The Aging Workforce and the Disruption of the Workplace
One of the biggest trends impacting organizations is the aging and shrinking workforce. In fact, according to Mercer’s new report – Aging Workforce and the Future Workplace– there will be more people leaving OECD workforces than joining them from this year onwards.
Mercer’s report focuses on findings drawn from interviews with 80 global organizations, and finds that 44% of those have done nothing so far to tackle the issue of an aging workforce. For those organizations that are responding to this issue, 28% believe this is a talent retention and attrition issue, while a further 20% are pursuing flexibility in working patterns and job design. These two responses most likely go hand in hand, to allow flexibility for aging workers who may wish to continue working but require additional flexibility in their schedule for any number of issues – aging parents, caring for grandchildren, caring for a spouse, non-profit work etc.
As this demographic shift takes hold in the years to come, the War for Talent will likely become more competitive than ever before, with a shrinking talent pool for executive and non-executive roles but increased demand for skilled candidates from the many emerging markets that will require experienced leaders. It is notable that many countries – the UK, Australia, Canada, Brazil, United States (with a few exemptions) – have abolished a mandatory retirement age in recognition of the significant talent drain that could occur if the transition from one generation to the next isn’t managed correctly.
The findings of Mercer’s report echo one of the megatrends identified by the McKinsey Global Institute (MGI) in its book No Ordinary Disruption. AESC recently interviewed Richard Dobbs, Director of MGI, and published an extract of the book. During this introduction, Dobbs explains that there are four trends that will affect businesses of the future over the next 50 years, and that each one of these trends will be more significant than the Industrial Revolution was in the United Kingdom. Of the aging workforce, Dobbs writes: “For the first time in human history, aging could mean that the world’s population plateaus in most of the world…A smaller workforce will place a greater onus on driving productivity for growth and may cause us to rethink the economy’s potential.”
In the complex business landscape of the future, proven leaders will be scarce. With average CEO tenure falling in most established economies, we are already beginning to see the strain placed on c-suite executives. Identifying, recruiting, optimizing and retaining the best leadership talent will become ever-more challenging, placing a premium on those firms that can do so effectively.