What can organisations do to stop older workers disengaging from the workforce?

Older workers
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Early retirement: facts, forces, and erroneous solutions

The ageing workforce is creating unprecedented challenges for organizations and governments.

By 2030 the number of people aged over 55 in high-income countries will have grown to 500 million. However, it can also present opportunities for policy makers and employers.

PricewaterhouseCoopers suggested that “the ageing workforce offers a potential $2.6 trillion prize to businesses”, whereas the Fuller Working Lives report noted benefits to individuals, organisations, and the economy of workers over 50 staying at work.

Government interest round labour market activity and the transition from work to retirement tends to focus on the importance of earnings for building a private pension and reducing the financial burden of individuals in retirement.

The strongest public policy incentives presented relate to raising the retirement age and reducing retirement benefits.

It is questionable, however, whether financial and labour participation incentives address the factors that shape people’s decisions to disengage and ultimately withdraw from the workforce.

An understanding of the reasons behind these decisions can inform relevant actions to retain older workers in an employment relationship that is meaningful and productive.

It is an unfortunate myth that older workers are less flexible or productive than younger workers.

People may lose engagement and motivation for their job due to a range of reasons, and these reasons may influence the career end that they may opt for or gravitate towards.

Some may decide on a career change (which involves major changes in skills and work environments), others may opt for a job change (which involves the same skills in a different organisation), and yet others may decide to retire, potentially finding themselves stranded in a waiting process until they reach or can collect full retirement.

Individuals’ needs and capabilities change across the lifespan as do the meaning of work. For older workers, work serves four functions:

  • it offers social contacts
  • it helps to maintain an income
  • it offers health benefits
  • it fulfils personal needs (such as pride and self-esteem or fulfilling the need for generativity, or the passing of one’s wisdom, knowledge, and skills to younger colleagues).

Forcing older people to remain in unsatisfying role or in jobs that they are no longer able to perform is hardly a solution to the challenges of the ageing workforce. People consider taking early retirement for a range of reasons which we can group into:

  • financial and lifestyle reasons (they have a financially secure household or access to a pension or social security income, or they may have other life interests and priorities)
  • health reasons (withdrawing from work due to ill-health or chronic illness)
  • the experience of work itself (not enjoying their work anymore, or the job being experienced as excessively demanding, and/or being unable to adjust work to their capabilities and needs as these change through the life course).

Older workers will not necessarily respond to financial and labour incentives, and if they are forced to remain in the workforce it is unlikely that they will maintain job satisfaction, wellbeing and productivity.

For example, people who have to remain in employment for financial reasons have lower life satisfaction compared to individuals who voluntarily choose to remain in the workforce.

This casts doubt over the effectiveness of measures that focus on raising retirement age and providing financial incentives as opposed to creating good jobs and workplaces.

Measures around designing good jobs and workplaces need not be costly for the organisations and should not be one-off measures.

Focusing on the nature of the job is essential for motivating those who may be considering their options to remain in the workforce.

Good workplaces form the backbone of healthy and productive engagement with work, for the whole workforce and especially for those closer to retirement.

The role of good jobs and workplaces

If the best way to retain an engaged older workforce is through the workplace, what can organisations do?

Good jobs and workplaces form the foundations for active working and engagement in the workforce past retirement age.

The dual aims of supporting quality of working life and promoting productivity can be achieved through measures that have, at their core, the creation of good jobs and workplaces that can support workers’ changing needs and adjustment to work.

Lower engagement and productivity result from jobs that do not allow workers to make the most of their skills, knowledge, and expertise (which underpin the success of organisations), or to adjust work to their personal and non-work needs, rather than of changing capacities with age.

It is an unfortunate myth that older workers are less flexible or productive than younger workers. On the contrary, older workers can be more adaptive and efficient in a number of tasks, as long as the job allows them freedom to utilise their accumulated knowledge and expertise.

In addition, they are more likely to be highly engaged in their work if they feel that they have high job demands (the job is more difficult but also perhaps more challenging) but also feel more in control of their jobs (in terms of how they carry out their work).

The design of good jobs

Designing good jobs that can accommodate older workers’ needs starts with a process of engagement and consultation.

It often includes offering more control, adjusting the physical requirements of the work, and engaging individuals in decisions regarding their work (including freedom and flexibility to decide how to carry out the work, and resources to adjust the pace or schedule of the work to their needs).

Reducing the demands of the job is rarely an effective plan A, as making jobs less challenging can take away some of the meaning and fulfilment of the job and opportunities to apply unique skills and knowledge as well as to transfer these to younger or less experienced employees.

Developing healthy workplaces

There is also a range of ways for employers to support active and healthy ageing by developing healthy workplaces.

Some of the strongest evidence comes from longitudinal research focused on a supportive workplace culture and intervention research focused on workplace practices.

Combatting age stereotypes among workers and managers, reducing age barriers, and promoting inclusion and age diversity is an excellent starting point for supporting engagement among older workers.

Good practice in age management

Furthermore, creating inclusive and supporting workplaces includes good practice in age management, which covers a range of elements including fair job recruitment; opportunities for learning, training and lifelong learning, and career development; flexible work practices that allow individuals to adjust work to their non-work commitments or needs; an emphasis on health promotion; redeployment, where necessary; and, finally, plans and options to ease the transition towards retirement.

Workplace practices

Additionally, the workplace practices that promote good jobs and good teamwork, employee-driven improvement, and employee voice, are also essential for retaining an engaged and active older workforce.

Workers are more likely to be highly engaged in their work, experience high workability, and have more positive occupational outlook if they also know that their organization’s structures, management and procedures are geared towards active ageing, if they experience employee-driven improvement and innovation, and if they feel that have employee voice and co-created leadership that allows them to take part in strategic decisions that impact their work.

Measures around designing good jobs and workplaces need not be costly for the organisations and should not be one-off measures.

Good jobs and workplaces are key to developing sustainable work and supporting active working.

Rather, many of these changes can be implemented at low lost and form part of general good practice that can benefit the whole organisation and its workforce.

Again, one of the loudest and clearest messages for developing workplaces that can support active working and delayed retirement is the importance of engagement, communication and participation among stakeholders.

There is strong evidence for the value of supportive workplace management and procedures and a workplace that values worker participation and voice, for retaining an active workforce.

Good jobs and workplaces are key to developing sustainable work and supporting active working.

It is possible to develop such workplace that offer tangible benefits to the whole workforce and specifically those closer to retirement, in order to retain older workers and maintain high productivity and innovation.

Acknowledgements

This article is based on two large-scale studies on how workplaces can support wellbeing and performance and pilot interventions for supporting engagement and retention in the workforce.

The former was funded by the Economic and Social Research Council (2009-2011) and the latter by the European Union's Programme for Employment and Social Solidarity – PROGRESS (2013-2016).

The former demonstrated that the characteristics of the workplace, more than the nature of the job or the organisation’s HR policies or leadership, underpins employee wellbeing.

The latter demonstrated that it is possible to develop targeted workplace interventions to improve job design and work organization with the aim to enhance engagement and retention of older workers and produce wider benefits for the organization and its employees.

Both offer evidence for the importance of the workplace for active and productive work.

About Maria Karanika-Murray

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