Aging workforce offers challenges

IBM is on a mission to transform the nature of work.

Upcoming demographic shifts in the composition of the workforce are the catalyst for change in developed countries. By 2025, about 20 per cent of the populations of the U.S. and U.K. will consist of people over the age of 60. In older societies such as Japan and Germany, the comparable figures will be over 30 per cent.

The number of Canadians participating in the labour force is expected to contract starting in 2016, according to IBM research. Industry sectors that will be hardest hit are utilities, healthcare, education and public service.

These are sectors where workers have a propensity to retire in their fifties. They are also unionized environments that weathered the economic storms of the 1980s and 1990s by downsizing junior staff.

IBM is aiming to take the lead in offering services to help organizations deal with the labour shortages anticipated as populations age.

“We as a society will need to do a business transformation,” said Terry Lister, a Toronto-based partner within IBM’s new human capital management consulting group. “We will also need good IT services to maintain the productivity we’ll be losing with the retirement of major chunks of the workforce.”

Cultural anthropologists, social scientists and researchers, in addition to IBM consultants, will help organizations analyze their workforce needs and develop strategies to adapt.

Demographic issues extend beyond the workforce to customer requirements, as they too will be aging, said Lister. Web sites, for example, may need to be redesigned with larger fonts to make them more readable to older eyes, she said.

For many organizations, succession planning in the form of flexible, part-time work arrangements to encourage older workers to stay on past retirement, mentoring and training programs, and incentives to attract new entrants will be needed.

Technology will also play a major role in addressing the issue by streamlining business processes, developing knowledge systems, and automating low-value work.

In the public sector, there are a number of corporate functions that are amenable to automation, explained Lister. Payroll services, for example, are often time-consuming, manual processes. “If these functions are handled by people who will be retiring in the next few years, are you going to have a succession plan that replaces them? Does that make sense?” said Lister.

Instead of training new replacement workers to handle the grunt work in the same way, Lister pointed out that wise organizations should consider automating such processes, and look into obtaining staff to handle high-end work such as monitoring, analysis and verification, post-automation.

Organizations that will be affected by demographic shifts have a general awareness of the coming problem, she said. “But many organizations haven’t thought through the repercussions. Some wait-and-see is fine, but if your solution is not succession, you don’t have the same lead time.”

The power sector is an example of an area that will be particularly hard hit by demographic shifts.

The Canadian demographic profile reflects the one emerging across North America’s power sector. About 40 per cent of employees will be eligible to retire by 2014, according to the Canadian Electricity Association (CEA), a national organization mandated to address human resources issues. All positions across the board will be impacted, said Tom Goldy, CEO of the CEA.

Encouraging workers to stay on post-retirement is difficult, he said. Many workers have been working for decades and have well-funded pensions, so they have little economic incentive to stay on. Moreover, part-time work arrangements are not an option in areas like operations and maintenance of the critical power infrastructure, where you need the right people on hand at defined times on an ongoing basis.

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