The impending jobs crisis and ageism: is problematic workforce thinking putting your company at risk?

Written By Tim Hessell

This month two recent consultant reports have grabbed our interest in their analysis of the future labour market and the possible opportunities it offers to older workers. Both highlight the year 2030, the end of this decade. Korn Ferry provide the alarmist perspective forecasting at this time there will be a global human talent shortage of more than 85 million people or roughly the equivalent of the population of Germany. Bain & Company alternatively predict the older worker finally coming ‘in from the cold’, forecasting a 150 million jobs will shift to workers over the age of 55 by 2030. Further, they believe within the Group of Seven countries, older and experienced workers will make up more than quarter of the workforce by 2031. One 2030 labour market and two very different perspectives on its potential dynamics. 

Korn Ferry position the problem as one based on simple demography with many Asian and European nations experiencing low birth rates for decades. In the United States, they forecast the majority of baby boomers will have moved out of the workforce by 2030. Korn Ferry don’t see automation, AI and robotics as the biggest workforce issue, instead, the issue is there will not be enough humans to take the jobs.

Supporting the Bain analysis of increasing global older worker participation rates, a Pew Research study has found the older workforce in America has nearly quadrupled in size since the mid-1980’s. The U.S. Bureau of Labor Statistics further predicts that older adults are projected to account for 57 percent of labour force growth over the next decade. Workers 75 and older are the fastest-growing age group in the workforce, according to Pew. 

What we find staggering about these scenarios is that they only 5 years away from today. You’d think companies would be urgently prioritising an age-inclusive workforce strategy right now to minimise the impending impacts of demography on their operating environments. But you would be wrong. Whilst 2030 is just over 5 chronological years away, our current business attitudes towards older workers seem more like 50 years away! Perplexingly, how business continues to perceive the value of older workers hasn’t changed much over the past decades. 

  • In a US survey of 1,200 people over age 55, Civic Science, a Pittsburgh based consumer analytics platform found that people in white-collar occupations experienced almost twice the level of ageism as those in service, craftsman, or technical roles. Women reported even higher levels of ageism than their male colleagues.

  • A 2023 study conducted by the OECD underscored the built-in ageist attitudes in the business world with employers perceiving professionals who have passed the mid-career threshold of age 45 as lacking drive and openness to innovation.

  • Ageism pervades the media with a 2021 study published in the International Journal of Environmental Research and Public Health finding that negative descriptions of older adults in a 1.1 billion-word U.S. and U.K. media database “outnumber positive ones by six times.”

  • According to the Boston Consulting Group, fewer than 15% of companies have a specific business strategy for the over-60s.

  • A 2020 global AARP study found fewer than 4% of firms were already committed to put programs in place to integrate older workers into their talent system with only a further 27% saying they were “very likely” to explore this path in the future.

  • 2021 research for the British Centre for Ageing Better revealed the majority (51%) of employers in England were unlikely to introduce or develop policies relating to age in the next 12 months.

Despite much corporate rhetoric surrounding commitment to progressive people management practices, when it comes to workers aged 50 years and over, business habits, structures and thinking continue to institutionalise systemic ageism within corporate policy and practice. Companies seem trapped in structured thinking and business approaches that are now becoming increasingly problematic as operating environments are disrupted. Attitudes to age and the iron-clad belief in an ongoing supply of younger workers to continually fill talent pipelines and underpin hierarchical organisation structures represents an example of this structured thinking.

Companies must revise their thinking and their approaches towards older employees. Today’s 60- to 75-year-olds are not the same as past generations, being healthier and more active. Yet negative age stereotypes persist, which might historically have had some validity but now no longer do. These outdated stereotypes fail to reflect the diversity with which people age. Research continues to de-bunk these antiquated negative age stereotypes: 

  • A 2023 OECD study found professionals 45 years and over consistently match or exceed the performance of younger colleagues.

  • A 2020 OECD analysis reveals that a firm with a 10% higher share of workers aged 50 and over is 1.1% more productive. Productivity gains come from lower job turnover and the greater management and general work experience of older workers.

  • Whilst companies sometimes cite studies that show as cognitive decline sets in, employees are not as productive, the reality is that only 11.7 percent of older adults have some type of cognitive impairment. That’s not much higher than the 10.8 percent of adults aged 45 to 65. The American Academy of Neurology reports that mild cognitive impairment affects only 15 percent of people ages 75 to 79.

  • Neurocognitive research is highlighting the potential benefit of wisdom to business. Neuroscientists understand wisdom as the ability to see patterns where others don’t see them, to extract generalised common points from prior experience and use them to make predictions about what is likely to happen next. Older workers consequently are much better at seeing the big picture. 
    Given the negative age stereotype of the perceived inability of the older worker to embrace technology, it is paradoxical that some workforce futurists are seeing a positive association between older worker wisdom and AI. An ability to critically review AI output is understood as a critical skill for effectively applying AI tools. Those skills according to these futurists tend to be more developed in workers with longer tenures and more management experience. This can be understood as the practical benefit of wisdom in action.

 There are a number of business risks for employers who persevere with out-of-date attraction, hiring, development and retention strategies. One risk is younger generations not having had the time or training to take many of the predicted unfilled high-skilled jobs. Another risk is junior managers being rapidly promoted into roles beyond their current competence levels. Actions we are recommending to help companies positively prepare for the impending impacts of an ageing demographic on business strategy and performance include:

  • Influencing senior leadership teams to adapt their organisations to this issue and create opportunity from the demographic changes. We are encouraged by an overseas initiative gaining some traction which is focused on educating Corporate Boards to help them understand the risks & opportunities associated with the demographic change phenomenon underway.
    Anticipating the potential impacts of demography change on organisation performance, markets, consumers & workforce management and preparing a business strategy to protect company interest strikes us as good corporate governance.  We believe educating Boards on this issue represents a great opportunity for the Australian Institute of Directors to embrace.

  • Another way to open up the dialogue in your company is to organise an Executive Team ‘Strategic Debate’ on Longevity Leadership. The purpose of this action is to awaken leadership teams to the data, the potential and the risks of an ageing world. An urgent and key requirement would be as a first step the prioritisation of an age-inclusive workforce management strategy.

  • A very practical activity to anticipate the potential future impacts of an ageing population within the workforce is to undertake an age profile workforce analysis, anticipating potential future retirement trends, key role exposures, succession planning risks, development requirements to prepare younger people for more senior future roles and whether existing recruitment practices might continue to be effective with the anticipated labour market changes. This information could act as great catalyst for getting the Executive Team to endorse a Strategic Debate’ on Longevity Leadership initiative.

  • For the more adventurous and innovative organisations rather than directing HR to handle the issue as just another people management challenge, the large impact of population ageing on all business facets warrants consideration of the creation of a Chief Longevity Officer position reporting either into a Strategy business unit or directly to the CEO. Creating an organisation longevity mindset offers a new approach to talking about age, customers, consumers and policies impacting employee attraction, development and retention. The goal is to rapidly prepare the organisation for the impending labour market disruptions driven by demographic change to establish a true competitive advantage.

Whichever way you look to our immediate future, clearly an ageing global demographic will have profound impacts on markets and business structures and performance. That future is moving very quickly towards us. And business remains unprepared to anticipate and embrace the opportunity offered by the change. Moving to integrate greater numbers of older and younger workers into the workforce as a major element in creating an age inclusive workforce management strategy is an urgent corporate governance issue. The time to get ahead of this change is rapidly closing. Now is the time to act.

Not sure how to get started?

We’re happy to speak to your organisation on the business case for older workers and intergenerational teams, and how to make age-inclusive teams work. It's a winning proposition for your organisation.

References

Tim Hessell
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