The Aging Workforce. How to sustain Employability and Career Development through Age Management Policies

Bachelor Thesis 2014 28 Pages

Economics - Job market economics


Table of Contents

1 Introduction
1.1 Theoretical Background
1.2 Scope of Work and Research Questions
1.3 Approach to problem

2 Age Management
2.1 Demographic Trends and the Aging Workforce
2.2 Definition of Age Management
2.3 Importance of Age Management Policies in HRM

3 Employability of the Aging Workforce
3.1 Definition of Employability
3.2 Importance of Employability for the Aging Workforce
3.3 Lifespan-oriented HRM concept

4 Career development of the Aging Workforce
4.1 Definition of Career development
4.2 Importance of the development of the Aging Workforce
4.3 HRM approach to extend working lives

5 Summary and outlook


List of abbreviations

illustration not visible in this excerpt

List of Figures

Figure 1: Population Structure in Austria 1950-2075 2

Figure 2: Five HRM areas for a lifespan-oriented concept 13

List of Tables

Table 1: Age Structure of Labour Force in Austria 2012, 2030 and 2050

1 Introduction

This thesis deals with the question how employability and career development of the aging workforce can be sustained through age management policies in times of demographic and technological change.

We are living in a time which is dominated by change and where people are getting older due to sophisticated health care systems. How can it be guaranteed that older employees still find jobs and upkeep their competencies in this ever changing environment and global competition? To understand the importance of this subject matter the present paper starts with a theoretical background of the aging of the workforce and what challenges this might entail in the HR landscape and its policies.

1.1 Theoretical Background

The world population used to grow steadily over the last hundreds of years and showed an equal balance of the total population in terms of age. There was a natural selection of the very young replacing the very old which ensured a balanced society. As the human knowledge and technology progressed over the last centuries, this replacement process has come to an end. Due to modern health care systems the older society (as of 50 years) is growing and holding more than 50% of the population, with a decreasing young generation following, speaking from industrialized nations. It is predicted that the world population will stabilize by 2050 after growing for hundreds of years at an increasing rate (Schaffer, Kearney, Voelpel, & Koester, 2012, p. 46). Much of this is due to decreasing birth rates in most industrialized countries and the population will be aging because of better health care where people tend to live much longer (Field, Burke, & Cooper, 2013, p. 1). According to Figure 1 on the next page, it is obvious that the population group in Austria aged 65 and above will more than double from 1950 to 2075 with a diminishing age group of 19 years and below.

Figure 1: Population Structure in Austria 1950-2075

illustration not visible in this excerpt

Source: according to “www.statistik.at,” 2013

Knowing the statistics, why is so little attention paid to the adaption of policies as a response to these changing demographics? This can be demonstrated from two perspectives: From the governmental side, it is because the demographic change is an issue which needs to be tackled over decades and politicians often only concentrate on their political term which consists of a couple of years. From the organizational perspective, organizations should start with retention planning in order to address the challenges of labour shortages – loss of older employees through retirement and the difficulty of recruiting younger workers – to make sure that valuable employees remain in the organization. Given these changes, the future situation raises concerns of a growing number of retirees and a shrinking number of workers paying for their retirement which will cause a huge problem within the society if this is not tackled (Field et al., 2013, p. 2).

As a result of these demographic changes, workplaces are becoming increasingly age diverse - where the baby-boom generation is working-side-by side with generations X and Y (Cogin, 2012, p. 2268). Today the multi-generational workplace consists of four different generations - traditionalists (born between 1928 and 1945), baby boomers (born between 1946 and 1964), generation X (born between 1965 and 1980) and generation Y or “millennials” (born between 1981 and 2000) - and each generation has different expectations, beliefs, values, wants and approaches to learning and balancing work and life (Cogin, 2012, p. 2268; Young, 2013, p. 29). The best is to combine the skills, experience and knowledge of older and younger employees. In this case organizations need to create a culture of communication and cooperation and set up processes to coordinate the interaction among all workforce generations (Field et al., 2013, p. 14).

So far, little attention has been paid to the impact of age diversity on Human Resource Management (HRM) practices (Cogin, 2012, p. 2268). As there will be a lack of young employees entering the labour market and the baby boomers will be slowly retiring, the growing aging workforce needs to continue working into later life (Aaltio, Salminen, & Koponen, 2014; Field et al., 2013; Hedge, Borman, & Lammlein, 2006). As a result of their professional expertise, employees over the age of 60 will remain important performers to employers. One of the greatest challenges in HRM is to implement policies and practices to sustain older workers and reconsider how HRM policies might pursue longer and more productive working lives (Aaltio et al., 2014, p. 160). The challenge of HR managers will be to understand and motivate the various generations and to use this knowledge to design relevant development practices to guarantee on-going employability and career development (Billett, Dymock, Johnson, & Martin, 2011, p. 1258). There is a need to create HR policies and programs that help employees transition to a new stage of work and life (Field et al., 2013, p. 15).

1.2 Scope of Work and Research Questions

The aim of this paper is to find out how employability and career development of aging employees can be sustained through a holistic approach which focuses on the entire life-span of an employee’s career. To respond to this subject matter the research questions have been set up on the basis of the following research gap: How does age management contribute to employability and career development taking into consideration the aging workforce?

- How does a lifespan-oriented HRM concept contribute to increase the employability of aging employees?
- How does redeployment contribute to the motivation of older workers by offering alternative career paths?

These questions shall be conducive to raise awareness on the demographic shift, the aging of our society and age diversity in workforces. So far, hardly any attention has been put on the organizational impact of age diversity on HRM practices. Further, very little is known about the practice of age management and the employability and career development of the aging workforce. This thesis seeks to elaborate the controversy of undervaluing older workers’ contributions and the necessity to keep them in the labour force until later stage in life. Therefore, this paper demonstrates the importance of age management for HRM in order to manage, develop and retain the aging workforce. According to the literature review, a holistic approach will help employers better understand the effects of the labour shortage and how to sustain employability of an aging workforce in times of demographic change. The aim is to change employers’ attitudes towards aging employees by providing direction for retaining and supporting their on-going employability. This thesis will expand knowledge on the age-development relationship and provide practical advice on the realization of age management policies in HRM through a lifespan-oriented development process and extending working lives.

1.3 Approach to problem

The title of this thesis contains the key words aging workforce, age management, employability and career development as a result of the following examination.

To begin with, the term age management had to be analysed in chapter two which was used in the literature under HRM measures. To find out where this term comes from a deeper analysis was conducted, in order to understand the concept of age management and its impact on the workforce and the labour market. The term aging workforce was mentioned in this context and so the demographic change had to be examined in this conjunction in subchapter 2.1 followed by a definition of age management taken from different literature research in subchapter 2.2. This led to the importance of age management policies in HRM described in subchapter 2.3 and how these practices are reflected in the employability and career development of the aging workforce.

To understand the impact of HRM practices on the employability this term had to be elaborated in connection with the aging workforce as a next step in chapter three. The meaning of employability is described in subchapter 3.1 followed by the importance of employability for the aging workforce in subchapter 3.2. In order to maintain the employability, employees’ skills have to be kept fresh through continuous training during the whole career life cycle. So far, there is very little research on the implementation of age management policies that implies a career long development process and enables older employees to work until a later age. Hence, the idea of a lifespan-oriented HRM concept is presented in subchapter 3.3.

Employability and a lifespan-oriented concept go hand in hand with the career development of the aging workforce covered in chapter four. It begins with a definition in subchapter 4.1 with a transition to the importance of the development of the aging workforce illustrated in subchapter 4.2. It raises the need to implement a valid career development program that particularly meets the needs for the aging workforce and encourages them to work longer. The human resource management approach to extend working lives is outlined in subchapter 4.3.

This paper considers a comprehensive career development plan and a lifelong learning process that contributes to the employability in every career stage and concludes with a summary and outlook described in chapter 5.

2 Age Management

This chapter deals with the age management policies and practices from an organizational point of view taking into consideration future demographic trends and necessary HRM practices. The question is how age management policies in organizations should be implemented to better capture the potential of an aging workforce and of age-diverse work teams and why it is important to adapt the corporate culture to age management.

2.1 Demographic Trends and the Aging Workforce

Our society is aging as a result of a demographic shift from a population with high fertility and mortality rates to a population with increasing life expectancy and declining birth rates (Bieling, 2011, p. 2; Flüter-Hoffmann, 2010, p. 199; Schaffer et al., 2012, p. 46). As the population is aging, this will lead to a greater proportion of older workers in the workforce and a smaller proportion of young employees entering the working world in industrialized nations (Aaltio et al., 2014, p. 160; von Bonsdorff, 2011, p. 1262). This implicates severe labour shortages and will have a significant impact in the labour market and employment practices; in particular increasing the need for employers to employ relatively older workers, extending people’s working lives and increasing the employability of all workers in different age groups (Fuertes, Egdell, & McQuaid, 2013, p. 272). This phenomenon emphasises the need for sustaining competent workers through applied age management policies (Billett et al., 2011, p. 1248; Fuertes et al., 2013, p. 274).

The number of younger workers is expected to decline substantially and the number of older workers, over the age of 45, is expected to grow. These shifts will result in almost 39.2% of the workforce being over the age of 45 by 2030 with an increase to 41.8% by 2050 as can be seen in Table 1 according to the Austrian labour statistics.



ISBN (eBook)
ISBN (Book)
File size
629 KB
Catalog Number
Institution / College
FH Vienna – Personal & Organisation
Sehr Gut
Aging Workforce Age Management Employability Life-span oriented development Career development



Title: The Aging Workforce. How to sustain Employability and Career Development through Age Management Policies