3 Strategies to Improve Career Outcomes for Older Employees

3 Strategies to Improve Career Outcomes for Older Employees
Workforce

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This insight is part 02 of 12 in this Collection.

September 27, 2024 17 mins

3 Strategies to Improve Career Outcomes for Older Employees

Older employees working in their late careers are an important part of the workforce for organizations. Explore strategies that can enhance their sense of belonging.

With life expectancies and retirement ages on the rise, organizations can capitalize on the value that older employees offer and support them by fostering a workplace where both the business and its people thrive.

Key Takeaways
  1. Older workers offer significant competitive advantages to organizations, including years of experience, developed skillsets and the ability to help recruit and mentor the next generation, which is critical amid talent shortages.
  2. As we enter an era of unprecedented access to skilled and experienced employees, organizations should consider the unique needs of older workers — from available health and wellbeing programs to retirement planning strategies and reskilling and upskilling.
  3. Two-way communication between companies and older workers is important to facilitate discussions around career goals and build trust.

Across the globe, life expectancy is increasing — and with it, impacts on our approach to work and retirement. By 2054, the average global life expectancy is predicted to reach 77.4 years. By the late 2070s, the global population aged 65 and older is projected to reach 2.2 billion, exceeding the number of children under 18.1 In turn, the normal retirement age is also forecasted to increase in many countries. 

Increasing lifespans, declining birth rates and a looming retirement crisis in parts of the world are additional factors contributing to people staying in the workforce longer. This environment presents organizations with a unique opportunity — to capitalize on a highly capable workforce that wants to stay engaged in ways that are meaningful to them, while also ensuring they are financially prepared for retirement.2

Debunking Age-Related Stereotypes

Companies and individuals have an opportunity to benefit from a changing workforce. Longer careers, alongside significant technological evolutions, are helping people experience education, exploration and learning at various stages of life. This shift provides opportunities for people of all ages to engage in diverse activities, discrediting stereotypes around capabilities related to age.

A recent study3 highlighted how age-related stereotypes are currently being challenged:

  1. Most people want to maintain their skills and this does not significantly decline with age.
  2. The same percentage of individuals felt positive about their work (just over 50 percent) regardless of their age.
  3. More people under the age of 45 said they were exhausted than those over 45; the least exhausted were those over 60.
  4. Older people don’t necessarily want to slow down. More than half of those aged 46 to 60 want to slow down, while just 39 percent of people over 60 want to.

It's important to recognize the wide range of benefits that older workers bring to organizations. For example, they help companies understand older consumers — a large cohort today given current demographic trends. Older employees also offer years of earned experience and developed skillsets, which organizations can use to train other employees. In some industries, such as logistics and healthcare, it can take a decade or longer for workers to gain the technical skills necessary to excel at their jobs, making years of experience a critical value-add to an organization.4

“People who live longer and have more money to spend need to be catered to,” says Marinus van Driel, a partner for Aon's Workforce Transformation Advisory. “Savvy companies know that older workers have more wisdom around this growing sector of the consumer market, and as a result, should view them as a key element of their workforce strategies.”

These steps help foster a workplace where older employees have a sense of belonging — prompting them to stay in the workforce because they want to rather than have to due to finances.

1. Maximize the Skills of an Older Workforce

Some of the most challenging workforce issues right now are skills shortages and the retention of established specialists. Enter older workers, who, with their experience, insight and ingenuity, can help develop critical skills, while also learning new skills to stay competitive in the job market.

Older workers often have a well-defined understanding of a role, its associated responsibilities and how to approach new projects based on past experiences. They may also have a strong understanding of how to handle unexpected issues, such as project setbacks and customer complaints. Sharing this knowledge with other employees is not only a key advantage for the business, but it also provides the older generation of workers with an ongoing sense of purpose in their teams.5

“Organizations should consider how to shape roles in a way that enables employees coming into their late careers to deploy skills in the best way possible, which in turn can provide job fulfillment and benefit employers in the long run,” says Rhys Connolly, head of client services for talent assessments in Aon’s Talent Solutions practice.

Nonetheless, the UK Centre for Aging finds older workers are least likely to receive on-the-job training. The World Economic Forum’s Future of Jobs Report 2023 found that just 36 percent of companies plan to prioritize workers over the age 55 in their diversity, equity and inclusion programs, and only 30 percent plan to focus on developing workers’ skills.

“As employees reach the late stages of their careers, they can feel undervalued by organizations and passed over for opportunities where the company is choosing which employees to invest in,” says John McLaughlin, chief commercial officer of Aon’s talent practice in Europe, Middle East and Africa. “Employers can focus on helping their people understand that ‘we see your skills, we see how they can be deployed and we’ll continue investing in you.’”

Potential solutions should focus on adapting roles to fit workers’ needs, making it both possible and interesting for an individual to stay in a particular role for the long term. This can be achieved through:

  • Talent Assessments

    Before developing a reskilling program, organizations need to identify the skills they have in their current workforce by using assessments to inventory a company’s organizational capabilities. Individual assessment data viewed in the aggregate provides a complete picture of current workforce skills and abilities, and how certain cohorts and individuals can be developed further.

  • Reskilling and Upskilling

    With a reskilling and upskilling program, organizations can develop or foster skills among their current workforce rather than hiring externally, which can be more expensive. Older employees may already have institutional knowledge and transferable skills that make them ideal candidates for open positions within the company. However, it’s important to embrace a personalized learning journey for each person where possible and understand what that individual wants to accomplish in their role and broader career, as well as what skills the company might need.

    After assessing future required skills and conducting a talent assessment to determine already existing skills, an employer can develop upskilling and reskilling tracks designed to fill gaps. Attaching reskilling tracks to specific career pathways and letting employees gravitate toward routes that match their aptitudes and interests can both help older employees find meaning in their work and ensure that organizations have the skills they need for long-term success.

  • Job Design

    On a broader scale, organizations can think about how to create jobs that can evolve alongside an individual across all life stages. This includes the flexibility to work three days per week to transition into retirement or participate in other opportunities, such as volunteering or continuing education. 

  • Knowledge Transfer

    Organizations should provide access to the expertise available in their older cohorts, particularly for specialty professions. This can be done through mentoring and coaching opportunities, which will provide older employees with an added sense of purpose. 

    The oil and gas industry is one example where this could be important, as many engineers who work offshore are approaching retirement age. Additionally, finding competent mechanical maintenance staff is one of the most challenging workforce issues globally. “Older workers with vocational skills have so much to teach younger workers who do not yet have the experience or know-how in whatever trade an organization is in,” says Van Driel.

The Bottom Line

Key questions that organizations should consider when addressing these areas and adapting to an aging workforce’s needs include:

  1. How do we secure the knowledge of specialized employees who have served in the industry for a long time?
  2. How do we create opportunities where these employees can help in the recruitment process and prime a new generation of employees for success?
  3. How do we help create and connect older employees with opportunities that align with their goals in the later stages of their careers?

2. Address Health and Wellbeing 

Older workers often have unique healthcare needs, which organizations can address through health and wellbeing programs that support employees at different life stages.

An Aon study conducted in Germany in 2023 of 1,050 workers found that health is the biggest influencing factor in whether people work longer. Fifty-nine percent of women and 57 percent of men said health has the greatest influence on when they will retire. That was followed by pension savings at 55 percent of women and only 47 percent of men. “Having fun at work” was listed as the third biggest influence, demonstrating the importance of strong employee value propositions.6

Somewhat paradoxically to increasing health conditions, older workers tend to experience fewer workplace injuries than their younger colleagues. This difference may be due to their experience or because they are more careful and aware of their physical limitations, though they can require more time to heal from workplace injuries.7 Older employees are also more resilient than other generations when it comes to aspects of mental health. Sixty-eight percent of employees born in 1989 or after report experiencing stress and 34 percent report experiencing burnout, compared to 40 percent experiencing stress and 18 percent experiencing burnout from those born between 1946 and 1964, according to a Gallup survey.8

Organizations need to ensure their health benefits meet the needs of older workers — particularly those who are working past traditional retirement age. To do so, employers should:

  • Use data and analytics to determine health risks for this demographic and ensure supplemental and core benefits are offered that address these risks, such as musculoskeletal support services.
  • Provide tools to help older workers select the right healthcare plan in countries where private healthcare is common. In the U.S., organizations are also bringing in an unbiased party to offer education around public healthcare options during retirement (Medicare), including enrollment.
  • Communicate mental and emotional wellbeing differently to older generations. This is important due to differences in how information and support is consumed. Even more, as employees approach retirement, they often face anxiety and depression over financial security and identity loss. “Organizations need to factor that risk into their funding and invest more in employee wellbeing to make sure that people are making positive choices throughout their careers,” says Nick Boyton, a principal for Aon’s health practice.

21%

Around one in five workers aged 55 to 64 across the Organization for Economic Co-operation and Development quit their jobs because of poor health.

Source: Pensions at a Glance 2023: OECD and G20 Indicators

Quote icon

Age is just one factor to consider when planning what accommodations someone might need over the course of their career. By acknowledging this alongside other factors, organizations will help individuals enjoy their role in the workforce longer.

Kembre Roberts
Senior Vice President, Health Solutions, North America
The Bottom Line

As demographic trends evolve, organizations can consider:

  1. How can we adapt traditional approaches to funding health and wellbeing programs to ensure that we address changing healthcare needs, particularly for older workers? 
  2. How are we accounting for the costs required to address employees’ unique healthcare needs?
  3. How can we realize the value that older employees bring to the workplace, which offsets these costs in other ways? 

3. Prepare Older Employees for the Next Stage of Life

People are working later into life for a variety of reasons — and not all of them are financial. But employers don’t want employees to work past traditional retirement age because they can’t afford to stop. The 2023 Aon study in Germany of 1,050 workers finds that the desire to retire before 63 increases with age. Twenty-two percent of workers aged 18 to 24 want to retire before 63, while 45 percent of workers between ages 45 and 55 want to retire before then.

Human Capital Insights

Changes to retirement planning prompted by new legislation present opportunities for employers to shift the narrative around retirement planning and savings, while also supporting employees’ long-term financial wellbeing.

Communicating effectively and providing clear guidance on how employees can access retirement savings is important. A 2023 Pew Research study found double the share of U.S. workers are 65 and older today compared to 35 years ago. However, workers of all ages would benefit from clear communication on their options as the landscape around retirement shifts. Today in the U.S., 36 percent of workers aged 65 and older can participate in an employer- or union-sponsored retirement plan, such as a pension or a 401(k)-type plan, up from 33 percent in 1987. However, only 41 percent of younger workers have access to this type of retirement plan at work, down from 55 percent in 1987.9

Potential solutions that organizations can offer their older employees as they consider how to transition to retirement include:

  • Partial retirement models, such as working time accounts, where employees pay in parts of their salary or worked hours to provide for continued salary payments during a period of leave or partial retirement.
  • “Flexi-pension,” combined with parallel (reduced) employment, which allows an employee to continue working in a reduced capacity and start withdrawing from their pension plan. This can help employees gradually phase into retirement over a number of years while maintaining their level of income.
  • Financial wellbeing education for all ages — not just younger workers. This should be led by a trusted financial advisor who can speak to employees about the retirement and pensions options available to them and understand when they can afford to retire.
  • Catch-up payments in defined contribution plans for older workers. 
  • Additional income from a Health Savings Account (HSA) in the U.S., if employees can pay out of pocket for expenses when they’re still employed. This option presents a triple-tax advantage: People are not taxed when they make the contribution, the earnings are not taxed and the funds are not taxed at distribution. “This can be a powerful savings tool and another way to diversify in terms of tax savings, if someone has already maximized their other tax savings opportunities,” explains Grace Lattyak, a partner in Aon’s Retirement Solutions.

-38%

Verbal memory declines 38 percent faster after retirement, though all domains of cognition decline over time for new retirees who no longer have the built-in stimulation and financial stability of work.

Source: Forbes Health

Quote icon

Organizations are bringing in financial counselors to discuss retirement planning with employees. This education is important; many individuals may not know what questions to ask early in their careers or as they approach retirement.

Grace Lattyak
Partner, Wealth Solutions, North America
The Bottom Line

The gold standard is for organizations to provide individual financial advice for their employees and ensure that they are aware of the retirement options available to them.

“The worst-case scenario for all parties involved is to have people continue working because they have to, which can lead to a feeling of disengagement and affect morale among the wider team,” says Steven Leigh, an associate partner in Aon's DC pension team. 

Leaders should ask these questions to determine how to best support workers in retirement planning:

  1. What guidance and other tools can we offer to help employees make the most of what they have saved for their next stage of life and how do these schemes impact their access to health benefits, stock options and other benefits?
  2. How can we help employees understand where they are in their retirement planning and what levers they can pull — whether it be saving more with catch-up plans or working an extra year — to prepare them financially for retirement?
  3. How can we tailor our communication around retirement planning to the diverse needs of employees across the organization?

Employee Communication is Key

Across all components of improving career outcomes for older employees, organizations need to listen to their workers to gain a better understanding of what's driving behaviors and decision making around skills development, health and wellbeing, and retirement planning.

One way to do this is through surveys that allow people to provide their feedback and insight on how they can be valued in the organization. We all wear social masks and as a result, are more likely to give socially conditioned responses when asked to feedback the traditional way. This can be especially true for older employees who may filter their responses to be socially desirable, strategic or simply protect their vulnerability. Tools like Neurotech® employee listening solutions that bypass conscious bias can help drive a more targeted strategy.

“Unless you listen and understand what's really driving the behaviors and decisions that this group of people is making, it's very difficult to then be able to design a strategy that's going to hit the mark,” says Nathalie Hyatt, strategy principal for Aon’s Global Neurotech® Analytics. “That's really going to move the dial in the right direction and give them a richer employee experience.”

Organizations can also challenge biases related to an older generation of workers — which starts with using tools like this to gain a full picture of this growing demographic. Through listening exercises, organizations can create multiple personas across their cohort of older employees to map the different reasons why they may want to work for the organization.

“Organizations can be flexible to what people want and need as they get into the later stages of their careers — and then help those employees understand that they can want different things at that stage as well,” notes Connolly. 

To optimize the workplace for older employees and demonstrate that their value within an organization is recognized, businesses should implement data-led, holistic approaches that drive measurable and targeted outcomes on performance, productivity, health, employer brand and benefit costs.

1 World Population Prospects 2024 | United Nations
2 Declining fertility rates put prosperity of future generations at risk | OECD
3 Our Assumptions About Old and Young Workers Are Wrong | Harvard Business Review
4 10 Advantages of Retaining and Hiring Older Workers: Lessons from NYC Small Businesses | Columbia Mailman School of Public Health
5 Why hiring older workers can benefit your business | British Business Bank
6 Ageing and health | World Health Organization
7 About Productive Aging and Work | National Institute for Occupational Safety and Health
8 Generation Disconnected: Data on Gen Z in the Workplace | Gallup
9 Older Workers Are Growing in Number and Earning Higher Wages | Pew Research Center

Aon’s Thoughts Leaders

Nick Boyton
Principal, Health Solutions
United Kingdom

Rhys Connolly
Head of Client Solutions, Talent Solutions
United Kingdom

Nathalie Hyatt
Strategy Principal, Neurotech® Analytics, Health Solutions
United Kingdom

Grace Lattyak
Partner, Wealth Solutions
North America

Steven Leigh
Associate Partner, Wealth Solutions
United Kingdom

John McLaughlin
Partner and Chief Commercial Officer, Talent Solutions
Europe, Middle East and Africa

Kembre Roberts
Senior Vice President, Health Solutions
North America

Marinus van Driel
Partner, Workforce Transformation Advisory, Talent Solutions
Global

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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