AMERICA’S AGING WORKFORCE: IMPLICATIONS FOR THE WORKPLACE
...aneously (Kinsella & Velkoff, 2001, 79). In fact, the number of workdays missed in America to take care of elderly parents has been rising for the last decade, giving birth to America’s newest cottage industry: adult day care centers. If caring for aging parents has been a problem for Boomers in the workplace, it could be even more so for Gen Xers. With so many Americans headed into their peak social health and welfare utilization years, and so few wage earners to fund the required government programs, it is no wonder that government agencies, politicians, and industry experts are already proposing possible interventions. Among the solutions: tax reforms, workforce development programs, the restoration of worker security, immigration reform, and the development of national policies that will provide for a more supportive workplace for working families (The Aspen Institute, 1998, 9). The government cannot solve this multi-generational issue alone, however. The rise of the four-generational family has given birth to the four-generational workforce, and companies must find ways to cope effectively with the largest employee generational gap in U.S. history. Complicating matters is that each of these four generations has different values, attitudes, and expectations, creating a complex environment for organizational leadership. To overcome generational barriers, companies are wise to offer choice (Sujansky, 2004). Younger workers are seeking more flexible hours and greater work-life balance than are their older counterparts. While Boomers and their predecessors – Traditionalists – have historically not required as many work and scheduling options, these programs are becoming increasingly important in extending their careers past normal retirement age. Although flexible work arrangements and enhanced training programs will provide the foundational structure for most organizations in the future, it will not be enough. Soon, every organization will tout similar offerings, if only to ensure corporate survival. To gain a competitive edge, American businesses must also evolve their motivational techniques in order to retain employees and enhance performance (Sujansky, 2004). While Traditionalists and Boomers have been comfortable working their way up the corporate ladder, Gen Xers are a different sort. This younger group focuses on personal strengths and weaknesses, failing and learning from their mistakes, and obtaining immediate feedback on their performance (Sujansky, 2004). This requires a different kind of manager – and a different kind of motivational coach. Generation Xers have a greater need for workplace relationships, requiring more communication – much of it conducted in a one-on-one setting – which older managers are not accustomed to providing. This new environment will be a challenge for today’s corporate manager. Older workers are used to putting themselves ahead of the team; younger workers often put the team first and expect everyone to adapt to the needs of the group. This will create conflict and interesting team dynamics as workplace groups begin to cut across multiple generational lines. Age diversity on workplace teams will provide unique perspectives to problems, issues, and processes, but the potential lack of unity may make it difficult for the team to reach consensus or agreement. Studies have shown that diverse teams have lower levels of cohesiveness. As such, to maintain productivity among work groups, corporate leaders will need to establish team norms that support generational differences among the members of the team. Even with solid and well-established team norms in place, age diversity training might be necessary to create a positive corporate culture. The Need for Training and Retraining Family and healthcare issues related to the aging population are causing companies to rethink how they will do business in the future. At stake is replacing a labor pool speeding into retirement while also restructuring benefits programs – primarily medical and retirement plans – to keep costs from rising out of control. Although the public focus has been on the cost side of the senior boom equation, the changing nature of the labor force may be the more jeopardizing of the two. Studies have shown that younger workers have lower skills than the very well-educated Baby Boomers they are replacing. In fact, the U.S. currently ranks 10th in the world in math and science (Susca & Edwards, 2003), a position that is expected to worsen as Boomers exit the workforce. In the United States today, more than 90 million people are unable to pass 10th grade literacy and math equivalency tests, the minimum level to get most jobs done. In fact, in 1999 the American Management Association reported that 38 percent of applicants lacked the basic reading and math skills required by the job for which they were applying. In 2002, the Transportation Security Administration (TSA) reported findings that were even more alarming. More than 60 percent of airport screening applicants failed TSA’s test of English proficiency and overall aptitude skills. One-third of the applicants failed to show up for the interviews (Herman et al., 2003, 92-94). Not only are children of Baby Boomers less numerous, but they are also less educated. Whereas American companies have generated huge productivity gains in the last two decades, experts now worry that U.S. businesses will soon begin to see a decline in productivity at a time when there is a more intense need for skilled and technologically sophisticated people (Barrett, 2002). Training and retraining programs will become increasingly important to American companies, not only to stave off productivity declines, but also to recruit and retain the talent they already have. According to a number of studies, training programs appeal to all generations, and they will continue to play an important role in attracting and retaining workers focused on continuous learning and career growth (Sujansky, 2004). These education trends are driving American corporations to create programs and strategies aimed at keeping Baby Boomers in the workplace as long as possible. Organizations are now investing in cross-training programs and flexible scheduling initiatives to attract those who want to retire, but who might still want to work part-time hours. Still, if these and other initiatives do not work, analysts anticipate that many firms will turn their focus to core activities, outsourcing others. After all, as the better-educated Boomers retire, it will not just become a numbers problem, it will also become a competency problem (Susca & Edwards, 2003). The Case for Diversity As crippling as the current labor trends might be, they pale in comparison to what is arguably the biggest problem faced by employers today: the employer itself. It is no longer enough to simply establish team norms for dealing with generational differences among work groups – and many organizations have not even done that. In general, U.S. business and industry must rid itself of its prevailing negative attitude toward older workers. The vast majority of U.S. companies have held on to assumptions about older employees that have resulted in years of age discrimination in the workplace (Goldberg, 2002, 105). For instance, employers have held fast to beliefs that older workers are less productive, less creative, more rigid, less reliable, and less trainable. However, with the shift from physical work to knowledge work, much of these long-held assumptions simply are not valid. Studies have shown that younger workers are absent more often than are older workers, younger workers file more workers’ compensation claims, older workers are far less likely to leave a job, and older workers are as flexible and trainable as their younger counterparts. In support of this last assertion, people older than the age of 50 are currently the fastest-growing group of Internet users. What’s more, the belief that older workers cost more is somewhat misleading. While it is true that older workers command higher salaries than younger workers do, when factoring in the higher costs of turnover and absenteeism associated with younger workers, the cost difference is minimal (Goldberg, 2002, 114-118). Observing trends in the local community can make the case for the older worker. Retirees, who are healthier than ever before, are working long hours for community non-profit organizations, such as The United Way and local hospitals. They are enrolling in college programs at record rates. In addition, they are participating in fitness programs of every kind. Traditionalists and Boomers are more productive than any other elderly group before them. They are healthier. Yet, many organizations still treat them with contempt, in part because organizations do not see older workers as long-term assets. Interestingly enough, however, turnover among older workers is actually lower than among younger workers (Robson, 2001, 34). Thus, older workers are a better investment. Still, many managers are reluctant to hire older workers because of concerns about increased healthcare costs, age bias about training older workers, or concerns about the limitation for long-term employment. Older workers are aware of this and perceive ageism is prevalent in the workplace (Susca & Edwards, 2003). As such, employers need to be conscious of false perceptions and provide diversity training and education to its workforce to ensure the organization does not tolerate this type of discrimination in its hiring practices, training, and promotion opportunities. Companies that do not could suffer one of two ill effects. First, they could be in violation of the Age Discrimination in Employment Act (ADEA) of 1967, a federal law that protects people over the age of 40 from discrimination. Second, they could find it difficult to retain and attract the older workers they will so sorely need in the future. Yet, some of the problem may be the subconscious result of the false assumptions about older workers held by the vast majority of U.S. businesses. As a result, it is common for a manager to use age as an indicator of aptitude when screening a large pool of applicants (Robson, 2001, 17). Additionally, managers may have a tendency to shy away from older applicants, for no other reason than they are uncomfortable having an older and more experienced worker as a subordinate. Diversity programs are important to help the varied generational labor force work together to prepare the company for the retirement of its older members. Baby Boomers see Generation Xers, who have a need for work-life balance and lack long-term employment, as lazy and disloyal. On the other hand, with their results-driven approach and long work history, Gen Xers may view Baby Boomers as uncaring of others and unmotivated to advance and learn new skills. Employers need a comprehensive strategy that includes training policies, retention programs, and recruiting programs that will maximize older workers’ productivity and slow the talent drain (Minton-Eversole, 2003). According to a 2002 Conference Board survey, employees say supervisors reserve promotion opportunities for younger employees, and two-thirds of older workers want more training and leadership development opportunities (Grossman, 2003). Businesses must rethink their approach to the diversity issue. “As long as these attitudes prevail, retention programs will not be enough to keep people working past the point at which they believe they can retire comfortably,” wrote Beverly Goldberg in her landmark book, “Age Works” (Goldberg, 2002, 119-120). “…Companies must develop measures to ensure that managers understand the value of older workers, manage them to the advantage of the organization, and integrate them into the culture rather than treating them as guests who have stayed too long at the party.” V. HEALTHCARE: ON THE BLEEDING EDGE Many government agencies and industry trade associations are keeping a watchful eye on the healthcare sector, as hospitals and other healthcare agencies are the first to feel the impact of the impending labor shortage. In fact, to hospital executives across the country, there is nothing impending about the situation at all; the vast majority of urban medical centers are struggling to survive what many industry analysts have dubbed “the perfect storm.” A decade ago, healthcare strategists and consultants forecasted a massive decline in hospital utilization, with predictions that many hospitals would simply go out of business. In response to those forecasts, hospitals began major downsizing programs, shutting down beds, and halting capital expansion projects. In turn, nursing schools cut enrollment and faculty. Those predictions set the stage for a healthcare tsunami. In the late 1990s, demand for healthcare services began to surge, fueled largely by the Baby Boomers who were now just reaching their peak healthcare utilization years. Hospital beds across the country filled rapidly. Medical centers could not put beds back on line fast enough. Nursing and other allied health schools were unable to recruit adequate numbers of faculty necessary to meet enrollment demands. As a result, hospital CEOs have been struggling with workforce issues ever since. Many hospital administrators openly blame the shortage of labor as the reason they have not expanded operations – and bed capacity – losing revenue growth opportunities for the near future (Health Care Advisory Board, 2001, 14). A Strain on Capacity The impact to healthcare organizations is not just one of growth constraints. The labor shortage has actually forced many hospitals to reduce their capacity, simply because there are not enough available nurses. In fact, 18 percent of hospitals have reported reducing their number of beds, 16 percent have reported delays in surgery caused by insufficient staffing, and another 11 percent have actually cancelled surgeries because of a lack of operating room staff. Among urban hospitals, the numbers are even higher (Herman et al., 2003, 155). In recent years, it has been common for many hospitals to call periods of “diversion,” when they actually divert ambulances to alternative facilities because they are unable to accept additional patients. Patients have overrun hospital emergency departments, and the labor shortage has only compounded the problem. Thirty percent of hospitals have reported emergency department overcrowding and delays in service caused by their inability to meet necessary staffing levels (Herman et al., 2003, 155). The Joint Commission for the Accreditation of Healthcare Organizations (JCAHO) is keeping a watchful eye on the impact staffing shortages might have on healthcare quality and patient safety. With hospital diversions and overcrowding now becoming the norm, the JCAHO is fearful that a rise in medical errors will follow. The Joint Commission is not alone; the State of California recently passed legislation mandating nurse-to-patient ratios. Hospitals there are crumbling under the weight of trying to recruit enough staff to be compliant with the new law. Hospitals are not the only healthcare providers swimming against this enormous current, however. Equally hard hit are nursing homes. In fact, in recent years, nursing home admissions have climbed at an alarming rate (Kinsella & Velkoff, 2001, 71). What’s more, industry experts predict that the nursing home population will double by the year 2030, which will create a critical gap between the demand and supply of qualified staff (Goldberg, 2002, 28). A Shortage of Talent Nowhere is the healthcare labor shortage more obvious than in nursing. Hospitals across the country are reporting vacancy rates of 15 percent or more (Health Care Advisory Board, 2001, 3). There are currently more than 126,000 hospital nursing positions available nationwide, and this number is expected to grow (Herman et al., 2003, 149). The average age of a nurse has been steadily increasing over the last two decades – in 2000, it was 47 – and this older nursing pool could create an overwhelming rush into retirement (American Hospital Association, 2002, 7). Because of these factors, industry experts are predicting a shortfall of approximately one million nurses by 2010 and 1.5 million nurses just five years later (Herman et al., 2003, 150). The labor problem, however, is not isolated among the nursing profession. Key positions across the institution are going unfilled as it is becoming more difficult to recruit talent across the labor spectrum. Nationwide, hospitals are reporting shortages in nearly every hospital job category. In 2000, there were 10.9 million healthcare jobs in the United States, a number forecasted to swell to more than 14 million by the end of this decade. In fact, labor analysts project healthcare jobs to grow at a rate of 30 percent – twice the rate of non-healthcare occupations. When factoring in the replacement demand for those who will leave the field, the result is the need for more than 5.3 million new healthcare workers in the first decade of this century alone (American Hospital Association, 2002, 9). Also rising to the top of the critical shortage list are pharmacists, with more than 13 percent of hospital pharmacy positions currently going unfilled (American Hospital Association, 2002, 10). The lack of pharmacists, however, is affecting more than hospitals. Pharmaceutical research, development, and manufacturing firms are taking the brunt of this blow, as the talent pool dries up. Pharmaceutical companies seeking human capital are finding it difficult to recruit and retain key talent, as pharmacists and other scientists now have a much wider choice of careers (Delany, 2001). Although the primary focus of the healthcare labor shortage has been on allied health professions, physicians are not immune. Most medical schools are reporting physician shortages in at least one specialty – most notably in radiology and anesthesiology – making it difficult to maintain appropriate faculty ratios. Some medical schools are closing fellowship programs because of the lack of faculty, while others are trying to cope with salary structures that are wreaking havoc on their budgets (Croasdale, 2004). Hospitals are now finding it hard to recruit physicians trained in cardiology, dermatology, gastroenterology, general surgery, and most other surgical subspecialties (Croasdale, 2004). At the current rate, the U.S. is facing a projected deficit of 50,000 physicians by 2010 and 200,000 physicians – 20 percent of the projected demand – by 2020 (Cooper, Getzen, McKee, & Laud, 2002). Compounding the problem is that younger physicians, because of lifestyle choices, do not see as many patients as their older counterparts, with a patient productivity variance of as much as 30 percent (Bloom, 2004). Reclaiming the Workforce The shortage of talent is crippling the healthcare industry, eroding what little operating margins many hospitals have left. In order to meet staffing needs, hospitals are tapping into overtime, agency and per diem labor, and specialized premium pay programs designed to entice already overworked staff to sign up for additional shifts. When that has not worked, some hospitals have resorted to mandatory overtime, which has damaged workforce morale and employee relations (Health Care Advisory Board, 2001, 16). Most hospitals are attacking this problem on three fronts: recruitment, retention, and leadership. At a time when every recruiting advantage seems monumental, programs such as the American Nursing Association’s “Magnet Hospital” and Fortune magazine’s “100 Best Companies to Work For” designations have become strategic initiatives. Beyond those public relations’ tactics – driven nonetheless by healthy corporate cultures – many hospitals are investing heavily on rebuilding the recruitment pipeline. Healthcare organizations are spending large sums of money on scholarships, sign-on bonuses, and subsidized training programs. Hospitals are offering these incentives in exchange for guaranteed work commitments. Other hospitals are filling the pipeline by underwriting the expansion of college faculty – especially in nursing, laboratory technology, radiation technology, and pharmacy – and funding the start-up of new fast-track programs. Hospitals are also putting a renewed focus on high school image campaigns designed to attract more students to the healthcare field (Health Care Advisory Board, 2001, 48). The recruitment of new talent is critical to the survival of most hospitals, as retention initiatives alone will not solve the vacancy problem. Because of the growth rate of new healthcare jobs, even with a substantial drop in the turnover rate, the number of vacant positions nationwide would still be at critical levels. In other words, hospitals are currently facing a zero-sum game. There are simply too many available positions and too few workers – a situation unlikely to change anytime in the near future. The goal for most hospitals, then, is to be able to attract and retain a disproportionate share of the talent pool (Health Care Advisory Board, 2001, 56-69). To that degree, retention programs are still important, and healthcare organizations are using organizational behavior motivational theory as their primary playbook. Hospitals have moved into an era of flexible benefits programs, flexible scheduling initiatives, gain-sharing opportunities, variable pay opportunities, and more. Skill-based pay plans are becoming prominent, as hospitals design professional ladders that allow staff to earn a higher rate of pay as they expand their competencies. Reward and recognition programs are abundant, shared governance (employee involvement) models are launching nationwide, and management by objectives programs are making a comeback. Nonetheless, whether the focus is on recruitment or retention, a healthcare organization’s leadership will ultimately influence its ability to defend itself against this shortage of labor. In the book, “Impending Crisis: Too Many Jobs, Too Few People,” the authors wrote (Herman et al., 2003, 163), “Leadership policies, philosophies, and behavior will determine whether one hospital is chosen or avoided by prospective employees – and patients.” Many hospitals are already finding this statement to be true. Early Lessons in Leadership Because of the paradigm shift currently transforming healthcare, it would be wise for leaders from other industry sectors to study the lessons already learned by hospital executives. While healthcare might be on the bleeding edge today, it is only a matter of time before other industries follow suit. Skilled workers are leaving healthcare in droves, citing stress and burnout as key reasons for their departure. Those who stay have increased workloads, which only lead to higher levels of stress and more rampant burnout – creating a self-perpetuating cycle of employee turnover. As the labor crisis has moved from a slow simmer to a rolling boil, it has forced hospitals to rethink how they provide patient care. In the late 1980s and early 1990s, when there was an abundance of talent, hospitals could dictate where, when, and how staff worked. That is no longer the case, and hospitals that hold fast to this mentality will not find a throng of applicants lining up at their doors. Although rigid work schedules and protocols established by hospital leadership are a way of life for Traditionalists and Baby Boomers, workplace rigidity is not acceptable to Gen Xers. This younger generation seeks greater levels of work-life balance and often moves from employer to employer to find the job flexibility they demand. For many healthcare organizations, this has created massive problems. Eight- and 12-hour shifts are the norm in most hospitals, with seniority the principle-driving factor in the assignment of work schedules. However, most Generation Xers put lifestyle ahead of career ambitions and are reluctant to take undesirable shifts – such as nights or weekends – especially when they know that day shifts are available at competing hospitals. Thus, to lure the necessary recruits needed to maintain minimum staffing levels, some hospitals have resorted to sign-on bonuses – usually around $5,000 to $10,000, but sometimes as much as $30,000. For the most part, this tactic has backfired for three reasons. First, it has minimized the value of the tenured employee who has 10 or more years of service, lowering staff morale in the process. Second, it has created a revolving door of talent, as many recruits leave as soon as their work commitments expire to accept new jobs with new sign-on bonuses. Third, a model built around sign-on bonuses is proving to be unsustainable. As sign-on bonuses escalate, it has eroded revenue margins, causing some organizations to dip into reserves. This, alone, has caused many healthcare organizations to scale back or discontinue offering sign-on bonus incentives. Hospitals are finding that investing huge sums of money into sign-on bonuses, compensation, and benefits is not the answer. Certainly, organizations must have market-competitive wage and compensation plans. However, hospitals that have driven down their vacancy and turnover rates have done so mainly by focusing on reducing workplace stress, investing in training and retraining programs, and adopting flexible work structures – studies show that the latter practice actually increases productivity and lowers absenteeism rates across all industries (Robson, 2001, 23). Effective workplace stress reduction programs have included enhanced communications efforts designed to improve information flow and build trust throughout all levels of the organization, as well as revamped evaluation programs that focus on isolating and enhancing worker strengths rather than ferreting out employee weaknesses. Additionally, hospital stress-reduction efforts have focused on technology enhancements that provide better and quicker access to information; job redesign to improve productivity and employee satisfaction; and collaborative team models consisting of physicians, nurses, and other allied health staff. Hospitals are also waking up to the fact that many healthcare workers will often change careers in the course of their lifetime. For instance, a hospital nurse may join a law firm specializing in medical malpractice. Alternatively, a patient transporter might leave the field to take a job at Home Depot. By investing in training and retraining programs, healthcare organizations can retain staff by helping them make a career change – without having to exit the organization. For instance, the hospital’s information technology department, where clinical information systems have become the backbone of the organization, can train the nurse – who might otherwise leave the organization – for an I.T. position. In addition, the hospital can retrain a patient transporter as a nursing unit secretary, laboratory technician, or medical transcriptionist – all vital positions for the organization. Finally, hospitals that have ditched their traditional scheduling models are attracting younger and older workers alike. By focusing on the needs of the individual – whether a Gen Xer who wants to work a part-time schedule of three six-hour shifts so that she can pursue an advanced degree or a retired nurse who wants to return to the workplace in a limited and modified fashion – hospitals are finding they can become desirable places to work. VI. A MATTER OF TIME Although the implications for society, healthcare, and education are overwhelming, other industries will face future obstacles as a direct result of the aging workforce. By 2008, the crisis now confronting healthcare will inflict all other business and industry sectors (Herman et al., 166). At risk are severe shortages in labor and skills – and most vulnerable, perhaps, are manufacturing companies (Susca & Edwards, 2003). Manufacturers that specialize in technical applications are especially susceptible to knowledge loss, which could affect future progress. Other Industries Not Far Behind The Baby Boomers who are now entering retirement all but built the aerospace industry, and they are taking their skills and experience with them. In fact, 68,000 workers, representing nearly eight percent of the labor force, left the aerospace industry over a nine-month period ending September 1999. What’s more, replacing this loss of talent will not happen anytime soon, as information technology and computer sciences companies steadily gobble up young recruits. To make matters worse, it will be difficult to train the employees that remain because of the high specialization that built the industry (Canizares, 1999). In short, unless industry experts discover a path across this chasm in the next decade, the U.S. could see a grounding of the aerospace industry. Aerospace is not the only industry suffering from a loss of skills. Because of the exodus of talent in all industries, new employees must have broader competencies and must be able to perform across multiple disciplines, limiting their ability to specialize. As a result, workers with highly needed specialized skills are likely to find themselves endangered. Recent studies give rise to this trend. In one such study, the highest level of technical proficiency on a single competency was 66.9 percent, and the lowest level was 16.2 percent. In comparison, general competency proficiency ranged from 90.5 percent to 44.6 percent – an indication that generalists are slowly replacing much-needed specialists (Governmentwide, 2004, 13-17). These survey results have industry analysts nervous; they fear a loss of specialized technical skills with the expected rash of retirement. As generalists continue to replace specialists in high-tech occupations, the knowledge seepage could hamper productivity and new product development. Some anecdotal evidence is already pointing to that trend. A study of commercial launch failures conducted by the U.S. Department of Defense noted a lack of training and experienced personnel as top problems plaguing U.S. launch vehicle companies (Adelsberger, 1998). The result is severe lack of progress in technical advancements. Even Government is Not Immune While the primary focus of the impending labor shortage has been on healthcare and manufacturing, other sectors – including government – will not escape unscathed. Over the next decade, government experts expect a rash of retirements at both the state and federal levels. This, coupled with increased turnover, has government officials worried. The average retirement age for a federal employee now sits at 61, partly because retirement benefits such as healthcare coverage...