The workplace of the future - managing the challenge of an ageing workforce
In a seminar organised for members of its Company Network, the European Foundation for the Improvement of Living and Working Conditions explored policies and practices associated with managing an ageing workforce. The seminar ‘The workplace of the future - managing the challenge of an ageing workforce’ was held in Vienna, Austria, on 4-5 March 2004. Three companies from Austria, France and Germany, representing different sectors (steel, electronics, financial services), and the Finnish Ministry of Labour presented their approach and policies to an audience of 60 participants coming from 12 EU Member States.
Managing human resources in a period of demographic decline and increasing life expectancy is one of the challenges companies face today. Company practices and policies associated with managing an ageing workforce was the topic for discussion at the company network seminar organised by the European Monitoring Centre on Change (EMCC) in Vienna on 4-5 March 2004. In the seminar The workplace of the future - managing the challenge of an ageing workforce, three companies from Austria, France and Germany, active in the steel, electronics and financial services sectors, and Finland’s Ministry of Labour presented their approaches and experiences. The cases showed many ways in which an ageing workforce can be best motivated, managed, and involved for the benefit of their employers, other employees, shareholders, society as a whole and themselves. The 60 participants represented stakeholders from 12 EU Member States ranging from the business community, employer and employee organisations and consultancy firms, to government and semi-government institutions.
Population demographics in Europe are showing clear signs of workforce ageing. This is occurring in parallel with a decline in the numbers of younger workers entering the workforce. These developments are raising a warning flag to governments, employers, and society in general as to a substantial loss of knowledge and experience in the working population. This is the key issue of age and work. As a consequence, many companies and organisations have realised they need to retain and nurture their older workers. They also found they could no longer afford the costs resulting from early retirement. Many companies are now devising and implementing policies to address this challenge. However, programmes for the ageing workforce currently tend to be restricted to companies large enough to have their own human resources departments. It is clear that small and medium-sized enterprises (SMEs) can also benefit from such programmes by adapting existing strategies to fit their specific needs.
Day one of the seminar looked at two company cases. The first dealt with the unit Missions & Conseil of the French Thales Group, a global player in electronics serving the defence, aerospace and information technology (IT) markets worldwide. As the Thales Group grew, valuable senior managers became redundant due to restructuring. Missions & Conseil devised a programme to train these managers for new jobs by working, under supervision, as consultants for other Thales operating units. The focus then moved to Voestalpine AG, one of Austria’s largest industrial enterprises active in the steel sector. The company was having difficulties attracting younger employees, showing ever less interest in the steel sector, and decided to develop LIFE. This is a programme helping older workers to stay while encouraging younger people to join, which has since contributed to the company being one of the most attractive employers in Austria.
On day two the seminar looked first at Deutsche Bank, a German-based international financial services provider. Its Diversity Policy offers many productive cross-generational activities. In Deutsche Bank, older workers are encouraged to join initiatives in which they take turns in being teacher and learner. The case shows the synergy that can result from older and younger employees working closely together. The last case was about a new national strategy on ageing. A representative of the Finnish Ministry of Labour presented various individual national sub-programmes aimed at promoting and maintaining the work ability of the older employee. Cumulatively, these programmes showed strong indications of effects such as reduction of sick leave, work disability and pension costs, as well as increased productivity.
Together, the cases gave the seminar audience insights into the needs and strengths of older people in the workforce and the impact of programmes being undertaken on their behalf. These four case examples represent the main source for the conclusions and recommendations drawn at the seminar.
The case examples can be downloaded as pdf files by clicking on the company's or the Finnish programme's names.
New strategies to retain an ageing workforce
Europe’s changing demographics and incipient shortage of human resources
New employment strategies have become a must. By 2025, the 50 to 64 year age group will grow by 25%, whereas the younger age groups will diminish, not only proportionally but also in absolute terms. It is expected that the population of working age in the EU 25 will fall from 303 million today to 280 million in 2030. The challenge for EU Member States is to retain a competitive position in the world market and maintain current standards of living. Part of the answer will be to reduce early retirement and encourage 50 to 65+ year olds to continue working. Thus, EU Member States have committed themselves to actively promote the employment of older people in the workforce (Barcelona Summit 2002). Governments, workers and employers all have an important role to play.
The four cases illustrated that demographics alone were not a sufficient reason to involve companies in implementing appropriate policies.
An urgent and immediate need accelerates strategy development
|Deutsche Bank (336 kb) decided to review its human resources policy because of its need to downsize. As a German bank, it had a long tradition of the apprenticeship system, where young people learn from older experienced workers. The age diversity approach is about older and younger employees benefiting from each other. It promotes exchange of knowledge and working together in teams.The motivation for Voestalpine AG (139 kb) was the ambition to belong to the top preferred employers in its operating regions. Their LIFE programme has given considerable stimulus to those regions and to the work satisfaction of its employees. Top management supports LIFE as part of Voestalpine’s corporate strategy.As the Thales Group (314 kb) grew, valuable senior managers were becoming redundant due to reorganisation. The company did not want to lose them, yet their capabilities did not fit available jobs. Thus the unit Missions & Conseil was created, providing a solution to this internal mobility problem and expanding to become much more than a career management system but a driver for desired change within the group.The Finnish programmes (198 kb) were motivated by national concerns for a high quality of life at work and life in general. Finland originally initiated these programmes in the early 1990s during a time of recession. Ageing workers were often the first to be let go. This situation called for new strategies. The programmes proved to be successful beyond expectations, helping the country at a later stage to exploit a period of record growth.|
Communication plays a key role in preventing age discrimination
During the seminar, work groups discussed the importance of the psychological aspects of age management. The willingness to reconsider attitudes about age is key. Participants emphasised the importance of communication. Many people in industry, commerce and society are not even aware that they discriminate. They are convinced that older workers cannot learn new skills, and that they become less productive with age. People believe too that the older worker naturally has a right to a rest after a career at work. In this context, employers, employees and society need to know what is truth and what is myth.
|Finnish research findings revealed that many positive aspects of ageing are relatively unknown and therefore unappreciated. Older people may suffer from declining short-term memory and a slower pace but, in the right work environment and with a flexible workload, older workers can maintain high productivity. Older workers possess a legion of strengths including good cumulative long-term memory, long working experience, good ability to perform accurate control tasks, a high level of dedication, low absenteeism, and a well-developed ability to evaluate issues and problems. These represent not only valuable assets for employers, but also strong arguments against age discrimination.|
Whatever the initial reasons for implementing the programmes, companies found themselves rethinking their most valuable asset: human capital. The three company case examples showed that programmes initially developed for older workers were beneficial for the company as a whole. Age management led not only to better human resources management, but also to better business management and ultimately to better business.
Benefits of a pro-active approach towards an ageing workforce
1. Improved ability and work satisfaction of older employees: Programmes for retaining the older workforce are improving both the work ability and work satisfaction of older employees.
|In Finland, where the programmes were implemented on a national scale, nearly all organisations (90%) reported a beneficial impact on work ability and on the employability of the older worker. Personal experiences of the older workers were generally positive. They remained valued contributors to the national effort and were proud of it.|
2. Overall better human resources management: The new policies and measures were proven to benefit all age groups and all employees. The experiences learnt regarding the 50+ age group could be adapted and applied to other segments of the workforce. This resulted in improved working morale, attitudes and efficiency.
|Deutsche Bank’s approach is not only about diversity in age. The policy is based on creating a heterogeneous workforce in which people of different nationality, gender, culture, religion and age work productively together. Age diversity creates a work environment rich in culture as people inspire each other: the wise and experienced guiding the young and ambitious, and the latter instructing the former on ultra-modern technologies.|
3. Age management is not only good human resources management, but also sound business sense: The benefits are both psychological and economic. Psychological benefits include improved work culture, better motivation, loyalty and work satisfaction plus an overall improved image for the company. Many of these psychological benefits can be quantified in positive economic terms. Straightforward economic benefits also come in the form of better training results, sustained increased productivity and reduced early retirement costs.
|Voestalpine’s LIFE programme is valued for its contribution to both the personal and professional development of its employees. At the same time, LIFE has made Voestalpine a very attractive employer in the sector.The Finnish Dahlbo company project serves as a telling example regarding economic benefits. The modest annual investment of 300,000 FIM in a ‘promote and maintain work ability’ (PMWA) programme paid back tenfold. The benefits included improved productivity and reduction of sick leave, work disability and pension costs.|
4. Being prepared for the future: Investing in an ageing workforce provides benefits in the short term, but even more so for the long term. The ultimate benefit will be Europe’s ability to retain its competitive position in the world market, and to maintain current standards of living. While this requires long-term investment from governments and business, it also means mobilising what is arguably its greatest asset - the experience and wisdom of its ageing workforce.
Concerns of small and medium-sized enterprises
Small and medium-sized enterprises (SMEs) represent a considerable proportion of total employment in Europe. Addressing the challenge of the ageing workforce thus depends on stimulating and mobilising SMEs. Many do not seem to be aware of the need, urgency or indeed the benefits of retaining older workers. Seminar participants voiced what they called ‘a perception gap’ and recommended two main ways of raising the involvement and commitment of SMEs:
- Creating awareness: They should be made aware of the risks of doing nothing. Seminar participants have the impression that people in SME management do not yet realise that an ageing workforce will also affect them sooner or later. They need to know and understand what is happening.
- Good practice examples: SMEs also need to be shown the practical value of investing in older workers. If the benefits are clear, SMEs will surely become interested. They would be well served with cases of good practice in comparable companies.
These two strategies are complementary. For both, publications, research surveys and company case examples such as presented at the seminar are extremely helpful.
Do examples of large companies apply?
The question was raised whether programmes that work for large, multinational companies can also effectively apply to SMEs. Many participants felt SMEs could not imitate large companies as they do not have the resources. However, some Swedish SMEs have successfully copied examples of larger enterprises, so SMEs could take similar initiatives to fit their own circumstances. In fact, many programmes work just as well for smaller companies as for larger ones. For example: younger and older people working together and learning from each other’s experience is not something that takes place only in large companies. Indeed, it is often especially effective in small companies.
The Finnish case examples proved that government support and relevant programmes help in this respect.
To activate the process, SMEs might consider combining forces regionally and within their own sectors (through local/regional authorities, employer circles, chambers of commerce and so on). Networking and sharing experience between SMEs helps to spread knowledge on age management. Joining forces can also offer financial benefits. Sharing costs of life-long learning can make programmes financially attractive, especially for SMEs. Governments, employer and employee organisations and insurance companies represent other bodies that have a vested interest in SME success.
The use of intermediaries
Government agencies, chambers of commerce and specialised organisations and associations can help develop and implement plans and programmes. Intermediaries can also help to develop SME management in its multiple role of entrepreneur, owner, manager and employer. As an example, the Irish Chamber of Commerce is organising a training programme for their SME members to raise awareness on the issue of the ageing workforce.
Success factors and potential pitfalls
Seminar participants identified various success factors for implementing policies and measures:
- A positive attitude: A positive non-discriminatory attitude towards ageing workers is absolutely essential for success. Society today perhaps overly values youth, and there is a relatively underdeveloped appreciation for old age. The starting point of all age management includes an open mind and the willingness to reconsider attitudes. A negative attitude creates barriers for any programme. Care must be invested not to develop programmes for older workers that serve rather to isolate and stigmatise them.
- Placing the older worker in a dynamic and positive work environment was seen in the case of Thales Missions & Conseil.
- Dissemination of knowledge about the benefits of age management: To create interest, the benefits of age management must be emphasised and communicated widely. Trusting that companies will be interested in age or an ageing workforce for its own sake is a pitfall. Company management and shareholders are primarily concerned with financial results.
- Management commitment: The involvement of top management is vital to the whole process. Vision combined with a top-down approach creates momentum. Without a clearly identified business need, top management is unlikely to be interested.
|The success of Voestalpine’s LIFE programme is to a large extent due to the vision of the CEO. Top management was totally committed to creating an attractive workplace and becoming one of the best employers in the areas in which Voestalpine operates.|
- Convincing arguments related to business needs and goals: Arguments to convince management have ranged from improved image, improved attractiveness as employer, higher work satisfaction, better performance, higher flexibility in a changing business environment, social responsibility, lower pension costs and lower sick leave costs, to name a few.
- Early vertical involvement: Participants felt that success would depend on all relevant parties being involved from the outset: top management, middle management, employees and works councils. Managing an ageing workforce should not be treated as something delegated purely to the human resources department. All levels must be involved.
|Deutsche Bank’s diversity approach began as a human resources initiative. Involvement grew and top management today completely supports it. In practice, middle management is reluctant to let people ‘take time off’ for training and other development activities. This leads to the question of whether programmes should be mandatory or voluntary.|
- Short-term versus long-term thinking: The company case examples clearly indicate that the business world will only welcome social innovations, such as age management, if they offer a competitive edge. Investing in an ageing workforce will show benefits in the short term, but even more so in the long term - managers have to be aware of this.
Some practical ideas and tips
- Bring about a change of attitude by discussing the issue: The competences and experience of ageing workers must be appreciated. Such a change of attitude can be achieved through relatively simple measures, for example, by initiating discussion within the company: talk about the subject and make those talks structural if possible.
- Invest in training: The method of training and learning must fit the specific learning abilities of the different age groups. Investments in training need not be limited to the older worker. Both younger and older employees can share knowledge and experience by working together in teams.
- Be innovative: There is a need to have an open mind and search for unconventional solutions - to be innovative is a requirement in a competitive world.
- Policies should not be exclusive to older employees: Older workers do not wish to be set apart or stigmatised. Strategies need to take a holistic view and cover peoples’ total working life.
- Managing the ageing workforce is a sound business strategy: If age management is properly understood and adapted, all ages contribute to optimising productivity. Age management is more than human resources management: it is business management.
- Employer and employee must carry their own responsibilities: A safe and attractive work environment is largely the responsibility of the employer. The culture and sense of community of an organisation is a shared responsibility of employer and employee. To look after one’s health and development is ultimately the responsibility of the individual.
Further company case examples
EMCC has published further case examples of companies addressing the challenge of managing an ageing workforce, by rethinking work organisation, adapting working time schedules, training and recruiting older employees. The companies operate partly in the same sectors (steel; financial services) and partly in different sectors (health; electrical) in Denmark, Norway and Sweden.
Related Foundation work
The Foundation has undertaken a number of projects in the area of ageing and work, looking at strategies to combat age barriers. The report Age and working conditions in the European Union covers issues such as the physical demands of work, shift and night work, intensification of work, new technologies, development of skills and task rotation.