Mercuri Urval Adam Gillett

Nicole Linger

Manchester, 18th September 2014

The Demographic Timebomb

Mercuri Urval

Founded in Sweden in 1967

1

Independent and

organically grown with

offices in 24 countries and

800 professionals

worldwide

Proven expertise in

finding, attracting,

selecting and on-boarding

senior executives

If you have the right people, doing the right things, the rest is easy….

Our thinking is

unconstrained about who

might have the right

capabilities and potential

Expertise drawn from our

work with local, national

and global partnerships

2

What are

the biggest

risks for the

world right

now?

?

?

?

? ?

A Global Perspective…

3

Source: Global Risks Perception Survey 2013-2014, World Economic Forum

Ten Global

Risks of

Highest

Concern in

2014

10. Profound political and social instability

9. Failure of a major financial mechanism/institution

8. Food crises

7. Global governance failure

6. Greater incidence of extreme weather events

5. Failure of climate change mitigation and adaptation

4. Severe income disparity

3. Water crises

2. Structurally high unemployment/underemployment

1. Fiscal crises in key economies

2. Structurally high unemployment/underemployment

There’s an iceberg dead ahead….

4

It’s called global ageing and it threatens to bankrupt the great powers. As

the population of the world’s leading economies age and shrink, we

will face unprecedented political, economic and moral challenges. But we are

woefully unprepared. Now is the time to ring the alarm bell..

Peter G Peterson, Chairman of the Council on Foreign Relations, Senior Chairman of

the Blackstone Group, US Secretary of Commerce (1972-73)

The Demographic Timebomb A definition…

5

“When a

country has

more older

populations in

it…

…Or when

there are more

people in

public need

than those that

are not...

…The country

must support

them and it

takes strain on

the overall

income….

Source: Global AgeWatch Index 2013

8.6%

10.8%

13.9%

19.0%

19.7%

28.0%

32.3%

11.7%

26

29.4

35.4

38.3

37.4

40.2

45.9

29.2

South Africa

Turkey

China

Russia

USA

UK

Japan

World Average

Average (Median) Age of the Population

The Proportion of People over 60 years (of total population)

We are ageing… fast…

The Ageing Planet

6

Source: UN Department of Economic and Social Affairs Data 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

USA NewZealand

Australia Ireland UK France Germany Italy Spain Japan

2005 2050

A reality for Dependency…

The UK, Europe and the world…

Source: Forecast for Dependency Ratios in different countries, Department of Work and Pensions

7

8

Impact of the Demographic Timebomb

Increase in the

dependency ratio

1

If the retirement age remains

fixed, and the life expectancy

increases, there will be

relatively more people

claiming pension benefits and

less people working and

paying income taxes.

The fear is that it will require

high tax rates on the current,

shrinking workforce

Increased government

spending on health care

and pensions

2

Also, those in retirement tend

to pay lower income taxes

because they are not

working.

This combination of higher

spending commitments and

lower tax revenue is a source

of concern for Western

governments – especially

those with existing debt

issues and unfunded pension

schemes

Those in work may have

to pay higher taxes

3

This could create

disincentives to work and

disincentives for firms to

invest, therefore there could

be a fall in productivity and

growth

9

Impact of the Demographic Timebomb

Shortage of workers

4

An ageing population could

lead to a shortage of workers

and hence push up wages

causing wage inflation.

Alternatively, firms may have

to respond by encouraging

more people to enter the

workforce, through offering

flexible working practices

Changing sectors within

the economy

5

An increase in the numbers

of retired people will create a

bigger market for goods and

services linked to older

people (e.g. retirement

homes)

Higher savings for

pensions may reduce

capital investment

6

If society is putting a higher

% of income into pension

funds, it could reduce the

amount of savings available

for more productive

investment, leading to lower

rates of economic growth

10

What are the challenges for the HR

community related to talent management?

What are the opportunities for the

HR community related to talent

management?

Key Current Challenges

11

Identification of

Existing Capability How does an organisation know the level of capability which exists within the organisation. 1

Clear Specification

Over Capability

Needed

How clear is the business in terms of the capabilities that will be required in order to achieve future

strategic objectives. 2

Skills

Transferability/

Upskilling Workforce

To what extent is the HR function integrated within the organisation strategy, tying in capability

frameworks, employee development plans, with the current and future needs of the business. 3

Attracting the Right

Capabilities What strategies does the organisation employ in order to bring in the required capabilities. 4

Retention/

Engagement

What is the current attrition rate? Industry benchmarking. What is healthy? How can this be

improved? 5

12

Thinking about your business units

What practical

actions could

you take?

How to address

some of these

challenges?

Mercuri Urval – Our View

Some Key Tips for Managing the Demographic Timebomb

13

Identification of

Existing Capability

Assessment of inherent capabilities – strengths to build on & development areas, mapping

exercise - review of historic performance, 360 assessment, performance review documentation.

Prioritise skills gaps within key functions or individuals. 1

Clear Specification

Over Capability

Needed

Clear and defined strategic objectives, regular meetings between the organisation and HR –

‘business partnering’, HR represented at strategic level in the organisation, interviews with

managers/departmental leaders to establish future requirements, gap analyses. 2

Skills

Transferability/

Upskilling Workforce

Develop bespoke capability frameworks (perhaps start with 3 distinct levels), clear technical

development plans, link between capability frameworks and employee development plans and

with the current and future needs of the business. 3

Attracting the Right

Capabilities

Understand employer brand in the marketplace (local, national, international), targeting individuals

not just advertising, approaching candidates that reflect the market, flexible benefits, flexible

employment, clear understanding of where the organisation is heading – ‘why work for us’, attend

employer open days, web/social media presence.

4

Retention/

Engagement

Invest in employees, flexible working, meaningful exit interviews, salary benchmarking, regular

employee survey, focus groups LTIP. 5

14

Closing comments

“

Mercuri Urval Adam Gillett Adam.gillett@mercuriurval.com

Nicole Linger Nicole.linger@mercuriurval.com Manchester, 18th September 2014

Thank you for listening