The topic of the discussion is based on the new decision made by the Australian government to increase the pension eligibility age to 67 years old and its consequences on an organisation regarding human resources and organisational development.
The research has been focused on the current issues relating older workers in the workplace and what are the challenges facing human resources management as well as what could be put in place to develop change.
Human Resource "is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization" following the definition given by the About.com website (2010).
As defined by Waddell, Cummings and Worley 2010, organisational development is "a system wide application of behavioural science knowledge to the planned development and reinforcement of organisational strategies, structures and processes for improving an organisation's effectiveness".
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In order to face future challenges and in the long term interest of the country, the Australian government decided to change the pension eligibility age from 65 to 67 years old by 2023, increasing the qualifying age of six months every two years from July 2017 (The Hon Jenny Macklin MP Minister for Families, Housing, Community Services and Indigenous Affairs 2009). This decision will have an impact on human resources management throughout organisations as well as on their development.
This paper focuses the current age related issues in the workplace as well as what the implications introduced by the new law in organisations regarding human resources and organisational development.
This report is based on an article entitled Age related issues in the workplace by Giardi and Teh (2009), along with researches in human behaviour and organisational books and internet, and underlines:
Some major facts about the current workforce
Issues relating to older workers
The influence of the new law on human resources and organisational development
Some recommendations based on a real case
I. AGEISM IN THE WORKPLACE
Facts and Ageism
Major changes have been happening in recent years regarding demographics, both population and workplace related, one influencing the other. Generations related to the workplace are more likely to be Baby Boomers (born after the Second World War, between 1946 and 1965), generation X (born between 1966 and 1982) and generation Y (born after 1983) (Schiffman, G., Bednall, D, O'Cass, A., Paladino, A., Ward, S., Kanuk, L. 2008).
As underlined by Giradi and The (2009) in the article Age Related Issues in the workplace, the amount of older people in the workplace increases as the global workers declines: this is underlined by a report from Access Economics (2001) stating that when the times comes for Baby boomers to retire, there will be 2, 5 workers to replace 1 retiring as opposed to the present ratio of 5 or more for 1 retiring. As explained by Michael O'Neill in his article posted on the National Senior Australia website, Australia's over 55 years old participation rate is the workforce is very low, and highlights the findings given by the Australian Bureau of Statistics showing that young people do not suffer from long periods of unemployment as much as older Australians.
Ageism as also an influence on the low participation rate of older Australians in the workplace: as defined by Traxler (1980, sighted in Age related in the Workplace), ageism is "any attitude, action, or institutional structure which subordinates a person or group because of age or any assignment of roles structure in society purely on the basis of age". As stated by Linda M. Woolf, Ph.D. (1998), Traxler defined four factors that reinforce the negative image of aging:
Aging is related to the fear of death in Western countries:
The youth culture as a bigger place nowadays than the older one (e.g. televisionâ€¦)
There is a focus on productivity which tends to discriminate older people
The lack of studies about older generations tend to contribute to negative ideas
Girardi and Teh (2009) underline that little studies have been done about ageism and its affect on intergenerational issues, as it can have an important impact on an organisation.
As underlined by Girardi and Teh (2009), older workers nowadays have difficulties complying with the changing values of the workplace: usually at the time they started their careers, having a job would assure a future and was the promise of following promotions in reward for loyalty and a "reasonably secure job identity" (Cascio 1998, sighted in Age related issues in the workplace). In the current workplace, promotions are more likely to be based on merit rather than based on how long an employee has been working in the organisation; salaries may also so be based on performance, having a high salary does not necessarily means superiority and obtaining a job does not assure long term employment (e.g. in hospitality industry, most of new employees are employed on a casual basis).
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As explained by Giradi and Teh (2009), Baby Boomers can be defined as hard working people who are more likely to have a vey high ethic and value success in their career: this generation basically "live to work". Younger generations on the other hand tend to "work to live", and are usually more independent and educated. Therefore, as Baby Boomers and generations X and Y have different values regarding work, this may lead to intergenerational issues: older workers may feel resentment towards other younger co-workers in the business, which can be increased if they think that they could not benefit from the same possibilities when they started their careers. On the other hand, younger workers may stereotype Baby Boomers as less productive being older, but conversely also tend to think being young is an inconvenient regarding possible future promotions compared to older workers. Table 1.1 Sources of Intergenerational Tension in the workplace by Girardi and The (2009) summarises the generational differences under five factors: stereotyping (coming from Baby Boomers and younger workers), ageism, different values between generations, low quality relationships between these groups (e.g. conflicts) and the fact that generation X might be better at teamwork than older workers.
These issues, like ageism for example, currently do not seem to be a high priority for organisations' management. The introduction by the Australian government of the new law regarding the increase of the pension eligibility age to 67 years old might reinforce these current problems, and this decision will have implications regarding Human Resources and organisational development for organisations.
II. CHANGING THE PENSION ELIGIBILITY AGE: INFLUENCES ON HR AND ORGANISATIONAL DEVELOPMENT
Challenges for Human Resources
Changing the pension eligibility age will certainly increase the current challenges of human resources departments in organisations and will imply creating or reinforcing strategies to retain staff and keep a good level of productivity. As underlined by Storer (1990), the focus must be on retaining younger staff and try to meet the expectations and needs of all generations: as these generations have different values regarding work and related topics (e.g. job satisfaction, motivation etcâ€¦), it is important to overcome these differences in order to maintain cohesion and productivity. Following Chay, Aryee and Chew's theory (1995, sighted in Age related issues in the workplace), motivation is what maintains Baby Boomers' performance, much more than financial reward. Older workers, and particularly older women, can be motivated by challenging jobs and tasks and by using their experience in their organisation as many older women might had to lower their career expectations because of parenthood and social representations: it is a way of satisfying their self-esteem (e.g. confidence, achievement etcâ€¦) and self-actualisation (e.g. creativity, problem solving etcâ€¦) needs following Maslow's hierarchy of needs (1943). It would also help balance with the negative image given to them because of ageism in the organisation, like with younger co-workers for example.
Girardi and Teh (2009) highlight that in some industries where jobs are physically demanding, changing the eligibility pension age to 67 will increase current issues about the ability of older workers who might already no well coping with their duties. Human resources must then be careful with safety and health matters, improve the procedures and make sure that measures are respected by the organisation as a whole and individually by the workers. This may suggest modifying inner safety rules to reinforce the safety of older workers and make their duties manageable and possible to be done. Also, human resources may put in place career reconversion programs for older workers no longer able to perform very physically demanding duties (e.g. supervising, office job), still making sure the employees feel they are needed and useful (motivation) and not just kept into the organisation because of the law.
Training is also a way of retaining staff and it offers various opportunities to older employees: Girardi and Teh (2009) explain that older workers may not have the required skills as they might be experienced in areas not in demand anymore or not up to date. As underlined by Shea (1994), training is a useful tool to increase job performance, and human resources department should focus on creating training courses and workshops that are suitable for older workers, taking in consideration their "fears and anxiety": the training programs should be then mainly suitable for both young and older people, as doing separate courses depending on the generation of workers would tend to reinforce the intergenerational issues in the organisation and older staff might then be less motivated by the training. In addition, training employees regularly through their careers will make them experienced in various areas and transform them into multi-skilled workers who will have more possibilities regarding their position in the organisation and therefore keep them motivated.
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Values of both older and younger generations may be difficult to change following Girardi and The (2009), so human resources need to make sure that the communication is optimum between management and employees as well as help older and young employees to communicate efficiently in the organisation (e.g. regular meeting, procedures etcâ€¦). Equal opportunities should be offered to employees so they do not feel that they are treated unfairly.
Impact on organisational development
Regarding organisational development, the first change should be to try to erase, or at least reduce negative attitudes related to ageism, in order to improve relationships between older and younger workers in the organisation, which would diminish intergenerational conflicts as underlined by Girardi and Teh (2009).
Management, and particularly human resources, should understand that overcoming intergenerational and older workers related issues is highly important as it can reduce the organisation's performance as a whole, in addition to limiting its potential as well as its employees' (Giradi and Teh 2009). As the workforce is getting older and will have to work longer, it is extremely important to keep staff motivated about their job to retain them in the organisation, as "an organisation's future competitive advantage is partly dependent on retaining its older workers" (Girardi and Teh 2009): for example, providing more meaningful and challenging job tasks using their skills, involving them in the decision process and training them. The organisation's culture must be in phase with its employees whether they are Baby Boomers or from generation X or Y. Some changes might be needed into the organisation's values that could balance between older and younger worker's ones. For example, a business selling a product targeting teenagers must have a culture that fits the targeted clientele but that also complies with its older workers inside the organisation or these workers might feel excluded.
As explained by Waddell, Cummings and Worley (2010), an organisation is an open system in which the inputs, once gone through the transformation process, will produce the outputs, than can be then analysed to see if changes need to be implemented or not. Based on this process, organisational development following the increase on the pension eligibility age could be done as followed, based on a model of group analysis given by Waddell, Cummings and Worley (2010):
Analyse the organisation design: human resources systems (e.g. appraisals, rewards etcâ€¦), structure, organisational culture, activity.
Analyse the design components: goal clarity (e.g. if group do understand the organisation's vision and goals), task structure (how groups are designed - e.g. younger and older employees working together, majority of young workers?), composition (group membership - e.g. different skills for a younger and on older worker is the same group, out-of-date skills from older workers?), group functioning (e.g. how older and younger communicate with each other) and performance norms (e.g. does ageism has an influence on members' relationships?).
Analysing the outputs, which refers to the group effectiveness (performance and quality). This could include analysing how productive are the older workers or if the training they are provided is efficient for example.
Changes needed in relation to the increase of the pension eligibility age to 67 years old can be introduced in the organisation through human resources and/or with the help of an Organisational Development practitioner. In order to analyse where changes need to be implemented, data can be collected either from questionnaires, interviews, observations or unobtrusive measures (e.g. revenue statement, various reports etcâ€¦).
The case of the Australia Post company is a good example to be followed as an organisation which took a step ahead and did some studies about older workers and their needs. They conducted a Work and Ageing survey of their employees aged from 45 years old and over in order to understand and analyse their profiles and characteristics. They also did a survey of newly retired to try to better understand "their work choices" (Wood, Zeffane, Fromholtz, Wiesner and Creed 2010). It was the first company in Australia to undertake such surveys, and Australia Post obtained a Mature Age Employer Award from the Department of Employment and Workplace Relations. The company increased its productivity by 16.7% over five years between 2001 and 2006.
The Australian workforce is ageing and the national birth rate is decreasing, which led the government to increase the pension eligibility age to 67.
Nowadays, there is general stereotype about age, which can be called ageism, which lead younger workers and sometimes even management to think that Baby Boomers might be less productive and flexible than new generations. As each generation has different values regarding work, this often leads to intergenerational issues in organisations.
The introduction of the new law will increase the challenges human resources management faces regarding older workers and demand for more efficient strategies to retain staff. The main factor in order to succeed is to keep older employees motivated and try to reduce bias about age in the organisation's culture.
This new law will also lead to organisational development in order to keep organisations efficient, and analysis of their current situations will help to implement the needed change to successfully deal with workers working longer and stay productive at the same time, satisfying both the businesses' goals and the employees.