Business, boldness and benefits: How Westpac tackled the ageing workforce

Westpac was one of the first Australian organisations to proactively address the ageing workforce. Its first initiative was to develop an acquisition strategy. In 2002, Ann Sherry, then group executive for people and performance, announced that the bank would hire 900 45 year-old plus employees over a period of three years.

At the time, there was a perception both internally and externally that these new recruits would take up more senior roles such as financial planners, business bankers and the like, according to Westpac’s Ross Miller, a people and performance business unit consultant who worked on the age balance strategy within the bank.

“What we actually did was to look at what we thought were considerable opportunity areas,” he says. “We’d done a lot of piloting approaches to entry level recruitment within the organisation, particularly within our call centres. Like a lot of organisations, our call centre population was predominantly under the age of 35. So that was really the focus.”

Over 2003 and 2004, Westpac opened a number of call centres and developed new approaches to promoting call centre job opportunities, with a focus on attracting a greater percentage of older workers to the candidate pool.

Miller says this has been very successful, with a significant shift in the age balance of new recruits. In one major call centre located in Perth, for example, 50 per cent of employees are over 35, 30 per cent are older than 45 and less than 25 per cent are under 25. When compared to an industry average of about 30 per cent of call centre staff who are aged 35 and over, Miller says this initiative has met with great success.

The bank had recruited more than 700 mature age employees as of late last year. In October 2001, only 18 per cent of the bank’s workforce was aged over 45 and this had increased to 23 per cent by October 2004.

Miller also says the feedback from mature age recruits, particularly in entry level roles, has been very positive. As a result, the bank has featured a number of these case studies in its corporate social responsibility report in which it has been able to showcase the benefits from both the bank’s perspective and mature age jobseeker’s perspective.

Age audit and analysis

In recognition that the ageing workforce is a much wider issue, Miller says the bank broadened its age balance strategy to focus not only on recruitment but retention of existing mature aged workers and understanding the associated commercial benefits of age balance.

“I think what’s so important about this initiative is that acquisition alone will not create age balance in your workforce,” says Miller. “Sustainability will only be achieved by having a good strategy around acquisition and retention and understanding the productivity implications of having a diverse age range within your organisation.”

As such, the bank conducted a full age audit in conjunction with Business, Work & Ageing at Swinburne University, and also examined how it compared to the banking industry, the broader workforce and population in general. The age audit looked at the age profile of new recruits to Westpac, those being promoted and those who left the bank. The audit found that while Westpac’s age demographics looked somewhat similar to the banking industry, it did not reflect the age profile of the broader workforce or population – including customers.

“You need to understand your own organisation first when it comes to age balance. So you can conduct an age audit but understand what it is you’re looking for and what you want to get out of it,”says Miller.

The business case for hiring managers

In its efforts to recruit more mature age workers, one of the major challenges the bank faced was educating and engaging managers with hiring responsibilities.

“The biggest lesson that we’ve learnt is that work around age balance must be integrated into business to ensure success,” Miller says. “It’s not about the head of HR saying you have to do this, because it doesn’t work from an ownership point of view. So what we’ve tried to do is create a business case to actually demonstrate that there’s a commercial benefit in this for line managers.” Whether it’s a branch manger or senior executive, the business case for age balance must be tangible for people to understand in their day-to-day work, he adds.

The bank has conducted age balance training on how to accommodate inter-generational workforces. “A lot of it has been about combating stereotypes about older workers and their ability and their productivity. There’s a stereotype that you can’t teach an old dog new tricks,” Miller says. “So we’re actually trying to teach hiring managers that there are commercial benefits and expel urban myths at the same time.”

Another part of the business case for line managers was to demonstrate the commercial benefits of hiring mature age workers. In the first year of service, for example, mature age workers have a much higher retention rate than workers in other age groups, take a significantly lower number of one day absences and were more productive once they had established themselves in a role. “Providing this proof to the line manager created a momentum in a self-funding business case for change,” Miller says.

Commercial benefits such as lower recruitment costs and the reduction of costs associated with absenteeism were modeled on HR management costs and variables were then assessed to cost by age. As such, a substantial cost benefit for age balance was established.

It was also important to help employees understand the implications of an ageing workforce from both a professional and a personal point of view, according to Miller. “This is one of the most interesting diversity subjects that any of us will ever encounter, because age doesn’t discriminate,” he says. “It happens to all of us and impacts all of us in some way. Whether it’s the labour market contracting, whether it’s the fact that we’re going to live longer and it means that we might have to work longer – it’s a powerful subject to actually engage people in because it affects all of us.”

In helping employees understand the implications of an ageing workforce and the responsibility of getting it right, Miller says hiring managers need to understand why this responsibility falls on their shoulders. To assist in this understanding, the business case clearly articulated that if the strategy was to be successful, it required support across the entire organisation. “So part of the case was that it’s important to the hiring manager because it’s important to Westpac,” Miller says.

The business case for executives

Tackling the ageing workforce is a thorny long term problem for executives. Given the relatively short tenure of modern day CEOs balanced against increased demand for shareholder returns, many executives would probably rather put the ageing workforce in the ‘too hard’ basket.

Building upon the business case for hiring managers, Miller says that a lot of the work involved in creating age balance is about sustainability within Westpac, as opposed to quick wins. “To win the hearts and minds of senior managers, they need to be able to see both short term and long term benefits. It has to be grounded in the value that it will deliver to Westpac, including shareholders, our people, our customers and the wider community,” says Miller.

Much of the business case was built on the understanding that there’s a strong correlation between customer experience and the age of the individual that interacts with that customer. Westpac found this was particularly significant amongst older customers seeking financial planning services and who wanted assurance that an advisor has life experience and can relate to their position. An improved customer experience also aligned closely with Westpac’s ‘ask once’ initiative which aims to streamline the bank’s responsiveness to customers’ questions.

“For the shareholder, the ultimate business case is the sustainability of our organisation,” says Miller. Younger people are an increasingly reducing proportion of the pool of available labour, and Miller says that in order to maintain access to people into the future the bank must be able to attract, develop and retain people from across all ages. “In this, our immediate challenge is to increase the representation of people over the age of 50 years in Westpac,” he says.

The bank has also been able to build a case for age balance into its corporate social responsibility. Through providing increased employment opportunities for mature age workers – a group often disadvantaged in such opportunities – Miller says Westpac has been able to enhance the social and economic environment in an era of ageing. “This is particularly pertinent in regard to enhancing individual’s financial situation in retirement and delaying and reducing the reliance of publicly funded allowances and services,”he says.

An ongoing journey

Westpac is continuing with a number of initiatives around its retail operations, where age management is a relatively new but complex and diverse challenge. “Many in the industry understand there’s a problem, but we don’t understand it really well yet,”says Miller. “A problem-solution approach will not deliver the outcomes of age balance and age aware practice that we’re aiming for across our organisation, and that’s why our strategy is integrated in the long-term.”

With the exiting of baby boomers from the Australian workforce, Miller believes there is a preference for early retirement among many people – a “work hard, retire early ethic”, Miller says. This has a number of ramifications for both employer and employee.

With increasing life expectancy, the reality is that many retirees will perhaps live longer than their superannuation fund can provide for the lifestyle they’ve become accustomed to, Miller says. “There’s a really good chance that we all won’t be able to do that because we’re going living longer. The ageing workforce issue is complex and without precedent –I think there’s a lot of work to do in this space and I don’t think we can underestimate that.”