The report, “ A Business Case for Workers Age 50+: A Look at the Value of Experience 2015,” was prepared by Aon Hewitt, the global talent, retirement, and health solutions company of Aon plc. It finds that the business case for employing workers age 50+ has grown even stronger in the last 10 years, reinforcing a 2005 AARP study that found that these experienced workers are highly motivated, productive and cost effective.
“Leading employers across all industries value the expertise and experience of workers 50+ and know that recruiting, retaining and engaging them will improve their business results,” said AARP CEO Jo Ann Jenkins today in releasing the report.
“This report confirmed what AARP has always said about older workers; they bring many desirable traits to the job, including experience and engagement, maturity and professionalism, a strong work ethic, loyalty, reliability, knowledge and understanding, and the ability to serve as mentors ,” said AARP Utah State Director Alan Ormsby.
Roselyn Feinsod, senior partner at Aon Hewitt, said “Workers age 50+ are highly valuable within many organizations – particularly in those industries that require highly skilled workers or workers with unique skill sets, such as health care or energy.”
The AARP report comes at a time when experienced workers are playing an increasing role in the workplace. In 2002, workers age 50+ made up 24.6 percent of the workforce. By 2012, they were 32.3 percent. And by 2022, they are projected to represent 35.4 percent of the total workforce.
The new study addresses the misconception that older workers cost “significantly more” than younger workers. While costs tend to increase with age, the impact on the employer is minimal. Recent trends in compensation and benefits (e.g., merit-based pay and defined contribution plans) have diminished the relationship between age and labor costs to the point that age is no longer a significant factor in the costs of hiring and retaining workers. In terms of retirement costs, only 22 percent of large companies now offer a defined benefit pension plan, down dramatically from the 68 percent in 2004.
Looking at the 50+ segment of the workforce from a performance standpoint, AARP and Aon Hewitt report that older workers remain the most engaged age group. The study states that 65 percent of workers age 55+ are considered “engaged”, based on survey data, while younger employee engagement averages 58 to 60 percent.
Although the generational differences in engagement might not seem large, “it takes only a five percent increase in engagement to achieve three percent incremental revenue growth,” according to the report.
That translates into a large company with $5 billion in revenue achieving a $150 million revenue increase as a result of even a five percent engagement improvement, the study says.
The report concludes “An engaged older workforce can influence and enhance organizational productivity and generate improved business outcomes.”
AARP commissioned the study to assess the advantages of both retaining and attracting older workers. The analysis relies primarily on data from Aon Hewitt databases, an extensive literature review and interviews with 18 large employers to obtain anecdotal information on how they approach older workers.
The Business Case study is the second major workforce-related report by AARP in the past several weeks. On March 30, the AARP Public Policy Institute released a landmark report showing that, despite recent economic gains, half of the people ages 45 to 70 who experienced unemployment during the past five years are not currently working. Among those who had become reemployed, nearly half said they were earning less than in their previous jobs.