VVK, Lithuania: Redeployment/Recruitment/Exit policy
VVK is a Lithuanian sewing and production company, established in 1995 in Kaunas. It has two small factories (one in Kaunas and the other in Siauliai) where yarns, cloth, zippers and leather products are manufactured. Business has expanded in recent years. In 2005, VVK started exporting and currently half of the company’s output is exported to other EU Member States, as well as to Russia and Belarus. Only the factory in Kaunas will be discussed in this case study.
The Kaunas factory has 40 employees (26 men and 14 women), 10 of whom work in administration and the remaining 30 in production and production-related positions. The average age of the workforce is 45 years: 14 employees are over 50, 16 are in the age range 40-50, while the remaining 10 are under 40. The staff turnover rate is about 3% per year, mainly due to younger employees leaving. Older workers tend to be more loyal and remain with the company because it suits their needs. The work is not physically demanding and the company offers the option of redeploying older workers to less demanding positions if health or other problems arise. In addition, recruitment policy targets older people and the company endeavours to keep on older employees beyond retirement age.
VVK's management makes efforts to maintain a good atmosphere in the factory, with its small, close-knit workforce. The company is realistic about its situation as an employer: the work is unskilled and not too demanding, thus wages are correspondingly low. Furthermore, there is no career structure. Management understands that young people prefer better paid jobs with career opportunities. Experience has shown that, on average, a worker under 30 years of age will stay with the company for 2-3 months and then leave. This is an unsatisfactory labour situation and has resulted in the company targeting older people when recruiting new workers.
Good practice today
Company policy with respect to older workers has three strands. Firstly, redeployment gives older workers the option to move within the company to less physically demanding jobs. Secondly, recruitment targets older people. Thirdly, workers may stay with the company after reaching retirement age.
There are different types of tasks carried out in the factory. Most of the work involves operating some kind of machinery (e.g. ensuring enough materials are available for production, checking that machinery is working properly and inspecting products that come off the machines). The speed and complexity of the required work depends on the exact machinery used. Older workers usually operate machinery that is simpler and produces zippers. There are other jobs not involving the use of machinery (e.g. sorting, packing, counting and cleaning) and these are less physically demanding than working on the machines.
According to VVK's CEO, even though the accuracy and speed of workers starts to decline as they get older, they are not required to leave when this is observed but rather are moved to work on orders that are less urgent. Furthermore, when an employee is no longer able to work in production (on a machine), it is suggested that he or she switch to packing consignments or to even less demanding jobs, such as the preparation of materials or cleaning. Thus, the company does its best to retain its workers. One motive for this is that, upon occasion, important and large orders need to be produced and the extra workforce can be used to meet such orders. Management considers that it is better to have a less productive worker than no worker at all.
Recruitment of older workers is another strand of the policy. In 2006, two workers over the age of 50 were recruited. Targeting of older workers is motivated by the following considerations: older workers are much more likely to stay with the company compared to younger ones; older workers do not demand such high wages; and older workers generally have a better attitude and take their work more seriously than younger workers. On the issue of attitude, management believes that younger people work only in order to earn money, while older people are more interested in having a permanent job with a steady income, which results in their putting in more effort to do the job properly. No age limits are put in the company's job advertisements and there is always a note to say that older people are welcome to apply and that an easier job can be found as a worker gets older.
Finally, the company also seeks to keep on workers beyond retirement age. Currently, there are 9 retirees working in the factory, or nearly 25% of the workforce. The exit policy, too, is flexible: employees can remain with the company as long as they desire. The reason why pensioners are encouraged to stay on is that they are proficient in what they do, while new employees are hard to find and once employed need training and time to become effective. The high turnover rate of younger workers makes them unattractive to the company and training them is seen as a waste of resources and time.
VVK is positive about the future, with management expecting growth to continue. The company will keep on trying to retain existing workers, by increasing wages and improving working conditions as the business expands.
Contact: A. Valiuskis, CEO