Megatrend demographics – Identifying key areas of action

22 November 2013

Amongst current megatrends, demographic change with its unprecedented implications for work and corporate organization now takes first place. And for good reason: according to current projections, up to a quarter of the present workforce will no longer be available in 2032 at the latest. Not only large corporations, but also small and medium enterprises have now realized that new strategies are required in order to deal with increased competition for young skilled workers and the workforce required to secure the firm’s long term future.

The resulting imbalance of the population’s age structure mainly affects the developed countries of Central and Western Europe, in particular Germany. However, the recruitment market will also become tight in developed countries such as Japan and South Korea, but also in the growing Chinese market, due to the one child policy in place since the 1980s.

These changes necessitate a reorientation of strategic planning of HR – moving away from the typical planning timeframe of the next 5 years to taking account of long term aspects in periods of 15–30 years. Companies which start considering a long-term horizon in their employee strategies will have the opportunity to offset the impact of population development change in their favor – the others will face a double lack of skilled labor.

In order to prepare for this demographic change, it is important for companies to recognize key areas for action and to identify location-adapted and meaningful solutions. Three main areas can be distinguished: recruitment of new employees, retention of current employees, and finally retention and enhancement of the performance of employees.

It would be a mistake to follow the motto ‘More is better’ and blindly implement corresponding measures. It is more promising to introduce fewer but more specific success-focused measures which are meaningfully coordinated and tailored specifically to the needs of the company. A suitable basis offers an analysis of both the internal and external situations which among other things highlight the age structure and critical occupations of the firm. This includes regular employee and management surveys. After establishing essential fields of action and appropriate measures, it is essential to assign concrete responsibilities to be implemented and to implement tracking indicators and regular controls in order to monitor success.

Concerning competition for young skilled workers, the visibility and attractiveness of the firm as well as its location are crucial. Firms must take into account that the attitude towards work of coming generations is changing. In addition to an attractive salary and career opportunities, top themes of desired employer services include family consideration and work-life balance with flexible time schedules as well as a pleasant work environment.

If the firm is able to accomplish high satisfaction levels for these factors, it is important to communicate this satisfaction internally and to the outside world in order to increase visibility as an attractive employer.

Perception and an early commitment to the company can be further accomplished through cooperation with schools, training establishments, and universities, such as through internships, thesis work, or participation in events. When looking for potential employees, it is also important to look into new target groups for qualified individuals. For example, in many professions, there is to this day an almost unused potential of qualified female employees or employees with a migration background. There is still much to be done to develop this potential. Interest of the target groups in corresponding professions is rising and qualification measures are being created. Another possibility is in-house training programs for unskilled employees.

Employee loyalty to the firm and the preservation or enhancement of their performance is primarily determined through health management and ergonomics, as well as through skill development and training measures. Health management and the relevant employer services are becoming increasingly important. In addition to improving mood and stimulating motivation, measures in this domain can also be an approach to reduce absenteeism and maintain the workforce.

An important aspect when it comes to employee loyalty is the expected aging of the workforce, to which the company must respond in various ways. The idea is to ensure age-adapted jobs: the jobs should take into account the various psychological and physical conditions which occur during different life stages. Measures against work overload start with the creation of custom jobs and continue with the reorganization of work processes, such as regular rotation in the production process in manufacturing jobs.

Beyond these practical aspects, it is also important to deal with the involvement of older employees in the company culture: the appreciation of their contribution to the firm must be made visible. This can be implemented through the establishment of practical measures, such as with the formation of mixed-age teams or through mentorships, where older employees are assigned to new employees as mentors. This not only promotes the integration of both groups but also leads to knowledge transfer and retention. Furthermore, older employees should not be forgotten when it comes to health promotion measures and further training. This is consistent with the expectations of trade unions, which on one hand reject a shift in the retirement age, and on the other hand call for creation of conditions under which employees are motivated and healthy and can work until the age of 65.

Regardless of the different age groups, employee retention calls for a positive corporate culture. This begins with a friendly work environment, such as very concretely through the design of desks and offices, including regular checks of their ergonomics. Equally important is the promotion of friendly and respectful interaction between employees. When it comes to corporate culture, management is asked to present a positive image. This is because measures that are not observed by top management are very unlikely to be followed by other employees.

It is also important to highlight all measures that are undertaken to improve the working situation of the employees. Only if the company makes visible its various activities will it be perceived well in the eyes of the public. Thus, so-called employer branding, with which a company looks to establish itself as a positive brand, has become an essential tool of strategic personnel planning.
Your contact person
Dr. Katja Flascha
Executive Partner


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