Most people are aware of the theory. If asked, they will acknowledge they’ve heard of the demographic time bomb. However when challenged many employers admit that they have not related this knowledge to their own business. Recent legislative changes have also made the subject of older workers a real business issue.
So what are the facts?
Some facts about the ageing workforce that affect ALL businesses…
- There are currently more people above the age of 65 than below the age of 16
- The number of people aged 16 to 24 is projected to fall from 6.9 million in 2005 to 6.6 million in 2020, equivalent to a 5% fall.
- The number of people in the ‘prime age’ of 25 to 49 is predicted to decline from 2012 onwards. In 2020 there are predicted to be 21 million in this group, the lowest number since 2005
- Recent research shows the number of people planning to work past State Pension Age has risen from 40-71%
- The Default Retirement Age (DRA) is currently being phased out and new dismissals based on the DRA are no longer legal
- The State Pension Age (SPA) is going to be raising to 66 for both genders by 2020
The phasing out of the DRA is focussing minds. Employers have to face the reality of not only the immediate impact of the removal, but they have also have to recognise that without the ‘safety net’ of a normal retirement age they will be required to adapt to a potentially older workforce. With the rise in SPA people will be forced to work longer than they may have originally planned turning this scenario into a reality.
Two facts of strategic importance to those in the retail sector…
The very rapid decline in numbers of those aged 40-49 is perhaps more of a concern; closely followed by the decline in numbers of 20-29 year olds in the labour force. In the retail sector these two facts are of strategic importance. Where will the sector find its future workforce?
One solution for employers is to reap the benefits from retaining their existing workforce and that includes their older workers.
What does this mean in practice to smaller retailers?
But this needs to include a new attitude to performance management. Larger employers of course carry out regular appraisals. However time, culture and practice have meant that many smaller retailers do not really appreciate the business value of effective performance management. Anecdotal evidence shows that older workers have been allowed to retire early or ‘mark time’ until retirement. Some employers have avoided what they have seen as ‘difficult conversations’ and relied on a ‘dignified exit’ at retirement age; the removal of the DRA takes this option away.
More robust performance management across the workforce improves business performance as a whole
But the arguments for more robust performance management across the workforce are not just about managing older workers more effectively than in the past. There are real business arguments for improving performance. These include an opportunity to:
- link performance with a focus on improved customer service
- ensure that workers are up to speed with the demands of the new technical environment and new ways of working
- identify and tackle issues that could lead to early retirement, to help retain skilled and experienced workers
- refresh attitudes in advance of any extension to the right to request flexible working
- engage workers more fully, as fairer processes will focus on ability not age
Whilst this may sound like a lot of work, in reality a very simple system can be put in place that does not take up lots of time and still deliver real business improvement.
Employers of all sizes must take the issue of older workers seriously
It is also vital that employers of all sizes (1 to 1 million employees) take the issues of older workers seriously. Did you know that in the latest figures from the employment tribunal service, age discrimination claims were up by one third? The answer to stop these claims is simple; clear and consistent treatment of employees at all ages will ensure that you and your business do not get embroiled in complicated legal proceedings which not only damage your reputation and profitability they cost a lot of money.
This demographic change is also impacting your customers…
Don’t forget that this demographic change is also impacting your customers. There are clear indicators from in depth research that older workers contribute to improved levels of customer service. B&Q proved this fact 20 years ago and it was further backed up by research from McDonalds in 2009. Whilst their operations are bigger and more sophisticated (due to the scale of their businesses) the principle was evidenced in individual branches. Branches that had a higher proportion of older workers had increased customer service levels leading to increased customer count, sales and profitability. In an environment where every pound in the till is vital – could this be your USP?
In conclusion, this all adds up to improved business performance. Employers who use the opportunity of the removal of the DRA to refresh performance management and associated working practices will undoubtedly be one step ahead of the rest.
This blog was written by Leon Foster-Hill. Leon is the extending working lives engagement manager for the retail sector at Captia Consulting. Leon is tasked with spreading the word about the impact on businesses of changes to legislation around the default retirement age, state pension age. The programme he works on has developed a number of guidance ‘one page’ easy to read documents as well as some more thought provoking articles. These are predominantly aimed at SME’s and are tailored for the Retail sector. Leon is working with Skillsmart Retail, British Retail Consortium and The Association of Convenience Stores amongst others in order to spread the word to the Independent Retail Sector. For full details visit www.businesslink.gov.uk/agepositive