Are financial institutions paying enough attention to the aging workforce? has been saved
Are financial institutions paying enough attention to the aging workforce?
Research shows that baby boomers are staying in work longer. Find out how financial institutions (FI) can take advantage.
The silver tsunami is here! Financial institutions are staring at a large proportion of baby boomers. This population nearly doubled, to 26 percent of total FI workforce in 2018 compared to 14 percent in 1998 (see Figure 1). Of this, 19 percent are aged 55-64 years, and 7 percent are 65 years or older. In contrast, the under-25 group decreased to 6 percent from 10 percent during the same period. Our analysis of the Bureau of Labor Statistics data suggests that some of the traditional FI roles, such as real estate brokers and sales agents, insurance sales agents, personal financial advisors, and so forth, have a relatively larger proportion of baby boomers.
One look at these numbers might beg the question: “Why are the baby boomers still working?” Older workers are staying on because they need to or want to. The combination of increased longevity and insufficient retirement savings is forcing many to stay at work for many more years than previous generations. Also, in some cases, boomers are still helping their children financially, many of whom are millennials saddled with college loan payments, so having more disposable income is important to them. Still others stay because they find work more enjoyable than the prospect of retiring.
Older employee advantages
There are a few advantages of paying attention to the older employees. Boomers bring in tacit knowledge and other soft skills such as relationship management, crisis management, problem-solving, critical thinking, listening, and empathy. To know more about the value they add, read our latest report “Tapping into the aging workforce in financial services: How baby boomers can help fill the talent gap.”
But, many FIs don’t seem to acknowledge the merits of engaging with the aging workforce and expend their energy attracting and retaining the younger employees. Many of the younger employees appear to have one foot out the door within a year or two of joining a FI.1 Others feel that the baby boomer cohort are not equipped to work in a digital environment. Some FIs that acknowledge the talent of the older employees are unaware of ways to engage them.
Result: there is a pervasive talent gap. A Korn Ferry study suggests financial and business services will likely be the most severely hit by a talent shortage, experiencing a deficit of 3 million professionals globally by 2020.2
Tapping into the aging workforce in financial services
How baby boomers can help fill the talent gapView the report
How can FIs take advantage of the aging workforce?
Companies can consider different recruitment and retention approaches to engage the older employees. We recommend four ways:
- Revisit hiring processes: There are two considerations in the hiring process. First, companies can consider using data analytics to enhance their understanding of the skills, behaviors, motivation patterns, and workstyle preferences job candidates and employees possess. They can share findings with business leaders and map the insights to job roles. Collectively, recruiters and business leaders can identify candidates who will likely be a good fit for the organization from both a skill set and a culture perspective, removing age bias from the process. Second, some companies may regard hiring full-time older employees as a business risk. Instead, they could try alternative employment arrangements, such as a contractual or short-term job rotation.
- Beef up and tailor upskilling and reskilling: FIs should prioritize upskilling talent across all generations to become more future-ready.3 However, they should be sensitive to the fact that different generations tend to have different learning needs and styles.4 For instance, older employees are likely to prefer training programs that are directly integrated with work and provide more timely feedback. FIs should tailor training to fit how boomers learn best. They should allow the older employees to develop personalized learning plans and offer short-term training courses, both in-person and virtually, to suit their digital learning requirements.
- Create training and mentoring opportunities to bridge generational divides: FIs can roll out programs so different generations can learn about one another and gain respect for each other’s strengths. Diversity training programs, for example, can help break age-based stereotypes, create mutual trust and respect, and resolve conflicts. Companies can ask boomers to mentor millennial and Gen Z employees, sharing their depth and breadth of institutional knowledge and soft skills expertise with these younger employees.
Another approach companies could use to complement formal training offerings is reverse mentoring. Here, younger employees would serve as guides, providing informal learning sessions to help older employees use digital tools and absorb the business impact of digitization.
- Focus on commonalities: Finally, when discussing preferences and proclivities, leaders should recognize that some trends cut across all generations. Every generation in the workplace today—Gen Z, millennials, Gen X, and boomers—seeks meaningful work and flexibility (time and/or location).5 Still, the reasons why employees want flexibility can differ among generations, so FIs should try to tailor flexible work arrangements to the needs of older employees who choose to remain in full-time jobs or want to gradually phase into retirement.
1 Kronos Incorporated, “Financial industry survey,” May 15, 2017.
2 Yannick Binvel et al., “Future of work: The global talent crunch,” Korn Ferry, 2018.
3 Analysis of MIT Sloan Management Review and Deloitte’s 2018 study.
4 Effective Teaching and Learning Department, Baker College, “Teaching across generations,” December 20, 2004.
5 Clint Boulton, “Reverse mentoring: A unique approach to rejuvenating your IT culture,” CIO.com, June 6, 2017.
QuickLook is a weekly blog from the Deloitte Center for Financial Services about technology, innovation, growth, regulation, and other challenges facing the industry. The views expressed in this blog are those of the blogger and not official statements by Deloitte or any of its affiliates or member firms.