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Surviving the Tidal Wave of Demographic Pressure

Employers Must Understand and Respond to Workforce Issues

Quickly rising and about to strike, the tidal wave of demographic pressure in the U.S. is a formidable threat to the health of American business. Employers are already passing up opportunities to expand their businesses because they do not have and cannot find workers who can handle what is required.

The challenges are well-documented, but remain daunting:

  • In the U.S., someone turns 60 every 10 seconds. Yet, few have sufficient savings for retirement, and many must stay in the workforce longer, although they may have difficulty keeping pace with the job demands.
  • Up to 75% of those 18 to 24 years old are not eligible for the military due to obesity, illiteracy, or substance abuse. Yet, jobs that once were available to workers with limited skills now require competency in reading, math, communication, and the use of computers.
  • Trends show that this is the first generation to be less healthy than their parents, with epidemic incidents of obesity and rising rates of adult-onset diabetes in children. Yet, employers are hard-pressed to meet today’s costs of health insurance, and, while wellness programs are as accepted as mom and apple pie, employers continually struggle with incentivizing participation.
  • Although this demographic tidal wave has been stirring for some time, few employers have strategies to deal with it. That’s not surprising, when Peter Cappelli, Wharton’s director of Human Resources, points out that about two-thirds of companies do no planning for workforce issues at all.

    The confluence of these challenges means there is a decreasing number of available fit, educated, trained employees with a strong work ethic. While knowing how best to attract, manage, and retain employees has always been a key component of sustaining growth and high productivity, this is the only way to grow profitably in times of scarcity.

    A good example is automobile technicians, jobs that will never be outsourced. The rapidly changing nature of the job, coupled with the need for highly technical skills and a negative stigma associated with this career choice, have resulted in a shortage of 35,000 to 60,000 technicians per year, according to Richard White, senior vice president of marketing and member relations for the Automotive Aftermarket Industry Association (AAIA). The situation will only be exacerbated in the next decade when Boomer-generation technicians enter retirement, with more than one-half of the top technicians expected to retire in the next 10 years.

    White strongly believes the solution is local and not national, according to “The Growing Scarcity of Qualified Auto Technicians” on “The quality repair shops are involved with schools in their community and are willing to mentor young people,” he notes. “They pay their employees fairly and run a clean, professional business. They treat their employees with respect, and in turn, their employees have a positive self-image that is portrayed to colleagues and customers.”

    Employers need to ask some serious questions: Are they the employer of choice in their area — the one that everyone wants to work for? Do their top employees regularly refer qualified candidates for hire? With rigorous hiring standards and high performance expectations, can they select and retain the best employees for the job? Which employees do they want to attract and retain, and how are they going to develop them?

    While the parameters defining ‘employer of choice’ will vary by industry and location, there are commonalities. Clearly, attractive salaries and wages, job security, advancement opportunities, rich benefits, flexibility, desirable perks, managers who treat their employees well, and ethical practices are all on the list.

    Each year, Fortune partners with the Great Place to Work Institute to pick the ‘100 Best Large Companies to Work for in America,’ and with the Society for Human Resource Management to pick the ‘50 Best Small and Medium Companies.’ Selections are made based on management’s credibility, job satisfaction, respect, fairness, and camaraderie — and, to a lesser degree, demographic makeup, pay and benefit programs, the company’s management philosophy, methods of internal communications, opportunities, compensation practices, and diversity efforts.

    Taking steps — such as employee surveys, retention, and exit interviews — to understand what motivates and drives employees and potential employees is key to becoming an employer of choice. For two consecutive years, Google has topped the list of large employers, and while financial security and flexibility are key attractions, the ‘opportunity to get things done’ is at the top of the list as well.

    Many companies might claim that they cannot afford to be among this group, but, in truth, they need to recognize that they must structure their budgets, priorities, and cultures so that they become an employer of choice. They cannot afford the alternative; only those employers that can be very selective and attract, retain, and motivate the best employees will grow profitably.

    An engaged employee has a vested interest in an employer’s success, and creating career paths is often identified as a way to keep people interested in their jobs. While younger employees with high potential are the focus of career-development opportunities, extending and redefining career paths to all employees enhances retention strategies and strengthens productivity. For example, the older automobile technician may move on to service writing or be paired with new employees as a mentor.

    Creating an environment people want to be a part of motivates employees and drives performance. The dramatic turnaround of the Boston Celtics from the worst team in 2007 to NBA champions a year later offers a valuable lesson. Three of the league’s top players (Paul Pierce, Kevin Garnett, and Ray Allen) sacrificed their personal glory and focused on a singular goal — winning the NBA championship — and did everything they could to speed up the team’s learning curve and solidify chemistry.

    Complementing this was the addition of savvy veterans who not only contributed meaningful minutes but also mentored young players to help them maximize their capabilities. The leadership of the Celtics was agile, attracting the talent they needed, fostering chemistry among young and veteran players, and focusing on a common goal.

    Stay in the Game

    Employers also need to be agile and responsive as they face the challenge of maintaining a healthy, trained, productive workforce. As workers’ comp professionals, we often see workers’ compensation used as an exit strategy. Pushing their physical capabilities, some older workers are injured, take longer to recover, and in many cases never return to the workforce. Not only does this drive up an employer’s workers’-compensation costs, but it also leads to a loss of capable employees with critical legacy knowledge.

    Constantly threatened with a double-edged sword — younger employees entering the workforce are less healthy than previous generations, and older employees are often working beyond their physical abilities to perform their jobs — employers need a strategy. While EAP and wellness programs are valuable and necessary tools, the best solution is to be the employer of choice. With ample job applicants and rigorous hiring practices, employers can hire the best and secure a lasting competitive advantage.v

    Frank Pennachio, CWCA is co-founder and director of learning at the Institute of WorkComp Professionals, Asheville, N.C., the largest network of workers’ compensation professionals in the nation. He is also president of a workers’ compensation insurance agency, and a licensee and trainer for Injury Management Partners;[email protected]

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