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Diversity Management and demographic change - What does the aging workforce imply?
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Diversity Management and the demographic change are complex topics which can be considered and analyzed from several views, as they are treated differently from one continent, country, region or organization to another. Also, different perspectives, for instance of the organizational management, older and younger employees or government can be examined. Due to the word restrictions of the assignment, not all perspectives can be examined. Therefore, this paper shall give an overview of older employees in organizations and what the aging workforce of an organization may imply.
Diversity Management and demographic change - What does the aging workforce imply?
Diversity Management (DiM), as a part of human resource, has increasingly gained more attention in the last two decades, mainly caused by factors such as globalization, increasing migration or other societal changes. In organizations, it deals with the growing diversity of stakeholders, especially since companies are confronted with new and more internal and external challenges, such as more diversity on the sales, labor or supply market as well as changes of the workforce. It is task of the management to gain the overall acceptance, understanding, apprehension and inclusion of these differences. In other words, the management shall recognize different skills and competences, support them and give all employees their right space to fulfill their tasks accordingly. It is of importance that by applying Diversity Management, the intention is to create an environment which is pleasant for all employees. By implementing it effectively, solving complex organizational problems, finding the ideal way to manage a company as well as generating competitive advantage shall be reached (Helms-Mills, Dye & Mills, 2009: p. 159-165; Aretz & Hansen, 2002: pp. 8-12; Krell & Ortlieb, 2011: pp. 156-160; Rosken, 2010: pp. 168-169).
The factor ‘age’, together with other traits such as gender or nationality, is classified as relatively unchangeable. Therewith, it is a profound part of what makes a person as who they are (Rosken, 2010: pp. 1743-173; Lotzmann, 2007: pp. 71-72). However, this factor has been influenced by the demographic change, which occurs in many industrialized countries. As life expectancy has been rising and birth rates have been declining, the gap between young and old people has become more significant. For this reason, it is expected that the “population [of developed countries] will decrease in some years and the average age of the population will increase” (Buck & Dworschark, 2003: p. 28). Especially the European Union has been affected by the demographic change: According to Eurostat (2015: pp. 19-20; pp. 30-31) in 2014 only 33,3% of the European Union citizens were young people (under 30), compared to 40,6% 20 years prior. Also, since 2004 older people (over 65) have outnumbered young people in the European Union and this gap is likely to increase, as life expectancy continues rising (2,5 years between 2002 and 2012). Additionally, specific, current situations underline the importance to act now to reduce future risks the best way possible: For instance, currently the highest labor force participation rate in Germany has the group of middle aged workers (approximately between 30 and 49) which lies between 80% (women) and 90% (men). However, as the overall number of workers will decrease due to the demographic change, compensations need to be found in order to guarantee an equal or similar economic wealth. As the rate of middle aged workers is already extremely high, it is difficult to increase it even more. The most convenient way will be to invest in older workers, as life expectancy has been increasing and older people have already outnumbered younger ones (Ehrentraut & Fetzer, 2007: pp. 26-28). Therewith, adaptions to the occurring and increasing change have to be made. The project ‘Active@Work’, which aims to create online and virtual solutions to enable older workers to fulfil their job longer, is an exemplary answer to this change. As this project is even co-funded by the EU Commission (AAL, 2016), it accentuates the need to act now to ensure future success.
Also, organizations need to react to the changing workforce, especially as the strong birth cohorts of the ‘baby boomers’ (approximately birth years between 1946 to 1964) are older than 50 now and are therewith already considered as the older part of the population (Dann, 2007: p. 429). As the other generations’ values, skills, attitudes, expectations, learning styles and ambitions differ from them, new challenges arise (Goodwin & O’Connor, 2012: pp. 559-562). For instance, modifications in human resource management strategies such as in “recruiting, staffing, leadership, career development, and incentive programs” (Hertel, van der Heijden, de Lange, Deller, 2013: p. 730) need to be made.
When concentrating on the older workers, it is aimed to help keep their contribution to the organization’s success as high as possible. Generally, factors such as compliance, mental flexibility, innovative abilities, creativity, social and communicative skills, sectoral knowledge, ability for problem-solving and resilience ensure this. By using and investing in new management functions and measures such as Corporate Health Management, ergonomics, flexible working time models, supporting individual career- and further education plans or implementing other motivational incentives, this may be achieved (Holz, 2007: pp. 48-49). Especially Corporate Health Management is of importance, as by keeping the performance high, health of the employees is a requirement. Here, challenges might occur by aiming to guarantee and maintain physical and psychological health in the long run by also preventively sensitizing young workers. The ‘Work Ability Index’, a test that indicates the degree of work accomplishments of each employee, might be a useful tool for that. Although it not only considers health but also other components such as qualification, it can give an overview of the workforce’s condition and performance at the moment. By conducting this test regularly, changes of the health status can be detected at an early stage as well as rising awareness of health importance by the young workers (Reifferscheid, 2007: pp. 146-149; p. 151).
Another big challenge at the workplace are the mostly negative prejudices against older workers and their performance. Among others they might include that “older workers are more cognitively rigid, more short-term focused, and thus more resistant to change” (Hertel et al., 2013: p. 731), there is a decreasing stress resilience or knowledge based intelligence, more absenteeism caused by sickness and less environmental awareness. However, these prejudices are not necessarily true in most cases. For instance, it has been conducted that by aging a person does not necessarily become more prone to stress. On the contrary, one might be more emotional stable and have sufficient regulations skills to be less affected by stress factors (Hertel et al., 2013: pp. 732-733). Another challenge might be the ‘lifelong learning’ which becomes more frequently demanded/ expected by the employer. However, the difficulty for this is to target each group of workers according to their knowledge, as diversity is increasing (Holz & Da-Cruz, 2007: pp.17-18). Also, only general, common assumptions can be made as a person’s condition also depends on various other factors, such as fitness, career stage or personal life including family demands. If prejudices are not combatted correctly and at an early stage, it may indeed decrease the older workers’ motivation so that in turn negative biases about their performance might actually become true (Hertel et al., 2013: pp. 732-734; Holz, 2007: p.48). This can be seen in connection to the self-fulfilling prophecy which explains that forecasts about certain events, and in this case the decreasing health conditions and performance when aging, might influence the mind that in the end this prophecy becomes reality. Therewith, management needs to act as early as possible to abolish biases and prejudices and create positive associations with aging for instance by reassurance of the supervisor or good leadership (Leidig, 2007: pp. 101-102; pp. 107-108).
On the other hand, the demographic change might also imply several possibilities that can be taken advantage of: As there is a higher diversity of skills, abilities and perspectives, more creative and innovative ideas can be found by combining each group’s strengths (Hertel et. al, 2013: p. 730; Holz, 2007: pp. 40-41) which in turn might generate competitive advantages if used correctly. Additionally, as there has been a shift to increasingly service-orientated jobs, it might be seen as an opportunity, as mental abilities can be obtained longer, for instance through life-long learning procedures, than physical abilities (Holz, 2007: p. 48).
For organizations the need to take actions becomes evident. One adaptation can be proceeded by the active change of leadership and management and concentrating on individual needs of employees. Generally, one goes through different phase in their working life: At first starting a successful career may be of importance, which might be replaced by personal life such as starting a family which and later on by factors like self-fulfillment. Although phases and their lengths may vary from person to person (Holz, 2007: p. 169), general assumptions about effective leadership for older workers can be drawn. The supervisor should aim to lead them effectively by being fair and transparent as well as building a relationship with their employees. By supporting them, giving them space to achieve tasks on their own and in their own speed, employees feel more comfortable. Also, being approachable and responding to personal needs can help creating an effective working atmosphere. As it is proven that certain abilities, such as visual faculty decrease when aging, adjustments of the workplace, for instance by changes in light at the workplace, may be small incentives to underline this. On a bigger scale, e-leaning programs which can be accomplished at their own pace or the introduction of individual working time models might be helpful. For instance, the German automotive manufacturer Audi AG offers several working time models for their employees, which not only support the ones starting a family, but also older workers shortly before retirement. Offering sabbaticals or partial retirements models are some of them as a response to the changing workforce (Neumann, Hentsch, Meier & Rank, 2005: p. 3; pp. 19-20).
Overall, a pleasant employee attitude should be created so that older workers are not seen as a burden but rather as an enrichment to a company’s success (Holz, 2007: pp.167-168; Leidig, 2007: p.107) and as a possibility to take advantage of the diversity of the workforce. The Deutsche Bank has created a ‘generation-network’ which aims to build and strengthen communication between employees of different ages. Not only have more and more people joined this network, but also it has brought more appreciation of differences of its workforce (Singer, 2013: pp. 91-93).
In short, respecting, appreciating, giving responsibility to, raising interest, supporting diversity and underlining the individual value is an important task that the effective leadership of this change shall accomplish. All this shall motivate employees, which in turn aims to bring increasing performance.
Personally, I believe that the demographic change and therewith the increasing diversity of the workforce will become more extreme. Therefore, it is important to act now to prevent further difficulties in the future. Right now, only reactions to a long-term developed problem can be taken. Therefore, it is important to solve the current challenges but also think ahead to ensure that this situation will not worsen. Although there have already been some incentives, for instance by assuring Corporate Child Care, they should be further strengthened in the future.
Also, there are several positive aspects such as the increasing diversity of the workfroce which can be taken advantage of. More creativity and different opinions and therewith more possible innovations are only one part of it. Additionally, older workers usually have a lot of experience which can have certain advantages compared to younger workers. In short, the change of the workforce might bring several challenges but if studied closely and reacted correctly it might have positive effects on companies. Therefore, I believe concentration should be put on trying to make the best of the current situation and generating the most positive outcome by supporting each’s strengths.
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- Anonymous, 2017, Diversity Management and demographic change. What does the aging workforce imply?, Munich, GRIN Verlag, https://www.grin.com/document/934289