Voestalpine Austria: a comprehensive approach
Voestalpine, a global steel company, makes steel and steel-based products, including automotive parts, tubes and rails. It has more than 22,000 employees, of whom 14,000 work in its 24 Austrian companies. In 1999 the employees’ average age was 41 years, with an average age of 47.5 years among high and middle management. In the Austrian companies 80% of the 13,000 male employees are production workers who do night-shift work.
After World War II the steel company was state owned and had up to 70,000 employees. An economic crisis in the 1970s prompted the government to reorganise the company and privatise most of the shares. Technological reorganisation reduced the staff to 8,000 employees in Austria. The new management’s leitmotiv was, ‘Not more steel, but more out of steel!’. Its streamlining strategy helped Voestalpine become a successful international company with 28 subsidiaries and 22,000 employees, that made a record profit in 2004.
The main reasons for this success are a highly experienced and skilled workforce, excellent management and a structured social dialogue with the works council. The human resources (HR) policy is based on management’s determination to serve shareholders, clients and employees. This threefold focus led to employees having a 10.1% stake in the company and to excellent preventive-health and social policies.
On the other side, 20 years of downsizing by early retirement and low recruitment led to an employee age profile that was mainly middle-aged, and keeping older workers and generation diversity were not seen as important.
The original initiative
Downsizing, a halt on recruitment and early retirement resulted in a high average age. Analysis revealed that this carried strategic risks for productivity, including rapid skills loss, workplace frictions and problems attracting new employees. The original health initiative for older workers was changed into a strategic reorganisation programme.
In 2001 the board of directors approved a programme designed ‘to achieve best personal output by best personal development in every generation, men and women, from joining the company to official retirement;’ and to create an ‘attractive working world Voestalpine.’ The programme, known as LIFE (for Light-hearted, Innovative, Fit, Efficient), has as its objectives:
- keeping older employees at work;
- sustainable integration of new employees;
- knowledge transfer between generations;
- ergonomic rationalisation of risky and unattractive tasks.
A second phase, aimed to implement the programme in Voestalpine’s Austrian companies in order to transfer it subsequently to its international companies, included:
- development of an HR strategy for each Austrian company;
- a measure called Formula 33 that grants every employee at least 33 hours a year for projects and training in, near or off the job. In 2004 more than 80% of employees availed of it.
- corporate culture and leadership;
- personnel management;
- occupational health and safety;
- working times;
- processes and ergonomics;
- integration management;
- equality – assessment and measures for equal opportunities among women and men.
Good practice today
Today the LIFE programme is part of Voestalpine strategy and the board of directors has responsibility for HR. The new CEO promotes LIFE as the ‘most important HR programme.’
In 2005, Voestalpine’s steel, rail systems and profiles divisions began to implement the LIFE programme including the LIFE toolbox measures. Steering groups at divisional level promote the programme and managers are given the objective of implementing it.
In April 2005 HR began to implement LIFE in Voestalpine’s automotive division and its international companies such as Polynorm in the Netherlands. The works council is active in LIFE and promotes the programme internationally. The LIFE toolbox has almost 100 projects in all eight HR fields, of which shift reform in the steel division is an example.
Night work is more exhausting than day work, especially for workers aged 45 years and over, who find that it causes sleep disorders, morbidity and chronic stress. The steel division’s coking factory, which has night and shift work, developed a plan to reform shift work which was implemented as a pilot project in 2005. The new shift plan offers age-adjusted schedules with options to reduce working time and night work.
The coking factory shift reform was part of the LIFE toolbox. Worker seminars about ageing, health and shift planning were followed up with questions about shift preferences, which employees and superiors incorporated into a new schedule. The new roster has three options for weekly hours: 34.4, 36 and 38.5. Each worker can choose a weekly working time.
A similar shift reform was implemented in another factory. In all cases, workers aged between 20 and 30 years were most in favour of reducing working time, even with salary reductions of up to 5%. The shift pilot involves around 800 employees in seven departments.
More employees are using the LIFE toolbox to improve their skills and more supervisors are using it to improve productivity. The following is a summary of the toolbox measures, across the eight HR fields:
- managers are educated in topics like ability to work, ageing and managing diversity;
- recognition and involvement of older workers are reinforced
- prevention of age and gender discrimination is on the agenda;
- a specific HR processes is designed for each generation profile;
- long-term employee and education planning increased worker efficiency;
- trainers learn instruction methods and behaviour that do not discriminate on the basis of age;
- older workers are trained as mentors, teachers or trainers;
- in many workplaces ergonomic initiatives reduce stress and strain;
- new production units are planned to be LIFE-conforming;
- occupational health and safety measures focus on ability to work and age profiling in health examinations;
- many health, safety and stress management programmes started;
- mentors for better integration and internal training were established;
- first female trainees were recruited for the steel mill;
- recruiting campaigns started at schools and high schools.
The effects of the LIFE process to date are:
- significant increase in workers’ satisfaction index – up from previous 74% to 89% in 2004;
- large increase in job applications;
- higher attractiveness index in the labour market;
- positive impact of LIFE on post-merger processes in international companies;
- partnerships with clients deepened;
- banks improved credit rating because of investment in sustainable workforce;
- JP Morgan upgraded the stock because of LIFE.
The following are the benefits of the LIFE programme in a broader context:
- Voestalpine’s innovative image make it more attractive to clients;
- LIFE also became a media campaign in television, journals and newspapers. The financial value of this campaign was estimated at more than €2 million;
- many invitations to management conferences and trade union congresses;
- the programme won several awards, including financial awards;
- the conservative government and the trade unions referred to the LIFE model in their economic and pension policies.
The greatest problem in implementing the programme was reconciling workers’ expectations with the slow pace of developing, discussing and implementing the LIFE measures. After two decades of downsizing, neither managers nor workers’ representatives could easily cope with a 180-degree turn in HR policy.
Heinz Rittenschober, Director of LIFE and former director of strategic HR management (Phone: (+43 7) 3265850)
Hannes Linsmaier, Works council representative Voestalpine steel division (Phone: (+43 7) 3265850)
Rudolf Karazman, Scientific consultant in LIFE process, Director IBG (Phone: (+43 1) 5243751