Age and Diversity Workforce - Literature review Example

Age and Diversity Workforce Name Institution Professor Course Date Introduction Demographic change and globalisation are considerably changing the composition of the workforce in the 21st century. Falling birth-rates, aging of the baby boom generation and extended life expectancies triggered by major improvements in healthcare and welfare systems contribute to changes in workforce and societal composition. As a result, one of the questionably, most essential diversity dimensions for business success in the today’s business world would be age diversity. However, most organisations have not yet realised the full effect of demographic changes. In the contemporary world, organisations have to face up to what sometimes appears off-putting to greatly compete for the well-educated young professional with other firms, retaining their older workers and the skills they hold upon their retirement, and in due course leveraging the potential that lies within their age-diverse workforce. Based on extensive literature review, this paper assesses the impact of age-diverse workforce. The paper also critically assesses available literature on workforce diverse and demonstrates relationships between different literature materials to ascertain major themes emerging from different sources pertaining to age-diverse workforce. The paper will discuss the concept of workforce diversity, age diversity in the workforce, reasons for age-diverse workforce, effects of age diversity and ways of addressing implications of age-diversity in the workplace Defining Workforce Diversity Efficient management of human resources is a major issue for economic success of organisations. It is does not only comprise of tackling single employees’ demands, institutional settings or bureaucratic procedures. Proper management of human resources means finding the right workforce mix and making good use of employees’ skills. A diverse workforce with respect to physical stamina, experience and education is required given the various tasks that have to be performed within organisations (Garnero, Kampelmann & Rycx 2014). Workforce diversity fosters complementarities, generates spill-over, makes workplace enjoyable and stimulate demands hence improving productivity in a firm. Daft (2014) defines workforce diversity as a workforce made up of people with different human characteristics or who belong to different cultural groups. Diversity entails disparities among persons in terms of dimensions such as physical ability, race, gender, age and ethnicity. Rice (2015) who defines diversity as a difference in cultural background, gender, race, sexual orientation, religion, age, and mental or physical capability mirrors this definition. Age-diverse Workforce Age diversity is the capacity to accept all diverse ages within an organisation. According to Scott (2009), inclusion of age diversity on any firm agenda is crucial because age has major effects on team outcomes and individual cognition and behaviour. Because employees are more and more likely to work in teams with great age gaps between co-workers, employers seek to leverage the potentially positive impacts of age diversity hoping that a widened perspective and knowledge prompts superior performance (Liebermann, Wegge, Jungmann, & Schmidt, 2013). Workforce demographics are changing with the number of mature employees increasing in the coming years. According to Kunisch, Boehm and Boppel (2009), age is becoming one of the most pertinent diversity dimensions. Prompted by demographic shifts, age diversity in the workplace is increasing more powerfully than other diversity dimensions such as nationality and gender. This assertion is supported by finkelstein, Truxillo, Fraccaroli, Kanfer (2009) who confirm that demographic shift is a pressing issue for many developing and industrialised nations today. From an organisational view, the aging and shrinking of the populace is most explained as a matter of a firm rise of the average age of the organisational workforce. Particularly to practitioners in firms, it is far less clear that age diversity is also considerably increasing in many departments and teams. Kunisch, Boehm and Boppel (2009) report that firms currently have only one vague notion of how the rise in age diversity impacts internal procedures and states including employees’ wellbeing, performance and commitment. Compared to other dimensions of diversity, addressing an age-diverse workforce is rather a novel challenge for firms. Reasons for Age-diversity in the Workforce Workforces are becoming more and more diverse in age demographics thereby establishing professional settings rich with maturity and experience besides youthful exuberance ( Rabl & Triana, 2014). Firms that employ workers with a wide range of age have the advantage of developing a dynamic multi-generational labour force with different range of skills essential to a company. Kunisch, Boehm and Boppel (2009) assert that demographic shift is a crucial force trend. However, workers are not only ageing but also the variation in age amid co-workers is on the rise. The increasing age diversity is triggered by numerous influences. According to Kunisch, Boehm and Boppel (2009), the demographic change and resulting change in the workforce’s distribution will trigger further diversity. For instance, most firms in Western Europe have tended to employ mainly young workers. In 2001, over half of companies in German had no employees older than fifty years. In 2006, over one third of the small and medium-sized firms had not yet employed any older people. Similarly, In Australia, the number of the older people is projected to outnumber young people by mid twenty-first century. This is according to the Australian Bureau of Statistics 2010 (Berman et al.2014). Baby boomer is the largest generation in Australia and USA comprising of people born between 1946 and 1964. Australia is one of the four nations to benefit from a true baby boom. The fact that the older populace is higher than the younger generation is a clear indication that the workforce in Australia absorbs different generations. According to Murray, Poole and Jones (2010), the large generation in Australian workforce, which is the baby boomer and will be retiring an aspect that will instigate chronic labour shortages in the country between 2011 and 2030. In contrast, older workers have often been given early retirement. In this respect, worker’s age distribution does not follow a normal distribution. Rather, worker’s age distribution is skewed to the right, leading to a relatively low mean or average age. Because of comparatively low birth rates, there will be a lack of young employees over the next few decades. This aspect, therefore, leaves older employees in the workplace. Another major cause of age diversity in the workplace is the augmenting number of retired persons who are becoming a heavy financial burden on social welfare systems. The ratio amid pensions received and taxes paid is changing because life expectancy is also increasing. People are receiving pensions for a longer time. Governments have learnt to balance the pensions and taxes by allowing their employees to work for longer periods and subsequently pay more taxes. As a result, to handle the impacts of demographic shifts, governments have begun increasing retirement age. Increased retirement age that, in fact, is an extension of the labour force’s age range leads to a higher variance and hence, increased age diversity. Finkelstein, Truxillo, Fraccaroli and Kanfer (2010) who maintain that the phasing out of early retirement programs and increased longevity of workers has contributed enormously to the increased age diversity in the workforce support this assertion. For instance, between 1991 and 2011, people in the oldest age group of between fifty-six and sixty-five years demonstrated the greatest increase in workforce involvement. The participation in the oldest group more than doubled during the past two decades. This is in contrast with the earlier time periods when firms could solely depend on a homogenous youth and middle-aged-centred workforce. The trend towards a greater proportion of older employees therefore necessitate that firms pay greater attention to establishing productive strategies for integrating workers from all age groups in order to remain competitive. For instance, the Westpac Group is one of the first Australian firms to focus on recruiting mature-age workers, a commitment that continues at present. With the aging populace holding great implications for Australia’s future workforce, Westpac focuses on extending the mean retirement age and establishing better quality of life for mature workers. These priorities have became major components of Westpac’s sustainability strategy. The company makes the most of the mature talent and retaining their skills through training, development, mentoring, and flexibility offerings (Hartel & Fujimoto, 2014). Another major reason for increased age diversity in the workplace is the shortening of the duration of the academic studies to allow people to start worker at an early age. In Europe, for instance, university degrees have shifted. Nations have begun to adopt the Anglo-Saxon master and bachelor system. In so doing, the academic studies’ duration is shortened. This extension of the age range in the workforce augments the age diversity.According to Gitman and McDaniel (2007), as the huge baby boomer generation age , so does the workforce. Baby boomers make up forty-two percent of the workforce. Although many older workers are expected to retire at the traditional age of sixty-five, a surprisingly large percentage plans to keep working beyond the typical retirement age often into their 70s and beyond. Older boomers and post-boomers are taking a positive mindset toward their later years. Financial reasons as well as longer life expectancies motivate some of the older workers to continue working. Other motivating factors include feeling productive and satisfaction of working. Even though, the studies period are shortened in some nations to allow young people to start working at an early age, the number of new entrants in the labour markets is not adequate to replace retirees. This is as a result of the increased low birth rates. These converging dynamic occurrence prompt several major challenges for modern-day firms today. Apparently, today’s workforce spans four generations. This includes recent college graduates, people in their 30s and 40s, baby boomers and traditionals. Therefore, it is not unusual to find employees in their 50s, 60s or 70s working for a manager below 30 years. Even though older workers have always been part of the labour force, their presence is increasing as retired people are returning to work. People in their 60s and 70s provide vast experience, where those in their 20s and 30s tend to be experimental, greater risk takers and open to options. Therefore, productive managers must recognise these generational disparities and utilise them to the advantage of their firms. Effects of Age-Diverse Workforce The above analysis demonstrates that the modern workplace spans around four generations. The baby boomer generation dominates most workplaces in the contemporary business environment. The age diversity has been as a result of three influences which include extension of older employee’s retirement age, demographic change and reduction of young persons’ education time. From the employee’s perspective, labour diversity may generate losses or benefits. Less enjoyable working environment triggers losses while an age-inclusive work environment triggers benefits. According to Costa, Carapinha and Catsouphes (2012), the degree to which employees feel a part of critical organisational process and their capacity to influence the decision-making increases the organisational productivity. On the contrary, a study carried out by Garnero, Kamplemann and Rycx (2014) indicated that diversity in terms of education, gender or age lowers social similarity and could hinder job satisfaction, firm performance and communication. However, according to the social comparison theory, people compare and evaluate their abilities and opinions with those akin to others. As a result, people may strive to outperform the members of their comparison group, which subsequently prompts conflicts, and rivalry that may undermine organisational performance. Social similarity, on the other hand, can be beneficial. This is because a decision may be of improved quality when it is an upshot of a confrontation amid competing views. More so, rivalry among akin employees may motivate employees to put more effort in the firm’s activities. In this respect, productivity impacts of workforce diversity are likely to differ across work settings. These effects may differ with respect to high-tech content and knowledge intensity of the production (Garnero, Kamplemann & Rycx, 2014). Companies that depend on the exploitation of novel prospects and the development of successful innovations may benefit from age diversity in the workplace. The greater intricacy of activities within innovative sectors is perceived as an aspect that fosters diversity-linked benefits. However, Gellner and Veen (2013) assert that the magnitude of the benefits depends on the type of activities that have to be performed. Gellner and Veen (2013), however, confirm that age-diverse workforces exhibit a host of diverse values, preferences and values. In this regard, an age-diverse workforce holds a larger pool of knowledge and a larger problem-solving toolbox. Provided that age diversity in the work place increases a set of potential solutions and ideas to a particular problem, it may inspire the innovative ability of companies and hence, productivity. These findings are reflected in a research carried out by Illmakunnas and Illmakunnas (2011) to assess the benefits of age and educational diversity. According to Illmakunnas and Illmakunnas (2011), age diversity is positively linked to total factor productivity. These researchers contend that aging hold negative influences overall economic growth because older workers are less productive than their younger counterparts. However, inclusion of all ages in the work force comes with positive benefits. Illmakunnas and Illmakunnas (2011) used plant-level and individual-level results to ascertain the effects of age diversity in the workplace. Apparently, age diversity widens the talent pool, broadens perspectives and increases the customer base. While older workers hold vast experience in organisational activities, younger employees are thought to learn faster and hold better physical and cognitive abilities. These two set of skills are complementary in scores of production processes, so that age-diversity may generate productivity gains for companies able to harness different age-specific skills. However, whether the net impact on productivity is positive depends on whether the benefits of age complementarities outweigh the costs that come with a more diverse workforce. Garnero, Kamplemann and Rycx (2014) further indicate that age diversity depresses mean employee’s wages. The findings that age diversity hold both beneficial and detrimental effects on productivity are practical because the researcher employed a pragmatic approach to determine the effects of age, gender and educational diversity on productivity and wage. Addressing the Challenges of Age Diversity In the Workforce According to Garnero, Kampelmann and Rycx (2014), today’s labour force is becoming increasingly heterogeneous, migration, women’s increased labour involvement, technological shifts and aging are major drivers of this occurrence. In scores of nations, firms are under pressure to diversify their workforce through affirmative action or quotas. In this respect, workforce diversity has therefore become a crucial business concern. Companies have to manage diversity both externally and internally. As a result, an increasing number of companies employ a diversity manager whose role is to ensure that diversity does not impede productivity but may contribute to achieving the objectives of a firm. The age diversity in the workplace requires managers to practice careful management of the workforce. Organisations must reach the high productivity of all the age groups in the workplace. According to Boehm, Kunze and Bruch (2014), organisations must install appropriate and focused HR Practices. The age-inclusive Human Resource practices might include the enhancement of an age-friendly organisational culture that values and promotes the contribution of all the age groups (Guajardo, 2015). An age-inclusive culture should aid to offer all workers the courage to speak up and bring their own ideas as well as help to promote organisational effectiveness and creativity. Therefore, firms interested in efficiently managing an age-diverse workforce should ensure that their age-inclusive HR practices cover the HR policy domains and consider the requirements of both the older and younger employees. Bell and Narz (2007) assert that flexible work arrangements are essential in addressing the challenges posed by age-diverse workforce. Apparently, flexible work arrangement provide scores of advantages in assisting firms to gain a competitive edge in attracting and retaining valued highly educated workers. Flexible work arrangement entails any arrangement that differs from traditional schedule of 8.00 a.m to 5.00 p.m. The flexible work arrangement should be provided to all generations of employees. Although younger employees are more likely to anticipate flexible work arrangement, such arrangement holds cross-generational appeal. Soldan and Nankervis (2014) believe that relationships amid HR professionals and line managers are essential in the management of an age-diverse workplace. Formulation of diversity policies is paramount in age-diverse work places. These findings are practical because the researched used as exploratory case study method that allowed the exploration of ways to manage age-diversity in the workplace. James and Mckechnie (2011) propose strategies to promote employee engagement as one of the ways of addressing the challenges of an age-diverse workforce. The researchers propose favourable job conditions and organisations rewards. According to social exchange theory, employees who feel appreciated and valued by an organisation reward the firm with discretionary effort in a form of quid pro quo Conclusion Demographic change and globalisation are altering the composition of the modern workforce. Extended life expectancy, falling birth rates and aging of the baby boom generation contribute to changes in the composition of workforce. The demographic change has become a pressing issue for scores of nations. From the literature review, the workforce today is diverse because of the inclusion of people of all ages in the workplaces. While the inclusion comes with benefits in terms of innovation, it may detrimental to organisational productivity. This calls for effective management of diversity, which is a critical success factor for firms. Firm should implement feasible HR policies, flexible working arrangements, favourable work environment and engagement strategies such as organisational rewards. References Bell, N., & Narz, M.(2007). Meeting the challenges of age diversity in the workplace. The CPA Journal, 56-59. Berman et al.(2014). Kozier & Erbs fundamentals of nursing Australian edition. Australia: Pearson Higher Education. Boehm, S., Kunze, F., & Bruch, H.(2014). Spotlight on age-diversity climate: The impact of age-inclusive HR practices in firm-level outcomes. Personnel Psychology, 67, 667- 704. Costa, C., Carapinha, R., & Catsouphes, M.(2012). Putting age in context: Relational age and inclusion at the workplace. Indian Journal of Gerontology, 26 (1), 50-74. Daft, R.(2007). The leadership experience. UK: Cengage Learning. Garnero, A., Kampelmann, Rycx.(2014). The heterogeneous effects of workforce diversity on productivity, wages and profits. Industrial Relations, 53(3), 430-477. Gellner, U., & Veen, S.(2013). Positive effects of ageing and age diversity in innovative companies-large scale empirical evidence in company productivity. Human Resource Management Journal, 23 (3), 279-295. Gitman, L., & McDaniel, C.(2007). The future of business: The essentials. UK: Cengage Learning. Guajardo, S.(2015). Assessing organisational efficiency and workforce diversity: An application of data envelopment analysis to New York City Agencies. Pubic Personnel Management, 44(2), 239-265. Hartel, C., & Fujimoto, Y.(2014). Human resource management. Australia: Pearson. Ilmakunnas, P., & Ilmakunnas, S.(2011). Diversity at the workplace: Whom does it benefit. De Economist, 159, 223-225. James, J., & Mckechnie, S.(2011). Predicting employee engagement in an age-diverse retail workforce. Journal of Organisational Behaviour, 32, 173-196. Kunisch, S., Boehm, S., & Boppel, M.(2010). From grey to sliver: Managing the demographic change successfully. USA: Springer Science & Business Media. Liebermann, S., Wegge, J., Jungmann, F., & Schmidt, K.(2013). Age diversity and individual team member health: The moderating role of age and age stereotypes. Journal of Occupational and Organisational Psychology, 86, 184-202. Murray, P., Poole, D., & Jones, G.(2006). Contemporary issues in management and organisational behaviour. Australia: Cengage Learning. Rabl, T., & Triana, C.(2014). Organisational value for age diversity and potential applicants’ organisational attraction: Individual attitude matter. Journal of Business Ethics, 121, 403-417. Rice, M.(2015). Diversity and public administration: Theory, issues and perspectives. UK: Routledge. Soldan, Z., & Nankervis, A.(2014). Employee perceptions of the effectiveness of diversity management in the Australian public service: Rhetoric and Reality. Public Personnel Management 43 (4), 543-564. Read More