Updated: Mar 5, 2019
HR directors are used to hearing about the importance of appealing to a millennial workforce. Businesses are constantly under pressure to bring these employees on board and – even more challenging – retain them. Workers from this generation are seen as the future of the workplace, so it’s no wonder that many companies spend the majority of their time catering to their needs.
However, while companies are focusing their attention on retaining millennial workers, they risk ignoring a growing challenge in the workplace: ageing staff. Employees that are unable to retire, and therefore must stay in work, will impact the entire business, from demotivated senior management to frustrated junior employees. Without an effective solution in place, the organisation can find itself with a huge proportion of its workforce working long into their later years.
The impact of an ageing workforce
Although older members of the team are invaluable for advice, experience and guidance, if they are forced to remain in work due to lack of savings or a robust pension, it can impact the regular running of the business. The likelihood is that these older, senior employees will grow increasingly frustrated as they pass retirement age with no clear end of their career in sight. Meanwhile, overall career development will also be impacted, as junior employees will be unable to progress into a more senior role.
In previous years, this may not have been such a big challenge. Employees remained loyal to the business and stayed in their role for years without progressing. However, with millennials and Gen Z’s coming into the workplace, this attitude is no longer the norm. Not only are staff eager to progress in their career, but the growing cost of living is also requiring employees to push for a bigger pay packet to manage their lifestyle.
Even with the needs of this generation put to one side, progression is important for the smooth running of the business. Promotions bring on a fresh perspective, more effective ways of running operations and an opportunity for junior members to aspire for a long-term career in the company. Without this process, staff can feel disengaged and demotivated in their role.
It is also equally important that senior members feel able to retire. Those employees that have dedicated years of loyal service to the company deserve to finish their career and feel positive about the future. If they feel forced to remain as part of the business, it could have a severe impact on their wellbeing.
The age of wellbeing
For some employees, working into old age isn’t always a positive choice. In many cases, lack of financial security post-work is the thing holding them back from retiring. In this scenario, it is not uncommon for their overall attitude to suffer and impact how they carry out their role.
Even if the company is highly supportive and engaging, as individuals progress through their career – and their lives – other factors tend to take priority. Whether it is children, grandchildren or personal projects and goals, employees at retirement age deserve the opportunity to explore these ambitions.
As such, a fundamental, though often forgotten part of employee wellbeing is ensuring that employees feel positive about their financial situation. Financial wellness in old age often relies upon a standard pension scheme and little else. Without further support and encouragement, many employees are therefore not prepared for a life outside of work.
The simple answer is that staff need more time to save, pay off their loans and think about their post-work life. In an ideal world, these considerations would be spaced out over the course of an entire career, but in reality, staff often put these plans off, which leads to increased negativity and frustration as they approach retirement. Companies therefore need to establish initiatives to build employee awareness of their finances and enable them to support themselves in retirement.
Getting people educated
The government and industry bodies may take steps to address this issue in the future, but businesses can take immediate action to reduce the number of workers who remain in employment longer than they wish to. Unsurprisingly, the solution to this is making sure staff are educated and aware of the options available to them. Through increased understanding around the importance of financial wellbeing – both during and after their work life – staff will have a greater awareness of the requirements needed to retire at the state pension age or their target retirement age.
At the moment, financial wellbeing at work is often limited to a standard pension scheme, yet figures released by Fidelity research show that staff need to save an average of 13% of their annual household income to maintain a similar standard of living in retirement. Companies will therefore need to look beyond the traditional defined contribution strategy to make sure staff are financially secure.
One option that businesses can consider is subsidising employees’ regular outgoings, whether that is supporting their travel, gym memberships or childcare costs. Combined with improved education on saving, this approach will make it much easier for employees to put money into savings, ISAs and stocks. Flexible working or shared increases in regular pension saving are two further options as well.
Initiatives like these aren’t a silver bullet, however. Although they may help employees who are part-way through their career, they will have a limited impact on those nearing retirement. As such, businesses need to adapt their financial wellness education to address this older demographic as well.
Any benefits that are designed to help staff to save more also need to be supported with broader lifestyle initiatives. For example, giving older staff the ability to work flexibly, spend time with their families or pursue their personal projects will be vital to keeping these older employees feeling motivated and productive.
Businesses should also consider giving junior staff opportunities to buddy up with someone in a more senior role while the employee is still working. Shadowing or job sharing in this way can be an effective way of keeping the junior members of the team engaged and motivated in their role, while also allowing senior members a chance to have an improved work-life balance.
An ageing workforce will continue to be a growing concern for businesses. For those who are nearing or at retirement age and still face a few more years in the office, it is important that companies provide opportunities for them to wind down and impart their experience to more junior members.
Conversely, for employees who are still a few years off retirement, building a comprehensive financial wellness strategy will help lay the groundwork that’s needed for staff to leave work at a reasonable age. If this can be established, businesses will be better prepared to manage their workforce for many years to come.