This measure will also be useful to organisations that carry heavy retirement cost burdens in defined benefit superannuation or unused accrued leave entitlements.
Description
Percentage of employees at the end of the period that are 50 years old or older.
Formula
End of period headcount . 50+ age / End of period headcount * 100
Interpretation
Staffing Rate – 50+ Years Old indicates the percentage of the organisation’s employees who are 50 years of age or older. A result of 20 per cent means that one out of every five employees is age 50 or older.
Organisations can use this measure to help understand their potential exposure to employees nearing retirement age.
Australia faces a future labour shortage created by the impending retirement of the baby boomer population. This retirement wave over the next 10 to 15 years is likely to bring with it significant retirement costs, such as payments on defined benefits superannuation schemes and accrued long service leave credits.
It is also likely to cause a drain of important knowledge, skill and experience held by older workers. Organisations must understand this knowledge drain exposure to plan in advance for the back-filling of those retirements.
This measure should also be considered in conjunction with an analysis of the organisation’s leadership ranks and succession pool. Because managers and executives tend to be older than other employees, the leadership strength of an organisation may be especially susceptible to retirement drains.
Other metrics are also available to measure the age of the workforce, including Age Staffing Breakdown and Average Workforce Age.
Age Staffing Breakdown would also reveal the percentage of the workforce 50 and older through components of the breakdown. However, Staffing Rate – 50+ Years Old is best suited among these three measures to specifically and simply measure retirement exposure by totalling all age groups 50 and older and indicating that result in a single percentage.
Data Sourcing
Organisations typically calculate age of employees based on their date of birth, as captured in a personal data table in an HRIS.
Analysis
Employers may wish to further break down the 50+ age grouping to assess the proportion of employees within one year, three years, five years, etc., of normal retirement age.
Additionally, employers are likely to analyse this measure by managerial level, organisational unit, organisation tenure, job function, job family and other analysis dimensions to identify pockets within the organisation that are most susceptible to the negative impact of a large wave of retirements.
Limitations
Staffing Rate—50+ Years Old does not indicate the age profile of those leaving and entering the organisation; it indicates only the relative level in the workforce of older workers. It does not indicate the average retirement age or the number of years until retirement for 50+ employees.
Also, the measure does not provide information about the cost of past or future retirements to the organisation, and it does not directly indicate the skill, knowledge or tenure levels of employees in the 50+ age group. Any interventions designed to address an organisation’s age profile must not have a discriminatory impact on protected age groups.
Targets
Organisations are likely to target results for Staffing Rate – 50+ Years Old at the median of a relevant benchmark group of industry or talent competitors.
At the median, it is assumed the organisation is not likely to be significantly more susceptible to retirement costs or ‘brain drains’ than competitors.
However, targets must be set with care to avoid creating any discriminatory impact on protected age classes.