesburg, Fla.8. George Mason University, Fairfax, Va.9. Principal Financial Group, Des Moines, Iowa10. Massachusetts General Hospital, Boston, Mass.

8. Why Are They Winners? • Policies for recruiting and retaining a mature workforce set high standards for the workplace. • SC Johnson, Racine, WI: • Offers a range of flexible work arrangements to help workers balance their professional and personal lives. • Offers an on-site medical center. • Has an on-site education program that provides college credits.

9. Strategy Review: Start at the Top Organizational age audit (profile organization). Mission/vision: diversity with clout. Organizational culture. Bottom line: cost assessment model. Audit all HR policies and practices regarding the effect of age.

10. Human Resource Audit by Age • Most employers are unaware of the age distribution within their organization except for very general estimates. • Strategically should review: • Age distribution by department (unit) and relative expenditures. • Cross-tabulations: • Age by turnover. • Age by accident rate. • Age by absenteeism.

11. Organization Culture: Mission, Vision and Diversity An organization’s culture is a set of shared assumptions, values and norms that identifies what that organization considers important and how employees and managers should behave (Becker, 1982; Schein, 1985).

12. Bottom Line: Replacement Cost Assessment Projected costs by unit can be estimated based on expected turnover/organization exit. Examine the “green money” or actual costs of turnover, and the “blue money” or softer costs of turnover (Alrichs, 2003). Replacing older workers who leave the organization must include both direct and indirect costs.

13. Actual and Soft Turnover Costs Notice Period + Vacancy Period + Hiring and Orientation Period + Hidden costs _____________________________ Total Replacement Cost

14. Turnover Costs: Notice Period Green Money (Actual) Costs: 1. Last paycheck, accrued vacation, separation pay. 2. Increased unemployment tax. 3. Continued benefits. Blue Money Costs(Appropriate salary/hour x time spent on each activity): 1. Administrative costs for processing the separation: process benefits; contact unemployment office, payroll, IS/IT departments; schedule exit interview; etc. 2. Lower productivity: employee, peers, supervisor, subordinates. 3. Exit interview, transition meetings.

15. Turnover Costs: Vacancy Period Green Money Costs: 1. Advertising and recruiter fees. 2. Interview expenses (meals, mileage or other). 3. Printing costs for marketing materials. 4. Assessments. 5. Criminal checks, reference checks, credit checks, etc. 6. Medical exams and drug tests. 7. Temporary/contract employee costs. 8. Overtime costs. 9. Relocation expenses and salary. Blue Money Costs:  1. Lost productivity: peers, supervisor, subordinates. 2. Advertising creation and placement. 3. Recruiter selection. 4. Administrative costs: ordering forms and copies of annual reports, scheduling and scoring assessments, coordinating with hiring manager and others, etc. 5. Resume screening. 6. Interviews: first, second, third.

16. Turnover Costs: Hiring and Orientation Period Green Money Costs: 1. Orientation materials (handbook, video, handouts, etc.). 2. Formal training programs (materials, course fees). 3. Informal one-on-one training (materials, if any). Blue Money Costs: 1. Orientation participants’ salaries. 2. Lost productivity: peers, supervisor, subordinates. 3. Administrative costs: orientation setup, ordering materials, etc. 4. Informal training and one-on-ones.

17. Turnover Costs: Hidden Costs 1.Missed deadlines and shipments. 2. Loss of organizational knowledge. 3. Lower morale due to overwork. 4. Learning curve. 5. Client issues due to turnover. 6. Loss of client relationships. 7. Disrupted department operations. 8. Chain-reaction turnover.

18. HR Specific Review and Strategies • Staffing strategies: • Retention. • Recruitment. Discussed in Learning Module 5: • Training and organizational learning (stemming the brain drain): • Continuous training for all. • Mentoring (non-age specific). • Stimulating creativity. • Career development: reinventing careers.

19. Staffing: Retention Tools • Supportive organizational culture. • Flexible work arrangements: • Flex-time. • Reduced time (part-time, part-year). • Flexible leave (to help meet caregiving obligations). • Flex careers (leaves, sabbaticals, “rehearsal retirement”). • Flex place (telecommuting, snow-bird programs).

20. Retention Tools Challenging work. Career transitions. Pro-rated health benefits.

21. Recruiting Older Workers • How does an employer establish hiring criteria? Is there a detailed job description used as a yardstick to measure job candidates, or “gut feeling”? • Do recruiting efforts include sources aimed at more experienced workers? • Do sources include college campuses AND professional associations? • Are interviewers trained to avoid age bias? • Are multiple interviewers used, to avoid age bias?

22. Recruiting Sources Do recruiting efforts include sources aimed at more experienced workers? • Are experienced workers asked to refer friends? • Do sources include college campuses AND professional associations? • Are non-traditional sources used? • Churches. • Golf courses. • Alumni associations.

23. Selection: Screening and Interviewing • Are gatekeepers (receptionists, secretaries, recruiters) trained to treat applicants equally? • Are there issues with the application form? • Readability (12-pt type or larger). • Adequate space for recording experience. • Are interviewers trained to avoid age bias? • Are multiple interviewers used, to avoid age bias? • Education versus experience (trade-offs?).

24. Employer Perspective Part 1: Summary The following topics were discussed: • Labor supply pressures. • The business case for recruiting and retaining older workers. • Best practices models. • Organizational strategy and valuing employees. • Implications for HR policies and practices: • HR audits. • Cost assessment of turnover. • Staffing: retention and recruiting tactics.