Recession and the Aging Workforce

Global models are used to help reduce uncertainty by generating alternative scenarios against baseline forecasts (Hughes & Hillebrand, 2006, p 1). A recent article in U.S. News focused on retirement age which states in 2011 a Gallup poll noted that Americans expected to retire at an average age of 67 (U.S. News, 2012). It is believed that this trend is a result of financial insecurity due to a majority belief by workers that they won’t have enough money to live comfortably in retirement (U.S. News, 2012). Secondary to the issue of an aging workforce is an increasing number of college graduates entering the workforce (Foster, 2012). An aging workforce could equate to increased costs through prolonged funding of retirement accounts; increased healthcare costs due to a larger pre-existing conditions pool of coverage; higher wages for more senior employed individuals; and increased costs in training for emerging technologies (Foster, 2012). Using the IF modeling software, we explored the connections and interdependencies among components of the problem: an aging workforce and growing inventory of younger human capital. Using a working scenario: the Labor Retirement Age Multiplier in the IF modeling software, we explored what the impact would be if the retirement age continued to rise over time (Foster, 2012). We asked what the impact of a 33% increase in retirement age might have on several key areas through 2030. A 33% increase in effect moves the retirement age from 67 to 87 (Foster, 2012). This analysis seeks to determine what kind of impact an aging workforce might have on the labor market, consumption ratio to household income, and deaths (Foster. 2012). It is estimated that by 2030, the United States will see population grow by 18% or 55.1 million people, bringing total population to 364.758 million (Foster, 2012). In dealing with an aging workforce, we felt it important to understand the impact of mortality on the workforce itself (Foster, 2012). The results of this analysis were somewhat surprising in that there was a slight decrease in the mortality/deaths of those individuals who remained working over the current base analysis (Foster, 2012). Using the Labor Retirement Age scenario it is estimated that 58% or 211.3 million up to age 87 would be in the workforce by 2030 (Foster, 2012). Finally, using the IF modeling software we analyzed Consumption (household) Ratio to Household Income (Skilled/Unskilled) and found a slight increase in the consumption ratio to household income with an aging population in the workforce (Foster, 2012). This trend is easy to understand as more individuals in the workforce making income will typically translate into more resources available for consumption (Foster, 2012). Using the International Futures model, we are able to take these scenarios and begin to create interventions that deal with the results of given changes in the base or status quot.

References:

Hughes, Barry B. and Hillebrand, Evan E. (2006). Exploring and Shaping International Futures. Boulder, CO: Paradigm Publishers.

USNews (2012). “The New Ideal Retirement Age: 67.” Retrieved on September 27, 2012 from http://money.usnews.com/money/blogs/planning-to-retire/2012/05/08/the-new-ideal-retirement-age-67

USNews (2010). “Why the Retirement Age Is Increasing.” Retrieved on September 27, 2012 from http://money.usnews.com/money/retirement/articles/2010/11/15/why-the-retirement-age-is-increasing

Foster, Philip (2012). “LDSL 718 – Major Project 1: Policy Structure Diagram” Assignment for Doctorate in Strategic Leadership, Regent University, Virginia Beach, VA.

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Philip A Foster, MA is Founder/CEO of Maximum Change Inc. Maximum Change, Inc. is a Leadership and Business Consulting firm located in Middle Tennessee offering business & leadership consulting, speaking and training. Philip Foster is a Thought Leader in Business Operations, Organization and Strategic Leadership. Facilitating change through the design and implementation of strategies, strategic foresight and strategic planning

Email | LinkedIn | Facebook | Twitter | Web | Skype: philip.a.foster | 615-216-5667

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A CASE STUDY – Assessments and Tough Changes

I often get the question: “What can Maximum Change do for my organization?” Here is a case study to help answer this question.

In early 2012 an organization engaged Maximum Change to assess the issues with their organization. The organization was losing money and they wanted to stop the financial hemorrhaging. We knew very little about the circumstances before going into the company. Our approach began simple enough with observations, interviews and an OCAI (Organizational Cultural Assessment Instrument). In less than a week we had identified a key problem within the organization and developed a strategy to deal with it. We went to the stakeholders and informed them that there bottleneck was with a particular employee and that our recommendation was either 1) spend $50,000+ to train them and bring them up to standards or 2) let them go. The company, having already lost a significant amount of money would end up spending much more to bring the one employee to standard. The stakeholder immediately told me that they would not let the person go and that we had to find a way to make it work. A little over a week later we received a call from the organization asking that we come in to help with a dismissal. I told the stakeholder that if they went through with this that I guaranteed they would begin to see a change in revenues and processes. In seven weeks the company cut expenses 18% and saw revenues increased by 38%! The organization has many more challenges that we must still deal with. For one, the stakeholders need to look at the deep core reasons why they make the decisions that they do. Since this process, the organization has hired at least one more person that eventually was let go for non-performance reasons. This organization is a work in progress and their revenues are on the mend. The organization is poised to continue growth into the foreseeable future with the help of Maximum Change and other strategically placed consultants.

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Philip A Foster, MA is Founder/CEO of Maximum Change Inc. Maximum Change, Inc. is a Leadership and Business Consulting firm located in Middle Tennessee offering business & leadership consulting, speaking and training. Philip Foster is a Thought Leader in Business Operations, Organization and Strategic Leadership. Facilitating change through the design and implementation of strategies, strategic foresight and strategic planning

Email | LinkedIn | Facebook | Twitter | Web | Skype: philip.a.foster | 615-216-5667