Shaping the Future of Work: Leading Through the Demographic Waves
In an ever-evolving world, one thing remains certain: the future of work will look starkly different than it does today. Leaders must navigate these changes, guiding organizations through impending demographic trends.
Understanding these trends is not just a necessity; it’s a mandate for success in the increasingly diverse, dynamic, and digital business landscape. Here are five significant demographic trends shaping the future of work:
- Trend One: Longevity
- Trend Two: Women Owned Businesses
- Trend Three: Diversity
- Trend Four: Contingent Workers
- Trend Five: Career Reinvention
Trend One: Longevity
This century is being called the “century of the centenarian.” Why? Because life expectancy is increasing across the globe. Japan improved by 3.14 years from an average of 81.1 years in 2000 to an average of 84.91 years in 2022. In the US, the life expectancy for men in the US is 76.1 years, while the life expectancy for women is 81.9 years. This means we could see over 589,000 US centenarians by the year 2060.
This increased longevity is challenging traditional retirement models. Consider that when Bismarck introduced pensions in Europe in 1889, the qualifying age was set at 65 when half the population didn’t live past 45. If we apply the same logic today, pensionable ages in high-income countries should be 103.
As the Baby Boomers hit 65, key questions arise: Will they retire on time? How will their skills keep up? How can they adjust to a new work culture? If not handled correctly, the answers could lead to skyrocketing healthcare costs and personnel issues.
Therefore, a new retirement landscape is emerging, featuring four phases: pre-retirement, career intermission, reengagement, and leisure. This model allows for more flexibility, with many retirees even launching into new lines of work or “Retirepreneurship.”
However, according to Mercer Global Talent Trends 2020, many organizations still lag in accommodating this shift: 51% don’t offer post-retirement part-time work arrangements and 66% lack a program to manage workers nearing retirement.
As organizations grapple with the evolving dynamics of the workforce, it is crucial to consider the latest statistics that reflect the changing landscape.
- According to a study by the Pew Research Center, 29% of Americans aged 65 and older are working, up from 23% in 2000.
- The Bureau of Labor Statistics projects that the number of workers aged 65 and older will increase by 27% between 2020 and 2030.
- A study by the Society of Human Resource Management found that 72% of employers are open to hiring older workers.
Leaders must recognize and adapt to these longevity trends to foster an inclusive, adaptable, and innovative workforce that leverages the wealth of experience older workers bring.
Trend Two: Women Owned Businesses
Women exhibit higher engagement levels at work (33% vs. 28% for men) according to Gallup, and hold as many college degrees as men. They even outstrip men in graduate degrees, earning 50% more.
However, despite this, gender equality in executive suites does not reflect this. At present, only 23% of executives around the world are women. The percentage of women executives varies from country to country. In some countries, such as Norway and Sweden, women hold more than 40% of senior and leadership roles. In other countries, such as Japan and Saudi Arabia, women hold less than 10% of these roles.
Even though women hold 47.4% of entry-level jobs, they occupy only 31% of senior management roles and a mere 8.8% of Fortune 500 CEO positions.
This disparity is largely due to a “broken rung” on the corporate ladder that hinders women’s advancement to managerial positions. For every 100 men promoted to manager, only 72 women achieve the same promotion, leading to fewer women in the talent pipeline for higher-level positions. Addressing this issue could potentially add one million more women to management roles in corporate America over the next five years.
Yet, the gender pay gap persists. Although it has narrowed since 1980, women in professional specialty occupations earn 72.3% of what their male counterparts earn, while women in executive, administrative and managerial roles earn 72.7%.
Despite these challenges, women are increasingly stepping up to forge their own paths. In fact, a 58% increase in the number of businesses since 2017 is attributed to women-owned enterprises. These businesses, which amount to more than 13 million firms, employ 9.4 million people and generate $2.3 trillion in sales as of 2022. Women-owned businesses make up 42% of all businesses in the United States and employ 9.9 million people.
Interestingly, the growth of women-owned businesses is happening in unexpected places such as Georgia, Oregon, Idaho, Nevada, South Dakota, Utah, and Michigan. Women between the ages of 35 and 44 are most likely to start new businesses and surprisingly a significant portion of them (42.9%) reported using less than $10,000 to start their ventures.
The increase in minority women-owned businesses is a noteworthy trend that showcases the power of diversity and representation in entrepreneurship. According to the U.S. Census Bureau, as of 2020, significant strides have been made, with 15.4% of women-owned businesses owned by Hispanic women, 14.9% by Black women, and 7.6% by Asian women. This surge in entrepreneurship among minority women not only highlights their growing economic influence but also underscores the importance of diversity and representation in the business landscape.
Trend Three: Diversity
Diversity is not just a buzzword; it is a reality that’s reshaping societies and workplaces across the globe. In the United States, the shift towards a more diverse population is highly evident. The Census Bureau reported in 2020 that the country was 76.3% White, 13.4% Hispanic or Latino, 12.4% Black or African American, 5.6% Asian, and 0.9% Native American. Interestingly, about 95% of the country’s population growth is attributed to ethnic minorities. Over the first nine years of the current decade, racial and ethnic minorities accounted for all of the nation’s population growth.
States like Hawaii, California, New Mexico, Texas, Washington, D.C., and Nevada are now majority-minority, where more than half of the population is composed of racial and ethnic minorities. This shift is projected to occur on a national scale by 2045, with the Census Bureau predicting that the US population will be 49.7% White, 24.6% Hispanic or Latino, 15.2% Black or African American, 10.4% Asian, and 0.9% Native American by 2060.
The increasingly diverse population is reflected in the educational landscape as well. As of 2022, 56.5% of Asians, 35.2% of Whites, 25.2% of Blacks, and 18.3% of Hispanics hold Bachelor’s degrees. This educational diversity, however, is not yet fully mirrored in the workforce.
In 2020, women made up 47.1% of the workforce, with a projection of reaching 49.7% by 2060. Racial and ethnic diversity within the workforce was also increasing, with 17.4% of the workforce being Hispanic or Latino, 13.4% Black or African American, and 5.8% Asian. By 2060, the Census Bureau anticipates that 28.5% of the workforce will be Hispanic or Latino, 15.5% will be Black or African American, and 10.9% will be Asian.
Diversity within the workforce is not just an outcome of demographic change; it is a catalyst for innovation, creativity, and productivity. A study by McKinsey found that companies ranking in the top quartile for racial and ethnic diversity are 35% more likely to surpass their respective national industry medians in terms of financial returns. This underscores the tremendous opportunity for businesses and leaders to harness diversity.
To leverage these benefits, businesses must make conscious efforts to build inclusive cultures, invest in diverse talent, and ensure their policies and practices are equitable. This involves setting clear goals and objectives for diversity and inclusion, investing in diversity and inclusion training, creating a culture of inclusion, ensuring fair hiring and promotion practices, and consistently measuring and tracking progress. The changing demographics of the US present a compelling case for businesses to adapt and evolve, creating more inclusive workplaces that can better serve a diverse customer base.
Trend Four: Contingent Workers
Contingent work, often synonymous with freelancing, consulting, or independent contracting, is rapidly becoming a significant part of the modern workforce. These workers are self-employed, bidding for temporary jobs and projects with one or more employers.
Currently, 57.3 million Americans — 35% of the workforce — are considered contingent workers. This number is projected to rise to 50% by 2027. Freelancing is contributing almost a trillion dollars each year to the US economy, representing nearly 5% of GDP.
Executives are taking note of this trend, with 77% believing that contingent and gig workers will substantially replace full-time employees within the next five years. The reasons for this shift are multifaceted. Employers are increasingly using freelancers to lower costs and meet specific project needs. Additionally, technology and infrastructure are expanding to accommodate freelancers better.
With a forecasted shortfall of 2 million college-educated workers in the US by 2025, organizations may turn to contingent workers to fill the gap, expanding geographically to find the talent they need.
America’s contingent workers are spread across urban (36%), suburban (44%), and rural (20%) areas, and importantly, 60% choose this mode of work, not out of necessity, but by choice. The three most common reasons for opting for contingent work are the desire for a flexible schedule, the ability to work where they want, and the opportunity to take on multiple different projects.
Leaders must understand the importance of this growing workforce segment, adapting their strategies to effectively manage, motivate, and integrate contingent workers into their organizations. The rise of the contingent workforce represents a significant shift in how work is done, calling for innovative leadership approaches to maximize productivity and engagement.
Trend Five: Career Reinvention
As the workplace evolves, so does the trajectory of careers. The trend of career reinvention, characterized by continuous learning and adaptation, is on the rise as the US workforce strives to stay competitive in the global marketplace and respond to rapid technological changes.
The traditional linear model of career progression, which involves training, working, and rewarding based on static levels, is giving way to a more cyclical model of reinvention. This model encourages constant learning, skill enhancement, and career shifts, reflecting the dynamism of today’s work landscape.
In the post-pandemic world, there’s a growing focus on skills rather than roles. Roles often group unrelated skills, while the skills themselves drive an organization’s competitive advantage and fuel the workflows that underpin that advantage. Encouraging employees to develop critical skills not only opens up multiple opportunities for their career development, but also prepares them for an evolving work landscape rather than a specific next role.
Employee engagement is a critical factor in this reinvention process. Organizations with the most engaged employees see 21% higher profitability than those with the least. This underscores the importance of developing a culture that promotes continuous learning, supports career reinvention, and recognizes and rewards adaptability.
Leaders should champion lifelong learning and foster an environment that encourages and supports career reinvention. By doing so, they can ensure their organizations remain agile, competitive, and ready to adapt to the future of work.
Navigating the dynamic five trends requires an adaptive leadership strategy and clear understanding of emerging trends. For the increasing longevity in our workforce, retirement planning should be given as much importance as development planning. The rising prominence of women in business calls for updated parental leave and flexible work policies, accompanied by formal mentoring programs.
As we witness a surge in diversity, it is crucial to invest in predictive analytics to spot and address potential discrimination, with a focus on retaining and developing minority employees. This is where partnering with CHCI and DEI360 can bolster these initiatives, providing leaders with valuable DEI and People Analytics tools.
With the expansion of contingent workers, their onboarding and integration into the organizational culture is vital. Lastly, as career reinvention becomes the norm, employees should be encouraged to explore a variety of potential career trajectories. These steps, taken together, can help leaders navigate the future of work, turning challenges into opportunities for growth and innovation.
How have you adapted to the five trends within your team or organization? What were the key strategies that contributed to your success? How do you plan to address these five major trends in your leadership role, and what impact do you foresee on your team and organization? I would love to hear about it. Let’s share experiences. Leave a comment below, send me an email, or find me on Twitter.