demographictimebomb - cipd
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Mercuri Urval Adam Gillett
Nicole Linger
Manchester, 18th September 2014
The Demographic Timebomb
Mercuri Urval
Founded in Sweden in 1967
1
Independent and
organically grown with
offices in 24 countries and
800 professionals
worldwide
Proven expertise in
finding, attracting,
selecting and on-boarding
senior executives
If you have the right people, doing the right things, the rest is easy….
Our thinking is
unconstrained about who
might have the right
capabilities and potential
Expertise drawn from our
work with local, national
and global partnerships
2
What are
the biggest
risks for the
world right
now?
?
?
?
? ?
A Global Perspective…
3
Source: Global Risks Perception Survey 2013-2014, World Economic Forum
Ten Global
Risks of
Highest
Concern in
2014
10. Profound political and social instability
9. Failure of a major financial mechanism/institution
8. Food crises
7. Global governance failure
6. Greater incidence of extreme weather events
5. Failure of climate change mitigation and adaptation
4. Severe income disparity
3. Water crises
2. Structurally high unemployment/underemployment
1. Fiscal crises in key economies
2. Structurally high unemployment/underemployment
There’s an iceberg dead ahead….
4
It’s called global ageing and it threatens to bankrupt the great powers. As
the population of the world’s leading economies age and shrink, we
will face unprecedented political, economic and moral challenges. But we are
woefully unprepared. Now is the time to ring the alarm bell..
Peter G Peterson, Chairman of the Council on Foreign Relations, Senior Chairman of
the Blackstone Group, US Secretary of Commerce (1972-73)
The Demographic Timebomb A definition…
5
“When a
country has
more older
populations in
it…
…Or when
there are more
people in
public need
than those that
are not...
…The country
must support
them and it
takes strain on
the overall
income….
Source: Global AgeWatch Index 2013
8.6%
10.8%
13.9%
19.0%
19.7%
28.0%
32.3%
11.7%
26
29.4
35.4
38.3
37.4
40.2
45.9
29.2
South Africa
Turkey
China
Russia
USA
UK
Japan
World Average
Average (Median) Age of the Population
The Proportion of People over 60 years (of total population)
We are ageing… fast…
The Ageing Planet
6
Source: UN Department of Economic and Social Affairs Data 2013
0%
10%
20%
30%
40%
50%
60%
70%
80%
USA NewZealand
Australia Ireland UK France Germany Italy Spain Japan
2005 2050
A reality for Dependency…
The UK, Europe and the world…
Source: Forecast for Dependency Ratios in different countries, Department of Work and Pensions
7
8
Impact of the Demographic Timebomb
Increase in the
dependency ratio
1
If the retirement age remains
fixed, and the life expectancy
increases, there will be
relatively more people
claiming pension benefits and
less people working and
paying income taxes.
The fear is that it will require
high tax rates on the current,
shrinking workforce
Increased government
spending on health care
and pensions
2
Also, those in retirement tend
to pay lower income taxes
because they are not
working.
This combination of higher
spending commitments and
lower tax revenue is a source
of concern for Western
governments – especially
those with existing debt
issues and unfunded pension
schemes
Those in work may have
to pay higher taxes
3
This could create
disincentives to work and
disincentives for firms to
invest, therefore there could
be a fall in productivity and
growth
9
Impact of the Demographic Timebomb
Shortage of workers
4
An ageing population could
lead to a shortage of workers
and hence push up wages
causing wage inflation.
Alternatively, firms may have
to respond by encouraging
more people to enter the
workforce, through offering
flexible working practices
Changing sectors within
the economy
5
An increase in the numbers
of retired people will create a
bigger market for goods and
services linked to older
people (e.g. retirement
homes)
Higher savings for
pensions may reduce
capital investment
6
If society is putting a higher
% of income into pension
funds, it could reduce the
amount of savings available
for more productive
investment, leading to lower
rates of economic growth
10
What are the challenges for the HR
community related to talent management?
What are the opportunities for the
HR community related to talent
management?
Key Current Challenges
11
Identification of
Existing Capability How does an organisation know the level of capability which exists within the organisation. 1
Clear Specification
Over Capability
Needed
How clear is the business in terms of the capabilities that will be required in order to achieve future
strategic objectives. 2
Skills
Transferability/
Upskilling Workforce
To what extent is the HR function integrated within the organisation strategy, tying in capability
frameworks, employee development plans, with the current and future needs of the business. 3
Attracting the Right
Capabilities What strategies does the organisation employ in order to bring in the required capabilities. 4
Retention/
Engagement
What is the current attrition rate? Industry benchmarking. What is healthy? How can this be
improved? 5
12
Thinking about your business units
What practical
actions could
you take?
How to address
some of these
challenges?
Mercuri Urval – Our View
Some Key Tips for Managing the Demographic Timebomb
13
Identification of
Existing Capability
Assessment of inherent capabilities – strengths to build on & development areas, mapping
exercise - review of historic performance, 360 assessment, performance review documentation.
Prioritise skills gaps within key functions or individuals. 1
Clear Specification
Over Capability
Needed
Clear and defined strategic objectives, regular meetings between the organisation and HR –
‘business partnering’, HR represented at strategic level in the organisation, interviews with
managers/departmental leaders to establish future requirements, gap analyses. 2
Skills
Transferability/
Upskilling Workforce
Develop bespoke capability frameworks (perhaps start with 3 distinct levels), clear technical
development plans, link between capability frameworks and employee development plans and
with the current and future needs of the business. 3
Attracting the Right
Capabilities
Understand employer brand in the marketplace (local, national, international), targeting individuals
not just advertising, approaching candidates that reflect the market, flexible benefits, flexible
employment, clear understanding of where the organisation is heading – ‘why work for us’, attend
employer open days, web/social media presence.
4
Retention/
Engagement
Invest in employees, flexible working, meaningful exit interviews, salary benchmarking, regular
employee survey, focus groups LTIP. 5
14
Closing comments
“
Mercuri Urval Adam Gillett Adam.gillett@mercuriurval.com
Nicole Linger Nicole.linger@mercuriurval.com Manchester, 18th September 2014
Thank you for listening
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