Managing the Aging Workforce

MA-Thesis / Master von Hanno Josef

Introduction:

In politics as well as in media and in social linguistic usage ‘aging society’ is a meaningful term. Since many years sociological scientists are warning against the impact of the demographic change. This social problem confronts among others governments, municipalities, welfare services and especially the economy. On current trends in the middle of the century 39.5% of the German population will be older than 60 (UN population division 2008). People live a longer and healthier life and also birthrates significantly declined over the past 20 years. Even migration in developed countries like Germany can only slow down the aging process. Subsequently, there will be a reduction of the supply of labor and a dramatic change in the age- related composition of the workforce.

Businesses worldwide in developed countries are facing the challenge to manage the aging skilled workforce. Executives find out that their companies will encounter a wave of retirements in the next decade as the ‘baby boomers’ of the post World- War II era reach retirement age. Simultaneously, the younger workforce has different expectations and work values than the older generation. Beside these trends businesses face losing significant numbers of experienced employees by retirement and with them lots of skills and qualification potential disappear. Thus, a substantial loss of knowledge will take place, if nothing will be done against it. In order to maintain competitiveness a ‘war of talents’ will affect businesses worldwide. The battle for so called high potentials shows dramatically the consequence of the fact, that a skilled workforce will be the scantiest resource for a successful business.

1.1, Motivation and objectives:

Our aging society takes effect on all areas of life - on political, social and economical areas. Hence, the aging of the population affects the aging of employees in the companies. In spite of this knowledge, published many years ago, the personnel policy of most companies still orientates towards younger people as a potential workforce. Older employees often are discarded when they reach a certain age. A study conducted by Bertelsmann Stiftung found out that in 2002 about 10% employees of an age between 55 and 64 were unemployed. While innovation and competitiveness are related to the younger generation the older ones have to face prejudices against themselves. Decisions of personnel managers affecting older employees come along with prejudices like frequent sickness, lack of motivation, decreased performance and some even promote that they have neither any willingness nor the ability to learn anything new.

For companies today it’s more necessary than ever to realign their demands on employees because of the demographic change and the preceding impacts on the workforce. Executives as well as Human Resource managers should abandon their prejudices and replace it with a new way of thinking towards the changing composition of the staff.

Meanwhile, especially production- intensive concerns became aware of their aging workforce with all its impacts and try to develop concepts and measures to meet this problem. Nevertheless there is a high number of companies which doesn’t foresee the danger rising up on the horizon of about 10 years or simply do not know how to face this development. Specialist in the company to minimize negative impacts or even to benefit from an aging workforce is the Human Resource Management. Supported by a changing corporate culture with the strategic aim to develop an age neutral culture, HRM faces a long term challenge.

Thus, on the one hand the leading motivation for this thesis is the fact that every one of us is an aging worker and has a justified interest in the way contents, conditions and environment of jobs, payment and retirement will probably change. On the other hand nowadays we already see that even skilled workers above a certain age are sorted out or do not manage to enter the job market again after a time of unemployment. The reason for treating aging employees like that might lie in the mentioned prejudices. Therefore, one part of my motivation is also to clean up with an outmoded way of thinking and a one-way-orientation towards the younger generation. Furthermore, the topic of an aging workforce today affects profit as well as non- profit organizations and represents a topic under currently discussion. Another motive force to survey this challenge is to show possible solutions and perhaps to contribute a small part in order to create more awareness to this problem.

Leading questions and objectives of this paper of course derive from arising challenges caused by demographic shifts. Thus, the first objective is to clarify the true extent of demographic changes in Germany and what impacts it brings with it. Generally, the prejudice prevails that older employees’ work ability and performance decreases with advanced age. This paper aims to find out about myths and realties of work ability as well as strength and weaknesses of elder workers. A further leading question is what role corporate culture plays in this context and how it must be converted to make positive contributions with regards to managing an aging workforce.

Demographic shifts lead to a changed composition regarding a company’s age structure and to challenges for Human Resource Management. Therefore, the main objective of this paper is to show where selected Human Resource approaches have a need to be adapted with reference to changing personnel conditions and what measures might fulfill these needs.

Summing up, the intention of this paper is to show how challenges of an aging workforce can be managed successfully.

TABLE OF CONTENT:

Text Sample:

Chapter 3.1.1, Promoting an age-neutral culture:

A major barrier to initiatives to retain older employees within a company may be the organisation’s cultural attitude toward them. Employees in general and older workers in particular should feel that their work experience and contribution are valued appropriate. Research indicates that it is common for older employees to feel that their experience is not recognised and that they are not generally respected by younger colleagues. More than likely influenced by a society that is youth-oriented and which continues to burden older people with prejudices, organisational practices are often biased against older workers. Changing attitudes within the company on the basis of age-friendly corporate culture approach may be a vital prerequisite to further initiatives.

Achieving an age neutral culture requires the willingness to reconsider attitudes about age and the awareness that prejudices and stereotypes exist. Probably members of the company are not even aware of myths about older workers. More often than not, age based stereotypes are systemic and embedded in the company’s system. Countering these stereotypes consequently implies changing the company’s corporate culture and should therefore be a long- term objective. A considerable amount of time and effort will be needed to change a value system of a company and finally develop an age neutral culture.

Thus, starting point to change a company’s culture is to promote awareness and sensitivity about the aging workforce at executive level as well as the whole workforce. Brandenburg therefore advices methods, such as: presentations in the intranet, brochures and workshops about aging, medical check-ups for every age or image campaigns concerning older workers, etc.

Promoting an age-neutral culture also implies that older workers have to revise their inadequate expectations. This refers to the expectation that an older worker above 50 cannot take for granted not to participate in further trainings and to retire in the beginning 60s. Thinking and acting like this doesn’t make any positive contribution to an age-neutral culture.

De Long suggests starting to create an ongoing dialog with groups of older employees to clarify how they are treated by the organisation. Employers should further try to address existing stereotypes and misunderstandings. This can be done by presenting evidence to managers, supervisory staff and the workforce in general as well as demonstrating the benefits of employing and investing in older workers. Such evidence may include examples from the company or may be based on scientific researches.

In promoting an age- neutral culture, executive managers can reveal that older workers are also indispensable for the company. The feeling to be needed correlates with psychological well-being in a higher age. As well, high job satisfaction is called an indicator for high performance. Debilitating contributions for an age-neutral culture are public statements of young executives that they won’t employ people over an age of 60. Counterproductive are personnel reductions which mainly affect older employees and which may be termed ‘age-mobbing’.

Moreover, a company should value the experience and capabilities of older workers. Communicating an age-friendly image through internal and external publications e.g. through a company’s website showing pictures of workers of all ages, may contribute to a balanced reputation as an active recruiter and good employer of older workers. Because nowadays terminology plays an important role, it makes sense to think about the right terms. Using ‘experienced’ or ‘advanced’ instead of old or senior is likely to be more appropriate in order to describe staff over 50. In doing so, a company demonstrates that it values employees with regard to their knowledge and experience, usually related to age.

One step to an age-neutral culture may be the anchorage of esteem of all members of the company independent from age or other diversity attributes in the corporate guiding principles.

3.1.2, Age diversity management:

In order to create new chances for older employees an age-based HR management system is to develop on the basis on the corporate culture without prejudices between generations. At this point the term ‘diversity’ appears on the scene. Diversity describes a ‘state of heterogeneity in organizations’ and with respect to human resource a state of disparity, differentness and individuality of people who varies in numerous attributes. Beside sex, ethnic and cultural background, sexual orientation and disability, age constitutes an own dimension according to the diversity model. Diversity management is a management approach that aims to integrate societal diversity in companies and to benefit from this resource. Holz describes diversity management as a topic for processes, approaches and measures which aim to change corporate culture to the effect that differences are understood, appreciated and integrated. Diversity isn’t just a societal necessity, but important capital of a company, because the goal is to use potentials and to provide equal chances for all employees to create more satisfaction, cooperation and innovation. Thus, productivity and profitability increases.

Regarding age-specific potentials and skills of older workers, a conscious exposure to age would be a good starting point. With age diversity management a company may benefit from these potentials and may gain competitive advantages. These rely on the maintenance of the ability to work and work experience of older employees as a precondition for job performance.

Central point of age diversity management is to maintain and to improve the ability to work. As mentioned in chapter 3.1.1 awareness on the topic of age or aging is the first step for age diversity management. Age diversity management comprehends according to Müller & Sander lots of measures linked to HRM such as:

Employee survey about work satisfaction. These data serve fundamental information for personnel field with a need for action.

Flexible forms of retirement, e. g. partial retirement.

Health management including accident prevention and health promotion. Thereby the focus is laid on a health keeping working environment like ergonomic conditions.

Generation teams with active involvement of competences of older and younger employees in order to ensure knowledge transfer within the company and letting benefit younger workers from experiences of older ones.

Further trainings especially tailored to aging employees.

Functions as ‘senior consultants’ with respect to executive and specialist areas.

Analysis of the internal demographic structure. The age structure analysis serves as a basis to determine personnel objectives within the framework of age diversity management.