Keeping mature-age workers on the job

To make Australian workplaces supportive and productive environments for all employees, it has never been more important to engage mature-age workers and will only become more so.

When Australia’s Age Pension was introduced in 1909, only 4% of our population lived long enough to claim it.

Today, the average Australian is expected to live 15 to 20 years beyond the traditional retirement age of 65. By 2050 nearly a quarter of our population will be aged 65 and over.

Our research has found that organisations can boost engagement among mature-age workers by adopting specific management practices targeting their needs. These include better job design, mentoring opportunities and phased retirement.

Baby Boomers have an unprecedented opportunity to extend their working careers beyond the traditional retirement age. As the largest and wealthiest older generation ever, their decision to retire depends largely on how much they are enjoying their work.

Australia’s social policies are designed to keep people working longer, but the effectiveness of these policies depends on employers’ willingness to accommodate the needs of ageing employees.

The research

We surveyed 666 men and women between the ages of 45 and 75. Over a three-year period (2011-2013), we found that people expressed less concern about negative age stereotypes and were more engaged in their work when their employer offered practices targeting mature-age workers.

In organisations without these practices, engagement levels of mature-age workers were 19-20% lower than in more supportive organisations.

Read more: Tackling hidden issues for older workers delivers wide-ranging returns

Further, mature-age practices were more effective in engaging mature-age workers than age-neutral practices like ongoing training, rewarding high performance and inviting employee participation.

A fully engaged employee delivers the full value of his or her salary, while a disengaged or semi-engaged employee might deliver only 60–80%.

The average salary in Australia in 2014 was nearly A$80,000. At that rate, a single disengaged employee could cost his or her employer $16,000 to $32,000 each year.

However, the cost of disengagement may be even higher for a mature-age employee with years of experience who is likely to be at the high end of organisational pay scales.

How to make a difference in retaining ageing employees

1) Redesign jobs to accommodate physical needs

Even the healthiest worker will experience age-related declines in speed, physical strength, hearing or vision that could impede performance. Giving a mature-age worker more control over when or how to do their work and eliminating or reassigning some physical components of a job can make a big difference.

When BMW encouraged mature-age workers to suggest modifications, an assembly line composed entirely of mature-age workers performed as well as one composed entirely of younger workers. Only a few modifications, including large-print instruction screens, adjustable worktables and more frequent task rotations were needed.

2) Create opportunities to meet psychological needs

As people age, they frequently become more concerned with personal relationships and express more interest in developing other people. These psychological needs can be met at work through cross-generational programs that enable a mature worker to share their experience with younger workers.

These programs can include reverse mentoring, where older workers upgrade technology or social media skills as a result of their interaction with younger workers.

Read more: Age discrimination in the workplace happening to people as young as 45: study

The Settepani Ristorante and Bakery in New York regularly pairs older and younger workers in co-mentoring arrangements. All employees are cross-trained, so that older workers teach younger workers the techniques they’ve learned over time, and younger workers train the older ones as new systems are introduced.

3) Be flexible in defining retirement

A healthy mature-age person has a choice: on the one hand, they’re physically capable of working longer, so they could stay in the workforce. On the other hand, they’re tempted by retirement so they can travel, spend quality time with family and friends, or pursue a favourite hobby.

One way to support older workers’ needs is to offer job-sharing (one job shared across two people) or phased retirement (a worker systematically decreases their work hours over several years). These options give these workers the opportunity to pursue off-work activities while maintaining their employment relationship.

Bon Secours Virginia Healthcare System, a nonprofit organisation with more than 13,000 employees, is one example. Bon Secours employees can gradually reduce their work hours, drawing on their retirement savings to compensate for lower salaries.

Missed opportunities

Australian employers have been slow to engage with the realities of an ageing workforce.

In our survey, we asked mature-age workers to rate the extent to which their organisations offer mature-age practices like job design, mentoring and phased retirement. On a scale ranging from 1 (not at all) to 5 (a very large extent), the average rating was 2.

This low engagement with older workers was consistent with our interview research. Mature-age workers often told us they would have worked “forever” if they could have negotiated specific – and often very small – changes in their role. These experienced workers tell their employer they are “retiring” then return to the labour market after a brief hiatus.

Our research shows that Australian companies and managers have been very slow to embrace activities geared to the needs of an ageing workforce. This is a missed opportunity that, in the long run, will be costly to employers and to society.

Professor Kulik will be appearing on SBS Insight at 8.30 tonight, exploring whether we are entering an era of no retirement age.