3 Mature-aged employment in the APS

Last updated: 13 Dec 2012

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Introduction

Consistent with its ageing profile, the APS is increasingly reliant on mature-aged workers (45 and over).

They now represent 37% of its workforce (up from 25% in 1992). However, this varies significantly between agencies (from 26% in Treasury to 53% in the Department of Veterans' Affairs).

Mature-aged workers in the APS have extensive experience, with a median length of service of 14 years. They are also likely to be well represented in senior positions (69% of SES and 46% of Executive level employees were aged 45 years or over at June 2002).

Engagements of mature-aged workers have increased significantly over the last decade (from 11% to 16% of all engagements).

After declining since the 1990s, separation rates for mature-aged workers have increased slightly in 2001-2002 and now stand at 7% for workers aged 45-54 and 16% for those 55 and over. The main ways they separate are by retrenchment (35%), resignation (34%) and aged retirement (21%). The median age for each is 54, 52 and 59 years respectively.

Research into mature-aged employment was conducted in the context of the following issues:

  • The ageing of the APS and the wider Australian workforce and the implications for the APS in terms of this increasing reliance on mature-aged employment, and the need to focus on strategies to maximise the participation of older employees.
  • The impact of current superannuation arrangements, in particular the financial incentives for some members of the Commonwealth Superannuation Scheme (CSS) to resign from APS employment at 54 years and 11 months (the 54/11 issue). 54/11 has been examined in the context of the potential loss of skilled and experienced employees in an environment where the APS is looking to facilitate the extended participation of older employees, and from the perspective of the challenges it may pose for the effective management of knowledge.

The research into mature-aged employment explored career and retirement intentions, attitudes to work, and whether changes to employment arrangements would encourage older workers to be retained or re-employed by the APS. Changes explored in the research included alterations to superannuation arrangements and more flexible working conditions to suit the needs of older workers.

Methodology

In exploring these issues, current and former employees aged 50 and above were surveyed. Current employees were from all classifications, whilst former employees were either at Executive or SES Level at the time they separated from the APS.

Agencies were surveyed about general strategies used to attract, retain and develop staff, as well as knowledge and succession management. Agency heads were also interviewed to provide an overall perspective on existing workforce planning strategies, and to provide their views on how the 54/11 issue will affect the capability of their agencies, and approaches to managing the issue.

More detailed information about the survey methodology and response rates is at Appendix B.

Key characteristics

As shown in Table 1, the key characteristics of the current and former employees surveyed are quite different in some respects, in particular, superannuation membership and classification. These differences are reflected in the varied responses between the two groups on some issues.

Table 1: Key characteristics of current and former employees
Key characteristics Current employees % Former employees %

* Employment status prior to leaving the APS

Note: Values may not add to 100% because of 'Unknown' values.

Source: MAC Surveys of current and former employees (50+)

Median age 53 years 56 years
Gender
- Male 64 82
- Female 34 17
Median length of service 18 years 32 years
Superannuation scheme membership
- CSS 44 83
- PSS 54 17
Classification
- APS 71
- Executive 26 87
- SES 2 13
Employment status
- Full-time 97 97*
- Part-time 3 3*
Table 2: Outline of the top 3 qualifications nominated by the two groups
Current employees Former employees
Source: MAC Surveys of current and former employees (50+)
Most common Associate Diploma/Certificate of Technology (21%) Undergraduate degree or Honours (32%)
Second most common Undergraduate degree or honours (16%) Post graduate diploma/ Graduate Certificate (20%)
Third most common Post graduate diploma/Graduate certificate (13%) Associate diploma/ Certificate of Technology (17%)

Fourteen per cent of former employees and 30% of current employees reported that their highest qualification was a Year 12 Certificate and below. Of those current employees with post school qualifications the most common fields of study were engineering, accountancy, administration and science. For former employees with post school qualifications, administration, science, economics and arts were identified as the top four fields of study.

Survey data analysis

Recruitment issues

Given that some respondents may have joined the APS or their current or last agency up to 30 years ago, there may be some limitations in analysing the reasons why they joined.

Job security and interesting work were the reasons rated most important by current and former employees for joining the APS or their current or last agency. Location of the job was also an important factor influencing current employees to join, and work related to degree or experience was also an important reason for joining for former employees.

General recruitment strategies used by agencies include employer branding, and marketing workplace factors such as attractive pay and conditions (including flexibility), the opportunity to make a difference, interesting work and training. Agencies reported that recruitment strategies are generally effective in terms of attracting quality applicants.

Interesting work was an important reason for joining the APS for current and former employees, which agencies also identified as an effective recruitment strategy. Agencies did not identify job security as one of the most effective recruitment strategies although employees rated it as an important reason for joining. This may have future implications for attraction strategies aimed at older workers.

Agency heads reported positively on the quality and performance of the employees being recruited, but experience some difficulties resulting from disparities between private and public sector remuneration and in recruiting from specialist fields such as economists and business analysts.

Retention

The median intended retirement age of current employees is 60 years for employees aged 50-54, and 63 years for employees aged 55 and above. This would indicate that a high proportion of current employees intend to work beyond 55.

A number of factors influence employees' resignation and retirement patterns. Current employees stated that retirement (47%), financial security (21%) or superannuation (15%) were the main drivers influencing their decision to leave the APS at their intended retirement age. This does not necessarily mean they intend withdrawing from the workforce as a whole, but may be a life stage change frequently involving re-engagement under different arrangements, which is reflected in a strong preference expressed for greater flexibility.

Superannuation

Respondents were asked specific questions about superannuation and intended retirement arrangements, to provide an indication as to the extent to which the 54/11 issue influences retirement decisions and whether changes to employment arrangements would influence retention.

The median intended retirement age for CSS members aged 50-54 is 55 years. This compares with PSS members of the same age for whom the median intended retirement age is 60 years.

Thirty-nine per cent of current employees surveyed aged 50-54 who are CSS members stated their main reason for leaving will be the 54/11 benefit. This should be considered in the context that, of the total population of 50-54 year-olds, only 18% nominated 54/11 as their main reason for leaving. This seems, however, to be concentrated at the senior levels with 39% of SES employees and 31% of Executive Level indicating they intend to leave because of 54/11.

In comparison, 41% of all current employees aged 50-54 years indicated retirement as the main reason for their intentions to leave the APS. This group has generally reported long periods of service and some have indicated 'change fatigue' and 'burnout' as reasons for retiring.

Figure 25: Main reasons for leaving the APS for current employees aged 50-54 years

Figure 25

Source: MAC surveys of current and former employees (50+)

Forty-four per cent of former employees aged 50-54 left the APS citing 54/11 as the main reason. This compares with 29% who said that voluntary redundancy was the main reason for leaving the APS, and 1% who retired.

Twenty-two per cent of current employees aged 50-54 and 14% of current employees aged 55 and above said that no loss to superannuation benefits would be the most important reason that would keep them beyond their current intended leaving date. Twenty per cent of current employees aged 50-54 (16% of men and 27% of women) said that more flexible working conditions would be the most important reason keeping them beyond their current leaving date. Seventeen per cent of current employees aged 50-54 and 16% of current employees aged 55 and above said that no financial disadvantage would be the most important reason keeping them beyond their current leaving date.

Agency heads reported that, overall and while acknowledging some risks in terms of loss of expertise and corporate knowledge, the current CSS arrangements do not pose a major problem. Where 54/11 applies, agencies are able to use the present arrangements to retain or re-engage the employees they need, while others have an incentive to leave, providing an opportunity for organisational regeneration.

In addition to 54/11, questions were also asked to gauge how many PSS members would or have reached their Maximum Benefit Limit (MBL). Only 3% of current employees indicated that reaching their MBL would be the main reason to leave, while only 1% of former employees stated they left because they had reached their MBL.

Preferred working arrangements

Questions were asked about preferred working patterns to provide an indication as to whether more flexible working arrangements targeted at older workers could assist in maximising their workforce participation.16

Both former and current employees display a preference for more flexible working arrangements, which indicates this could be an important future attraction and retention issue for the APS. For example, of those Executive Level and SES employees that have rejoined the APS, or would consider rejoining, 90% of current employees and 82% of former employees would prefer to work more flexible hours.

Of the former employees surveyed, 30% had worked in the APS at some time since the survey. Eighteen per cent were working with an APS agency at the time of the survey, the majority of whom (78%) were working on a part-time or more flexible basis.

Although only small proportions of current and former employees nominated health and caring for sick relatives as main factors for leaving the APS, ageing issues may mean that more employees will need access to more flexible arrangements if they are to remain in employment.

All agencies surveyed used flexible conditions to retain employees and considered them to be an effective component of overall retention strategies.

As 97% of current and former employees are, or were, working full-time, agencies may need to look at increasing the availability of flexible conditions for older employees.

Some catering for this preference is being made on re-engagement. However, little provision is being made for part-time work as part of ongoing employment and phased retirement approaches for mature-aged workers in the APS.

A number of agency heads reported a preference from some of their senior mature-aged workers for divesting themselves of their managerial responsibilities and being used in specific expert, project and/or mentoring roles. Again a changed role appears to be catered for on re-engagement rather than pre-departure.

There is also an apparent misconception that having a staged retirement by 'going part-time' or moving to a lower level of work (or both) in the years leading up to retirement from the APS has a detrimental effect on the PSS or CSS benefit paid in retirement. This is not the case and equitable arrangements apply to the calculation of PSS and CSS benefits where this occurs. Appendix C provides information and examples about the effect on PSS and CSS benefits of working part-time and of working at a reduced work level. An agency that seeks to offer such flexible working arrangements needs to be familiar with these provisions.

Changes to employment arrangements

Only 28% of current Executive Level and SES employees and 25% of former Executive Level and SES employees said they would not consider working for the APS again. Fifty-three per cent of current APS level employees said they would not consider working for the APS again.

Sixty-five per cent of all current employees, however, indicated that changes to their superannuation and/or employment arrangements (such as no loss to superannuation benefits, no financial disadvantage, more flexible conditions and changing the type of work done) would keep them in the APS for longer than they currently intend.

  • 19% of current employees said that no loss to superannuation arrangements would be the most important reason that would keep them beyond their current intended leaving date.
  • 19% of current employees said more flexible working arrangements would influence their decision to leave.
  • 17% of current employees nominated that they would consider working for the APS past their intended leaving age if there were no financial disadvantage.
  • 8% of current employees would reconsider their decision to leave if there were a change in work.

Given the right working conditions, the median period of time that current employees would stay beyond their intended leaving age is 5 years. Given the desire to work more flexibly, it is unlikely that most employees would consider working this additional 5 years on a full-time basis.

Attitudes to the workplace

Information was gathered about the factors encouraging and discouraging current and former employees from seeking to be retained or re-employed by the APS. They were also asked about the importance they place on a range of workplace factors, and their overall satisfaction with these factors.

Overall, current and former employees indicated positive views about the APS, with both current and former employees reporting themselves to be generally satisfied with most workplace factors.

Workplace factors most commonly rated by current employees as the most encouraging to remain in the APS include job security, superannuation and interesting work. Former employees also stated that the factors they liked most about working in the APS were interesting work, job security and commitment to agency goals.

Although both current and former employees generally consider all workplace factors to be of some degree of importance, the three workplace factors that were rated as most important for both groups were the opportunity to utilise skills, good working relationships and interesting work.

As shown in Tables 3 and 4, the importance placed on workplace factors was, for all the surveyed factors, higher than levels of satisfaction.17 This suggests that employees perceive that there is scope to increase their satisfaction in the workplace. Responses suggest that both current and former employees perceive there is most scope for improvement (that is, the biggest gaps between importance and satisfaction) with recognition for effort. 'Opportunities to utilise skills' was rated by both former and current employees within the top three workplace factors where they view scope for most improvement.

Table 3: Satisfaction and importance scores with workplace factors for current employees
Workplace factor Satisfaction score Importance score Net difference*

* Due to rounding the net difference may not exactly add to the difference between the two scores.

Source: MAC survey of current employees (50+)

Recognition for effort 3.05 4.14 -1.09
Opportunities to utilise skills 3.44 4.37 -0.93
Career development 2.87 3.74 -0.87
Regular feedback provided 3.22 4.06 -0.84
Duties/expectations made clear 3.43 4.24 -0.81
Appropriate workload size 3.31 4.09 -0.78
Chance to be creative/innovative 3.28 4.04 -0.77
Training provided 3.29 4.00 -0.71
Interesting work provided 3.65 4.35 -0.70
Chance to contribute to corporate issues 3.15 3.79 -0.63
Good working relationships 3.87 4.45 -0.58
Doing type of work expected to do 3.56 4.03 -0.48
Table 4: Satisfaction and importance scores with workplace factors for former employees
Workplace factor Satisfaction score Importance score Net difference*

* Due to rounding the net difference may not exactly add to the difference between the two scores.

Source: MAC survey of current employees (50+)

Recognition for effort 2.85 4.25 -1.40
Regular feedback provided 2.83 3.98 -1.15
Opportunities to utilise skills 3.44 4.53 -1.09
Chance to be creative/innovative 3.32 4.33 -1.01
Duties/expectations made clear 3.19 4.13 -0.94
Chance to contribute to corporate issues 3.28 4.18 -0.91
Appropriate workload size 3.02 3.90 -0.88
Career development 2.69 3.50 -0.81
Interesting work provided 3.73 4.47 -0.73
Training provided 3.09 3.50 -0.41
Good working relationships 3.59 4.40 -0.81
Doing type of work expected to do 3.59 4.07 -0.48

Both groups reported good working relationships, interesting work and doing the type of work they expected to do as the three factors with which they are most satisfied.

Both groups reported being dissatisfied with opportunities for career development.

Figure 26: Satisfaction scores with selected workplace factors

Figure 26

Source: APSED

Agencies reported on a number of effective general retention strategies including initiatives through AWAs, job rotation, training and career opportunities, recognition for effort, career progression and attractive pay and conditions. As older employees were reporting dissatisfaction with career opportunities and recognition for effort, agencies may need to revise the targeting of these strategies to better include older workers.

Sixty-five per cent of former employees and 41% of current employees reported that work related factors contributed to their desire to leave the APS: most commonly, poor management and supervision and being overworked or undervalued.

Re-employment

Current and former employees were asked about career intentions and whether they would consider returning to the APS.

Responses to questions on re-employment suggest that a high proportion of current and former employees would consider working for the APS again, that a considerable number of former employees have returned to APS employment and that most would prefer to return under more flexible arrangements.

Of Executive and SES Level employees, 71% of current employees and 75% of former employees would consider working for the APS again, or have rejoined.

Forty-nine per cent of former employees aged 50-54 and 31% of former employees aged 55 and above were employed either in the APS or the wider workforce at the time of the survey.

Of those former employees who said their main reason for leaving was 54/11, 34% have worked in the APS again since leaving, and 22% are currently working in the APS In comparison:

  • 26% of employees who were retrenched have worked in the APS since leaving and 15% are currently employed in the APS.
  • 34% of employees who said their main reason was retirement have worked in the APS since leaving and 19% are currently employed in the APS.

Flexibility is a critical factor in the decisions of older workers to return to the APS- as discussed previously in the section on preferred working arrangements, of those Executive Level and SES employees that have rejoined the APS, or would consider rejoining, 90% of current employees and 82% of former employees would prefer to work more flexible hours.

Agencies reported having effective strategies in place to re-employ those with valuable knowledge and expertise, including re-employment on contract or consultancy basis and flexible remuneration and conditions.

Retrenchment

There appears to be a relatively high incidence of retrenchment for mature-aged workers.

For the last five years, APSED data show that retrenchments have made up the largest proportion of separations of employees over the age of 50 years, and in 2001-02 accounted for 36% of separations for this group. As a comparison, total retrenchments accounted for just 25% of separations.

Of former employees surveyed, 37% said that voluntary redundancy (VR) was the main reason for leaving the APS, compared with 31% who retired. Of those former employees who were retrenched, 38% have been re-employed by the APS or in the wider workforce. Some 79% of retrenched former employees were employed in the APS at the same time of the survey, or were willing to rejoin it.

An analysis of CSS exits for 2000-01 shows that:

  • There were more retrenchments than resignations/deferrals for members aged 47 to 53 at last birthday.
  • There were more retrenchment exits than standard pension exits for ages 55, 56 and 57.
  • A significant proportion of retrenchment exits continue for members well into their 60s.

The use of VR is now particularly apparent for the SES with around 30% of all departures in this group being effected through the use of a separation payment in 2001- 02.

Some higher incidence of retrenchments for mature-aged workers could be expected given that, with their longer length of service, offers of redundancy packages are more likely to be a viable financial option for this group. In addition, with the major structural and functional changes across the Service, there may be skill/requirement mismatches that need to be addressed.

However, there does appear to be a need for agencies to consider the appropriateness and nature of the redundancy packages for people approaching retirement and how to apply performance management systems more rigorously. This is regarded as an issue meriting further examination.

Knowledge management

Both current and former employees were uncertain that their corporate knowledge is, or was, being effectively transferred. This is a concern, given that this view is shared by executive and SES level employees and that many employees have worked in the APS for relatively long periods of time.

Agencies reported use of a number of knowledge management strategies including mentoring and coaching, job sharing, handovers, partnership approaches with consultants, team based approaches, rotations and exposure to a range of work and records management. Agencies rated these strategies as being effective in assisting knowledge transfer.

Although most agencies identified no current problems in terms of loss of upper and middle management skills and knowledge (through general turnover and 54/11) some agencies identified it as a future issue. Half or more of agencies identified program and contract management evaluation as being specific skills and knowledge areas necessary for future capability.

Although some agency heads expressed some loss of corporate knowledge as a result of employee turnover, they were, overall, satisfied with existing knowledge management strategies. Indeed, some agency heads consider manageable levels of general turnover as healthy as it provides opportunities for organisational regeneration.

Succession planning

Agencies were asked to report on existing succession planning arrangements, to identify whether agencies are attempting to minimise the risk of knowledge loss and developing the generation of employees behind the 'baby boomers' to ensure the APS has leadership capability into the future.

Agencies reported using a range of succession planning strategies, including:

  • mentoring programs
  • identifying those with potential through performance management frameworks
  • encouraging employees who show potential through accelerated advancement and higher duties
  • project work
  • offering broad development opportunities to ensure capability across the organisation
  • leadership development programs
  • workplace exchange with other agencies or overseas.

Although agencies reported strategies to generally be effective, some agencies identified challenges to succession planning that still need to be overcome, such as lack of coordination, cost, reluctance of managers to release high performers for long-term development and perceptions of inequity in how people are identified as showing potential.

Conclusions

Responses to the survey suggest:

  • A high proportion of Executive and SES Level current and former employees would consider rejoining the APS, and a number of former employees have already done so. Most would prefer to come back on a more flexible basis.
  • A high proportion of current employees intend to simply retire, with anecdotal evidence suggesting that some are suffering from change fatigue and burnout.
  • Only some CSS members approaching 55 are considering leaving, or have left the APS, because of the 54/11 issue and these employees represent a relatively small proportion of the total population of APS employees.
  • Changes to superannuation arrangements could influence some current employees to reconsider their leaving age.
  • Changes to employment arrangements, such as flexible arrangements or work, could also influence some current employees to reconsider their leaving age.
  • Current and former employees have a strong preference for more flexible working arrangements.
  • Although agencies have knowledge management strategies in place, both current and former employees are uncertain as to whether their knowledge has been or is currently being effectively transferred.
  • Older employees are generally satisfied with most workplace factors (with the exception of career development), although they perceive scope for improvement.
  • There is some misalignment between the perceptions of employees and agency recruitment and retention strategies.
  • There appears to be a relatively high incidence of redundancies for mature-aged workers and agencies need to ensure packages are properly targeted.

16 For the purpose of the research, the definition of full-time employment is 5 days a week, 12 months per year. Employees who nominated a preference to work less than full-time hours have been considered to prefer more flexible employment.

17 More than 3 indicates average satisfaction or importance, less than 3 indicates average dissatisfaction or unimportance. Further information about satisfaction and importance scores is at Appendix B