Retire + Health

How the Face of Retirement is Changing on a Global Scale

June 12, 2018
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“A large part of the workforce is getting older and they’re not retiring. Employers in growth markets must prepare for a multi-generational workforce."

It used to be that workers retired around age 65, and then lived off of pensions, savings and family support. But now that people are healthier and living longer, retiring in their mid-60s is no longer as attractive. Many people plan to work well into their 60s and 70s, not simply because they want to, but more likely due to financial need.

Mercer’s recent study, Healthy, Wealthy and Work-Wise: The New Imperatives for Financial Security, looked at the forces that impact financial security and beliefs about retirement. The 12-country study surveyed 7,000 adults across six age groups, as well as 600 senior executives in business and government. More than two-thirds (68%) of the respondents in the study said that they expect to keep working past a traditional retirement age.

Today, the way that people work and ‘retire’ has fundamentally changed. Employers and workers need to adapt. This is especially true in growth markets like Asia and Latin America, which are rapidly expanding and the growing middle class are optimistic about the future. However, they need the tools to make sure they can maintain their newfound, higher quality of life in later years.

Urbanization
 

As these aging populations face urbanized economies, this will also have an impact on the multi-generations of workers and family structures. For instance, in China, where younger generations traditionally support older generations, and with 60% of the Chinese population expected to be in an urban city by 2030, urbanization will shape the physical and cultural fabrics of this thriving country. Chinese families now face dramatically higher housing, transportation, and food prices, not to mention increasingly limited workforce mobility.

Latin America is also one of the world’s most urbanized regions (in comparison, the European Union is 74% urbanized; the East Asia and Pacific region is 50%). By 2050, UN-Habitat predicts Latin America’s cities will include 90% of the region’s population. Latin America, like China, has traditionally had a very family-based culture, so urbanization could also strain family structures and workforce mobility[1].

Time To Retire Retirement
 

Today, on average globally, people expect to spend 15-20 years in retirement. Without better planning, many will either outlive their savings or have to reduce their expected quality of life. These realities will become more acute in many growth economies, where employer sponsored retirement benefits are often immature and government pension systems are threatened by sustainability. The number of working people to retirees will drop dramatically over the next 20 years, globally falling from 1:8 today to 1:4 by 2050[2].

Countries like Chile, China and Brazil will actually halve to 1:2. This puts extraordinary strain on social systems. The strain increases with the high proportion of informal workers in most growth countries. Informal workers can comprise up to 50% of the workforce in some countries. These workers may be unlikely to contribute to or benefit from social security and aged pension systems. In addition to the individual implications, this can also have profound macro-economic implications.[3]

The proportion of pension spend relative to GDP is also rising in growth markets. Combined with an aging population, the sustainability of government pension systems is even lower. For instance, Italy, Greece and the Ukraine have among the highest percentages of pension spend at around 16% of GDP, and these were around 10% in 2000, which highlights how rapidly pension spend is growing. Many other European countries have considerably high percentages (>11% of GDP), including Portugal, France, Austria, Slovenia, Spain, and Finland. For context, the U.S. public pension spend is currently 7% of GDP, while Japan and Hungary are 10% of GDP.[4]

With societies rapidly aging, organizations will need to be far more flexible in providing programs that meet the needs of a wide range of employees – from millennials who typically switch jobs frequently, to informal workers seeking financial stability, to older workers looking to stay healthy so they can work longer and ensure income in their later years. In 2010, the East Asia and Pacific growth regions accounted for 36% of the global population aged over 65 years. Between 2015 and 2034, the older population in East Asia alone is expected to grow by about 22% every five years.[5]

As we navigate aging and urbanized growth markets, employers need to be prepared for a multi-generational workforce. A large part of the workforce is getting older, and they’re not retiring. Further, as more older workers are increasingly likely to live in urban areas, they have less workforce mobility and industry options, not to mention a higher cost of living that will only rise as urban real estate is claimed by the middle and upper classes. This puts a strain on individuals’ abilities to live well for longer.

Different expectations around work and retirement on the part of employers and employees could help both groups. Older workers have significant experience that could be extremely valuable —employers that figure out how to keep these employees contributing longer may have a competitive advantage.

Opportunities for people to work for an additional decade or two (or three), in different capacities or with adjusted schedules, would mean that people would have many more years where they could contribute to savings and investments. Ideally, a steady savings plan over a longer timeframe could be maintained regardless of how people structure their working lives. It may also provide better retirement outcomes for those who take time out of the workforce, structure their work flexibly or work in the informal economy.

On a policy level, it is time to consider raising or even eliminating set retirement ages. Similarly, many countries need to consider providing incentives for people to work past the traditional retirement age. While some growth economies, Singapore for example, have done this successfully, the number of social pension systems that incentivize people to work longer is still small.

What individuals can do
 

Around the world, respondents in the survey felt that planning for retirement was their own responsibility, and for the most part, were optimistic about being able to save. China, for instance, ranked highest in their optimism for the future. Seventy-percent expect to maintain their quality of life after fully retiring. This may be due to the quickly growing middle class and traditional savings culture. While this savings may not necessarily be earmarked for retirement, saving for the future is a part of the day-to-day lives of many in the country.

On the other hand, Japan, which is the second oldest society in the world,[6] has very low financial security, with 72% of survey respondents saying they do not feel financially secure. Only 21% expect to maintain a desired quality of life after fully retiring and only 8% are confident they have saved enough to provide income for retirement. It is not surprising that 78% of respondents are at least somewhat stressed about their financial situation, with the top factors contributing to this stress being personal health, lack of reliance on a state pension, and not saving enough for retirement.

As we face aging societies around the world, not just in Japan, these alarming statistics serve as a warning of the impact a long-term savings gap can have if no action is taken. Although we accept it is our personal responsibility to better prepare for retirement, we are not taking the necessary actions to improve our financial security.

Eighty-five percent of survey respondents were willing to change their current lifestyle, realizing trade-offs - such as saving more or downsizing - were necessary to afford to live longer. 40% were willing to save a greater percentage of disposable income, followed by 32% who were willing to spend less and downsize. 27% were willing to take on part-time work. Respondents were looking for greater guidance regarding the trade-offs they should make.

What employers can do
 

As later-life financial needs vary, flexibility is vital. People want to choose how long they work. A big role employers play is in rethinking their retirement benefits, especially since workers may want to keep working past the traditional age of retirement. This means, in many cases, employers benefit from the experience and skill sets of older workers — especially in the face of a shrinking talent pool.

Employers have much to gain from helping their employees become more financially fit. Research shows that employees who are not financially healthy have higher levels of stress and distraction, leading to lower productivity, poorer customer service and impaired health.

As a matter of fact, the Mercer study found that 40% of respondents globally reported their financial security caused them stress.

The study also found that 79% of adults trust employers to give sound advice about financial planning. Eighty-six percent of employees said that if their employer improved benefits or added access to an investment plan, it would result in higher job satisfaction and greater commitment to the organization. In short, workers are looking to their employers to help them help themselves.

Worrying about money matters at work places a significant drag on productivity — and could be eliminated if employers helped their employees find appropriate financial tools and information to make smarter financial decisions, including long-term savings options. Beyond the practical gains, employers committed to helping their employees attain financial security is simply the right thing to do.

These tools would be especially effective for Millennials. They are the least financially secure generation in the workforce today. Ninety-three percent are willing to use online tools to help track and manage their financial, health and personal data as long as the tools are easy-to-use and their data is secure. Eighty-tw percent of millennials surveyed said they would save more if they understood the impact of those savings on later years.

Some resources, however, do not hold the same level of interest: 52% of all adults are not comfortable with robo-advisors giving automated advice and feel similarly about call centers with financial advisors. This implies people are looking to be treated individually when it comes to guidance and advice.

Employers need to transform savings into an engaging experience and make it achievable through simplified language, tools, and the ability to track savings and progress in real time. This could create the same explosion in the savings industry as we have seen over the past several decades in the fitness industry – aided by the fitness revolution of the 1970s and 1980s, and current digital tools to track, motivate, and improve performance.

Act now to live well later
 

Acting now applies to business and government, and is not solely the responsibility of the individual. The need to adapt long-term savings programs and products to new demographic and economic realities is urgent. The current trajectory could put large numbers of people at risk of poverty, not to mention diminished productivity at work. Applying creative and strategic thinking would transform the future reality for many.

The dynamics of retirement savings need to change to reflect our diverse and modern social systems and work experiences. Financial security should not be the domain of only those with access to employer programs, of one gender over another, or of older generations to the detriment of those that follow. Public and private enterprises must join forces to ensure that financial security is available to everyone, now.

 

1 UN Habitat, 2012
2 United Nations Population Data, 2017
3 World Bank, 2017
4 OECD, 2015
5 World Bank, 2015
6 Central Intelligence Agency, 2017

More in Retire

Pat Milligan | 19 Dec 2019

Life expectancies have risen sharply in recent decades, from an average age of under 53 years in 1960 to 72 years in 2017. And in high-income countries, the average life expectancy is closer to 80 years of age.1 Given longer lives and longer work lives across the globe, fewer people today are adhering to a career model defined by three key phases of professional working life: school, work and retirement. Instead, a multistage life is increasingly common — one in which individuals may go in and out of the workforce, work part time or join the gig economy, and get new training or credentials in midlife or later. As workforces live longer and delay retirement, employers are struggling to evolve models, practices and policies that align with this new reality. To permit people to extend working life and remain productive into older age, employers must become "age ready" — or risk losing out on the benefits this growing segment has to offer. Another important factor is ensuring these employees are not victims of age discrimination — a common prejudice that often goes overlooked even in organizations committed to employment equity and that embrace the most comprehensive Diversity & Inclusion strategies. A Global Workforce of Experienced Employees   Mercer's "Next Stage: Are You Age-Ready" report reveals that, though populations across the world are living and working longer, the Asia Pacific region is feeling the greatest impact from a rapidly emerging generation of experienced employees. In fact, the report states that there will more than 200 million people age 65 and older between 2015 and 2030. Japan is becoming the world's first "ultra-aged" population, where those over 65 years of age will comprise more than 28% of the population. Hong Kong, South Korea and Taiwan — designated as "super-aged" populations — are not far behind, with more than 21% of their citizens soon becoming 65 and older. Increasing life expectancies have forced mature employees to face some difficult decisions. While many continue working out of a desire to learn new skills, connect with others or satisfy a desire to contribute to society, some aging workers don't have that choice. Instead, these employees continue working simply to finance the costs of their extended lives. Getting older is expensive, and weakening pension systems, poor savings habits in a context of inequalities in income growth, and low interest rates have all conspired to undermine the security once taken for granted by those nearing retirement age. Aging workers who opt not to retire present their employers, as well as incoming generations of younger workers, with unprecedented challenges and opportunities. Dispelling Preconceived Notions and Biases   Though workplaces around the world have greatly improved their efforts to curtail discrimination related to an employee's race, sexual orientation and gender, efforts to address age discrimination are often overlooked. Here are some of the most entrenched and damaging myths concerning seasoned employees, according to Mercer's Next Stage report: 1.  Myth: "Experienced workers are less productive." Truth: Extensive research dispels the myth that job performance declines with age. 2.  Myth: "Experienced workers have difficulties learning new skills and technologies." Truth: The hurdle here is not that these workers have difficulties learning new skills, but rather they often haven't previously received the training necessary to advance certain skills or knowledge. However, research shows that 85% of workers, including experienced employees, actively seek opportunities for skills development and technical training to enhance their career development possibilities. 3.  Myth: "Experienced workers are more costly." Truth: Pay can be higher for increased age (and responsibility) but older workers can significantly reduce costs for employers in other ways, like through reduced turnover rates. In Mercer's data, some drop off in pay for the same level of job is experienced as workers age. Mercer's penetrating research and analysis on the productivity levels, learning intent and capacities, and employer expenses related to experienced workers reveals a much more nuanced and complex relationship between older employees and their younger colleagues. Even in study cases where older workers did show lower individual productivity levels, the assessments did not account for key nuances, such as the time dedicated to mentoring, training and guiding others instead of focusing on their individual performances. Expanding the Value of Experienced Employees   Businesses must learn to capitalize on the talents, skills and potential of mature employees who are postponing retirement. Mercer's Global Talent Trends 2019 report states that the integration of modern technologies into corporate HR systems presents older employees with powerful tools that can teach them new, valuable skills. In addition, these technologies provide them with curated career development paths using specialized learning functionalities and predictive software algorithms. Corporate learning platforms can be used to shape content relevant to a particular ambition, close a skills gap or build connections among peers who can share expertise. Curated learning programs also allow employees to develop at their own pace and earn credentials based on benchmarks determined by personal career objectives. Professional development opportunities for experienced employees are also limited by many employers' inability to accurately assess the value and scope of their contributions. Mercer's Next Stage report argues that experienced workers can contribute significantly to organizational performance through their deep institutional knowledge, social capital specific to the business and technical or content expertise honed from years of on-the-job practice. Also, critical soft skills, such as listening, communicating, collaborating and team building, are commonly undervalued. Businesses that rely on common proxies for performance, such as performance ratings, promotion probability and pay, are likely to under-appreciate the contributions of their experienced workers and miss opportunities to better leverage their work. By maximizing the value and potential of experienced workers, employers can create new professional development opportunities that leverage these workers' experience, expertise and life-knowledge. With age comes wisdom. When empowered, experienced employees can lead their companies into the future — guided by their invaluable experience with the past. Sources: 1. "Life expectancy at birth, total (years)." The World Bank, 2017, https://data.worldbank.org/indicator/sp.dyn.le00.in

Anil Lobo | 27 Jun 2019

Supplementary retirement savings plans can provide security and stability for older people who no longer have a steady paycheck — and India's National Pension System (NPS) aims to do just that. NPS is a supplementary Defined Contribution pension plan, and subscription to the scheme is purely voluntary in nature. Like most of the world, India's population is aging, and lifespans are increasing. As a result of improved health and sanitation conditions, the global life expectancy is forecast to increase from an average of 65 years in 1990 to 77 years by 2050.1 For most people, living longer means more non-working years to enjoy. But for growing numbers of people around the world, maintaining enough income to live comfortably during those non-working years is expected to be a challenge. Not only are most older people no longer earning income, but as the years advance, the cost of living and inflation continue to increase. As government leaders around the world consider ways to help citizens prepare for retirement, they can look to India's NPS as a model for boosting retirement savings and helping aging workers avoid poverty during old age. The Basics of India's National Pension System   In 2004, the Indian government launched its National Pension System with the goal of providing retirement income to its citizens.2 The system aims to institute pension reform and foster the habit of saving for retirement. Initially, the program was made available for government employees only, but in 2009, NPS became available on a supplementary basis for all Indian citizens between the ages of 18 and 60. A Tier I NPS account (a mandatory account offering tax benefits) is designed in such a way that it discourages early withdrawal until the account owner reaches retirement age. If the account owner intends to withdraw before retirement age, they are allowed to withdraw only 20%, and the balance has to be used to purchase annuity. The NPS offers a decent tax benefit for its participants — contributions are made before taxes — but a portion of withdrawals are subject to taxes. On reaching the retirement age, one can withdraw 60% of accumulations, which are tax free, and the balance of 40% has to be utilized to purchase annuity from approved annuity providers. One can defer the withdrawal and stay invested until the age of 70 or continue to make fresh contributions, if desired. Tier II NPS accounts provide voluntary savings options without stiff exit penalties or lock-ins. There is a proposal to provide some tax benefits under Tier II NPS, which would require a lock-in period of three years; however, this proposal is yet to be confirmed. Since the launch of the system, the Indian government has created additional social security programs to encourage retirement saving, especially among the working poor. In 2010, the government's Swavalamban Scheme committed to depositing 1,000 rupees into the accounts of each saver who contributed 1,000 to 12,000 rupees into their own account annually and was not covered by a government or employer pension. But in 2015, that plan was scrapped in favor of the Atal Pension Yojana (APY), which guarantees defined pension distributions during retirement for savers who meet certain qualifications based on their contributions. APY also offered a government contribution of 50% of the saver's total contribution or 1,000 rupees per year, whichever is lower, for a period of five years (from 2015 to 2020). India's NPS has gone through a few iterations and continues to evolve, but the plan is helping to boost retirement savings among Indian citizens. It's also shifting citizens' expectations: Instead of relying on younger family members to support them in their old age, many are now adjusting their savings and preparing to support themselves in their retirement years. On top of that, NPS is one of the cheapest investment products. Overall costs of the NPS are far lower than those of other products, and it is perhaps the cheapest pension product available. 3 Lessons You Can Learn From India's Model   For organizational leaders around the world, India's experiment in providing a national pension program for all its citizens offers a number of valuable lessons. 1. Unsustainable National Debt Requires New Solutions   Long before the NPS was launched, India's federal and state government employees were covered by a tax-funded defined benefit pension program that provided a 50% replacement wage at retirement with an inflation-linked adjustment. In the mid-1980s, this program cost the country less than $0.5 billion annually, but by 2006, with people living longer, the price tag jumped to more than $600 billion per year.3 Maintaining the program was unsustainable, and leaders realized they needed to develop a replacement program to ensure successful retirements for future workers and protect the nation's finances. Since the launch of NPS, all new government employees have been enrolled in it, fostering a responsibility among workers to prepare for their own retirement and protecting the government from continuing to run up unsustainable pension debt. 2. Tax Advantages Are Key for Supplementary Retirement Savings Plans   Most participants choose to invest in the NPS due to the tax benefits. However, some Indian citizens report that they did not opt for participating in the NPS as they perceived that some mutual fund instruments and private retirement savings vehicles have greater potential to beat the market and also provide better tax benefits. In order to encourage citizens and promote NPS, the government developed three categories of tax-saving options. The third of these options is exclusively for salaried employees whose contributions are made through the corporate model of NPS. All three categories can be availed together and exclusive of each other. Moreover, there was a recent relaxation in the tax-free withdrawal limit of corpus allowed at the time of retirement (from an earlier limit of 40% of corpus to 60% of corpus). Originally, though 60% was allowed to be withdrawn, the balance of 20% was taxed at normal rates, and making it entirely tax free has made it even more attractive. While a few senior executives may have access to other retirement savings plans, including employer-sponsored Defined Contribution superannuation plans, most of the population (particularly among the working class) do not have access to other retirement savings plans, and hence, the tax advantages inherent in NPS are crucial encouragement for them to save for retirement. 3. Citizens Need Education About the Model's Benefits   While the NPS offers a number of benefits to savers, participation rates remain relatively low.4 Some respondents to a recent survey revealed that not understanding the importance of saving and the advantages of compounding interest could have influenced their choice to stay out. NPS leaders have used a variety of methods for communicating and educating the population about the system. For instance, pilot programs staged in two different geographic areas hosted workshops, meetings and camps targeting unorganized sector workers and key stakeholders. Information was also distributed through cable television networks, radio, mobile publicity vans, seminars and road shows. India continues to measure the success of its pension program and may make more changes in the future. Many countries are struggling to solve the potential challenge of poverty in old age, but the NPS in India is an encouraging step toward protecting the future for many of its citizens, and it's worth taking a look at the model for inspiration. Sources: 1. United Nations: Department of Economic and Social Affairs,"World Population Prospects — 2017 Revision: Global life expectancy," United Nations: Department of Public Information, June 21, 2017, https://www.un.org/development/desa/publications/graphic/wpp2017-global-life-expectancy./ 2. "National Pension System — Retirement Plan for All," National Portal of India, October 22, 2018, https://www.india.gov.in/spotlight/national-pension-system-retirement-plan-all. 3. Kim, Cheolsu; MacKellar, Landis; Galer, Russel G.; Bhardwaj, Guatam, "Implementing an Inclusive and Equitable Pension Reform," Asian Development Bank and Routledge, 2012, https://www.adb.org/sites/default/files/publication/29796/implementing-pension-reform-india.pdf. 4.Zaidi, Babar, "5 Reasons Why Investors Stay Away From NPS. But Should You?" The Economic Times, December 27, 2018, https://economictimes.indiatimes.com/wealth/invest/5-reasons-why-investors-stay-away-from-nps-but-should-you/articleshow/61890679.cms.

David Anderson | 03 Apr 2019

Asian pension systems are facing major challenges. The region is experiencing seismic demographic changes, with rapidly aging populations and declining birthrates. But investment returns are relatively low due to geopolitical uncertainty and minimal interest rates. With the region having relatively few robust retirement systems, many Asian countries will struggle to provide adequate pensions. Governments need to take positive action now to reduce financial pressures and avoid intergenerational conflicts between the young and old. Life expectancy at birth in the region has increased by seven to 14 years in most countries during the last 40 years, according to the 2018 Melbourne Mercer Global Pension Index (MMGPI), which ranks pension systems round the world on adequacy, sustainability and integrity. This is an average of one additional year every four years. The increased life expectancy of a 65-year-old over the last 40 years has ranged from 1.7 years in Indonesia to 8.1 years in Singapore. Much of the rest of the world is facing similar challenges relating to aging populations, and nations are pursuing similar policy reforms. These include raising pension ages, encouraging people to work longer, increasing the funding levels set aside for retirement and reducing the amount of money people can take out of their pension accounts before they reach retirement age. The 2018 MMGPI findings pose the fundamental question: What reforms can Asian governments implement to improve the long-term outcomes of their retirement income systems? The natural starting place to create a world-class pension system is ensuring the right balance between adequacy and sustainability. A system providing generous benefits in the short-term is unlikely to be sustainable, while a system that's sustainable over many years usually provides modest benefits. Without changes to retirement ages and eligibility ages to access social security and private pensions, the pressure on retirement systems will increase, which could threaten the financial security provided to the elderly. Increased workforce participation by women and older workers can improve adequacy and sustainability. Japan, China and South Korea rank near the bottom of the Mercer index. Their pension systems do not represent a sustainable model to support the retirement of current and future generations. If left unchanged, these countries will suffer social conflicts, since pension benefits will not be distributed equally between generations. Japan, for instance, is taking baby steps to reform its pension system by gradually raising the mandatory retirement age of some 3.4 million civil servants to 65 from the current 60 years of age. Japanese retirees can now choose to start receiving their pensions at any point between the ages of 60 and 70, with greater monthly payments offered to those who start at age 65 or older. Having the world's highest life expectancy and lowest birthrate, Japan's population is expected to shrink. This challenging situation is already contributing to skill shortages, which will further impact Japan's shrinking tax revenue base. The Japanese government could improve its pension system by encouraging higher levels of household savings and continuing to increase the level of state pension coverage, since 49 percent of the working age population is not covered by private pension plans. Introducing a requirement that part of the retirement benefit must be taken as an income stream and not a lump sum will improve the overall sustainability of the social security system — as would reducing government debt as a percentage of gross domestic product, as this improves the likelihood that the current level of pension payments can be maintained. China faces different issues. China's unique pension system comprises various plans for urban and rural populations, as well as for rural migrants and public sector workers. The urban and rural systems have a pay-as-you-go basic pension consisting of a pooled account (from employer contributions or government expenditure) and funded individual accounts (from employee contributions). Supplementary plans are also provided by some employers, particularly in urban areas. The Chinese pension system could be improved by increasing the use of workers' contributions to pensions to enhance the overall retirement protection of workers and increasing minimum support for the poorest retirees. A requirement that part of the supplementary retirement benefit must be taken as an income stream should be introduced, as well. More investment options should be offered to pension holders to permit a greater exposure to growth assets, while pension plans should improve their communications with members. Hong Kong should consider introducing tax incentives to encourage voluntary member contributions, thus increasing retirement savings. Hong Kong should also require that part of the retirement benefit be taken as an income stream. Older workers should be retained in the labor market as life expectancies rise. South Korea suffers from one of the weakest pension systems for the poor when expressed as a percentage of the average wage at just six percent. Its system would benefit by improving the level of support provided to the poorest pensioners, introducing a requirement that part of the retirement benefit from private pension arrangements be taken as an income stream and increasing the overall level of contributions. Singapore's well-structured pension system is ranked top in the region and has seen improvements in sustainability. Its retirement system, the Central Provident Fund, provides flexibility to its members, who include all employed Singaporean residents and permanent residents. But more can be done. Barriers to establishing tax-approved group corporate retirement plans should be reduced, and the CPF should also be opened to temporary nonresident workers who comprise more than a third of the labor force. The age that CPF members can access their savings should be raised, as well. Since pension systems are an intergenerational issue, they require a long-term perspective. Pension systems, which are one of the largest institutional investors in any market, should increasingly recognize the importance of acting as good stewards of the capital entrusted to them, including managing risks, such as climate change. With Asia's aging populations staying productive well into their 70s and even 80s, it is critical to improve the provision of adequate and sustainable retirement income. Raising the retirement age, expanding the coverage of private pensions for workers and encouraging financial planning and early savings should be the focus of employers and policy makers. Article originally published in Nikkei Asian Review.

More from Voice on Growth

Pat Milligan | 19 Dec 2019

Life expectancies have risen sharply in recent decades, from an average age of under 53 years in 1960 to 72 years in 2017. And in high-income countries, the average life expectancy is closer to 80 years of age.1 Given longer lives and longer work lives across the globe, fewer people today are adhering to a career model defined by three key phases of professional working life: school, work and retirement. Instead, a multistage life is increasingly common — one in which individuals may go in and out of the workforce, work part time or join the gig economy, and get new training or credentials in midlife or later. As workforces live longer and delay retirement, employers are struggling to evolve models, practices and policies that align with this new reality. To permit people to extend working life and remain productive into older age, employers must become "age ready" — or risk losing out on the benefits this growing segment has to offer. Another important factor is ensuring these employees are not victims of age discrimination — a common prejudice that often goes overlooked even in organizations committed to employment equity and that embrace the most comprehensive Diversity & Inclusion strategies. A Global Workforce of Experienced Employees   Mercer's "Next Stage: Are You Age-Ready" report reveals that, though populations across the world are living and working longer, the Asia Pacific region is feeling the greatest impact from a rapidly emerging generation of experienced employees. In fact, the report states that there will more than 200 million people age 65 and older between 2015 and 2030. Japan is becoming the world's first "ultra-aged" population, where those over 65 years of age will comprise more than 28% of the population. Hong Kong, South Korea and Taiwan — designated as "super-aged" populations — are not far behind, with more than 21% of their citizens soon becoming 65 and older. Increasing life expectancies have forced mature employees to face some difficult decisions. While many continue working out of a desire to learn new skills, connect with others or satisfy a desire to contribute to society, some aging workers don't have that choice. Instead, these employees continue working simply to finance the costs of their extended lives. Getting older is expensive, and weakening pension systems, poor savings habits in a context of inequalities in income growth, and low interest rates have all conspired to undermine the security once taken for granted by those nearing retirement age. Aging workers who opt not to retire present their employers, as well as incoming generations of younger workers, with unprecedented challenges and opportunities. Dispelling Preconceived Notions and Biases   Though workplaces around the world have greatly improved their efforts to curtail discrimination related to an employee's race, sexual orientation and gender, efforts to address age discrimination are often overlooked. Here are some of the most entrenched and damaging myths concerning seasoned employees, according to Mercer's Next Stage report: 1.  Myth: "Experienced workers are less productive." Truth: Extensive research dispels the myth that job performance declines with age. 2.  Myth: "Experienced workers have difficulties learning new skills and technologies." Truth: The hurdle here is not that these workers have difficulties learning new skills, but rather they often haven't previously received the training necessary to advance certain skills or knowledge. However, research shows that 85% of workers, including experienced employees, actively seek opportunities for skills development and technical training to enhance their career development possibilities. 3.  Myth: "Experienced workers are more costly." Truth: Pay can be higher for increased age (and responsibility) but older workers can significantly reduce costs for employers in other ways, like through reduced turnover rates. In Mercer's data, some drop off in pay for the same level of job is experienced as workers age. Mercer's penetrating research and analysis on the productivity levels, learning intent and capacities, and employer expenses related to experienced workers reveals a much more nuanced and complex relationship between older employees and their younger colleagues. Even in study cases where older workers did show lower individual productivity levels, the assessments did not account for key nuances, such as the time dedicated to mentoring, training and guiding others instead of focusing on their individual performances. Expanding the Value of Experienced Employees   Businesses must learn to capitalize on the talents, skills and potential of mature employees who are postponing retirement. Mercer's Global Talent Trends 2019 report states that the integration of modern technologies into corporate HR systems presents older employees with powerful tools that can teach them new, valuable skills. In addition, these technologies provide them with curated career development paths using specialized learning functionalities and predictive software algorithms. Corporate learning platforms can be used to shape content relevant to a particular ambition, close a skills gap or build connections among peers who can share expertise. Curated learning programs also allow employees to develop at their own pace and earn credentials based on benchmarks determined by personal career objectives. Professional development opportunities for experienced employees are also limited by many employers' inability to accurately assess the value and scope of their contributions. Mercer's Next Stage report argues that experienced workers can contribute significantly to organizational performance through their deep institutional knowledge, social capital specific to the business and technical or content expertise honed from years of on-the-job practice. Also, critical soft skills, such as listening, communicating, collaborating and team building, are commonly undervalued. Businesses that rely on common proxies for performance, such as performance ratings, promotion probability and pay, are likely to under-appreciate the contributions of their experienced workers and miss opportunities to better leverage their work. By maximizing the value and potential of experienced workers, employers can create new professional development opportunities that leverage these workers' experience, expertise and life-knowledge. With age comes wisdom. When empowered, experienced employees can lead their companies into the future — guided by their invaluable experience with the past. Sources: 1. "Life expectancy at birth, total (years)." The World Bank, 2017, https://data.worldbank.org/indicator/sp.dyn.le00.in

Fabio Takaki | 19 Dec 2019

Influential women can make a transformative difference in a company, industry or even a nation. When women are leaders, they are more likely to contribute to education, health and community development programs in the areas where they work and live, according to Mercer's "When Women Thrive, Businesses Thrive" report. Despite the positive benefits women leaders bring to businesses and communities, female decision-makers remain difficult to find in leading financial firms around the world. Women are also significantly underrepresented on the leadership teams of companies that receive investment capital. A new report from Oliver Wyman (part of MMC group of companies) shows that globally, women hold 20% of positions in executive committees and 23% on boards, but only 6% of CEOs in financial institutions are women. However, in the Middle East — traditionally one of the most challenging regions for female leaders to scale — women are gradually being named to leadership positions in the region's financial sector.1 As women make their mark in Middle Eastern finance and, in turn, their communities and region, business leaders around the world should take notice. Women Leaders in Middle East Finance   The growing number of influential women in Middle Eastern finance includes those working in banks, investment firms, financial law and consulting companies.1 For instance, in September 2018, Ms. Rola Abu Manneh was named CEO of Standard Chartered UAE, becoming the first Emirati woman to lead a bank in the UAE. With a long experience in UAE banking, Ms. Abu Manneh has the knowledge and leadership competencies to bring important business to her bank. In her first year as CEO, she has already advised Dubai-based Emaar Properties on the sale of its hotels to Abu Dhabi National Hotels.2 Ms. Rania Nashar is another great example — she is the first female CEO of Saudi commercial bank, Samba Financial Group, one of the largest in the region. Ms. Nashar has over 20 years of experience in the commercial banking sector and was named CEO in 2017, becoming the first female CEO of a listed Saudi Arabian bank.3 That was also a moment when Saudi Arabia began implementing reforms to promote gender equality as part of the KSA's Vision 2030, and Ms. Nashar says she wants to continue doing more. "I have to not only prove to myself that a bank of Samba's size can be run by a female CEO — and can achieve the best results in its history — I have to prove it for all the women in Saudi Arabia and in the world," Ms. Nashar notes. "I hope that I can be an honourable portrait for Saudi women."4 Ms. Lubna Olayan is also an influential leader in Saudi Arabia. For more than 30 years, she was the CEO of Olayan Financing Company, the holding company through which The Olayan Group's trading, real estate, investment, consumer and industrial-related operations are conducted in the Gulf region. She has received numerous awards and recognition, including landing in Time's list of the 100 most influential people in the world, Fortune's list of Most Powerful Women and recognized as a champion of women's economic empowerment.5 Why Gender-Balanced Leadership Matters   Women leaders such as these are helping to advance and make a shift in the gender balance in the region's financial sector. While they represent progress, there is still much to be done. Governments are working to increase the gender balance but transforming the mindsets of business leaders and overcoming bias is a slow process. However, it's a process worth pursuing. For organizations and nations that are facing workforce challenges, an underutilized female workforce represents a strategic opportunity to compete, grow and win, helping to transform the entire economy. According to Mercer's "When Women Thrive, Businesses Thrive" report, women's essential roles as providers, caretakers, decision-makers and consumers make them instrumental in the education and health of future generations, as well as the development of their communities. Women leaders can also be instrumental in building stronger and more collaborative teams; retaining, developing and nurturing talent; and bringing a diverse and new perspective for organizations. In fact, the Mercer report also shows that increased participation from women in the workforce has implications for the economic and social development of communities and nations. Economists have calculated that eliminating the gap between male and female employment rates could significantly boost gross domestic product by 5% in the United States, 9% in Japan, 12% in the United Arab Emirates and 34% in Europe. Achieving Gender Equity in Underrepresented Sectors   Finding the right approach for sourcing and engaging female talent depends on the individual company's culture and needs, but there are some broad strategies that may be effective globally. Mercer research shows that the chief building blocks for achieving gender diversity are health, financial well-being and talent management elements. 1. Health   Health concerns are of special significance to the female population, as women are affected by different health issues and illnesses than men, and they experience and use the healthcare system in different ways than men. For example, there are gender specific risk factors for common mental disorders that disproportionately affect women, affecting their capacity to be productive at work. Unipolar depression, a leading factor of working disability, is twice as common in women than in men.6 To achieve gender equity in business, companies must make healthcare available to women in the ways they most need, including: 1.  Flexibility for maternity leave 2.  Physical health, wellness and mental health support 3.  More autonomy and access to health resources 4.  Psychological support for severe life events 5.  Confidential medical support dedicated for women 2. Financial Well-being   Women reportedly have greater financial responsibility and greater financial stress than men. According to a 2018 study conducted by Prudential, the average woman has saved less for retirement compared to the average man. Only 54% of women have put aside money for retirement, and on average, they have saved $115,412. By contract, 61% of men have saved for retirement, and on average, they have saved $202,859. This greatly increases the likelihood of a woman living in poverty in retirement and is exacerbated by women's longer life expectancies.7 To address this, organizations need to ensure that women receive fair financial compensation, greater coaching and educational support in planning for their financial futures, tailored retirement options for women, and encouragement for systematic and regular contributions to savings and retirement accounts. 3. Talent Management   Women need opportunities for advancement, as well as training and development opportunities. In addition, they also need flexible work options that make it possible for them to fulfill other essential roles outside of work. Attention to management positions are critical to further improve the gender participation in executive levels. These jobs are usually high demanding in working hours, requiring management of teams, clients and superiors. For women who achieve such positions, it may also coincide with motherhood period, making it even more challenging if companies do not provide adequate working arrangements — such as flexible working options leveraging technology, childcare support, mentoring and leadership support for women, business resource groups and diversity and inclusion efforts and training. Women in the workforce have an undeniable power to make meaningful contributions and expand businesses. When financial institutions and governments begin to focus on the strategies required to get talented women working and leading, they will begin to see positive results. Not only can influential women bring business acumen to help grow organizations, but their roles in societies also enable them to make significant improvements in education, communities and the transformation of countries. Sources: 1. "The 50 Most Influential Women in Middle East Finance," Financial News, 29 Apr. 2019, https://www.fnlondon.com/articles/the-50-most-influential-women-in-middle-east-finance-20190429. 2. "FN 50 Middle East Women 2019," Financial News, 2019,https://lists.fnlondon.com/fn50/women_in_finance_/2019/?mod=lists-profile. 3. "Rania Nashar," Forbes, 2018,https://www.forbes.com/profile/rania-nashar/#20d8136e473c. 4. Masige, Sharon. "Raising the Bar: Rania Nashar," The CEO Magazine, 27 Jun. 2019,https://www.theceomagazine.com/executive-interviews/finance-banking/rania-nashar/ 5. "Lubna Olayan Retires as CEO of Olayan Financing Co.; Jonathan Franklin Named New CEO," Olayan, 29 Apr. 2019, https://olayan.com/lubna-olayan-retires-ceo-olayan-financing-co-jonathan-franklin-named-new-ceo. 6. "Gender and Women's Mental Health: The Facts," World Health Organization, https://www.who.int/mental_health/prevention/genderwomen/en/#:~:targetText=Unipolar%20depression%2C%20predicted%20to%20be,persistent%20in%20women%20than%20men. 7. "The Cut: Exploring Financial Wellness Within Diverse Populations," Prudential, 2018, http://news.prudential.com/content/1209/files/PrudentialTheCutExploringFinancialWellnessWithinDiversePopulations.pdf.

Amy Scissons | 28 Nov 2019

What does it take to lead successful international teams? Successful teams are often united over a common goal and a shared set of experiences. But, as the workforce becomes more distributed and business travel becomes increasingly burdensome to the bottom line and detrimental to the environment, leaders need to be more creative in developing and fostering positive team dynamics. With fewer face-to-face meetings, how are international leaders coalescing their teams? Here are four habits I have adopted that you should consider in managing international teams: Habit 1: Remove the Mentality of "You Need to Be There"   Technology is, without a doubt, the game changer when it comes to international team effectiveness. Yet, human-led organizations often struggle to accommodate and leverage the speedy and persistent nature of change brought by digital technologies. There are, of course, times when face-to-face meetings are required; however, Mercer has noticed clients are demonstrating an increasing comfort level with holding seminars, conferences and other traditional in-person interactions via online meeting platforms. Though the virtual workforce trend is nothing new, it has reached an inflection point where clients often prefer to partner with companies that actively internalize the power and practicality of being agile, versatile and virtual. Today's transformative Chief Marketing Officers (CMOs) urge their C-suite peers to adopt have this mindset and leverage differentiating new technologies. As managers, marketing leaders will find that their employees and marketing teams are more productive and online more, if allowed to do their work on their own time. People react well to not only managing their work but also having the flexibility to set their own schedules. At Mercer, we have seen our people work with more excitement, passion and collaborative enthusiasm when provided the freedom to excel according to their personal cadences. Let talented people do what they need to do to get stuff done. Habit 2: Cross-Cultural Communication With International Teams   With the direction set and the team empowered to find their path forward, it's time to focus on communication. Different cultures, of course, perceive, process and interpret information and context differently. These differences can create communication breakdowns that are extremely costly in terms of time, quality and money. Effective messaging is direct and only refers to limited but critical pieces of information that necessitate a particular email, phone call or conversation. Inspiring leaders find their voice and communicate in a way that is simple, memorable and supportive. All correspondences among international teams should be carefully packaged, contained and well thought out. Don't underestimate the power of repetition. Often, when dealing with team members from multiple cultures and languages, repetition of established goals, processes, timelines and expectations is vital to successful outcomes. Repetition, when done with tact and clear intentions, is not disrespectful or seen as micromanaging. It bolsters the ability of everyone on the team to achieve their goals (honestly, I find repetition extremely helpful. By the time I'm reminded what we're trying to get done three or four times — especially in a few different ways — it sticks!). When you're dealing with cross-border teams, never assume that everyone fully understands the strategy and desired results on the first two or three discussions. Using repetition creatively helps the team focus on the north star. Habit 3: Be Succinct and Culturally Aware   Cultural awareness is learned. It took me a while to appreciate and understand the nuances of each member of my team, not only in their approach to solving problems, but the influence of their culture on their overall outlook. Our research on diversity and inclusion points to the value of ensuring all voices are heard on the team. As a matter of fact, there are a range of products today designed to enable employees to share their perspectives (separate from employee engagement surveys) — and many of these are being tailored for D&I purposes. With international teams, this lesson is particularly punctuated. When team members in Tokyo, Taiwan and Mexico City are speaking to each other, ensuring they use the same direct, simple and familiar language increases efficiency and the likelihood of success. Being culturally sensitive and aware is incredibly important. Years ago, I used to feel very concerned if people were not speaking up in marketing meetings or weren't instantly on video conferences showing their face, but I realized over time that people need to communicate in ways that make sense to them. As a leader, I've learned it is my responsibility to respect other people's learning and working styles and that — if I did that — these individuals would become increasingly more open and trusting of me. Marketing leaders have to earn trust, just like everyone else. It is important to not expect that people think and act the way you think and act. People come from different perspectives and have different personality types — from introverts to extroverts and everything in between. And that diversity is instrumental to success. Habit 4: Lead With Genuine Positivity   My favorite habit, is bringing my whole self to work. As leaders, we must make a conscious effort to be encouraging and find genuine, sincere ways to boost people's confidence. This takes time and awareness as each person behaves according to varying types of motivations, instructions and sensibilities. As a company, we have to be demanding, because we have aggressive goals. However, the most effective and rewarding route to achieving those goals is by making the conscious decision to encourage employees as they execute their responsibilities — especially during challenging times. Regardless of gender, race or nationality, I think that one overriding universal truth is that people respond more graciously, productively and passionately to authentic positive feedback and encouragement. I know this personally, because I have benefited from positive reinforcement many times in my career — often when I needed it the most — from my peers, colleagues and fellow team members. It really helps. In fact, the most successful leaders I know and have worked with are extremely positive people. Teams and individuals need to be reminded, particularly during tough times, that they are doing excellent work and they are moving in the right direction. Never underestimate how much a genuine comment, like "You're doing a great job" and "Keep going" can do for someone who feels overwhelmed, underappreciated or unmotivated at a particular moment in their career. Positivity is all about appreciating the time and work employees invest into success and giving them credit for their efforts and accomplishments. Originally published in Thrive Global.

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