On the Ageing Global Workforce
With both eyes set on the future and years of international consulting experience behind her, Yvonne Sonsino’s current contributions as Mercer EuroPac’s Innovation Leader are leading to great results for a diverse array of clients. A truly passionate, articulate individual, Yvonne was more than ready to discuss the current and potential implications of not properly addressing the ageing workforce issues affecting top organizations in economies throughout the world. In addition, she also discussed her globetrotting career path, how ageing workforce issues directly affect mobile employees and expatriates, her recent bestselling book covering the ageing workforce topic in extensive detail, and much more.
What is your current role at Mercer?
My current role is Innovation Leader for Mercer’s EuroPac [Europe, Australia, and New Zealand] region, but I’ve had a few roles at Mercer throughout my career. I used to run the International Consulting team, and I also did a lot of work on mobility. I then became an expat myself for about six years, but I ultimately came back to Mercer around four years ago.
The Innovation Leader role involves developing new products and solutions that meet our clients’ needs while also looking at existing products and solutions and seeing where they need updating.
It sounds like you’ve had a lengthy career in international HR. Where all have you worked specifically?
The International Consulting role involved working all over the world. I was based in London, but I would work with clients that were all over the world. There was a lot of traveling in those days.
In particular, I used to do a lot of work in the Middle East. My father-in-law was Arabic, and I’ve always enjoyed those regions because they provide unique challenges in a lot of interesting ways. I really like a challenge, so I did a lot of work in the Middle East, and then I eventually went to live there. In fact, I spent three years living in Abu Dhabi working with the Abu Dhabi Investment Authority before coming back to Europe. I’ve been back in Europe about seven years now.
You said you took a few years away from Mercer to work at some other roles. How has that experience shaped your professional development, especially now that you’re back at Mercer in a new role?
It was probably the best thing I could have done at the time! I had reached a stage at Mercer where I was running a big practice and I could have stopped there, but I was really keen to understand what it was like to receive consulting advice on the client side. That’s why I left and became a client.
I was intrigued to experience real delivery challenges, budget cycles, and everything that goes along with that. I also wanted to better understand why it seems like so many consulting projects often get left on the shelf. It seemed like consultants do lots of big project work, deliver the report and the recommendations, and then nothing would ever happen. Why?!
By seeing things from the client side, I was able to better understand why this was by experiencing first-hand the complexities of managing in-house HR people, strategies, and teams. I saw the impacts of challenges in leadership, changes within teams, changes to strategy, changes in the external environment; all these things don’t enable you to deliver according to plan all the time. I learned a huge amount about how hard it is in that world, and that was incredibly insightful.
I finally came back to the consulting world because I think I can do more good from this side where I’m working to support clients. But everything leading up to that really helped shaped my new job. In regards to looking at innovation at Mercer, how we innovate in particular, and what new products are needed for specific roles—it was essential to have that time and experience.
Managing the ageing workforce is a major focus of yours now. Are there any experiences you had during this time that helped prepare you for this?
Very much, actually. When I was at VISA [as Director of Performance, Talent & Reward], the UK abolished the compulsory retirement age and the government lifted all restrictions on the age that people could work. Previously, if you were a working man in the UK, you got up to 65 and then you had to leave the workforce and take your pension. As a woman, you got to 60 and then you’d leave and take your pension. All of that was changed so quickly and so drastically, and it gave us all some really interesting challenges around succession planning and people management.
For example, say you had people who were approaching the old standard retirement age. Imagine those people had a great pension scheme, they had been ready to retire, and they were able to afford to retire. All well and good. But pensions have changed drastically over the years, and they’ve gotten worse and worse with time, so that clearly complicates things for them. Now there’s a lot of people coming up to those later ages who can’t afford to retire, so they just have to keep on working.
As an employer, that means you’ve got a lot less certainty about when people (and skills) will leave your workforce. Many highly skilled and experienced workers in banking and engineering for example, have historically enjoyed good pension provision and can afford to retire, taking their precious experience and skills out of the door. Some even retire earlier than you might expect – the UK minimum age to draw pension is now 55 in these professions. On the other hand, in a worst-case scenario, you may have underperforming people who can’t afford to retire anymore and will need to carry on working, so now your only real option for exit is to fire them. As you can see, this all leaves employers with a great degree of uncertainty and challenges around succession.
Are there misconceptions about the ageing workforce that are preventing positive progress?
Today, overall, there’s a lot of worry surrounding workforce planning and succession planning. You’ve also got challenges surrounding the affordability of retirement and potentially, motivation and productivity. You’ve got health problems as the population ages. It’s a really difficult set of problems overall, and most employers are really struggling.
I really don’t think many employers have attempted to address all of these issues yet. There’s one mindset where some companies don’t believe that older workers are as valuable as younger workers, and recruitment will just carry on as normal from younger age groups. The common thought is that older workers are usually more expensive because of the misconception that pay goes up as you get older. It goes up due to promotion – but not just for age. There’s also the thought that older workers tend to get sick more and are less productive overall. Yet, the reality is that pay doesn’t go up with age– pay goes up with seniority. If you get promoted, your pay goes up, but if you remain in the same job, then pay for older workers actually often goes down in later years (evidence shows up to 7% decline for older workers in same job). This still isn’t widely known.
Meanwhile, health is very much an individualized thing. Some older workers are very fit, and some younger workers are chronically sick. We do know that younger workers tend to take a lot of sick days, but older workers don’t do that so much. So, even the preconceptions about health that many people associate with older workers aren’t always as accurate as people would expect them to be.
And are there any misconceptions about older workers in regards to productivity?
Yes, there are. Recent research has actually shown that if you have a diverse team in regards to age – that is, young, medium, and older workers all in the same team – that’s actually the most productive combination. Most people think that older workers are less productive, but it’s just not true because the things they bring to a team are valuable. They tend to move around between jobs a lot less, so the cost of replacement and recruiting is less. They tend to have better people skills and have found the ‘organizational short cuts’ so things can get done quickly. Younger people move between jobs a lot, so the cost of replacement and recruitment is very high. Older people tend to be more satisfied with their jobs and less inclined to demand rapid promotion or more training or new experiences. They’re just a bit more satisfied with a level playing field. Back in 2008, McDonald’s commissioned a Lancaster University study to analyse the value of older workers to the business, and found that overall levels of customer satisfaction were statistically significantly higher in those restaurants with one or more mature employees.
How do all of these misconceptions motivate you as an Innovation Leader?
A lot of what I’m doing is working with companies on the topic of affordability of retirement and how their assumptions about the ageing workforce might be wrong, particularly in regards to productivity and costliness.
I also want to help companies find ways to add older workers to their ranks, as they will become essential in the near future. That’s because the ageing population situation doesn’t just stem from the fact that we’re all living longer – it also stems from the fact that the birth rate is significantly reduced in developed countries around the globe, like Japan, the UK, Germany, Italy, Australia, New Zealand, and even within the US somewhat. The young labor pool that companies believe to be deep enough to sustain future growth is just not deep enough in these countries and others. You can’t hire what is not there.
There are several reasons for the declining birth rates, including contraception, childcare costs, and the simple fact that many people just want smaller families nowadays. But the end result is that we just don’t have as high of a volume of younger workers to recruit, so the only way that you’re going to get that talent you need in your workplace will be by hiring under-represented labor groups in the future, like older workers, return-to-work parents, or even accelerating automation . So, for all those reasons, older workers are actually quite a good demographic to target and engage.
It sounds like you have a lot of passion for this aspect of HR. What originally led you to this niche?
When I came back to Mercer several years ago, I remember wanting to talk to a particular company about their experiences related to ageing workers. I had already had a shocking realization while at VISA that the abolition of the default retirement age would give companies all sorts of problems, so I wanted to talk to some other companies and ask them how they planned to deal with these problems.
I remember speaking to one particularly large company. I asked, “What are you doing about this whole ageing demographic thing? You obviously need more workers, but there’s also an obvious shortage of younger people.” The response was something along the lines of, “It’s not an issue for us. We don’t want old people because they cost more and they’re not productive.”
I was shocked. I remember thinking that if someone in that position can be ignorant of the social and demographic implications of all of this, and their business is going to suffer as a result, I have to do something drastic here to get the right messages across. I have to be one of the campaigners to educate the world around the social and demographic realities of ageing worker pay, promotion, productivity, health, and so on. If we don’t do this, these businesses and economies will face one of the biggest economic challenges we’ve ever had.
Are there any countries that are already seeing a sort of decline as a result of not properly addressing this ageing workforce issue?
You can actually already see the effects going on in Japan right now, and also in the UK. In fact, I believe Japan has one of the most severe and mature manifestations of this ageing challenge of all. It has people who are living really long lives because Japan is a great place to live and to support longer life – good nutrition, they’ve got great technology, and they take care of people. Over one quarter of citizens are over 65 and this is growing. However, Japan faced the same decline in birth rates shortly after the baby boom years. It has certainly contributed to the relative low growth in the region.
The UK example is just beginning to come to a head. Lower immigration, one of the Brexit vote swingers, will mean that our younger labor population pool will shrink even faster. Industries are already being affected quite badly. The only labor pool growing at the moment is those over 50. Employers should be considering what decreasing unemployment rates across all age bands – which is especially low in the 35-49 age group at only 2.8% - means for them, and their availability to recruit and retain the workforce needed. Mercer’s projections show that by 2025:
- The UK will have 750,000 fewer people under 50.
- The UK-born workforce will fall by more than 750,000, and the under-50 UK-born workforce will decrease by 850,000.
- The under-50 workforce will fall by 200,000, while the over-50 group will increase by more than a million.
And there is an increasingly number of jobs available, many left unfilled. The situation is particularly dire for sectors that are human-intensive, such as health care, construction, education, or hospitality. For example, in a high-volume tourism centre such as London, hotel and restaurant expansion plans rest on the ability to get wait staff, baristas, kitchen staff, housekeeping staff, etc. The work cannot be moved or automated, so the business failure risk increases.
Are you taking any initiatives outside of Mercer to educate people on this issue?
I started to go to a number of different events that were being organized around the issue, some by the UK government and others by various charities, etc. Eventually, by doing that, you’ll start to get into a circle of people who are just as passionate as you, and then you start to see even bigger opportunities to lobby for change. It was very inspiring being around all these people at the time as I could see what progress was being made, and which direction I needed to head in.
Also, my brother-in-law is in the publishing business, and his wife has written 12 books and used to be a journalist. He has always been saying to me, “Yvonne, you’ve got to write a book at some point!” And we just so happened to meet up again at just the right time a few years ago. He said to me, “All this stuff that you’ve been talking about on ageing – that’s your book! You’ve got to write that book!” So, I sat down, put my mind to it, and I wrote and published this book [The New Rules of Living Longer] in four months. That was a good way to get a lot of it out of my system, but I’m still doing the hands-on work with companies to get them to understand some of these dire consequences.
Do you see any positive progress being made?
I do believe that we’re slowly starting to see change, but it’s too slow.
Within Mercer, there’s a lot of work currently being done on Brexit projections. And that is getting headline news now, all of the implications of Brexit. So for me, it’s the only good thing coming out of Brexit, because at least it’s getting these bigger issues into the public mindset: we need immigration, because the ageing workforce is a massive challenge for us.
What high-level advice would you give a company, an employer, or an HR professional on how to start dealing with these issues?
Take a look at your employee population, do some strategic workforce planning, and analyze what’s actually happening in your business. You should look carefully across your workforce population and your critical roles and then take a look at your age groups and your potential future labor pool options. It’s a basic supply-and-demand matching, and that should be enough to scare the living daylights out of most HR professionals, and give them the evidence they need to begin to plan for future business growth and change.
My next piece of advice would be to take a good look at your employee population and evaluate who can actually afford to retire. By doing that, you’ll start to see whether or not all the experienced workers in your critical jobs actually can afford to retire, and if so, you’ll know better whether they’re going to be leaving you soon. You might have a very hard time replacing them. That’s a big business continuity risk to be prepared for. One company that I know did this realized they had a ‘cliff-edge’ of critical roles approaching retirement (an affordable and comfortable retirement), and they had no ‘next-generation’ of skills to replace them. They partially fixed it with some clever reward retention mechanisms, and gave the older workers a chance at training up the next generation. It was motivating and proved a useful short term stop gap. Longer term however, the demographic challenges need to be assessed and addressed in a more proactive, not reactive, panicky way.
We have got a pretty good “How age ready are you?” survey ready for release shortly. You can self-assess against our checklist of interventions that will ensure you are a more age-friendly employer. Remember also that things you fix, like flexible working, to attract and retain older workers, are just as valued by younger workers too.
How can HR professionals specializing in talent mobility be better prepared to address these issues?
I think as far as mobility and expatriation is concerned, all of these things apply. As companies send people abroad, they should always be an integral part of the workforce planning process. You have to ask, “Who do I need where, and when do I need them there? What life stage are they at and what might we do to provide a good experience?” As expats age along with the general workforce, the number of careers in the mobility space is going to increase as well. That can really lead to complications.
For example, when I was in Abu Dhabi, my husband lost his mother while we were 3,000 miles away. She was diagnosed with inoperable late-stage cancer. She was the youngest of all our parents – only 69 when she was diagnosed. As such, she was the last one we ever would have expected something like that to happen to. But during that time period, I learned how variable an expat’s experiences can be when dealing with an issue like that.
My husband could come and go quite freely as he wasn’t working in Abu Dhabi like me, but doing a distance learning degree, so he was going back and forth to the UK in those final few months with her. However, for me as an expat, I was working with a pretty heavy schedule, so I couldn’t go back as often as I wanted so we spent a lot of time apart during those times. But if it had been my mom, I would have had to get home more often. So, at the end of the day, it’s all about building those types of contingency plans into expatriate policies that could be very useful for employers going forward.
Could you comment on some of the more interesting strategies that you’ve seen global companies use recently to deal with their ageing mobility workforce?
A big thing that’s happening at the moment that I’m a fan of is flexible working and creating a more flexible working environment. It works particularly well with talent mobility because then you can ask, “Do I actually need to be there?” Technology lets us work more remotely, it lets us work different hours, and it even lets us work in different time zones. Flexibility, agile working – define it how you will, is an initiative that most companies are now doing, Mercer included. And that’s great because it’s really motivating for employees to be able to choose the right work-life balance structure. The other thing that’s happening that I find quite clever and appealing is giving more careers’ leave, which encompasses parental leave, maternity leave, and paternity leave, as well as leave if you have to care for an elderly relative, as in the example I gave above. I am convinced this will become law before long.
Companies should also do some more work around health and being proactive around health. That would involve actually thinking, “How do we understand the health of our population? How can we positively intervene, regardless of what generation they are? What are the conditions and the things that will help keep that population healthy?” That would be another thing that companies are already doing that is very helpful, but could definitely be focused on even more in the future.
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