Older workers and business growth - harnessing the productivity potential of older Australians
03 Sep 2012
Thank you to the Commission for inviting me today. I'm really pleased to be here as this is a topic IAG is looking closely at, and it is also a topic that I personally feel very passionate about - and not just out of self interest.
Australian businesses do some great things - we are a generator of wealth for families as an employer, and a provider and manufacturer of goods or services that improve quality of life. But most excitingly, from time to time, you are also presented with a real opportunity to lead social change for the good of all Australians.
Harnessing the productivity potential of older Australians is one such opportunity.
Before I share some of the things we are doing, and some of the things we would like to see to support this ambition, let me quickly introduce you to IAG.
Insurance Australia Group is the parent company of an international general insurance group with operations in Australia, New Zealand, the United Kingdom and Asia. Our businesses underwrite over $9 billion of premiums and we pay around $6 billion in insurance claims each year. We employ more than 13,000 people - most of who are in Australia. In this room most of you would know us as NRMA Insurance or CGU and we have a number of other brands in the different geographies in which we operate.
As a large employer - and a socially responsible corporate citizen - IAG has a leading role to play in effecting change as to how society views and supports older workers. It is a role we happily accept and I commit our company to delivering on.
The case for addressing this opportunity is well understood and widely supported, so I don't propose to labour the point, other than to say it is a simple and clearly illustrated case of numbers telling the story.
In Australia, the number of older people aged between 65 and 84 is expected to more than double by 2050. In 2010 there were five people aged in the traditional working ages of 15 to 64 for every person over 65, in 2050 it is thought there will be around two and a half.
We are living to an older age, are healthier and unfortunately many are more financially stretched in retirement, so generally all in all we want to work longer. Conversely, businesses face a skills shortage and lose crucial expertise every time a valued employee leaves the organisation. It is a no-brainer to bring the two sides of the coin together and with the right attitudes, policies, flexibility, legislative settings and will on all sides we can.
DIVERSITY WORKING GROUP
Diversity at IAG is something we take very seriously because it makes us a better organisation.
Making IAG successful takes a wide range of people with broad skills from a range of backgrounds. Diversity is fundamental to our performance because talent does not confine itself to one gender or group of people. Attracting and retaining disciplined business leaders who are passionate about customers and who have a broad range of skills, experiences and frames of references drives innovation and, in turn, contributes to an improved customer outcome and financial performance.
Our diversity goal is simple. We will create a workforce and culture where we respect and value the different experiences of our people, and harness the opportunity and business benefits that diverse ideas and perspectives bring to our organisation. Under this ambition we have found a common truth - it doesn't matter if you are an older person, a graduate, or of a particular background - our people all want the same thing - and that is above all else to feel valued and have their talents respected.
We started our diversity journey by setting up a Diversity Working Group, of which I was the inaugural chairman.
After surveying our people to confirm the areas that would deliver most value, the working group was charged with looking at gender, age and ethnicity as its three key areas.
The working group is made up of very senior business leaders who are passionate about the cause and it has delivered major reform in our organisation. Amongst other things, the group was responsible for IAG introducing a new parental leave policy that is the most generous and accessible in the financial services industry. To support primary carers, who in our experience are mostly women, we now offer 20 weeks leave at full pay that includes a welcome back payment that doubles pay for 6 weeks upon return to work. This is not only industry leading, but we think it helps us retain our talent and gives people another reason to consider IAG as a perspective employer.
The group is currently looking at the issue of older workers. It has many proposals on the table in addition to the policies and practices we already have in place. One that I am particularly supportive of is a new mentoring initiative, particularly as we enter a time whereby we will have four different generations in the workforce at once. There has to be value in mentoring between the generations. Simply put, a more experienced worker may appreciate guidance in the world of social media and a younger worker may need up skilling in the intricacies of underwriting or the like. It is something we are currently looking to put some rigour around as we determine our complete proposition for mature workers that will also include further flexibility options and improved benefits.
DIVERSITY AT IAG
I think often in the past when business has thought of diversity it has made the mistake of looking at it as having a 'sprinkle of women and a dab of colour' to quote a report I recently read on the subject.
But diversity is really about diversity of thought - where different perspectives and capabilities are the point of difference, not visible characteristics, although diversity of gender, ethnicity and age are positive lead indicators of a healthy organisation.
To help create a more diverse workforce at IAG we recently ran unconscious bias sessions with our leaders to help them recognise their thought process when they make employment decisions. At its most basic, it looked at the assumptions we automatically make - for instance that an older person may not have the technical nous required in a modern workplace. As an IAG employee with some experience under my belt I can confirm this is simply wrong, but it was an effective exercise in illustrating that business leaders are holding themselves and their organisation back if they "hire themselves" which can sometimes be the default position. It should always be about placing the best people in the best opportunities – and creating the best team or mix of people. You can’t be adaptive and identify emerging risks, trends and opportunities if everyone in the team has had the same life experiences.
A practical example of this is in our compulsory third party business or CTP. Our CTP area looks after people who are injured in motor vehicle accidents. As you can imagine in many instances injuries can be horrific and require years of ongoing care. We knew from customer feedback that rightly or wrongly, many injured people felt younger IAG caseworkers couldn't empathise with their personal circumstances. How could a single 21 year old with limited life experience understand the stresses caused to a 50 year old with a family and a mortgage whose life has been forever changed because of the injuries suffered in a crash? A concerted effort to improve the diversity of the workforce in that part of the business, particularly around older workers, immediately paid dividends with higher customer satisfaction and the ability to improve mentoring opportunities across the team from older worker to younger.
As a company we also regularly promote and celebrate the achievements and long service milestones of our employees. I'm pleased that we benefit from scores of people that have given the business twenty, thirty and even forty years of service. I can report an 83 year old claims worker still happily engaged in our CGU business and several in their 70s across the operations. Stopping to recognise this, whether it be through stories on our intranet, local events, or through our 25 year club celebrations for our people with a long tenure, it all sends a powerful message about what we value.
IAG is also well aware of the need for a range of options to extend the working lives of older employees.
We have an established range of policies, programs, and practices to respond to this demographic challenge, largely around the need for flexibility that older workers frequently want.
A couple of these are employees who have 10 or more years of service may use their long service leave entitlement in small blocks such as single days allowing more choice on how they phase into retirement and a shorter working year option where employees can apply to purchase up to 6 weeks additional leave annually.
So while we are doing our bit, the federal government also has a role to play - and I'm heartened to have heard The Honourable Wayne Swan's comments earlier this morning.
There are a number of legislative and regulatory requirements that act as barriers to workforce participation by older workers that IAG would like to see addressed.
Superannuation arrangements should not discourage people from remaining in or re-entering the workforce. Nor should they discourage employers from employing older workers. Increasing complexity and continual change to superannuation regulations are a disincentive for prospective workers to engage with the workforce. Each time a change is made to superannuation regulations older people have to factor in how it will impact their tax positions, pension entitlements and ongoing benefits. We also note that the 2012-13 federal budget reduced the concessional contributions cap for those aged over 50 to $25,000 - the introduction of a $50,000 cap delayed until 2014-15. We would also like to see possible subsidies for older workers who want to take on mentoring roles and tax breaks to make it more appealing for older workers to re-enter the workforce.
Immediately there is a need for a nationally consistent workers compensation framework. I applaud the Queensland and Western Australian governments for removing the age limit on their workers compensation schemes. All states and territories should do the same. Workers need to be afforded these protections if they are to keep working and the absence of such places employees in a precarious situation in those states with less supportive schemes.
So, in conclusion IAG is a strong supporter of the work the Commission is undertaking to harness the productivity potential of older Australians and congratulates it on today’s event.
We believe that:
- Business has the responsibility to help change community attitudes around older workers
- We must as business leaders walk the talk
- While there are initiatives that will help make employment a more viable option for older workers, ultimately creating an inclusive workforce that values all its participants is the best thing we can do to drive change
- There is a role for governments in ensuring policy settings don't undermine workforce participation
Thank you again for inviting me today and I look forward to our further discussion shortly.