Baby Boomers, Gen Xers, Millennials.
If you’re in any way involved in the recruitment of technical and engineering professionals for the oil industry you’re sure to be familiar with these terms. These various generational cohorts all have their own contributions to make to the industry as we face ‘The Great Crew Change’.
But now there’s a new cohort that could make a big difference in solving the looming skills gap- Perennials.
The Perennial Workforce
Loosely defined as ‘workers of 55 years and older, who have decided to return to the workforce’, Perennials represent a powerful new demographic within the workforce. In the U.S., Perennials represent the fastest-growing population of workers, with twice as many over-55s as teenagers currently employed. It’s a change which is expected to continue according to the U.S. Bureau of Labor Statistics; in the 30-year span from 1994 to 2024, workers aged 55 and older will go from being the smallest segment of the US working population to the largest.
Nor is this a phenomenon confined to the Americas. Other industrialised nations are experiencing similar trends. In Japan and South Korea, the proportion of their workforces comprising Perennials is rising even faster.
It’s a global shift which will see the composition of workforces radically change. Consider the following; Globally, the number of people aged 60 and over is projected to double to more than 2 billion by 2050 (World Health Organisation), at which point those 60 and over will outnumber children under the age of 5.
Labour force participation is increasing amongst older workers and it’s a trend which isn’t going to go away. According to one study (Retirement Patterns and the Macroeconomy 1992-2010, The Gerontologist, June 2015), about 60 per cent of older workers with a ‘career job’ retire and move on to a ‘bridge job'; that is, a short-term and/or part-time position.
Perennials as a dynamic segment of the workforce
There is ample evidence to suggest that Perennials make a valuable contribution to the workforce, and that today’s engineering and technical businesses should do more to craft an employer value proposition targeting this cohort.
Firstly, the perception of older workers does not align with reality. New research from German economist Axel Borsch-Supan reveals that as workers age, contrary to popular opinion their productivity rates do not decrease. Instead, with knowledge-based jobs productivity increases with age and eventually plateaus.
Older workers can also aid overall team performance. A Stanford University study conducted at an auto plant examined three teams; one made up of all young workers, one made up of all older workers, and one of mixed older and younger workers. It was the latter team that performed best. The productivity of the mixed-age group was the best as they benefitted from the knowledge and experience of the older workers as well as the skill and speed of the younger workers.
Research from the Milken Institute’s Center for the Future of Aging and the Stanford Center on Longevity found that older employees took fewer sick days, showed stronger problem-solving skills, and were more likely to experience job satisfaction than younger colleagues.
There are also significant benefits to the economy when Perennials remain in (or return to) the workforce. Not only does remaining in work improve the health of over-55s thus reducing governmental healthcare expenditure, but as Paul Irving, Chairman of the Milken Institute Center for the Future of Aging, states, “keeping older people working means they remain taxpayers. With their increased financial resources and confidence and ongoing engagement, they are likely to continue to consume. The more people are actively engaged in the economy, the more likely the economy is to grow. That’s good for everyone”. Estimates already put the spending power of Americans over the age of 50 at $7.6 trillion per year. By 2020, with their increased representation in the workforce, over-50s are expected to have grown this spending power to $15 trillion annually.
Whilst the focus of this article examines the impact that Perennials could have upon the oil industry, it’s important to note that this cohort is also having a demonstrably positive impact upon other sectors of the economy including the broader engineering industries, consulting, and even retail and FMCG.
Could Perennials be the key to solving the oil industry’s Great Crew Change?
As I have written previously on EngineeringPro, the oil industry is facing ‘the Great Crew Change’, which refers to the imminent retirement of thousands of older workers and a lack of younger workers to take their place.
The roots of the problem lie in the great industry downturn of the 1980s, which resulted in many young engineers and graduates choosing to work in aerospace and automotive industries (amongst others) rather than the oil industry which was incorrectly perceived as a ‘sunset industry’.
Until a new generation of millennials can be recruited into the industry, could Perennials help fill the gap?
Any attempt to answer this question, must begin by examining the motivating factors for those over-55s who choose to re-join the workforce after retirement. By building up a comprehensive picture of the motivations of Perennials, employers can than craft an appropriate and attractive employment proposition.
What data is available, appears to indicate that the primary motivating factors for Perennials to re-join the workforce are:
- Financial- changes to company pension plans, rising retirement ages, and the restructure of old-age welfare in many developed countries means that for many over-55s, remaining in or re-joining the workforce has become a financial necessity.
- Longevity- thanks to progress in public health and secondary care people can expect to be healthier, for longer. In 2014, Americans at age 65 could expect to live an additional 19.3 years according to the Centers for Disease Control and Prevention. An increase of 3 years compared to the early 1980s.
- Cultural & economic participation- linked to the point above regarding longevity, many Perennials have described their reluctance to shed the intellectual and social stimulation that comes with participation in the workforce. With the prospect of decades of leisure time thanks to increased life-span, many Perennials are choosing to re-join the workforce where they can continue to make a meaningful contribution to their industry and wider society.
Only with a comprehensive understanding of what Perennials want, can oil companies then begin to craft a compelling employer value proposition for this generation of workers. Research indicates that there are plenty of workers with experience in the oil industry who would fall into the Perennial cohort. A workforce survey conducted by Oil & Gas UK in 2018 revealed that the average age of Britain’s oil industry workforce is 43 and getting older. Therefore, in addition to recruiting millennials, hiring managers should also factor in the recruitment and retention of Perennials as part of their workforce planning strategies.
Attracting and retaining Perennials
It’s never easy to assess the wants and needs of an entire cohort.
After all, each generation is made up of individuals with their own wants, needs, desires and aspirations. However, an increasing body of research does point to some consistent expectations from Perennials regarding their ideal employment options.
What are these expectations, and what can employers do to create a workplace that is attractive to Perennials?
- Work-life balance– A CIPD survey in early 2018 revealed that nearly two-thirds of workers- and by implication Perennials would like to improve their work-life balance. A key priority for these workers was the ability to have flexible schedules which would help them accommodate their personal and professional obligations. As a result, leading multinationals such as PWC have implemented a flexible working policy which allow the working day to be broken into ‘segments’, or the ability to work from home when presence in the office is not essential. Similar policies could enable Perennials to partake more fully in the oil industry.
- Phased-retirement– Many older workers would prefer to reduce their working hours or number of working days per week. But all too often, the current choice is either complete retirement or remaining in full-time work. The oil industry could avoid the mass-exodus of talent threatened by the Great Crew Change by offering various forms of phased-retirement which would help retain valuable skills and experience within the industry.
- Adaptive workplaces– Where companies are keen to retain the institutional knowledge of older workers, they have created adaptive workplaces. By installing ergonomic seating, enlarging the type on computers, and making many other small, inexpensive changes, employers can better accommodate older workers. Making such changes does not merely maintain productivity amongst an aging workforce but can in fact improve productivity. This was the case at BMW’s power-train plant in Dingolfing, Southern Bavaria, which adapted its workplace for older workers, and as a result increased productivity by 7%.
Introducing policies and changes such as these could help to attract and retain Perennials and soften the oil industry’s transition from an older, to a younger workforce as the Great Crew Change commences within the next 5 years.
Older workers have already contributed an enormous amount to the oil industry of today, and for many they have much more still to give. By listening to their needs and accommodating them oil companies can help Perennials to play a major role in solving the oil industry’s looming skills gap.
Are you a Perennial? Have you re-joined the oil industry after a period of retirement? We’d love to hear your story in the comments below.
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