HR management tools to deal with the ageing of the workforce

A study by the Cologne Institute for Economic Research presents a holistic human resource management approach to tackle the challenges arising from demographic change. The study finds that such management approaches are more prevalent in large companies.

In November 2006, the Cologne Institute for Economic Research (Institut der deutschen Wirtschaft Köln, IW Köln) published a study on a holistic human resource management (HRM) approach (in German, 3.63Mb PDF) that can aid companies in their attempt to tackle the challenges of an ageing workforce. This HRM approach is ‘orientated towards the work–life cycle’ (lebenszyklusorientierte Personalarbeit). HRM policies should, therefore, consider the various needs of employees at different stages of their careers. Although this means that HRM policies will vary depending on different groups of employees, these policies should, nevertheless, be harmonised and synchronised.

Focus of HRM policies

Work–life cycle orientated HRM policies respond to three basic and interrelated questions:

  • How can companies act to adapt in a pre-emptive way to an ageing workforce and how can they overcome the looming shortage of appropriately skilled workers?
  • How can work organisation be aligned to the specific needs of the various age groups and how can the company benefit from the potential of employees of different ages?
  • How can companies become attractive for employees with children as well as for female and older workers?

Responses to these questions should address issues such as recruitment, work–life balance, employability, knowledge transfer, workplace arrangements and health at work. The IW study presents work–life balance concepts, such as flexible working time arrangements, training during parental leave, reintegration programmes, as well as so-called ‘demographic tools’, some of which are described below. Holistic HRM is more prevalent in large companies according to case studies carried out at DaimlerChrysler (in German, 238Kb PDF), DekaBank (in German, 625Kb PDF), Deutsche Bank (in German, 211Kb PDF) and Quelle (in German, 126Kb PDF).

Demographic tools

Analysis of age profile

A company should forecast how the experience and qualifications of its employees will develop over time (for example, in the next five or 10 years). The analysis should provide information on the following:

  • the number of employees the company is likely to need to replace as a result of workers retiring or quitting,
  • the probable timing of such replacements.

The crucial point is to identify any potential shortages of skilled labour. The analysis should also show how the skills and abilities of the remaining employees are likely to develop over time. Forecasting allows HR managers to set up a strategy based on recruitment, retention and retirement. Policies on training and lifelong learning, knowledge transfer and health prevention can be planned in advance.

Work ability index

The ‘work ability index’ is based on a questionnaire (in German) that is distributed among employees. Individuals are asked to provide an evaluation of their current and future work-related abilities, state of health and well-being and attitudes towards work. The responses allow for the calculation of the work ability index. The higher the value of the index, the better an employee’s ‘work ability’ is.

Teams of various age groups

According to data provided by the Institute for Employment Research (Institut für Arbeitsmarkt- und Berufsforschung, IAB), in 2002, teams whose members came from different age groups existed in only 6% of establishments in western Germany and 7% of companies in eastern Germany. The companies with a long track record of mixed teams report that prejudices between younger and older workers have been dealt with, knowledge transfer has been facilitated, the composition of skills and competences is well-balanced, and that experienced mentors have been able to promote and coach young candidates for managerial positions.

Knowledge-transfer systems

In general, knowledge-transfer systems aim to retain knowledge, skills and competences when an experienced employee retires or quits. Besides the coaching approach, companies can, firstly, systematically appoint employees who are able to replace other workers due to their temporary absence from work. If such role substitution is to be effective, employees must share the same information and skills. Small and medium-sized enterprises (SMEs), however, often fail to find persons with matching abilities. Secondly, interviews with employees who are due to leave the company can motivate these persons to transfer information and knowledge to other colleagues. Interviews are particularly important when employees unexpectedly announce their intention to resign. These interviews can reveal the circumstances and reasons for the employee’s decision to leave and HR managers can thus address any revealed shortcomings. Thirdly, and especially within SMEs, an internal training market has become an important way of transferring knowledge and skills. For instance, employees who have attended external training courses can subsequently hold internal training sessions to transfer the knowledge attained to other colleagues. Similarly, such internal training courses can be held when an employee has superior knowledge of specific subjects or tasks.

Oliver Stettes, Cologne Institute for Economic Research (IW Köln)

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