Penta, Hungary: Comprehensive approach
Penta General Construction Industry has implemented an initiative to reward and retain older employees. As the company values the knowledge and experience of older workers, small teams of younger workers are placed with an older team leader to achieve higher productivity and quality work.
Penta General Construction Industry Kft, a construction company in the Budapest area, specialises in civil engineering. Recently, the company has extended its activities to include telecommunications and currently has three divisions: production (the largest), telecommunications and an entrepreneurial division. The company was established in 1991 by five graduates who left the civil engineering division of a large state training farm. Thirty blue-collar workers also left the training farm and joined the five company founders. By 1998 the firm’s labour force had increased to 100, both turnover and the number employed more than doubled and development of the company continued between 2001 and 2006. Fluctuation is slight and is mainly among the younger element of the labour force.
The company employs 241 persons, of which 61% are blue-collar and 39% are white-collar workers. Women make up 12% of the workforce but are employed only in white-collar jobs. The age profile is:
- 20 to 29 years of age, 30%;
- 30 to 44 years, 30%;
- 45 to 49 years, 10%;
- 50-54 years, 15%;
- 55+ years and older, 15%.
25% of the workers in production and telecommunications are skilled workers, 23% are semi-skilled and 52% are unskilled. Only men are employed in the areas of production and telecommunications. Among the white-collar workers, 8% of the engineers are women.
There is no trade union and no collective agreement but the management conducts a social dialogue with the employees.
Description of the initiative
Various areas of work in civil engineering require skills and knowledge that can only be acquired over time and are not provided for in any of the present forms of training whether for white-collar or blue-collar workers. Certain operations can only be performed by experienced workers. The high proportion of persons over 50 in the company’s age structure in all three divisions is therefore not incidental.
The demand for older, experienced workers is also reflected in recruitment. Some technical tasks can only be performed properly by older engineers, with the preparatory work being done by younger engineers. A long period of experience (e.g. ten years) is therefore a requirement for recruitment.
In the production division, the company hires teams (work brigades) and looks for teams with experienced older leaders. The team leader generally recruits people from the same small community, usually the same village or a small area of a larger community. The team members always work together and the company negotiates only with the team leader on all matters, including wages. A 40-year-old team leader is regarded as young, most leaders are between 50 to 62 years of age (62 years is currently the retirement age). The team leader is responsible for the members of the team but also protects their interests and negotiates their wages at the time of hiring. A good team leader is able to bargain for higher wages for a job. The team leader also arranges the transport (e.g. if they commute a long distance, a minibus is requested). If the company needs fewer hands than the number of members in a team, team leaders decide which members they will work with best. Even if a team leader does not have formal qualifications, an older team leader’s experience is a guarantee for the company that the work will be done well. The company values team leaders financially – with regular annual rewards and special bonuses for particularly difficult work requiring special attention – and treats them with respect. All problems arising during the work are discussed with team leaders and they are consulted about the rewards to be given to members of the team.
There are also a high proportion of persons over 55 in the telecommunications division where large numbers of skilled workers and technicians are needed. In general, there are fewer of these workers in the labour marker. Generally, construction occupations favour older workers and civil engineering work requires workers with long years of experience (even in the manual jobs). Both of these factors contribute to the shortage of skilled workers.
Wages and rewards are differentiated on the basis of performance. Older workers are better able to meet the requirements (e.g. guarantees for several years can only be given if quality work is performed). Productivity and quality work can only be achieved with the experience possessed by older workers; they control the work and give practical guidance to the younger workers.
Substantial annual sums, which are paid as rewards, favour the older workers and they are generally the ones who receive bonuses during the year for good quality or for work finished before the deadline.
Older workers can continue active work beyond retirement age (currently four persons over 62 years of age are employed). Nevertheless, the usual practice is to retire on reaching the official retirement age, then to return to work full time (the law allows hiring of retired pensioners full time, this has not changed despite the stricter macro-level regulations applying in 2007 to work by pensioners).
The company provides training courses of one to three weeks duration needed to ensure its market competitiveness.
Workers are sent for health checks annually, which is more frequent than required by the regulations. Work in certain jobs is dangerous for anyone found to have health impairments; in such cases they are placed in lighter jobs. Although this means lower earnings, keeping a job in case of work disability is of great importance; otherwise the person concerned might not be able to find new employment.
Penta General aims to create a good, congenial atmosphere by means of the following measures:
- an annual May Day picnic for all workers and their families with various entertainments, games and meals;
- trips abroad lasting up to one week;
- a supper evening and gifts for white-collar workers;
- balls held occasionally.
Penta General has created a structure based on the work of teams, where, in the interests of efficiency and quality, the team leader is an experienced older worker who controls and trains the younger workers. The team leader also conducts a dialogue with the employer, provides feedback on problems arising in production, discusses these problems with the employer as a partner and defends the interests of the team.