Strategies to Respond to Aging Workforce

DBP RESEARCH REQUEST

1 Report Summary

The U.S. population – and the nation’s workforce – is aging. According to the US Census, from 2005 to 2035, the population of individuals over age 65 will double to more than 83 million. From 2015 to 2030, the population under age 18 is projected to grow by only 5%, while the population age 65 and over is projected to grow by 55%. The nature of is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, many workers wish to ease into retirement, transitioning out of the workforce with a reduced workload. Over the next ten years, record numbers of leaders and managers will approach retirement in the U.S. labor force and look to off-ramp. The trend provides companies with a unique opportunity to accelerate their demographic profile at the management and executive level. Leaders need to assess their organization’s demographics and age profile, identify when employees in mission critical positions will retire, understand what knowledge and skills will be lost, and develop a plan to advance and onboard the next generation of diverse talent. A new standard for paid leave is emerging across corporate America that increasingly focused on caregiving. Every year, more than 40 million people, or 18% of the U.S. working population, spend an average of 24 hours a week providing unpaid care for a chronically ill, disabled, or elderly family member. As our population ages, caregiving needs will only increase, with a disproportionate impact on working women and people of color who make up the majority of unpaid family caregivers in this country.

2 Overview

1. Retirement Today – page 4 2. Phased Retirement Trends – page 17 3. Succession Planning – page 37 4. Caregiver Leave – page 48

Within each of the four sections, key statistics and trends are identified, strategies and tips are provided, and case study examples of what other companies are doing to prepare for an aging workforce are presented

3 Retirement Today The Nation’s Retiring Workforce

The 2018 Longer Working Survey found 83% of employers have a significant number of employees at or nearing retirement. However, only 53% have a good understanding of when their employees will retire. While 81% say managing the timing of their employees’ is an important business issue, only 25% do this effectively. According to the survey, 80% of respondents view older employees as crucial to their success. 54% believe the loss of talent due to retiring workers will be more significant than other labor market risks over the next five years. Additionally, 50% expect difficulty finding workers with similar knowledge and skills over the next five years; 48% worry about the loss of organization-specific knowledge. Employers are also concerned over workers delaying retirements. 49% worry that delayed retirements will increase benefit costs over the next five years, 41% are concerned they will increase and costs, and 37% worry that workers who stay on the past normal retirement will block promotions for younger employees.

Source: WillisTowersWatson 5 The Nation’s Retiring Workforce

69% of older workers wish that employers would make working past conventional retirement age easier. About two thirds would prefer to remain at their current employers, even if a comparable job is available elsewhere. Still, 55% of employees over 50 express a desire to retire as soon as they can afford to. For many, reaching that goal could be delayed: more than half of older employees report financial worries, and about a third feels stuck in their . Many older employees expect to defer retirement until after age 70. Employers are out of touch with employee perceptions. 71% of employers believe that most of their older employees are likely to have adequate funds to retire when they choose, and 77% expect that most of their older employees are not likely to need to work into their 70s for financial reasons.

Source: WillisTowersWatson 6 Employer Concerns about Retirement

Source: WillisTowersWatson 7 Understanding Different Generational Perspectives

More than Half of Workers Expect to Work Past Age 65. 54% of workers expect to work past age 65 or do not plan to retire. Expectations differ across generations: 69% of Baby Boomers either expect to or are already working past age 65, or do not plan to retire, compared to 57% of Generation X workers and 58% of Millennials. More than Half of Workers Plan to Work in Retirement. 55% of workers plan to work in retirement, including 41% who plan to work part time and 14% full time. Just 28% do not plan to work after they retire and 17% are not sure. Baby Boomers, Generation X, and Millennials share similar expectations of working in retirement; however, Millennials (17%) and Generation X (14%) are significantly more likely than Baby Boomers (8%) to plan to work full time after they retire. Four in Ten Envision a Phased Transition Into Retirement. 44% of workers envision a phased transition into retirement during which they will reduce work hours (27%), or work in a different capacity that is less demanding and/or brings greater personal satisfaction (17%). 22% plan to continue working as long as possible until they cannot work anymore. Only 22% expect to immediately stop working either when they reach a specific age or savings goal, and 12% are not sure. Generation X (26%) are more likely to envision continuing to work as long as possible, compared with Baby Boomers (21%) and Millennials (19%). Most Are Realistic About Compensation in Phased Retirement. Most agree that if they were to reduce their hours, they would expect to be paid the same hourly rate (82%). If they were to take on a new role with fewer responsibilities, the majority would expect their job title to change (80%), and would expect to be paid the market rate for duties involved, even if it means a reduction in their level of pay (77%). Notably, 59% say that if they were to shift from full- to part-time work, they would expect the same level of – an expectation that may not be realistic because many employers do not offer benefits to part-time workers.

Source: TransAmericaCenter 8 Millennials

Source: TransAmericaCenter 9 Generation X

Source: TransAmericaCenter 10 Baby Boomers

Source: TransAmericaCenter 11 Plans to Retire

Source: TransAmericaCenter 12 Work After Retirement

Source: TransAmericaCenter 13 Age Discrimination Facts

Age discrimination is illegal at any of , including during hiring, promotions, raises and layoffs. The law also prohibits , by coworkers, or clients, because of age. Also prohibited: ages except for a few exemptions, such as airline pilots and public safety workers. It is currently legal for employers and prospective employers to ask your age as well as your graduation date. There is nothing stopping a prospective employer from asking. A 2009 U.S. Supreme Court ruling made it harder for older workers who've experienced proven age discrimination to prevail in court. The court said plaintiffs must meet a higher burden of proof for age discrimination than for other types of discrimination. In other words, the Supreme Court moved the law backward and sent a message to employers that some amount of proven discrimination is legally allowed. Most people believe age discrimination begins when workers hit their 50s, according to AARP research of workers between the ages of 45 and 74. Still, 22% believe it begins even earlier, when workers hit their 30s and 40s. And 17% say they think it begins in one's 60s. There's also a gender difference in the perception of age discrimination: While 72% of women between the ages of 45 and 74 said they think people face age discrimination at work, only 57% of men in the same age range said so. Among older workers, not getting hired is the most common type of age discrimination they experienced, with 19% of respondents citing it. An additional 12% say they missed out on a promotion because of age, and 8% say they were laid off or fired. In 2017, the EEOC received 20,857 charges of age discrimination. Age discrimination makes up more than 1 in 5 of the discrimination charges received by the EEOC. Contrary to stereotypes, workers age 50 and up are among the most engaged members of the workforce, according to an AARP study. 65% of employees age 55 and up are "engaged," compared to 58 to 60% of younger employees. They also offer employers lower rates and greater levels of experience.

Source: AARP 14 Relationship Between Age and Job Performance

Source: SHRM 15 Building an Age-Inclusive Culture

• Establish policies to prevent age discrimination in , hiring, and advancement. • Provide to combat age-related bias and stereotypes in the workforce. • Involve professionals from HR, occupational health, facilities, , and employees in identifying goals and actions to establish an age-inclusive culture. • Establish flexible work schedules and job design modifications. • Offer benefits that address the needs of older workers. • Create an employee affinity group on aging – topics might include workplace health and wellness, work-life balance, benefits, training needs, and retirement options. • Foster a dialogue among generations in the workforce around common areas of interest to develop intergenerational rapport • Get input on issues related to flexible work schedules, job modifications, safety, and retirement alternatives.

16 Phased Retirement Phased Retirement

The nature of retirement is changing, and many workers do not wish to experience a sudden end to work, followed by the equally sudden onset of full-time retirement. Instead, many workers wish to ease into retirement, transitioning out of the workforce with a reduced workload. A phased retirement often refers to a broad range of flexible retirement arrangements, both informal practices, and formal workplace policies, which allow employees are approaching normal retirement age to reduce the hours worked or work for their employers in a different capacity after retirement. It is seen as a benefit by many older workers, as it allows them to gradually ease into retirement while maintaining a higher income than they would receive if they quit work entirely. From the employers' point of view, phased retirement programs can be used to retain skilled older employees who would otherwise retire (especially in sectors where there is a shortage of entry-level job applicants), to reduce labor costs or to arrange the training of replacement employees by older workers.

Source: Investopedia 18 Trends: Preparing for a Retiring Workforce

The 2018 Longer Working Careers Survey found a majority of employers either have adopted or plan to adopt one or more of the following strategies over the next few years: Wellbeing enhancements: 66% offer financial wellbeing or retirement planning programs tailored to older employees approaching retirement. Another 19% are either planning to offer these next year or considering these programs for 2020. 36% have modified working conditions to conform to preferences of older employees, and that is expected to increase to 43% by 2020. Flexible employment: 30% of respondents allow workers to change positions (e.g., shift from management to individual contributor), and this could increase to more than half by 2020. 27% provide part-time employment, and this could increase to 45% by 2020. Consulting arrangements: 49% allow their retired employees who are collecting benefits to work as consultants or contingent workers. Another 10% might add this by 2020. A similar percentage hires experienced retired employees in their industry on a consulting or contingent basis. Phased retirement: 9% offer formal phased retirement programs, but this could grow to 23% by 2020. However, informal phased retirement programs are much more common, since they avoid some of the administration and compliance challenges of a formal program. Employers offer these informal phased retirement programs more often to senior workers in professional roles, and less so to those in sales, administration or hourly positions.

Source: WillisTowersWatson 19 Phased Retirement

Source: TransAmericaCenter 20 Staying with Current Employer in Phased Retirement

Source: TransAmericaCenter 21 Compensation in Phased Retirement

Source: TransAmericaCenter 22 Employer Support for Phase Retirement

Source: TransAmericaCenter 23 Improving Workers Retirement Literacy

Source: TransAmericaCenter 24 Best Employers for Older Workers

50+ Worker Priorities Best Employers for Workers 50+ • 70% want a flexible work • 98% offer flex time and compressed work schedules • 95% stay employed because they need the money • 94% offer • 53% say a 401K plan is essential • 74% offer • 72% work to support their families • 94% offer medical insurance to part-time • 60% keep working to fully fund their employees • 60% offer phased retirement programs • 19% have taken time off or quit to • 38% provide designated time off for provide caregiving caregiving

Source: AARP/SHRM 25 Phased Retirement Programs

Formal phased retirement programs can take many forms. Examples cited in a 2017 report by the Government Accountability Office include: • One program that allows workers who are at least 55 years old with 10 years of service to cut their hours by 20% with a 20% cut in pay, but keep and accrual benefits. • Another that allows employees 60 and older with five years of service to reduce their hours by 20% to 50%, or even more if they’re willing to lose their health insurance benefit. • An employer that allows workers 55 and older with seven years of service to negotiate their own “glide path” to retirement, ramping down from full time to full retirement while retaining benefits. • Yet another company that allows any employee to switch to less stressful or complex duties or phase to part-time work, retaining health insurance if they work at least 25 hours a week.

Source: GAO Report 26 Phased Retirement: Employer 1

Basics: In this formal phased retirement program, workers work 80% time and receive 80% of pay and 80% of their bonus money, but the defined benefit (DB) pension formula is based on full salary for up to five years because workers appear full time on paper. Cited benefits/advantages: Retention of workers and development of future leaders and the ability of the employer to do workforce planning. The employer has conducted surveys of workers and managers, and feedback about the phased retirement program is very positive. Eligible workers: All employees in the U.S. who are at least age 55 with 10 or more years of service, who have achieved or exceeded performance expectations, and who have permission from management are eligible. Length of phased retirement: Workers can stay in the program for any length of time as long as they are meeting program standards and have their manager’s approval. Knowledge transfer: Phasing workers agree to spend time transferring knowledge, skills, and expertise. For each year the worker participates, he or she creates a proposal that includes a knowledge transfer plan with recommendations on how it will ensure business continuity. Effect on health care benefits: Participation in phased retirement does not affect the cost of health insurance for the worker or employer. Effect on pension benefits: • DB plan: For phased retirement participants, DB benefits are based on the worker’s full-time salary and reduced bonus. This mitigates the effect of reduced pay on the worker’s benefit. However, if the worker participates in the program for more than five years, the pension will be affected. DC plan: The defined contribution (DC) plan contribution is based on a worker’s full-time salary and reduced bonus

Source: GAO Report 27 Phased Retirement: Employer 2

Basics: In this formal phased retirement program, workers and managers develop a structured plan to transfer knowledge and transition to retirement within two years. Cited benefits/advantages: The primary benefit is knowledge and skills retention. Additionally, it helps the company with workforce planning by encouraging workers to inform the company about their retirement plans and to help transfer their knowledge before they retire. The employer has conducted surveys of workers and managers, and feedback about the phased retirement program is very positive. Eligible workers: All workers who have reached age 60 and who have been at the company for five or more years and who have permission from their managers and human resources, are eligible. Hours reduction allowed: Participants must work at least 50 percent and no more than 80 percent. A participant may submit a request to work less than 50 percent, though they lose eligibility for health care benefits. • Length of phased retirement: Phasing can last from six months up to two years. Knowledge transfer: Knowledge transfer is a large component of the program. The employer provides many tools and guidelines, and it is expected that phasing workers create a transfer plan. Effect on health care benefits: The employer provides a subsidy so that the health insurance rates for phased retirement participants are the same as if they were working full time. Effect on pension benefits: There is no DB plan. The DC plan contribution formula does not change with phased retirement, but the amount of pay upon which the contribution is based changes in proportion to the worker’s reduced salary. Other: To deal with the challenge of completing work with phasing workers working only part time, the company has a group of workers who fill in as needed throughout the company. Members can be called on to fill in for phasing workers

Source: GAO Report 28 Phased Retirement: Employer 3

Basics: In this formal phased retirement program, workers in units that have implemented the program may participate. Cited benefits/advantages: The benefits are primarily worker retention and knowledge transfer, training, and mentoring of staff that remain. Eligible workers: Eligibility is up to management and management’s perception of the business need to retain staff, and of the ability to fill a position with a part-time worker. It can begin at any age. Some work units have implemented the program, while others have not. Hours reduction allowed: Participants typically work 60 percent of full time. Knowledge transfer: There is an expectation that participants will mentor or train staff, but there is no formal knowledge transfer program. Effect on health care benefits: If the worker is more than 60 percent time, the employer provides a subsidy so that the health insurance rates for phased retirement participants are the same as if they were working full time. However, employer-provided health benefits end at age 65—the age at which workers become eligible for Medicare. Effect on pension benefits: There is no DB plan. The employer provides a dollar-to-dollar match for the DC plan. Since it is not based on a proportion of the worker’s salary, the match remains unchanged regardless of participation in phased retirement.

NOTE: Click the link below to see other employer examples

Source: GAO Report 29 Case Studies: Phased Employment

Approximately 25% of the workforce at Herman Miller is over age 55. To retain that talent, the company has a program that allows employees to take 6 to 12 consecutive weeks off during the year. They aren't paid during that time, but they keep their benefits and length of service. The company also has a "flex-retirement" plan that allows for an exit stretched out from six months to two years. In return for the planned reduction in hours, employees put together a knowledge transfer plan to teach the ropes of the job to their replacement. Southern California Gas employs more than 8,200 people; in 10 years, half of them will be eligible to retire. Instead of watching knowledge walk out the door, the utility lets older workers scale back hours while maintaining full pay through part-time plus accrued vacation and . In turn, they mentor younger colleagues. For older employees who have been working decades, this lets them ease into retirement for a year or so rather than abruptly end their careers. Intuitive Research and Technology is focused on retaining experienced workers with the specialized skills needed for the engineering and analytical contracting it provides, and that means offering all sorts of flexible work schedules. About 8 percent of the workforce is in some sort of phased retirement program. Some of these workers sign on for specific projects, while others may work many hours for a few weeks and then be off for nine months. The phased retirement arrangements are open-ended, with no required retirement date.

30 Case Studies: Phased Retirement

To meet the needs of employees age 55+, Scripps enables employees to plan for their retirement by phasing into it with staged benefits and flexible scheduling. Employees who want to retire gradually can reduce their current work schedule to maintain medical and dental benefits and pay the same premiums as regular active employees. Individuals may select their retirement options, including flexible working hours, to fit their lifestyle. Bon Secours changed several of its benefits to make them more appealing to older workers who want to ease into retirement. The company changed how its pension plan calculates payouts. It based benefits on the five highest-paying years of service instead of the last five years of service. That move allowed people who reduced their work schedule retain their top pension benefit. It also extended health coverage to part-time employees and allowed employees to use day-care centers for their grandchildren. Employees can also keep their employer-provided health insurance benefits as long as they're working at least 16 hours a week.

31 Case Studies: Phased Retirement

Hartford created a reverse mentoring program to help senior leaders learn about social media from younger workers. Junior mentors were required to apply for the program and were screened on qualities required for effective mentoring. Senior leaders committed to structured sessions with their mentors. The program is such a success, it has spawned ideas for reverse mentoring on other topics, such as sustainability and green corporate practices. Of Newport News Shipbuilding’s 21,000 employees, about 2,900 are Apprentice School alumni. Many of them are now in leadership positions at the company.

32 Case Studies: ‘Returnships’ for Older Workers

Barclays expanded upon the success of its program (which appointed over 2,000 apprentices) to offer targeted to candidates over age 50 who are returning to work or looking for a new career. The bank said it considers mature workers from unrelated fields, and that the only experience needed is practical experience. This is not a PR stunt; the bank states it values older workers who have life experience and can better relate to the financial needs of mature customers. Barclays already has a Digital Eagles offering, a team at Barclays established to help customers with online issues. An extension of this is Barclays’ Silver Eagles, a team of tech-savvy older workers geared up to help mature customers with online banking. The new apprenticeship program builds on this effort to capitalize on the life skills of experienced employees. The bank predicts that bringing in apprentices over 50 years of age will make the institution more accessible, and ensure a better fit with more mature customers. Goldman Sachs’ returnship program was specifically designed for individuals who have left the workforce for two or more years and are ready to return. This paid program offers returning workers opportunities in a variety of divisions. The returnship offers a guided period of exploration, and provides individuals with an opportunity to sharpen their skills in a work environment that may have changed significantly since their last experience as an employee. It also gives participants the ability to explore a new area of expertise and learn new skills. The program was launched in the US in 2008, and given its success, was expanded globally.

33 Case Studies: ‘Returnships’ for Returning Workers

Centrica’s HitReturn program is targeted toward senior-level professionals who are seeking to return to the workforce following a career of two years or more. Launched in partnership with Mars and Vodafone, it is the first cross-company partnership in the UK. The pilot program offers 12-week, paid returnships, which provide participants the opportunity to work on professional assignments and to receive expert . Each of the three participating companies also provides a mentor, as well as access to all relevant internal networks. Job opportunities are based in the head offices of the three companies in areas including marketing, legal, finance operations, technology, and human resources. Participation in the program does not guarantee a permanent job, but landing a permanent job is a strong possibility. In an effort to retain older workers, CVS Caremark’s ‘snowbird’ program transfers several hundred pharmacists and other employees from northern states each winter to pharmacies in warmer states. The older workers help the southern CVS locations keep up with the surge in business during the colder months. The older workers are offered a flexible schedule, and their duties include training and mentoring newer employees. “A good number of our pharmacy customers are going to be mature customers, and as part of our focus on diversity, we want a work force that reflects our customer base,” said David Casey, CVS’s vice president for work force strategies. As part of its Talent is Ageless program, CVS Caremark partners with community agencies to recruit, hire and train workers ages 50 to 99. Since the program began, the percentage of the Caremark workforce age 50+ grew from 6 percent to 18 percent.

34 Case Studies: ‘Returnships’ for Older Workers

Data provider Return Path initially launched its program of for returning mid-career professionals to increase the representation of women in the company, particularly in technical roles. The initiative was so successful the company established the program as a standalone nonprofit organization called Path Forward, designed to set up similar programs for other companies. The nonprofit helps corporate HR departments set up mid-career internships for a flat fee. The internships are to be 20-week, paid positions available to individuals who have been out of the professional workforce for at least two years to care for children, a spouse, or a parent. The goal is that employers will hire interns as full-time workers at the end of the temporary stint. Return Path reports more than 80 percent of participants across six of the companies were offered continued employment at the conclusion of the program. The nonprofit Encore.org offers mature workers a one-year fellowship, typically in a professional capacity at another nonprofit, to help them re-enter the job market. This is a temporary arrangement and pays just $25,000. However, it's an arrangement that fits the needs of all participants, and it has broader ramifications: as the population ages, keeping older workers in the workforce could boost the economy, alleviate retirement insecurity, and ease strain on the social-safety net. The organization estimates that 31 million Americans ages 44 to 70 want to find work with a bigger social impact. However, it is generally harder for older workers to find new jobs than younger workers, and a bad economy has exacerbated the trend. In 2011, the average job seeker over age 55 was spending 35 weeks looking for a job, compared to 26 weeks for younger job seekers, according to federal statistics. Encore fellowships help older workers beat these odds by getting their foot in the door.

35 Case Studies: ‘Returnships’ for Older Workers

Fidelity’s customers wanted call center representatives with a first-hand understanding of common life decisions, so Fidelity hired retirees to staff its 401(k) call centers and offered flexible work arrangements to attract and keep them. As a way to attract mature engineers to its firm, Burns and McDonnell offers 100 percent vesting in its employee stock ownership plan when workers reach age 62, regardless of years of service. Atlantic Health System allows retirees in the 1000 Hour Club to return to work either on a part-time or per diem basis three months after retirement. A retiree can work up to 999 hours annually and still collect retirement benefits.

36 Succession Planning Women and POC Underrepresented in Succession Planning

Source: DBP Health Series Report 38 MethodologySteps for Effective Succession Planning

Whatever your organization’s size and your target, a succession plan should focus on certain core elements: • It’s up to CEOs, CFOs, COOs and other C-level executives to set the stage and agenda for succession. • Be sure your HR leadership has a seat at the executive table to ensure that succession planning strikes that fine balance between a data-driven initiative and a people-centric approach to talent management. • Identify mission-critical positions and any current or impending talent gaps – based on the strategic opportunities you identify and how you create competitive advantage. Which jobs and skills are must-haves? Do those positions already exist or do we need to create them? • Identify employees at every level who have the potential to assume greater responsibility advancing your organization’s strategic goals and how they fit together – what combination of A, B and C performers do we need and how do we attract and keep them? As leadership roles rapidly evolve in our digital age, the succession plan and profiles of future leaders must keep up. • Encourage meaningful investment in a training and development program for high-potential employees – be ready to defend allocating resources to a given talent pools. Many organizations find that the women and culturally diverse employees don’t quite have the experience and skills they need to become top leaders. Be sure you’re expunging unconscious bias in your systems and your culture, so your assessments and succession plans reflect gender-neutral and race-neutral standards. • Establish a process for revisiting and revising your succession plan as conditions change.

Source: HumanResourcesToday 39 Succession Planning Assessment

Source: DBP Health Series Report 40 MethodologyPosition -specific Skillset Analysis

• What are the external and internal factors affecting this specific position? • How will the position be used in the future? • What competencies or skillsets will be required? • What is the current bench strength? • How will you provide stretch opportunities to high-potential employees? • What is the path from where they are to where you need them to be? • What are the gaps (competencies or skillsets not possessed by current employees)?

Source: HumanResourcesToday 41 Succession Planning Best Practices

Source: DBP Health Series Report 42 MethodologyCriteria for Setting Representation Goals

Workforce goal setting should be based on a sound methodology. The methodology should be able to stand up to any challenges and be able to answer the simple question of: What is the basis for establishing this goal?

Is it based on...

• US Census? Global Market Region Data availability? Designated market area (DMA *)? • # of ethnic groups available in the workforce for each particular function/role or industry? • % of demographic represented in the business unit’s DMA? • Based on the year over year hiring trends for diverse groups in each department? • Determine the scope: Will you establish by region? By country/location? By business? • Or a combination of the list above?

Note: Gender and diverse representation in the manufacturing sectors may be less available than other industry sectors, so a combination of # of talent available by industry or region and historical hiring trends may work best.

* DMA represents a region where the population can coincide or overlap with 1 or more areas and refers to the available talent pool within the DMA 43 Designated Market Area as Basis for Goal-Setting

The Goal: All workforce goals would be based on Meeting or Exceeding the designated market area (DMA) for each business unit. In more simplistic terms – we want to look like the places where we live, work and play.

The Process for establishing Workforce Goals based on DMA: 1. First, determine the criteria for workforce demographic success before setting goals. With DMA as a basis for goal setting the organization wants to resemble the community where they live, work and play, thereby mirroring the population of their business unit's DMA. 2. Partner with HR to collect current workforce demographic data across all diverse categories and gender within the company. 3. Conduct an analysis of the gaps between the company's current diverse demographic data and their DMA. 4. Highlight areas of success where the internal population meets or exceeds the current DMA 5. Highlight opportunity areas where the internal population does not meet the current DMA. 6. These opportunity areas where the internal population does not meet the current DMA is where the gaps are identified. 7. The percentage gaps between the current workforce and the DMA provides parameters in which to establish your goals.

44 MethodologySuccession Planning Case: Baker Tilly

Baker Tilly is taking a more comprehensive approach to succession planning by pinpointing talent development intersections and applying a lens of age, gender and ethnicity along with competency criteria. These intersections include: a) learning and development programs at different career stages; b) selection for special projects; c) inclusion on client engagement teams; and d) firm governance. Additionally, Baker Tilly is launching a revamped mentoring program initially geared toward women, with the goal of expanding to non-majority male team members. The mentoring program has four objectives: 1) increase diverse leadership; 2) improve retention; 3) learn and lead differently with empathy; 4) reach one’s full potential with whole self.

In two years’ time, the company increased women representation on all firm governance committees by 25% with several committees chaired by women. The company is also taking a more deliberate approach to ensuring equal gender representation in learning and development programs – especially those geared toward partner track. The company revamped its five-year partner projection process in two key ways: 1) elevating its visibility with the board of partners and national management committee and 2) actively selecting candidates from the five-year partner projection list for visible leadership opportunities throughout the year. The selection of teams for firmwide projects now considers age, ethnicity and gender in addition to knowledge and experience. Baker Tilly is increasing awareness of inclusion throughout the firm by using its intranet and internal communications to highlight successful client engagements whose teams are also diverse.

45 MethodologySuccession Planning Case: Kimberly Clark

Six years ago, Kimberly-Clark began implementing three interconnected strategies to deepen and diversify its bench of successors for Senior Leader positions. First, the enhanced its Talent Review process, implementing robust definitions to identify high potentials and holding succession planning discussions to align on near- and long-term successors for Senior Leader roles. To drive accountability, the company established a goal tied to executive bonuses that at least 75% of Senior Leader roles need to be filled according to the succession plan.

The second strategy centers on accelerating the development of high potentials, including the implementation of a 9-month program to develop successors for Senior Leader positions. The company reports that 44% of program participants have been women, which is more than 10% points higher than the percentage of women in the overall population. In addition, 50% of the high potential participants who have been promoted to Senior Leader roles are women. Finally, the company established analytical tools that enable HR and business leaders to have visibility to the demographics of high potential leaders and successors. This supports the company’s ability to make data-based decisions and assess progress in enhancing the diversity of its executive ranks.

Since 2014, Kimberly Clark has seen a 30% increase in the number of women in Senior Leader roles. Over the past two years, 79% of Senior Leader roles have been filled according to their succession plan, with 38% of these roles being filled by women. Importantly, women comprise more than 45% of successors being developed for Senior Leader roles, laying the foundation for Kimberly-Clark to increase the number of women executives in the future.

46 MethodologySuccession Planning Case: ADP

A review of talent data at ADP, including mobility analysis, succession planning, associate engagement survey and talent acquisition identified areas of opportunity. A combination of strategies were deployed including diverse slates for executive openings; reporting on diversity metrics monthly to executive committee; expanding the role and number of employee resource groups to include business outcomes; implementing “the business case for diversity” in executive and leadership programs; expanding unconscious bias training for leaders; establishing 3-year diversity goals for women and minorities in executive leadership and introducing accountability scorecards by business area.

One of ADP’s programs, “Cultivate Your Career” was focused on advancing women of color. ADP became the title sponsor for the Black Enterprise Women of Power Summit and sponsored approximately 45 high potential women of color across multiple disciplines. In addition, the company sponsored quarterly development programs targeting these high potential women covering topics like executive presence and business acumen. Another program, Multicultural Leadership Development, offers high potential men and women of color a one-year leadership seminar focused on leading self, leading others and leading the business. ADP also initiated key partnerships with non-profit organizations focused on gender and ethnic diversity to support its talent pipeline.

The company has achieved a 5-point improvement in the representation of both women and minorities in executive roles. Engagement for women and minorities improved over the same period.

47 Extending Caregiver Leave

48 Growing Need for Caregiver Leave

A new standard for paid leave is emerging across corporate America that increasingly focused on caregiving. Every year, more than 40 million people, or 18% of the U.S. working population, spend an average of 24 hours a week providing unpaid care for a chronically ill, disabled, or elderly family member. As our population ages, these caregiving needs will only increase, with a disproportionate impact on working women and people of color who make up the majority of unpaid family caregivers in this country. U.S. Employers are totally unprepared for the caregiver boom. When most people think about the unmet need for paid leave in the U.S., they think of new parents who need time to be with their infants, but just 21% of family leaves from work are taken for new babies. People who make more than $75,000 a year are twice as likely as those who make less than $30,000 to get paid leave. The majority of paid family leave policies reinforce class and racial divides by giving different paid family leave benefits to different classes of employees, with those in salaried positions getting much more leave than those in hourly jobs. This is reflective of a national reality where only six percent of low-wage earners have access to paid family leave. Today’s leading companies understand that quality paid family leave policies are good for business. Benefits include cost savings in recruitment and retention, increased employee morale, and an effective tool for narrowing the gender leadership and pay gap. Companies will need to adhere to new standards in paid family leave to remain competitive.

Source: 2018 PL&US Report 49 Caregiver Challenges and Supports

Challenges: Strategies: § An AARP study found that 58% of adults ages 45 to 74 are § Reduced hours and workload responsible for some combination of parents, spouses or children. § Awareness-raising and skills development among managers and the workforce § Almost one out of five workers ages 45 to 74 have taken leave from a job to care for an adult family member, and § Caregiver-specific assistance through an employee 4% quit for this reason. assistance program (EAP) § According to SHRM, caregiving responsibilities are one of § Flexible spending accounts that can be used to pay for the primary reasons why older workers need work elder care services with pretax income schedule and work location flexibility. § Leave banks that allow participating workers to donate § Most surveys find that caregiver responsibilities fall more some of their accrued paid leave and, in return, withdraw heavily on women than on men and tend to have a paid leave from the bank after exhausting their own greater impact on women’s career trajectories. § Work options that allow retirees to work a certain number of § Substantial caregiving responsibilities can have a negative hours without jeopardizing pension benefits. effect on the health of caregivers themselves, adding yet § Job-sharing opportunities, for example, assigning shared another challenge to their ability to work productively. responsibilities to several older workers, or partnering an older worker with a younger trainee.

Source: SHRM Foundation 50 Paid Family Leave: A Critical Need

Source: PL+US 51 Paid Family Leave: A Critical Need

Source: PL+US 52 Caregiver Responsibilities Impact Jobs

Source: TransAmericaCenter 53 Benefits of Paid Family Leave

Source: 2017 BCG Report 54 Gap in Benefits Older Workers

Source: TransAmericaCenter 55 Paid Family Leave in the U.S.

Source: 2017 BCG Report 56 Building Leave Equity for All Employees

“Like so many companies before us, my company, Rent the Runway, had two tiers of workers. Our salaried employees — who typically came from relatively privileged, educated backgrounds — were given generous , paid sick leave and the flexibility to work from home, or even abroad. Our hourly employees, working in Rent the Runway’s warehouse, on the customer service team and in our retail stores, had to face life events like caring for a newborn, grieving after the death of a family member or taking care of a critically ill loved one without this same level of benefits. I had inadvertently created classes of employees — and by doing so, had done my part to contribute to America’s inequality problem. But over the years, I began to reflect on how the system that I and others had constructed may have been perpetuating deep-seated social problems. Last month, I equalized benefits for all of our employees at Rent the Runway. Our warehouse, customer service and store employees now have the same bereavement, parental leave, family sick leave and packages that corporate employees have.”

Jennifer Y. Hyman, co-founder of Rent the Runway

57 Increased Visibility on the Issue

Increased visibility on the issue puts brand and reputation at stake. In 2018, AT&T, Cargill, CVS Health, Dollar General, EY, Ford Motor Company, Gap Inc, Home Depot, IBM, Kroger, L Brands, PwC, Starbucks, TJX, Walgreens, Walmart, H&M, Darden Restaurants, Marriott, and McDonald's all introduced new policies, which means more than 4.8 million people gained access to new or expanded paid leave last year. Trader Joe’s, UPS, Wegmans, Honeywell International, Wegmans, Rite Aid, Sears Holding, and Costco declined to disclose their paid family leave policies.

Follow this link to read the 2018 PL&US report.

58 Family Leave Benchmarks

Discovery’s parental leave benefit was expanded to a full 12 weeks of paid leave, and will now offer those same 12 weeks as part of a caregiver leave benefit designed to support families in the case of serious health conditions. Paid at 100 percent and created to assist all of today’s growing, evolving, and unique family structures, the caregiver leave benefit will extend the definition of family beyond children, spouses, and parents to also include care for qualified domestic partners, siblings, parent-in-laws, and grandparents. Caregiver leave also will extend to military caregivers caring for seriously injured or ill veterans as defined under the FMLA. With the option to add up to two weeks of vacation time, caregiver leave will max at 14 consecutive weeks. As part of the company’s new policy, these 12 weeks – covering both parental and caregiver leave – can now be taken consecutively or divided as needed over the course of a 12-month period. Under the new policy and with the addition of short-term disability and up to two weeks of vacation time, maternity leave will now max at 20 to 22 weeks, depending on delivery. With the option to add up to two weeks of vacation for all parental leave, paternity, adoption, and foster care placement, leave will max at 14 consecutive weeks.

Source: QuartzAtWork 59 Providing Support for Caregivers

While Novartis provides generous benefits to caregivers, the company recognized that not many employees utilize those benefits, or even know what is available to them. The CARES employee resource group (ERG) understood that employees had concerns about how they would be perceived when they needed to provide caregiving support to family members, depending on who the family member was and what the circumstances were. For example, they were worried that providing caregiving to a child might be seen as more important than caring for an elderly parent. The group also understood that associates can find themselves thrust into a caregiving situation with little or no warning or preparation. The emotional stress of caring for persons who are aging, chronically ill or disabled is debilitating for family members, especially when they are also managing career demands. The ERG brought specialists into the organization and worked closely with HR to provide their perspective on being a caregiver. The ERG was able to provide important information and insights about the needs of caregivers and to bring attention to the challenges they face, at home and in the workplace. In recognition of the number employees in the workforce providing caregiving, and the toll of those responsibilities, the company implemented a reason neutral workplace flexibility policy to support caregivers. Over the course of six months, CARES joined with a team of multiple cross-functional business units to create The Caregiver’s Guidebook. The collaboration included medical practitioners from corporate health, benefits and HR professionals, patient support services, legal, and the company’s in-house print production team. The Guidebook examines the company’s benefit programs through the lens of a caregiver and provides guidance on all areas of caregiving, not just elder care. It is designed to communicate internal and external caregiving resources to Novartis associates, and includes a wide range of information, from detailed guidance on how to write a will, to where to find a home health aide, or how to navigate the care of an elderly parent.

Source: 2018 DBP ERG Leadership Handbook 60 Family Leave Benchmarks

Bristol-Myers Squibb’s inclusive new family care leave program broadens the definition of family to include all types of caregivers and family members of all ages who need care. Each eligible employee caregiver – from those caring for an ill family member to new parents of birth, foster, or adoptive children – may take up to eight weeks of paid leave. The program is open to all U.S. employees, including hourly workers provided they meet the eligibility requirements for the program. Flexibility is a key feature of the program. All eligible employees can use their paid leave all at once or in intervals throughout the year, based on their personal situations and consistent with the policy terms. Cisco updated its global leave program to be more inclusive for family members caring for a new baby, as well as provide extra emergency time off for its employees. The new policy terminates maternity and paternity leave, instead expanding the firm’s definition of parent to “main and supporting caregiver” — a gender-neutral term, the company says — for its full- and part-time employees. In the U.S., main caregivers will now receive 13 weeks of consecutive leave, up from just four weeks, and unlimited for all appointments. The updated policy includes the existing benefit of four weeks of leave with time off for appointments for supporting caregivers, as well. The company’s expanded caregiver leave benefit has been rolled out to 37,000 U.S. employees, while more than 33,000 additional employees globally will receive the benefit in 2019.

61 Strategies to Consider

Get Input from Employees To be successful, benefits must be relevant and responsive to the needs of employees – all employees. To gather employee input, many companies hold regularly scheduled meetings or conduct ad hoc focus groups to discuss work-life priorities and frame benefits and work-life strategies It is important that data collection efforts fully engage employees across diversity dimensions and in different life- and career-stages. Lead by Example The behaviors of company leadership can have a significant impact on how employees view and embrace work- life integration. In a Harvard Business Review study of employees across global locations, only 25% of employees reported that their company leaders modeled sustainable work-life practices. Simply stating the company supports work-life integration isn’t enough. Business leaders need to ‘walk the talk’ and demonstrate their own commitment to achieving work-life equilibrium: this means taking advantage of the same benefits and leave options offered to employees. Establish & Promote Work-life Policies Unless properly managed, differences in beliefs and expectations about work-life integration can lead to discord and resentment. Business leaders need to develop clear work-life policies, communicate the benefits of effective work-life integration to the organization and the individual, and strongly encourage employees to utilize available work-life supports. In the absence of formal policies and a clear articulation of company expectations, employees reluctant to participate in new business practices may resent workers who take advantage of those practices, and managers may view those same workers as less committed to their job.

Source: DBP Report on Work-life Integration 62 Extending Employee Benefits

Provide Family-care Supports Family-care supports vary for different generations in the workforce. For workers with young children, employers might offer onsite babysitting and daycare services, or discounts for childcare services if it isn’t feasible to offer on-site supports. Other benefits include flexible start/end times for workers who drive their children to school, or time off to pick up a sick child or attend a soccer game at the end of the day. Family-care supports also apply to workers caring for aging parents or a spouse. According to a Pew Research Center report, one in seven US adults in their 40s and 50s financially support both an aging parent and at least one child. For workers that have responsibility caring for a parent or ailing spouse, employers can provide reduced hours and workload, and offer caregiver-specific assistance through their EAP. Other options include flexible spending accounts that can be used to pay for elder care services, or establishing leave banks that allow participating workers to donate and draw upon paid leave after exhausting their own.

Offer Leave for Significant Life Events Major life events such as death, providing care for an ill family member, and even the birth of a child create stress for employees and distract from the job. Offering time off builds loyalty and allows employees to deal with complicated situations in an effective way. Some employers offer paid leave for life events that don’t qualify under the Family and Medical Leave Act, such as caring for a sick family member, or providing bereavement leave following the death of a loved one.

Source: DBP Report Work-life Integration 63 Links to Information on Family Leave Benefits

The following links offer additional insight and in-depth information on the business case for paid family leave, as well as links to reports highlighting best practice companies and details about their leave benefits. http://paidleave.us/topemployerpolicies https://www.glassdoor.com/blog/best-parental-leave-policies/ https://www.entrepreneur.com/slideshow/ https://qz.com/work/806516/the-secret-to-patagonias-success-keeping-moms-and-onsite-child- care-and-paid-parental-leave/ http://media-publications.bcg.com/BCG-Why-Paid-Family-Leave-Is-Good-Business-Feb-2017- Revised.pdf https://fairygodboss.com/articles/paid-maternity-leave-companies-who-offer-the-most-paid-leave http://www.nationalpartnership.org/our-work/resources/workplace/paid-leave/new-and- expanded-employer-paid-family-leave-policies.pdf https://www.dove.com/us/en/men-care/paternity-leave.html

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