The document discusses leveraging the aging workforce. It notes that average life expectancy has increased by over 17 years since retirement ages were originally set, meaning people can work longer. Both mandatory retirement is now banned and patterns of work have changed, with many seniors continuing to work part-time or consult. While there are challenges to an aging workforce like skills upgrades, benefits can include experience and loyalty. The document argues for flexible work arrangements, ongoing training, and compensation based on performance rather than solely on seniority to help retain older workers.
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 so
2
3. Life Expectancy of a 65 year old today
Male – 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 #1
We are all getting older! …
It’s better than the alternative
4
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 work
•low-end
• Hourly service workers (McDonald’s)
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 66
6
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
employee
7
9. Challenges
•
Skills need to be continuously upgraded
•
Older workers may be uncomfortable with
new technologies and methodologies
•
Attitudinal barriers to training
•
Employers may be reluctant to train older
workers on the theory that the return on
investment will be less than investing in
younger worker
•
Younger workers often trained in cuttingedge methods and technology
9
10. Myth number 1
“It’s 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, It’s 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 facts
•
Younger workers far less loyal and more
mobile
•
Workers 45 and up much more likely to
remain with the firm for 5 years or more
12
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 Court
14
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
discriminatory
16
17. Case Study No 2
•
Performance review and 360 review presented
to Clennon in late May 2004
•
No specific follow up or coaching plan
implemented, but there was some monitoring in
spring/early summer 2004
•
Hospital practice is to develop a detailed plan
•
Some vague discussions/questions regarding
retirement
•
Terminated 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 can’t teach old dog new tricks
• Why be unkind to experienced employee who is a hard
worker?
• Let employee retire in dignity
19
20. Moral of the story
• Need to performance manage all employees
• Don’t assume that older worker unable to be coached
• Don’t 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 OLDER
20
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 retirements
21
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 package
24
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-out
25
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 enough
26
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 issues
28
29. Training
• Everyone’s training/education becomes obsolete
• Depending on your workplace, a recent
graduate’s 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;photovideo
31
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 incentives
32
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 service
33
34. Leveraging An Aging Workforce
“Life 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
Canada’s Aging Workforce: A National Conference
on Maximizing Employment Opportunities for
Mature Workers
34
35. Further Reading
Economic and Fiscal Implications of Canada’s 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) 575.7501
Email:
neena.gupta@gowlings.com
DM#1285555
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