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Last updated: 3 December 2003

Workforce ageing: Materials for Human Resource practitioners in the APS

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Part 1: Planning for a mature-aged workforce

Taking account of broader workforce factors

Agency workforce planning occurs within a broader context.

The agency workforce is a subset of the APS workforce, which in turn is a subset of the Australian workforce as a whole. Labour market pressures are not uniform at all three levels. There are likely to be variations in capabilities and skill demands between individual agencies, the APS as a whole and the Australian workforce more generally. Attraction and retention issues may also vary between these levels. But demographic pressures are being brought to bear which affect the labour market across the board. Critical among these is the ageing of the workforce.

The Australian workforce is ageing

The Intergenerational Report released by the Department of the Treasury in 2002 provides a challenging picture of the Australian labour market within 20 years.¹ The report confirmed that Australia, like other OECD countries, is experiencing an ageing of its population and labour force, driven by declining fertility and mortality rates. Figure 1 clearly shows the projected ageing of the population.²

Access Economics forecasts that the working age population will grow by just 125,000 for the entire decade of the 2020s, compared with around 170,000 people a year currently. The number of people aged 55 to 64 is expected to increase by more than 50% over the next two decades.³

Figure 1: Age profile of population, 2002 and 2021

Chart: Figure 1: Age profile of population, 2002 and 2021

Source: Australian Bureau of Statistics

Figure 2: Age profile of APS and employed persons, 2003

Chart: Figure 2: Age profile of APS and employed persons, 2003

Source: Australian Public Service Employment Database, APS labour force

Demographers, academics and policy makers have been discussing the social and economic impact of the ageing of the workforce since the mid-1990s. But the future has arrived, and though preparedness varies between organisations, many are yet to examine the organisational capability they will need in order to respond to the contracting labour market they will encounter in the years to come.

Mature-aged employees will be a key focus of private and public sector strategies responding to the ageing of the workforce-not just because of the existing corporate knowledge and networks of these employees, but because they represent the only segment of the workforce where significant increases in participation rates can be achieved. This is not hypothetical-it is what is already known about the Australian workforce in the next 20 years, because those who will make up its numbers have already been born.

The APS is ageing

The APS workforce is older than the Australian workforce overall (see Figure 2), and on average is now four years older than it was only a decade ago.

This reflects, among other things, the large number of 'baby boomers' recruited in the late 1960s and 1970s and the relative stability of the APS labour force. At the same time, there has been a general decline in the proportion of APS staff aged under 25 over much of the past decade, although there has been a slight turnaround in recent years.

The MAC report on Organisational Renewal identified the ageing of the APS workforce as a core issue. Projections prepared for the MAC indicate that the age profile of the APS will continue its upward trend as large numbers of baby boomers enter the 55 and over age group, without corresponding numbers of young people joining the APS.

The report foreshadowed increased competition for new entrants to the labour market, and identified the attraction and retention of younger people as a critical part of the response to changing APS workforce demographics. Another part of the response, which is the focus here, is the retention of skilled and experienced mature-aged employees.

Early departure (through resignation or retirement) has been an ongoing feature of employment in the APS, where employees have access to retirement benefits from age 55. Given its current age profile, the APS is facing the likely departure of about 23% of its workforce over the period to 2008.⁴

Agencies are being asked to critically examine how they will compete for a declining pool of qualified young people, and to rein in the expected rate of separation of valued mature-aged workers. From an APS-wide perspective, the aim is to maximise the Commonwealth's investment in its workforce by taking a strategic approach to addressing those factors which are a disincentive to employees' workforce participation beyond the point at which they would otherwise resign or retire.

The change required of Australian businesses is firstly an attitudinal one, to junk the falsehood that productivity declines with age, and secondly, to adopt new employment practices which recognise the value of mature-aged workers.

The change required of employees is to abandon expectations of early retirement and ensure they update their skills so they remain employable.

The Hon. Kevin Andrews, MP, 27 August 2003

The challenge for APS agencies is to develop strategies that optimise the contribution and job satisfaction of mature-aged workers. In this they are supported by a devolved legislative and policy framework that gives them the flexibility to develop innovative responses that meet their business needs.

This challenge will necessarily involve developing strategies for succession management and knowledge transfer. It will also involve taking a long-term view to preventing and managing workplace injury and to promoting employees' health throughout their working lives.

There is also a need to challenge cultural expectations of early retirement, and to develop and promote flexible workplace arrangements that make continued workforce participation attractive to those over 55 (and to the significant number of employees who leave the APS mid-career and may return). At the same time, there will be a need to address misconceptions identified in Organisational Renewal that phased retirement and part-time work have a negative impact on superannuation entitlements.

Flexible working arrangements are also likely to be attractive to, and benefit, younger workers as they navigate personal circumstances and life stages.

Agency workforce planning

A short-term approach to recruitment may have been sufficient when labour supply was plentiful, but it is unlikely to be effective in the current and future environment.

Workforce planning is a continuous process of shaping the workforce to ensure that it has the capabilities it needs to deliver organisational objectives now and into the future. It is a necessary first step for agency retention of valued mature-aged workers, and for strategic people planning in general.

Knowing your workforce

In addressing their longer-term capability requirements APS agencies will need a detailed demographic profile of their workforce. In addition to internal data sources, external information sources are available.

These include:

the APS Employment Database (APSED) maintained by the APS Commission
the annual State of the Service report issued by the Public Service Commissioner.
the annual Australian Public Service Statistical bulletin.

In addition to knowing how many employees are shortly to become eligible to access their retirement benefits, and what skill sets those employees possess, agencies need to understand the factors that contribute to employees' decisions to resign or retire. For some agencies, this may mean that an employee survey or a separate data collection exercise is warranted (Part 2 of this publication contains more information about using surveys to understand employee intentions).

WHAT IS APSED?

APSED stores employment and socio-demographic data relating to all current and former APS employees. It includes information about employment status, employment history, age, gender and, where employees have chosen to provide the information, whether the person is an Indigenous Australian, whether they have a disability, country of birth, language and education details. APSED data are provided to the APS Commission by APS agencies.

To assist agencies in workforce planning, the APS Commission has developed an internet interface that allows authorised personnel in agencies direct access to their agency data on APSED. Human resource managers are able to extract customised tables providing a demographic profile of staff in their agency, as well as APS averages for benchmarking. Data items include age, length of service, employment status, gender, equal employment opportunity group and location. Where agencies have not experienced significant machinery of government changes, historical data are also available to assist in examining trends.

The data are easily manipulated, and are available in both tables and charts that can be downloaded into reports.

People count-using APSED data for workforce planning is an appendix to this publication.

Planning for the future

Workforce planning is a system to deliver the right people to the right place at the right time. To be effective it must be undertaken as part of an agency's overall strategic planning. Like other planning, it should be based on an assessment of the risks (such as demographic change) to the organisation's longer-term capacity to deliver on its organisational objectives. It should link directly to business planning and capability development.

The Australian National Audit Office (ANAO) has reported that many agencies are only in the early stages of strategic business/people planning, including the integration of workforce planning and other people management initiatives.⁵

APS agencies' physical, organisational and operational requirements and business objectives vary considerably. However, broad guidance on the key elements of effective workforce planning is available in the ANAO's 2001 Better Practice Guide, Planning for the workforce of the future (available on the ANAO website at http://www.anao.gov.au/WebSite.nsf/Publications).

The key principles identified in the guide are set out below and in the diagrammatic framework in Figure 3.

Identify future business direction and workforce needs

What organisational capabilities are going to be required?
What are the characteristics of your current workforce?
What is the current profile of individual capabilities in the organisation?
What workforce data are available on current demographics?

Bridge the gap-identify and address workforce issues

Analyse workforce attraction, retention and development issues (survey data may be critical here).
Use strategic HR intervention to address gaps in present and future capability.

Provide a sound basis for effective implementation

Develop an investment plan.
Integrate workforce development with agency business direction.
Establish implementation roles and responsibilities for the plan.

Monitor and evaluate progress against the plan

Revisit any step as required, bearing in mind that workforce planning is a continuous process.

Throughout the workforce planning process it will be important to consider the broader context in which planning is taking place. In addition to APS and broader workforce factors such consideration should include the corporate governance framework, the broader business planning cycle, and organisational vision and values.

Section 5 of the ANAO Better Practice Guide provides a useful checklist to support the establishment of an effective planning process for those agencies still in the early stages of workforce planning.

Part 2 of this booklet examines some aspects of workforce planning in more details, including flexible working arrangements, phasing retirement and changing job roles.

Managing for succession

Senior employees and those with above average corporate knowledge are disproportionately represented in the mature-aged cohort. Organisational Renewal found that increases in length of service are correlated with increases in age and classification. For example the median length of service for employees aged 50-54 years had increased over the last 10 years, from 12 to 15 years.

Figure 3: Key principles of effective workforce planning


Identify future business direction and workforce needs - Organisational capabilities Know your current workforce - Individual capabilities - Workforce data	Bridge the gap - identify and address workforce issues - Analysis - Strategic HR intervention	Provide a sound basis for effective implementation - Investment - Integration with business direction	Monitor and evaluate Revisit any step as required

Consider the broader context Sound corporate governance framework Strategic integration External factors Vision and values		Workforce planning is a continuous process

Source: ANAO 2001, Better Practice Guide: Planning for the workforce of the future

Agencies are likely to be differentially affected by the loss of key staff, depending partly on their existing age profile, the spread of the mature-aged population in their workplaces, the success of their retention strategies, and the nature of the work being undertaken by departing employees. Agency age profiles in Figure 4 are indicative of how widely any of these factors can vary between agencies. The graph includes all those agencies with more than 1500 ongoing staff, as well as some others with particularly young or old age profiles.

Agencies that do not have effective succession and knowledge management strategies in place, and fail to retain key staff may be exposed to a significant loss of organisational capability.

Succession management is a deliberate response to the potential loss of critical capabilities in an organisation. The aim is to build bench strength-that is, a robust field of employees with the capabilities, flexibilities and skill sets to fill emerging roles/vacancies.

The APS Commission's 2003 publication Managing succession in the Australian Public Service defines succession management as 'a strategic, systematic deliberate activity to ensure an organisation's future capability to fill vacancies.⁶

The publication also provides advice on approaching succession management, including:

designing a succession management process
ensuring that it is integrated with other agency human resource processes (such as performance management and learning and development)
undertaking a risk assessment of potential departures from existing critical roles
identifying and assessing high-potential employees (including identifying the assessor and the assessment processes)
planning and implementing development opportunities for high-potential employees
ensuring that there are opportunities for feedback and regular review of developmental assignments and other opportunities
evaluating the succession management system itself as well as its outcomes for individuals and ensuring that the system and its operation are consistent with the APS Values and the merit principle.

Organisational Renewal identified a range of succession management strategies. What these strategies have in common is the need to capitalise on the knowledge, talents and abilities of employees, and to maintain the momentum of their development. These strategies include:

identifying those with potential through performance management frameworks
encouraging employees who show potential through accelerated advancement and higher duties
providing mentoring programs
offering access to project work
offering broad development opportunities to ensure capability across the organisation
providing access to leadership development programs
initiating temporary placements with other agencies in Australia or overseas.

Figure 4: Ongoing employees in selectd agencies by age group, June 2003

Chart: Figure 4: Ongoing employees in selectd agencies by age group, June 2003

Source: APSED

Managing knowledge transfer

Succession management strategies must engage mature-aged employees in a process of consciously passing on information, knowledge and skills that they have gained through their exposure to the job. Simply briefing the next person in the job about the status of work under way will not be sufficient. Effective succession management cannot be separated from effective knowledge management.

Surveys of mature-aged workers undertaken for Organisational Renewal found that both current and former employees were uncertain that their corporate knowledge was being effectively transferred. Depending on the nature of the work in which these employees were involved, this could be an issue of concern to agencies.

At the most fundamental level, knowledge management is about appropriate recordkeeping. Employee surveys undertaken for the State of the Service Report 2002-03 found that there is a correlation between seniority and reduced access to information and training around recordkeeping systems and procedures. Both awareness-raising and systems-based instruction would assist senior managers to record and pass on corporate knowledge that may otherwise be lost. Skills sets that may be required include routine document management and appropriate filing of electronic documents in a way that is accessible to others. Of course, all employees should be made aware of their legal recordkeeping obligations, and how they apply in their workplace context.⁷

More broadly, however, knowledge management means putting in place strategies to facilitate and encourage knowledge sharing and transfer from employees who are planning to leave the workplace to those who will need to apply that knowledge. The broad aim is to ensure that knowledge is shared as an integral part of workplace practice and not as someone is actually poised to leave. These strategies can include but are not limited to:

mentoring and coaching by departing employees
job sharing between employees who may be staying and those who may be leaving
handovers through planned arrangements such as phased retirement
partnership approaches between departing staff and consultants
team-based approaches to managing long-term projects
as discussed above, consistently good record keeping practices.

A number of the approaches identified can be used to pass on more than factual or even contextual information. For example, mentoring, job sharing and handovers can be used to introduce new employees to key formal and informal networks established by departing employees.

Investment in short-term mentoring can save considerable investment in reinventing the policy development or program management wheel, in rebuilding professional networks and in developing high-potential employees as part of a succession management program.

Health and safety in the workplace

Under the Occupational Health and Safety (Commonwealth Employment) Act 1991, Commonwealth agencies have an obligation to take all reasonably practicable steps to protect the health and safety of their employees at work. The ageing of the Australian workforce has raised issues about whether there are any occupational health and safety issues specific to mature-aged workers.

Comcare's research shows that a range of factors determine healthy ageing and that these can be significantly affected by individual differences and the influence of non-age-related factors (such as physical activity). This means that, within the age range of our current workforce, chronological age is only a rough indicator of health or performance capacity. For this reason Comcare recommends that strategies to promote healthy ageing begin early and continue throughout life.

Comcare's contribution to this package of resource materials provides managers in APS agencies with assistance in developing strategies to address workforce ageing as a part of their human resource and risk management programs. Implementation of these strategies is an investment not only in current health and safety, but also in the future health and performance of the APS workforce.

The resource material developed by Comcare includes advice to assist agencies to develop an action plan for ageing. The appropriate mix of strategies will depend on the specific workplace and workforce characteristics of particular agencies and their risk assessments.

The strategies outlined cover:

health and well-being promotion to reduce the impact of risk factors and slow the changes associated with ageing
improving job and work task design
improving work organisation and the physical work environment to maximise the ability of mature-aged workers to participate in the workforce
reducing the risk of injury
providing training and information resources appropriate to the needs of mature-aged workers to further develop their performance capacities.

1 Commonwealth of Australia, Intergenerational Report 2002-03, May 2002.

2 Australian Bureau of Statistics, Labour force projections 1999-2016, Catalogue no. 6260.0.

3 Access Economics, 'All in it together', a paper prepared for the Department of Health and Ageing, Canberra, June 2000, p. 1.

4 Management Advisory Committee, Organisational Renewal, 2003, p. 3.

5 ANAO, Report No. 61, Managing people for business outcomes, June 2002. The importance of the integration of people management systems with other corporate/business systems is also discussed in the 2001 Management Advisory Committee report Performance management in the APS: a strategic framework.

6 Australian Public Service Commission, Managing succession in the Australian Public Service, 2003, p. 3.

7 National Archives of Australia, Keep the knowledge-make a record: what every Commonwealth employee needs to know about recordkeeping, 2003 http://www.naa.gov.au/recordkeeping/training/keep/package.html