November, 2004
Bruce Shutan
A National Dialogue
More Americans over 50 are working today than at any time in decades. Their numbers have risen seven percentage points in the past decade, reaching 46% last year. Home Depot wants these older workers to staff its 1,700-plus stores in North America and Puerto Rico.
Earlier this year, the Atlanta-based chain formed a national hiring partnership with AARP to help fill 35,000 jobs it plans to add in 2004. That accounts for a big chunk of the 100,000 new workers the company expects to hire to make up for attrition and promotions. Those who apply for employment opportunities at the nation's No. 1 home-improvement chain through the AARP Foundation Senior Community Service Employment Program (SCSEP), which manages 90 job sites in 27 states, must be at least age 55. They also must meet federal income guidelines—i.e., about $12,000 in annual earnings.
Among the skills sought are plumbing, landscaping, interior design, and customer service. Wages range from $7 to $20 an hour for part-time and full-time jobs that offer health and dental benefits—all-important to many older workers. Other benefits include a 401(k) plan, also a helpful source of retirement income for these employees.
"As we look at the demographic changes in the US over the next 10 years with the Baby Boomer population, we’re concerned as a corporation about a shrinking labor pool," reports Cindy Milburn, senior staffing director for Home Depot. “One way of addressing this issue is to try to keep more older workers in the workforce.” In addition, seniors, quite simply, make good workers. “All of our internal metrics are very positive as they relate to older workers whose tenure is longer, and voluntary attrition rates are much lower for us. They also have better attendance as a group.”
Some long-term trends are driving Home Depot’s quest for older talent as well. A longer life expectancy fueled by breakthroughs in medical science, dramatically shifting demographics, a poor national savings rate, and growing boredom with a leisure lifestyle have turned the notion of retirement on its head.
“When you think about it, the concept of retiring at 65 in this emerging age of longevity begins to seem a little bit ridiculous,” says Maddy Dychtwald, senior vice president of Age Wave, a San Francisco, California, research firm that focuses on the graying workforce. She lauds the AARP-Home Depot partnership for encouraging older Americans to stay in the workforce, which she believes will help shore up US productivity in the face of expected labor shortages.
Government policy appears to be moving in a similar direction. Home Depot’s national hiring partnership with AARP was announced about two months before an Equal Employment Opportunity Commission order that reversed a 2000 federal appeals court ruling that required employers to provide health-care coverage for retirees that was equal to actives. Nearly 12 million Medicare-eligible retirees who have employer coverage could be affected. AARP has threatened legal action if Washington does not take steps to protect older retirees, although the EEOC says it is merely helping employers to coordinate benefits with Medicare more easily.
By courting older workers, companies like Home Depot that offer health insurance provide a safety net when many employers cannot afford to offer post-retirement medical benefits—a trend that took hold in 1993 with a landmark accounting change under FAS 106 requiring that employers record these expenses on their balance sheet. It’s an investment Home Depot deems worthwhile because older workers, who typically embark on a second career when they join the retailer, bring to work a sense of loyalty, maturity, and dependability, and they’re rewarded accordingly.
Even so, Home Depot’s strategy of offering part-timers a full range of employee benefits is uncommon in retail, Milburn says. Common plan offerings include limited medical coverage, life and disability insurance, and dental and vision benefits that are equal to full-timers—something, the company says, most large employers do not offer to this segment of the workforce. Older workers at the company greatly appreciate their benefits package as well as the opportunity to continue their education, she adds.
Home Depot’s benefits package for both full-time and part-time employees accounts for about 25% to 35% of total compensation, also a rarity for retail. Just 18% of part-timers receive health-care and retirement benefits compared with 58% for full-timers, according to the US Bureau of Labor Statistics’ National Compensation Survey conducted in March 2003. The company picks up 70% of medical, dental, and vision coverage and offers a 401(k) plan, sales bonuses, nearly a dozen paid vacation and sick days, life insurance, an employee assistance program, training, and career development opportunities, plus tuition reimbursement for MBA programs. Some two-thirds of eligible workers enroll in each of these benefits.
Home Depot also makes flexible work schedules available. “If people want to work weekends or nights or mornings, we’re not one-size-fits-all as a corporation and are able to be very flexible and accommodating,” Milburn explains. Indeed, Allen sees a need to make the workplace a more conducive environment for older workers through greater use of phased retirement, job-sharing, and flexible scheduling options.
Both full-time and part-time Home Depot associates are eligible to participate in the company’s 401k plan, receiving the same match and investment choices. In terms of participation in the plan, all the company would say is that it is high and participants commonly max out their contributions in order to receive the full company match. All participants are 100% vested automatically at age 65, regardless of years of service, which encourages older workers to participate in the plan.
“We look for experience on multiple levels and in various competencies,” Milburn says. For example, stores have sought to hire people with customer-service skills who have a sales ability, are extroverted and conscientious, enjoy working with other people, and have leadership qualities. “We also love to hire experienced plumbers and carpenters, people with a millwork background, flooring experience, decorators, and horticultural specialists—what I’d call subject-matter expertise in the specific departments through which we serve customers,” she adds.
This is where AARP comes in. Emily Allen, assistant national director for the SCSEP, says AARP has a diverse membership, including many individuals in their 50s, still seeking an active career and higher wages, and others who already are retired but want part-time employment. Since early February, Home Depot has connected the AARP Foundation’s SCSEP Centers, which focus on low-income workers, with the 80 stores closest to them.
“That raised awareness with the entire AARP member base has resulted in us receiving numerous job inquiries and applications,” Milburn reports. Since February, more than 2,000 AARP members have landed jobs through the partnership. Home Depot, which posted sales of $64.8 billion in fiscal 2003, does about 40% of its hiring between February and June, when customers tend to be more involved in home improvement and gardening projects.
The AARP national hiring partnership is the second of its kind for Home Depot in as many years, following a similar effort with the Labor Department dating back to June 2002 that resulted in the hiring of at least 12,000 people. Human resources managers at the local store level worked closely with directors of the DoL’s One-Stop Career Centers to bring aboard their new charges. Home Depot also has forged ties with other organizations, including the Art Institutes’ multiple locations nationwide and the US Department of Defense, whose military personnel are seeking to make the transition to civilian roles and find their spouses employment opportunities. Additional partnerships are in the works, and the numbers are expected to climb with new store openings. While older workers clearly have benefited from these efforts, Home Depot has used each of these hiring partnerships to target workers of all ages.
“What has made [the AARP] partnership so successful,” suggests Allen, “is the fact that it brought a national dialogue around the issue of mature workers. All predictions indicate that this segment will make up about 60% of the population between now and about 2012.”
Yet, AARP’s leadership did not realize it would find such “a pent-up demand for mature workers to connect with companies that may have opportunities and that put into place some sort of system to value the experience and work ethic they bring to the table,” Allen says.
SCSEP, whose $80 million annual budget is primarily funded by the DoL, has served as a resource for nearly 50 companies that have expressed interest in recruiting older workers. Allen believes these employers are motivated by a broader strategy to retain high-performing individuals, avoid a brain drain, and prepare for labor shortages—especially in industries such as retail, that traditionally have high employee turnover. As such, AARP is focusing resources on providing its members with comparative-analysis tools, including industry-specific ones, to help them decide which company to approach based on their past wage and benefit packages, corporate culture, and other factors.
It is also using its bully pulpit to single out companies that are offering a better deal to older workers. In August, AARP and Mercer Human Resource Consulting released a survey of the 35 best employers for over-50 workers. The list included St. Mary’s Medical Center in Huntington, West Virginia; Deere & Co.; Principal Financial Group; Pitney Bowes; and Vanguard Group. AARP also has launched a Web site, www.aarp.org/employerresourcecenter, offering tips on how employers can attract older workers.
Home Depot’s employment marketing team, meanwhile, has developed a new brand message—“Passion Never Retires”—aimed directly at AARP members. “I don’t think anybody ever wants to feel like they’re retiring,” Milburn says. “People say they want to stay engaged in the community as long as their minds and bodies are active. We have received very positive feedback anecdotally from a number of people who’ve applied for positions with us, and from older associates who had not thought it would be possible for them to continue working with us once they retired—that it made them feel different about retirement.”
That attitude still renders Home Depot fairly unique at a time when other companies are only slowly grasping the demographic trend and what it means for their employment policies. “Home Depot has been a leader in hiring older workers and not using them for window dressing,” Dychtwald observes. “They’re not just doing the mundane jobs—they’re using their lifelong experience, which I think is a great use of talent. If we can help individuals gain more experience and give it back to society, then that will be the best of all worlds. After people have been retired for several years, they generally are looking for things to do.”
That dovetails with AARP’s long-range objectives, one of which is to influence public policy to encourage employers to offer retiree benefits.
“As mature workers become more in demand,” says Allen, “companies will need to look internally at their benefits and other factors to see what they need to do to be competitive with other companies.”
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