Pay Flexibility in an Ageing Workforce. A Model of Pay for the German Building Trade

Table of Contents

List of Figures

List of Tables

1 Introduction
1.1 Statement of the problem
1.2 Research aim with questions and objectives
1.3 Overview of the methodology
1.4 Rationale and significance
1.5 Role of the researcher
1.6 Organisation of the thesis

2 Literature review
2.1 Working with teams
2.1.1 Team processes and group dynamics
2.1.2 Communication in work teams
2.2 Effects of a higher average age in work teams
2.2.1 Changing workforce composition
2.2.2 Age structure in the German building trade
2.2.3 Team performance and productivity
2.2.4 Team effectiveness and successful teamwork
2.2.5 Summary
2.3 The interrelation between performance and pay
2.3.1 Performance in anticipation of pay
2.3.2 Effects of perceived unjust pay to performance
2.3.3 Motivation in connection with pay and performance
2.3.4 Summary
2.4 Rewarding teams
2.4.1 Pay based on the job or on skills
2.4.2 Seniority-based pay
2.4.3 Performance-based pay
2.4.4 Team-based pay
2.4.5 Collective bargaining agreements in the German building trade
2.4.6 Effectiveness of team-based-pay
2.4.7 Pay flexibility and more dynamism in pay
2.5 Theoretical concept and conclusions

3 Research Methodology
3.1 Structured organisational plan
3.2 Methodological foundations
3.2.1 Embodied philosophy and researcher‘s values
3.2.2 Adopting an inductive approach
3.2.3 Qualitative research
3.2.4 Selection of the research design
3.2.5 Case study research design
3.3 Research sample and data sources
3.4 Limitations and delimitations
3.5 Data collection using triangulation
3.5.1 Description of the procedure
3.5.2 Selection of the cases
3.5.3 The method of semi-structured and in-depth expert interviews
3.5.4 The method of focus group
3.6 Data analysis methods and interpretation
3.7 Quality criteria in case study research
3.8 Ethics of qualitative research
3.9 Own methodological experiences

4 Data collection and findings from the case studies
4.1 Structure of the case organisations
4.2 Different headings of the data collection
4.2.1 Data that emerged from the expert interviews
4.2.2 Data that emerged from the focus groups
4.3 Further data interpretation
4.3.1 Cross-case matrix of different performance shapes
4.3.2 Cross-case analysis
4.3.3 Labour market conditions influences on pay flexibility
4.3.4 Moral dilemma of pay flexibility
4.4 Summarized findings of the expert interviews and focus groups

5 Results of the research
5.1 Why pay flexibility at all?
5.2 Requirements for a model of pay flexibility
5.3 The Four-dimensions-model of pay flexibility
5.3.1 The central factors of the model
5.3.2 The dimension of "individually"
5.3.3 The dimension of "contractually"
5.3.4 The dimension of "collectively"
5.3.5 The dimension of "market-oriented"

6 Contributions and an outlook to further research

References

Annex I

Annex II

Annex III

Annex IV

Annex V

Annex VI

Annex VII

Annex VIII

Abstract

Starting from the demographic change, the average age of work team members in the German building trade is expected to increase in the following decades. The findings of this study show that the performance of work teams also change due to a higher average age in organisations. The changes are not uniformly positive or negative; sometimes they are even contradictory. Some relevant theories and models demonstrate that performance and pay are in a causal relationship. They affect each other or are in mutual dependence. The data analysis of the expert interviews and focus groups carried out in twelve different business types from the building trade has revealed that a change in performance does not trigger necessarily an adaptation in pay. An adaptation of pay could prove if it reduces or compensates a possible negative impact of a higher average age on team performance in work teams. The Four-dimensions-model of pay flexibility which is developed by the researcher based on the results and the findings of this study identifies the different fields of action distributed on four dimensions. The model is based on the current pay conditions of the German building trade and represents a new approach to pay. It has been worked out that pay flexibility can be expanded based on the existing conditions and has to be built up on new structures which consider the demographic change. The model is broadly set up and takes into account the individual and contractual as well as collective and market-oriented dimensions. As the German building trade is traditionally not a pioneer in future-oriented change processes it is a challenge to implement the Four-dimensions-model of pay flexibility in this trade. The establishment of the model in practice aims to preserve the competitiveness and increases the attractiveness of the occupations in the trade, in order to counteract the shortage of skilled workers.

Keywords: work team, age, pay flexibility

List of Figures

Figure 1: Five stages of team development (Tuckman & Jensen 1977)

Figure 2: Model of Group Socialization (Levine & Moreland 1994)

Figure 3: Process of Performance Management (Mentzel et al. 2006)

Figure 4: Effects of Diversity in Organizational Groups (Milliken & Martins 1996)

Figure 5: Typology of Demographic Diversity Variables (Pelled 1996)

Figure 6: Relationship among work group demographic diversity, conflict, and performance and turnover consequences (Pelled 1996)

Figure 7: theory of group interactions and team success (Stock-Homburg 2010)

Figure 8: Effects of a higher average age on performance

Figure 9: The Collective Effort Model (Karau & Williams 1993)

Figure 10: A Heuristic Model of Group Effectiveness (Cohen & Bailey 1997:244)

Figure 11: The interrelation between performance and pay

Figure 12: Age-earning-profiles by education level (income in Euro and age)

Figure 13: Factors influencing the effectiveness of team-based rewards (DeMatteo et al. 1998:153)

Figure 14: Evaluation of the pay schemes in terms of age and performance

Figure 15: Theoretical concept of the research

Figure 16: Inductive and deductive reasoning (Anderson 2009:145)

Figure 17: Five-phase cycle for analysing qualitative data (Yin 2011:178)

Figure 18: Relationships between the main aspects of analysis

Figure 19: Pay flexibility in an ageing workforce (skills shortage)

Figure 20: The Four-dimensions-model of pay flexibility (self-developed)

List of Tables

Table 1: Tradesmen of the German building trade - Employee groups by age

Table 2: Increasing rates of three age groups in the roofing trade (following Bonin et al. 2012)

Table 3: Studies dealing with the factor of age and its effects

Table 4: Overview of the collective bargaining agreements related to the research

Table 5: Overview of the legal foundation for performance-based pay in the collective bargaining agreements of the related trades

Table 6: Structured organisation plan

Table 7: The three phases of case studies (following George & Bennett 2005)

Table 8: Structure and age range of the case organisations

Table 9: Summary of the data from the expert interviews related to each research question

Table 10: Data from the focus groups related to the three research questions

Table 11: Overview of the direction of change related to a higher average age

Table 12: Results and findings of the literature review realised in the model

Table 13: Results and findings of the case studies realised in the model

1 Introduction

Lower birth rates and increased life expectancy mean for the German population that the number of older people will increase (Federal Statistical Office 2015b; Pack et al. 2000). The number of immigrants from abroad is unlikely to stop this development. A migration rate of approximately 200,000 people a year is expected (Federal Statistical Office 2015b; Richenhagen 2007). In addition, firstly, the lead time to achieve general university entrance qualification has been matched to the European conditions and reduced by one year (Federal Ministers of Education 2015) and secondly, the legal age of retirement has been increased to the age of 67 (RV-Altersrentenanpassungsgesetz [pension adjustment law] 2007). In the 2015 Ageing Report of the European Commission, it is expected that by the year 2030, the population of working age (15-64 years) in Germany will decrease from 66.1% (2013) to 59,0% , by the year 2060 to 54,5 (European Commission 2014). By 2020, it is also expected that the largest age group in Germany will be between 50 to 64 years, representing 39% of the total population (Federal Statistical Office 2015a). Today the largest age group is formed by employees in the age group between 35 and 49 years at 37%. Currently, the 50-64 age class accounts for 32% (Richenhagen 2007). All these figures point to the fact that the average age of the workforce will rise (Brücker et al. 2012; Vogler-Ludwig & Düll 2013). In total figures, there will be 10.684 million less employable people in Germany by 2060 than in 2013 (European Commission 2014). On the other hand 14.7 million employable people in the age group of 30-49 years by 2050 - in contrast to 22.6 million in 2008 - will be available on the labour market (Anger et al. 2014; Fuchs et al. 2011). It has been suggested that the ageing workforce impacts organisations (Seitz & Wagner 2009).

This predicted change of the population profile is the starting point for this research. It is assumed that the workforce composition in work teams is also changing (Kunze & Reinwald 2017), as well as in the total workforce of organisations, directly derived from the changing population profile. Work teams in the German building trade and their individual team members are the focus of the investigation. Changes in structures - in this case, the age structure - may require an adjustment of internal systems. In particular, the aspect of payment for the individual worker in these work teams is examined. There are various components which constitute the system of payment. But the question posed by this research is: Is the pay adaptable to the upcoming changes in demographic make-up? Therefore, the research asks what the implications are of changing demographics for team related performance and thereby pay. It is to analyse which interrelations there are between the changing workforce composition and related pay.

This study starts with the research strategy by pointing out the problem definition, the purpose and the research questions. Then the ontological and epistemological assumptions show the researcher’s values. After that the research methodology is represented. The main part of this study deals with the findings of the literature review and of the case studies. Thereafter, the analysis and synthesis follows. In the centre of the results’ chapter the model of pay flexibility is developed which is based on theory and empirical research. Finally, the study ends with the contributions to theory and practicesummary, an outlook and recommondations for further research.

1.1 Statement of the problem

The increasing average age of the population has a direct impact on organisations and the labour of work teams in terms of performance, team effectiveness and outcome. Team composition (Boersch-Supan et al. 2005; Cohen & Bailey 1997) and the team design (Belbin 2010a) are crucial for the team performance, combined with the individual knowledge and skills (Cohen & Bailey 1997; Porter et al. 1975) which depend among other factors on the age of the team member (Backes-Gellner & Veen 2008; Boersch-Supan & Weiss 2016). There is no uniform statement about the direction of these effects. The range varies from weak to strong depending also on the type of tasks, team composition, team roles or individual skills. The effects can be either positive (Backes-Gellner & Veen 2008; Boersch-Supan & Weiss 2016; Gellert & Kuipers 2008) or negative (Backes-Gellner & Veen 2008). The team performance refers to the team result (Becker 2002) and is defined as productivity per man-hour worked (Jung 2006). In general, performance is linked to pay. Rewards and payments can lead to higher performance if they are attractive for the individual (Adams 1963; Karau & Williams 1993; Thierry 2001; Vroom 1964). Lawler and Cohen point out that designing a pay system means a mix of team-level and organisational-level pay of performance (1992) taking into account that a pay system can displace the intrinsic motivation (Lawler 1998).

The pay system in the German building trade is characterised by collective bargaining agreements that enable only limited design options for pay. Elements of pay are related to the job combined with individual skills, job tenure and the seniority of the individual. Performance-related elements may be paid above the collectively agreed rates. In some agreements there is also the possibility to pay less than the wages agreed. Regulations for team-based pay are not provided in the collective agreements. Thus, team performance, team composition or team roles are not currently aspects for paying team members. They are paid individually, independently of these aspects. A change in performance due to the ageing workforce and irrespective of the direction of the change in performance is not taken into account in the payment arrangements. For economic reasons of profit maximisation or safe guarding, both contracting parties, employers and workers, are interested in making a wage adjustment. Negativity is not at the center of this research, an adaptation is open to all directions and can have a direct or indirect approach. There is, however, no systematic development for adapting pay to performance.

1.2 Research aim with questions and objectives

The aim of this research is to develop a model of pay flexibility for work teams in the German building trade related to the changing workforce composition. The model of pay flexibility may include new thinking about pay and thus performance forms a basis for new concepts of payment.

The need for pay flexibility is essential because the changes of the workforce composition will have consequences on the team work results. By adapting the pay of the workers in the work teams, the team work results can be positively influenced. Possible negative effects of the increasing average age can be counteracted by a system of pay flexibility which can have both a direct or indirect approach.

The definition of the research questions is of central importance for a successful completion of this research work. With it, the research questions must relate to the problem definition and to the aim of this research. To reach the aim of this research it is necessary “to discover answers to questions through the application of systematic procedures” (Berg 2007:8). Before describing the research strategy with its systematic procedures, the research questions and research objectives are explained. The research strategy is the general approach to answer the research questions and to reach the research objectives (Anderson 2009).

Based on the research aim, three main questions are to be answered:

1) What are the effects of changing work team demographic composition on team performance?
2) What are the interrelations between the effects of team performance on related pay?
3) How could a flexible payment system be established in order to realise pay adjustments for the team members?

This research explores the way in which pay flexibility for work teams may be adapted to meet their changing demographic composition.

To answer these questions, the following objectives have to be fulfiled:

- To identify the effects of changing work team demographic composition on team performance
- To explore the interrelations between the effects of work team demographic composition on team performance
- To explore the interrelations between the effects of team performance on related pay
- To examine the options available to introduce a flexible payment system that considers changing work team demographic composition in combination with team performance
- To examine the practical implications and potential of a flexible payment system as proposed.

1.3 Overview of the methodology

This section outlines the methodological approach, the research setting and the methods of data collection and analysis used.

This research is based on the ontology and the epistemology of relativism under the paradigm of constructivism (Easterby-Smith et al. 2008; Guba 1990). To achieve the research aim of developing a model of pay flexibility for work teams in the German building trade related to the changing work team demographic composition an exploratory research purpose has been chosen. Through this purpose new insights should be found or social phenomena can be reconsidered (Anderson 2009). An inductive research approach provides the basis to lay foundations for further research. An appropriate strategy is necessary to answer the research questions. A qualitative research strategy in combination with the methodology of the case study design is selected for this purpose. Multiple cases with the type of configurative-idiographic in connection with an extensive literature review provide a sufficient amount of data to derive findings for answering the research questions. Twelve different businesses in the German building trade are involved in this research. The selection of these businesses are made in order to set up the study broadly. The businesses cover different trades but they are comparable in their organisation and their management of team composition. Applying triangulation two methods of data collecting are chosen: semi-structured in-depth expert interviews and focus groups. On one hand, the decision-makers in the case study organsisations are the experts and on the other hand, the workers in the case study organisations are the participants of the focus groups. The method that Yin (2011) called the ‘Five-phase cycle for analysing qualitative data‘ is used for analysing and interpreting the data. Five phases are given for this process: compiling, disassembling, reassembling, interpreting and concluding. The aim is achieved when the model of pay flexibility for the German building trade is developed and explained.

1.4 Rationale and significance

Many scientific publications deal with the consequences of the demographic change. They include, among other topics, the extent to which a higher average age affects the performance of individuals or work teams. For various reasons the results are different and not uniform: they are positive, negative as well as there being no effects (Backes-Gellner et al. 2011). But only rarely further questions are asked, especially the link between demographic change and pay seems to be very loose. Pay increases in the course of a working life are considered usual and self-evident. The discussion that the pay of an older employee, whose performance decreases, should be adjusted, has not been given attention. An older worker is defined by an age of 50 years and older (Warr 2000). The topic of "pay cuts in old age" does not seem to be explored. The source for this lack of attention can be due to moral reasons. This research is not centred on negativity but is about the variations in pay and pay flexibility for the particular sector of the German building trade to which a higher average age of its workers will occur.

As there is no uniform direction of change in performance with increasing age it is significant to discuss the related pay, based on the approach that pay follows performance (Weißenrieder 2014) or pay is related to performance (Lawler 1998). Currently, pay is usually disconnected from the performance. This is particularly evident in the structures of collective bargaining agreements. The collective bargaining partners mostly use professional training, age, tenure and tasks as the basis for pay, apart from the actual performance. So far it was not necessary to deal with the effects of the demographic change on pay because the age structures in work teams have not drastically changed. But technical developments in particular by digitisation (Klebig 2017) and increased complexity will continue increasing and the working conditions will change steadily (Federal Ministry of Labour and Social Affairs 2013). Continuous professional training is necessary so that the performance can be maintained with increasing age (Dostie 2011; Landmann 2013). Already, the employed workers are mostly not qualified in the digital innovations (German Confederation of Skilled Crafts 2017). With the demographic change in the following years, however, the age structures in the work teams will change markedly so that the ‘price for performance‘ has to adjust because the age differences expand (Federal Statistical Office 2015b). Some institutions and scientists have dealt with this issue such as the BDA Confederation of the German Employers‘ Associations (2003), Rump and Eilers (2006), Kienbaum Consulting (von Hülsen 2011), DGFP German Association for People Management (Femppel 2012), Bloom and Sousa-Poza (2013), Cologne Institute for Economic Research (Lesch et al. 2014), Schmierl and Weimer (2014) and Hoffmann-Remy (2016). They ask for a connection between performance and pay or offer suggestions for pay systems with increasing average age.

For economic reasons I as a researcher regard this research as an adventurous exploration to shed light on this topic. If one of the contracting parties (employer or employee) changes its performance during the course of the contractual relationship, the other contracting party has at least the right to question or even to adjust its consideration supported by employment law. It is important to proceed systematically today, in order to provide a basis for a flexible approach. A flexible approach offers the possibility to manage pay for performance in an individual way on an organisational basis if it is considered necessary. Changing paths often takes time. This is the reason why it is important that the acting parties perform an early start to initiate changes. The possibility should be availiable for both contracting parties to discuss the agreed contractual content on an equal basis, as long as changes occur. It is the matter of the individual contracted parties whether wage adjustments are actually realised. Addressing the question of pay flexibility in the German building trade is a particular challenge because the activities in the building trade are not uniformly oriented. Organisational as well as physical and manual activities are carried out in the building trade. Certainly, the building trade is still characterized by the fact that predominantly physical-manual activities have to be done. The research is particularly interesting on this topic because of the mixture and the variety of the tasks. Design and compensation possibilities can be perceived. Entrepreneurs or decision-makers in organisations of the building trade as well as trades associations, chambers of crafts or the affiliated trade unions are therefore entities who might be interested in the research. Workers in the building trade should also be aware of their situation and be open-minded to the consequences of the demographic changes at an early stage. They are also the target group. Pay flexibility is an important success factor that can benefit both parties, the employer and the employee. The goal of this research - to develop a model of pay flexibility - is a contribution to reduce the gap between demographic change with an ageing workforce and pay. This study generates theoretical understanding in the field of pay flexibility in the environment of higher average age in the particular sector of the building trade . It aims to contribute to knowledge in a number of different ways and will add to the knowledge basis, both theoretical and empirical, in demographic change, human resource management, organisational analysis and business management and to the development of professional practice with regard to pay flexibility.

1.5 Role of the researcher

This section explains my personal role as the researcher of this study taking into account the planning and the conducting of the study.

I have been working for more than 20 years as a human resource manager in different companies of the industry. I have been in contact with almost all subjects in the area of human resources. With regard to the research topic concerning the human resource element, I feel myself to be a practical expert, who has applied practical application experience in my professional life. In my studies, the focus was also on human resources so that I do not have only practical application knowledge but also considerable theoretical knowledge in human resources. But until now I have never worked in the German building trade. Due to the years of work experience that I have gained in the industry, an access to an industrial organisation would have been easier, but not challenging for me. My personal interest in this research project lies in the fact that I can combine my knowledge with a business in which I have no deeper insight. Thus the topic is a personal gain in addition to the scientific contribution.

In principle, there are two possible roles to work as a researcher: as an insider or as an outsider. An insider is someone who undertakes the research in his/her own organisation or someone who wants to get information about people’s inner attitudes or feelings. Someone who works as an outsider is not part of the organisation in which the research takes place or who has little or no personal contact to the participants of the research (Anderson 2009). I take on the role of the outsider because I am not a part of any organisation in the German building trade. For this study, I consider this role to be advantageous, since I belong neither to one side nor to the other, employer or employee. In this role, my independence allows me to detect and evaluate the findings of both sides without bias. I do not have to be especially sensitive in the area of pay with the participants or prejudiced, because I am in no personal relationship with them. They regard me as a researcher who is not familiar with their business. However, it is disadvantageous not to be a member of the organisation, because it is more difficult to classify the importance of individual statements. In assessing whether a statement is of less or significant importance, the comparison from the various case study organisations can help me. If an argument is used several times, for example, this is an indication of a higher importance. The literature review helped me to prepare myself for the issue of the German building trade and its specific structure and thinking.

Considering three research analogies - researcher as a detective, doctor or explorer (Anderson 2009), I take on the role of the explorer in this study. The explorer is the one of the three types who is interested in seeking new insights and finding out what is behind the social phenomena. I want to obtain new approaches to the current situations or issues (Anderson 2009). To achieve this goal, I need to be curious and open-minded to new ideas and approaches. The role of the outsider supports this way of proceeding.

Personal compentences I need especially for the successful conduct of the interviews are the following features (Saunders et al. 2003):

- opening the interview
- using appropriate language
- questioning with moving from one question to the other
- listening actively
- testing and summarising understanding,
- recording.

The competences listed above are available because I have received these skills through my many years of professional experience.

To summarise, I was really looking forward to this study because I could combine using my experiences and entering new areas at the same time to reach the research objectives. Developing something new is exciting and a special challenge for me. This study is a further personal component to deal with new additional scientific questions in the future.

1.6 Organisation of the thesis

This thesis starts with a detailed literature review which deals with - in a broad sense –performance of work teams and its interrelation to pay. Further topics are group dynamic processes, team communication, motivation, different forms of payment and their rules in the collective bargaining agreements. In addition, the dynamic in pay is discussed. I have reviewed the current management literature. Particularly scientific models were added, which contain a combination of age, performance and pay in order to understand the interrelations. As I worked on my diploma thesis in 2008 on the topic of performance-based pay systems with a critical consideration from the perspective of the motivation theories, I was aware that the subject of motivation is also a topic in this context. I added this topic to this research, because performance, pay and motivation are closely linked (Wunderer & Kuepers 2003). As the behaviour of individuals, here employers or employees, is also determined by the framework conditions which they find, I put aspects into consideration relating to markets or contract relationships. I also included the terms of collective bargaining agreements and examined the extent to which pay flexibility is provided and possible.

After the literature review, the research methodology is clarified. This section starts with the methodological foundations with the embodied philosophy and the research design. Afterwards the research sample and data sources are mentioned. The description of the data collection and data analysis methods follows. Before the section of interpretation, the data collection of the case studies are explained in detail. I worked as a research outsider in organisations of the German building trade, which I defined as case study organisations. In the interviews with the decision-makers and with the workers, I discussed the research topic with the aim of finding out about their behaviour, thoughts, patterns, points of views and their expectations. In the section of the results of the research I describe the Four-dimensions-model of pay flexibility which I developed from the findings of the literature review and the field research. For that, new ways of thinking and ideas, which I gained from the interviews, I reconciled with the literature. The thesis ends with presenting the contributions, limitations and an outlook to further research.

2 Literature review

This literature review is based on the research objectives above and provides a broad picture of conceptes, theories and scientific data which are relevant to the topic of this study. It presents a critical view of the existing literature according to the different subjects in which the topic is divided. First, after giving an overview of group dynamic processes and team communication it deals with the analysis of different theories and studies to answer the question of effects of increasing average age in work teams. Based on these findings the interrelation between the recognized effects and pay in general is determined. Afterwards, the possibilities of paying workers in work teams are demonstrated and assessed with regard to the previous findings. Beside representing what is already known about the topic the review also addresses gaps in the literature. Various sources are used, such as books and articles of specialist magazines and the internet. After the critical analysis of the literature this section ends with a conceptual framework created by the relevant contents and interrelations. It represents elements of pay that could be adapted to take into account increasing average age.

2.1 Working with teams

If individuals work together in teams group dynamic processes start running. These processes and also the team cognition affect the productivity and group effectiveness. People working in teams go through different group phases. Social loafing or intergroup conflicts can occur. These processes are accompanied by differentiated communication requirements and structures. When working with teams it is helpful to know about these processes in order to work effectively and to achieve a team success. These are shown below.

2.1.1 Team processes and group dynamics

If two or more individuals work together in a team, group dynamic processes affect the work results of the team. In the following, group dynamics in teams are presented in more detail.

Regardless of the group targets or group results, group processes are constantly changing and are permanently subject to a circular course (Worchel et al. 1992).

If two or more individuals enter into an interpersonal relationship, interactions arise and develop (Thibaut & Kelley 1959). The individuals are aware of each other and interact with one another. Communication between individuals arises. The extent of the interaction is determined by factors which reduce costs or generate rewards. The individuals of the group strive to reach their personal goals or to maximize their results through this interaction (Thibaut & Kelley 1959). If the group works in a company in team work, higher productivity or group effectiveness can be the result. For this, it is necessary that the group members perceive the company as a supportive setting for achieving their group goals. If this is not the case, productivity can be restricted (Thibaut & Kelley 1959). For the team composition, it is therefore important to know as much as possible about the goals of the group members and their common team goal. Thus a higher productivity can be realized.

The success of a team also depends on whether an optimal interface management is carried out by the team responsible. In the theory of the dynamics of groups, these interactions between the different interfaces are discussed (Berne 1963). The various interfaces affect the team success. High-quality-interfaces make a team powerful and efficient (Müller 2013), poorly structured interfaces reduce success (Stock-Homburg 2010).

The sum of the knowledge of each team member is not equal to the sum of the knowledge which is available to the team. The dynamics of team cognition is an essential component of the theory of team knowledge emergence (Grand et al. 2016). The theory describes the relationship between individual knowledge and shared knowledge in teams. Starting from internalized knowledge of the individuals the path leads over the process of learning and sharing in the knowledge pool to externalized knowledge which becomes noticeable in the team performance. The knowledge is available in three different stages: non-overlap, partial overlap or full overlap because it is differently encoded or decoded, selected and integrated. Information and communication are essential core processes. As not all information or knowledge the individuals have is converted into externalized knowledge provided for the team, team performance is critically influenced by team cognition. In this theory, it is concluded that processes on the individual level are responsible for the team-level outcomes. Thus, a higher team performance is achieved when the team members quickly convert their individual knowledge into externalized team knowledge which can be shared and used by each team member. In particular, the entry of new members or the departure of old members influence strongly the knowledge pool in terms of task-relevant knowledge within a group (Moreland 2006).

In addition, when evaluating the success of a team, it is important to consider that teams do not provide their full performance right from the start. Teams go through a development that Tuckman (1965) is split into four phases. In 1977, Tuckman and Jensen added a fifth phase to their model. Figure 1 shows the model.

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Five stages of team development (Tuckman & Jensen 1977)

In the fourth phase of development, the team will be the most successful. This phase is called “performing”. Therefore, the goal of team development must be to go through the first three phases as quickly as possible so that the team can achieve its best possible performance. The person who composes and controls the team must be aware of the phases preceding the performing phase. Through appropriate management, he/she should try to support and promote these upstream phases so that they are of short duration.

Social loafing is another phenomenon which can occur in groups. Social loafing is the decrease of performance combined with a decline of team members’ motivation (Pearsall et al. 2010). Social loafers in a group keep their performance down and ultimately benefit from the group's profit (Comer 1995). Different reasons can trigger social loafing (Comer 1995):

- The individual achievements are difficult to evaluate
- The individual recognizes that the group result is achieved even without his efforts
- The individual can take only limited impact on the group result
- Other team members also operate social loafing.

In order not to suffer a performance decline, social loafing effects must be recognized and avoided by taking measures against the above mentioned triggers.

When considering team processes, intergroup conflicts are also to be taken into account, which arise and exist in teams. Conflicts are the result of the team members’ behaviour (Tajfel & Turner 2001). Based on social identity and social comparison inter-group discriminiation can arise or competition can develop.

When considering team processes, it is also important to deal not only with the group itself but also with each team member who is subject to a life cycle within the group. Each team member goes through different stages of membership: prospective member, new member, full member, marginal member and ex-member (Levine & Moreland 1994). At each stage (entry, acceptance, divergence and exit) the team member invests a different intensity of commitment in the group. Figure 2 shows the model of group socialization with the individual passage.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Model of Group Socialization (Levine & Moreland 1994)

Each individual of the team passes five phases of group membership: investigation, socialization, maintenance, resocialization and remembrance (Levine & Moreland 1994). In terms of the team composition, it must be taken into account that the commitment is differently characterised in the certain stages, in particular, if the team members enter the team at different time points. In relation to the group there is no uniform commitment if the team members have different histories in their group life cycle.

Team processes are determined by “basic building blocks“ (Levi 2011) which lead to successful team performance. These include motivation, group cohesion, role assignments, and performing both task and social behaviours. In the following each block is described in more detail. Motivation can be integrated into the team by several means. Interesting, involving and challenging tasks are one of the key factors for increasing motivation in the team. The motivation for an increased performance of the individual is given when the team members need each other to fulfil the tasks. Evaluations and rewards are necessary for each team member because they are indicators for feeling the importance of responsibility for the team tasks and the recognition of their individual performance. Defining team goals is also a means for increasing motivation. Furthermore goals provide direction to the whole team. The team members can plan with more foresight and can monitor their performance more exactly (Weldon et al. 1991). Overall, goals can inspire support to a higher group commitment and to group cohesion. If teamwork leads to a better result than the sum of the each individual work group cohesion is encouraged (Levi 2011). A commitment to the team tasks and shared social identity also increase team performance. Group cohesion increases if team membership is important for the individual. Each team member assumes a certain team role. A role is a “set of behaviors typical of people in certain social contexts” (Levi 2011: 64). Team roles describe what the team members have to do, indicate the position which each team member has to fulfil within the group and ensure therefore the achievement of the team tasks. In teams two basic types of behaviours are available: task behaviours and social behaviours. On one hand task behaviours concentrate on the goals and tasks of the team, on the other hand social behaviours focus on the social and emotional needs of the team members. As work teams are more task-oriented more task behaviours are observed. Social interactions occur in the background. While considering the different stages which a team passes the team shows more social behaviours when the team is in the forming phase. During the phase of performing there are more task behaviours. Time pressure, for example, can be better handled if the team has learned social behaviours because teamwork has been better trained. This is an advantage when dealing with conflicts or challenges. Overall, an adaptation of individual behaviours to the needs of the team promotes the team performance (Levi 2011).

In summary, if people come together, unavoidably interactions arise between individuals. Team processes are set in motion. It is important for the team success that the team members receive a base on which they can offer their knowledge to the team. Simulatiously, both the entire team passes through a certain life cycle with defined phases, as well as each individual member. When working with teams it has to be taken into account that phases in which high team performance can be achieved do not necessarily match with high performance phases of the individual. In addition, each team member initially pursues his/her own goals. If the team goals agree with the individual goals, the individual is more motivated to perform for the team. The phenomenon of social loafing should be recognized and avoided because this behaviour reduces team performance. As rewards offered to the team members influence individual behaviour they should be designed so that they provide motivation. In this paragraph, only a selection of group dynamic processes was made. The variety of different fields of research on the subject (Brown 1988; Cartwright & Zander 1968; Levi 2011) shows that the subject is extensive. Team dynamics are often difficult to predict or to control because processes, interactions or behaviours take place in parallel.

Regarding the development of a model of pay it is important to take into account that each team member is considered individually because the contribution of each individual impacts on the team performance and the team success. The interactions of the individuals form the team composition which is responsible for the fulfilment of customer orders and therefore for the competitiveness of the organisation. Disturbing behaviour of the individual, for example social loafing, can lead to a performance loss of the entire team.

2.1.2 Communication in work teams

Communication is one of the most important processes that take place between individuals. In order for interactions between individuals to take place, communication is required. Through communication, individuals can exchange information, needs, thoughts and feelings among themselves. Three elements determine the communication: the sender, the receiver and the message (Levi 2011). In the sender-receiver model (Hall 1973) the sender wants to transmit a message to a receiver. To transmit the message, the sender must encode the message by converting it into speech, mimic or gesture. Then the receiver translates and interprets this verbal or non-verbal message. The response of the receiver informs the sender of his understanding of the message. With the receiver's response, he initiates a new communication process. If the communication is disturbed by different coding methods, understanding problems arise (Polzin & Weigl 2009).

If the task to be accomplished in the team is to be done faster, more easily or more effectively than by the individual alone, communication processes arise in the team. The person who leads a team can influence the processes through targeted control. This is done through communication. These communication processes serve the flow of information (Bavelas 1968). In teams, communication is essential for coordination. Especially in work teams, where a substantial interdependence of team members exists to complete the tasks together, coordination is important. A work team is a “full-time, permanent team that is the major part of the members’ work“ (Levi 2011:283). Work teams are responsible for producing a product or providing a service (Cohen & Bailey 1997; Lawler 2000).

According to Jewell and Reitz (1981), communication provides the foundation for team orientation, goal setting, the distribution of information and rewards and the maintenance of relationships between team members. One of the most important reasons to communicate within a team is the enforcement of standards and norms of the team members (Festinger 1968).

In order to achieve the team goals and to develop a team, it is important that the team leader regularly communicates with all team members. In work teams in the building trade, the team leader is usually integrated into the team. He is given title of foreman or column leader. He reports to the decision-makers in the organisation of the building trade. Relating to communication, he decides what issues are relevant for the whole team. Topics on individual behaviour or personal development, especially with regard to the individual performance, are discussed between the individual team member and the team leader (Rossnagel 2008). Targeted coaching can be used here. Communication within the team should be characterized by openness and trust so that disagreements can be discussed (Schulz von Thun et al. 2001). The involvement of team members in decision-making processes increases their identification with the tasks and objectives (Schulz von Thun et al. 2001). The team leader is responsible for the main team processes. These are leading, training, providing feedback and rewarding the team members (Levi 2011). He represents the team and the performance results outwards into the rest of the organisation. In order to achieve the team goals, the team leader can carry out certain activities. This includes the definition of performance results and the agreement of team goals for the work team. Operating figures can support the measurement of performance (Stock-Homburg 2010). As work teams have a mutual interdependency between the team members, the roles in the team have to be defined and transparent for all team members. A particular aspect of team management is the assessment of team performance and individual performance. The identification and the assessment of the performance which the individual reaches in the overall result of the team is the basis for the rewards of the individual team member. The team leader must be qualified for these tasks. Team members feeling unchallenged or exposed to excessively high expectations can result in a decline in performance or demotivation (Stock-Homburg 2010).

In communications, there is a factual level and a relationship level. An efficient team communication is characterized by a high expression of both levels. The team members strive to use the problem-solving techniques together to achieve the desired performance. Through information, consultation and coordination, these aims are achieved. At the relationship level few or no conflicts exist (Stock-Homburg 2010). To achieve this balance between the two levels, regularly conducted employee interviews are necessary. They support the continuous process of performance management. This consists of the following four elements: agree on goals, goal and work review, assess performance and promote and develop employees (see figure 3).

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Figure 3: Process of Performance Management (Mentzel et al. 2006)

A systematic approach and a constant communication between the team leader and the team member are essential in the process of performance management. In this process there is the possibility to recognize changes, wishes and expectations on both sides. In particular, performance fluctuations both upwards and downwards can be discussed. The resulting measures or consequences can be realized simultaniously.

Face-to-face communication is more and more replaced by digital communication. The use of digital communication technologies influences the group dynamic processes. The physical distance between the team members causes a reduction in the status differences. The team members are more bold in formulating things than in direct communication. On the other hand, anonymity and deindividuation in the team increases (Levi 2011). Due to the lack of spatial proximity digital communication makes it difficult to discover and solve conflicts, but this is of particular importance for the team development (Müller 2013). There are changed requirements for the team leader as well as for the team members regarding technical affinity and extended network skills (Müller 2013). Currently, deficits of digital competences are still being seen in the German building trade (Prescher 2017).

In summary: An essential part of group processes is communication. Communication is a factor leading to the success of the team. In addition to the continuous flow of information, participation in decision-making processes and involvement in the further development of team is also important for the performance and motivation of each team member. The team leader is responsible for ensuring communication processes, in particular also under changing conditions of increasing digital communication.

For the developing of a model of pay constant and open communication with the individual team member should be taken into account in order to recognize whether the individual can also realise his/her personal goals in the team. This is a requirement that he/she will perform. Pay can be an individual goal.

2.2 Effects of a higher average age in work teams

To work in teams is a usual and common form in work organisations. The Hawthorne studies, conducted in the 1930s in Chicago, are the beginnings of studies on the behaviour of groups and group members (Staehle 1999; Sundstrom et al. 2000). There are a lot of different definitions of the terms ‘group’ and ‘team’ in the literature (Cohen & Bailey 1997; Gold et al. 2010). Not all researchers define a group as being composed of just two members. Small groups usually consist of three to five members (Staehle 1999). A common goal forms the group into a team. Sundstrom et al. (2000) use “work team” and “work group” interchangeably. A team or group is “an interdependent collection of individuals who share responsibility for specific outcomes for their organizations” (Sundstrom et al. 2000:44). In groups or teams, a feeling of belonging together arises.

In addition, there are a lot of different types of teams. Armstrong (2000) differentiates four categories: work teams, project teams, ad hoc teams and organisational teams. Lawler (1998) however mentions parallel teams, production and service teams, management teams and also project teams. This research only deals with work teams, which are defined as one of the varieties that are characterized by persistent affiliation often in full-time. For these members team work comprises the main form of their work. Often they have “similar skill sets and work experience” (Taylor 2010). They are responsible for work methods, meaning “how the task is performed”, managing activities and handling individual tasks within the group (Lawler & Cohen 1992).

The ageing workforce results that the age structure of the work teams also changes. The change in the age heterogeneity means an increase of the average age. An increasing average age affects the team performance in different ways. The following selected studies include theories and models that deal with the issue of age and team. Not all work is concerned specifically with increasing average age and work teams. But a link is established. The aim is to achieve an understanding that there is transferability to the specifics of this research topic.

2.2.1 Changing workforce composition

In the coming decades the workforce will be characterized by a reinforced diversity of its composition (Buche et al. 2013; Knopf 2008). Diversity is defined as "any attribute that another person may use to detect individual differences" (Williams & O'Reilly 1998). In particular, demographic diversity consists of characteristics such as gender, age, ethnicity, tenure, educational background and functional background (Knippenberg & Schippers 2007). As the changes of the age structure of the workforce composition impacts the organisations (Seitz & Wagner 2009) this investigation focuses mainly on the characteristic of age. These other characteristics are not taken into account in depth. Thus, in the following the explanations concentrate on the changing workforce composition regarding the characteristic of age.

The labour force projections in the upcoming decades in Germany will be strongly affected by the ageing of the baby-boom generation (Boersch-Supan & Weiss 2016; Park 1994; Veen 2008). The demographic development predicts both a reduction in labour supply and an ageing of the labour force potential (Federal Statistical Office 2015b). This development is based on projections. Firstly, lower birth rates and increased life expectancy mean that the number of people older than 45 years old in the German population will increase (Pack et al. 2000). As the proportion of elderly in the population increases, the proportion of younger people remains constant or decreases (Veen 2008). The number of immigrants from abroad will not compensate for this development (Federal Statistical Office 2015b; Richenhagen 2007). This trend is reinforced by the match of the lead time to achieve general university entrance qualification to the European conditions which has been reduced by one year (Federal Ministers of Education 2015) and by the legal age of retirement which has been increased to the age of 67. In addition, the baby-boom generation of the 1980s will be the last to work in the 2020s (Geißler 2005; Jackson 1992). It is expected that by the year 2030, the population of the working aged in Germany defined as 20-65 years old by the Federal statistical office of Germany will decrease from 61% (2008) to 54% (Federal statistical office 2012b). The projection to 2060 predicts a reduction of the workforce to 82% of the 2013 level with an age interval of 15 to 66 years (Fuchs et al. 2016). For 2020, it is also expected that the largest age group in Germany will be between 50 to 64 years old, represented by 39%. Today the largest age group is formed by employees in the age range between 35 and 49 years old at 37%. Furthermore, a scarcity of young qualified people is predicted (von Hülsen 2011; Staudinger 2006). All these figures point to the fact that the average age of the workforce will rise (Jackson et al. 1995). In total figures, there will be 10.1 million less employable persons under 45 years old in Germany by 2020 than in 2000. On the other hand 4.7 million employable persons over 45 years old by 2020 in contrast to 2000 will be available on the labour market (Pack et al. 2000).

The organisations will be faced with a different structure of the workforce composition justified by the ageing workforce (Jackson 1992) and a change in age heterogeneity (Backes-Gellner & Veen 2008; Bellmann et al. 2007). The challenge for organisations is to manage a workforce characterized by an increasing average age (Veen 2008). It is assumed that the workforce composition in work teams is also changing following a similar pattern (Jackson et al. 1995), consistent with the total workforce available to organisations.

2.2.2 Age structure in the German building trade

The phenomenon of the ageing workforce also relates to the German building trade. When considering the entire trades groups, the building trade represents the largest share with 50.9 % in 2015 (German Confederation of Skilled Crafts 2016). Within this percentage 511,032 companies existed in 2015 divided into two areas: the main construction trade and the finishing trade. 83.2 % of the companies have less than 9 employees (Federal Statistical Office 2017b). The census of the Trade industry in 2014 provides the number of more than 5.12 million employees working in the building trade (Federal Statistical Office 2017a). Deriving from the numbers of companies combined with the number of employees it is recognized that the building trade consists of very small businesses. 39.9% of labour worked in organisations with less than 9 employees in 2015 (Federal Statistical Office 2017b).

The building trade still mainly consists of manual, partly hard labour, but also by knowledge based work. In addition, organisational tasks have to be done by the craftsman. The job of tradesman occurs primarily outdoors at building sites in construction work teams. Some occupations also carry out their work indoors (“Berufsinformationen finden” 2016). Often customer orders require the execution by a work team consisting of at least two or more workers. The Institute for Labour Market and Occupational Research for the Federal Employment Agency reports regularly on statistical numbers for the German trade industry: Based on numbers of this institute (2013) the age structure which is relevant for this thesis is shown in table 1. It can be seen that in the last twelve years the proportion of workers, more than 50 years old (Warr 2000), has increased more than the proportion of younger workers.

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Table 1: Tradesmen of the German building trade - Employee groups by age

In 1999, the age group ‘25 to under 35’ had a share of 33.2%, in 2011 decreased to 24.6%, the share of the age group ’35 to under 50’ increased from 37.4% (1999) to 42.3% (2011). Addionally, the share of employees at the age of 50 and older increased from 15.2% to 23.4%.

Bonin et al. deal with the employment situation of older roofers. On condition that the age-specific leaving rate of this profession remains quite similar, the number of roofers at the age of 50 and older doubles (Bonin et al. 2012).

Whereas 1995 the probability of remaining in the profession falls sharply below 95% among the under-50s, this rate shifts in 2008 to the age of 56 with a lesser gradient (Bonin et al. 2012). This means that in 2008 more employees over 50 years old remain in their profession. In addition, the younger age groups - absolutely measured - became smaller, so that the average age of roofers has been increased by six years since 1995 (Bonin et al. 2012). Table 2 shows the increasing rates of the share of employees related to three age groups on the basis of 2000.

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Table 2: Increasing rates of three age groups in the roofing trade (following Bonin et al. 2012)

This topic is significant in the trade industry: an article in the Deutsche HandwerksZeitung (“teamwork” 2013) which refers to the study of ZEW [Centre for European Economic Research] (Goebel and Zwick 2010) shows such a concern. Goebel and Zwick examined mixed-age teams and came to the conclusion that these teams seemed to be more productive. The results of the study are presented in a positive way, suggesting potential benefits. Overall, a higher average age is generally seen critically.

2.2.3 Team performance and productivity

The model of Milliken and Martins (1996) (see in figure 4) confirms age effects on performance in organisational groups. It shows that age diversity has implications on different variables. The researchers considered factors that influence teams and showed the effects of diversity. Diversity in age has both short-term and long-term consequences. The short-term consequences differ generally between affective, cognitive, symbolic and communication-related issues. Effects to performance are worked out as long-term. But there is no information about the directions of these effects.

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Figure 4: Effects of Diversity in Organizational Groups (Milliken & Martins 1996)

McEvoy and Cascio (1989) conducted an investigation of 96 studies which dealt with the correlation of age and performance. They found a mean correlation between age and performance, but this insight did not apply in general. Waldman & Avolio (1986) determine a positive relationship between age and performance by stating that occupation influences the relationship between age and performance. The relationship varies upon different factors.

In their meta-analystic review Horwitz & Horwitz (2007) examined the effects of team diversity on team outcome. The study includes in total 78 correlations of 35 peer-reviewed articles published between 1985 and 2006 in academic journals. The researchers present the hypothesis that there is a positive relationship between bio-demographic diversity and the quantity of team performance. Bio-demographic characteristics are defined as age, gender and race. This hypothesis is not confirmed by the analysis. However, it is important to note that there are only three numbers of correlations.

Pelled’s Intervening Process Theory (1996) indicates different directions of effects between age and performance. The theory explains the interventions between demographic diversity, conflict and work group outcome. She divides the demographic variables, which include the factor age, into two typologies: ‘visibility’ and ‘job-relatedness’ – each is subdivided into low and high dimensions (see in figure 5). The factor age is grouped into the category high visibility – low job-relatedness.

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Figure 5: Typology of Demographic Diversity Variables (Pelled 1996)

These two dimensions determine the strength of the relationship between demographic diversity variables and conflicts which are subdivided into substantive and affective conflicts. Conflicts are substantive if they are task-related and affective if they are emotion-based and non-task (Pelled 1996). The different types of conflict affect turnover or cognitive task performance, which then influences the outcome of team work (see in figure 6).

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Figure 6: Relationship among work group demographic diversity, conflict, and performance and turnover consequences (Pelled 1996)

Her statements are that an affective conflict increases turnover but an increasing affective conflict weakens the positive relationship between substantive conflict and cognitive task performance. Thus, age diversity as an element of the demographic diversity has a positive impact on turnover and negative impact on cognitive task performance.

A few studies emphasize a positive relationship between age and performance. Murray (1989) examined the oil industry and stated that diversity in age and tenure is positively related to long-term performance. Also Sterns & McDaniel (1994) determined a weak positive relationship between age and performance. Cleveland and Lim (2009) formulate carefully the statement that older workers fulfil some tasks better than younger workers, but also the other way round: some components of the job are better performed by younger workers. Concerning the way of working in teams Streufert et al. (1990) found that older teams demonstrate both positive and negative aspects in working strategies.

In their empirical exploration with the subject of ageing teams Gellert and Kuipers (2008) use the model of Milliken and Martins (1996). The researchers focus on the relationship between team work and age. They collected data among 150 work teams from an automotive company in Sweden. Justified by more experience, knowledge and responsibility they summarize their research results by suggesting “teams with higher average age seem to produce better quality” (Gellert & Kuipers 2008).

Backes-Gellner and Veen (2008) investigated the impact of aging and age diversity on company performance based on an employer-employee data set for Germany with more than 18,000 companies and more than 2 million employees over a ten year period. They proceed from the assumption that employees with different ages possess different skills and abilities and that individual productivity decreases with increasing age, depending on the type of task (Veen 2008). This process starts at different times and develops at different rates. A similar statement is also made by Kroell and Brinkmann (1999). During an employee’s working life, knowledge and skills can change (Backes-Gellner & Veen 2008) or “devalue” as long as ageing employees do not pursue their competence development (Kroell & Brinkmann 1999). Backes-Gellner and Veen found that in companies with routine work, increasing age heterogeneity has a negative effect on organisational productivity. In contrast, companies with more innovative and creative tasks, increasing age heterogeneity has a positive effect on organisational productivity (2008). They state that an increase of 10% in age heterogeneity affects a reduction in productivity by 3-4.6 % (Veen 2008). Their study provides a new aspect into consideration. It shows that the effect of increasing age on productivity also depends on what kind of tasks have to be done by the team.

In the study of the ZEW the researchers Goebel and Zwick (2010) also examined mixed-age groups. The result of their research is more general when they say that there are more advantages which impact a higher productivity of work teams than disadvantages. In particular the benefits of the different knowledge of younger and older members which is invested into teamwork are identified. Again, the aspect of team composition is addressed in both studies. Increasing average age affects the team composition and thus, impacts on the success of teamwork and on productivity.

Boersch-Supan & Weiss (2016) studied the relationship between workers’ age and their productivity in work teams. They examine production process data of a large car manufacturer. Productivity measurement is based upon errors in production assigned to specific workers, whose ages are then reviewed. Their finding is that average age-productivity increased until the age of 65, based on the industry they have considered.

Bell et al. (2011) carried out a meta-analysis on the relationship between demographic diversity variables and team performance. It was found that individuals take age, as well as sex, race, into account when they categorize each other. With this categorizing may an influence on team performance may arise (Bell et al. 2011).

In summary, age and team performance are interrelated. A higher average age in teams can influence team performance and team outcome. Also there is no unified statement found in the review of the relationship between age and productivity or quality in teams. In the next chapter the aspects of team effectiveness are investigated.

2.2.4 Team effectiveness and successful teamwork

In their heuristic model of group effectiveness - based on reviewing the research of teams in organisations from 1990 to 1996 - Cohen and Bailey (1997) show variables which influence and lead to effectiveness in teams (work, parallel, project and top management teams). One of these variables is group composition which includes demographics such as age and diversity. They categorize team effectiveness with three major dimensions of (1) performance outcome, “(2) member attitudes, and (3) behavioral outcomes” (Cohen & Bailey 1997:243-244). They indicate two studies with the topic of group composition in work teams and team effectiveness dealing with group size and group diversity. In case of diversity this relates to knowledge and skills. They mentioned the study of Magjuka and Baldwin (1991) who state that greater diversity contributes positively to effectiveness. The other statement of Campion et al. (1993) declares that there is no relationship between diversity and productivity.

Seitz and Wagner (2009) state advantages of mixed-age team work. They regard the mix of current expertise of the younger together with the experience and knowledge of the older as a success factor of mixed-age teams. For large and complex tasks the combination of expertise, process knowledge and know-how is especially significant. This can be achieved if the team members are located in different age groups. Stressing that teamwork is associated with risks they emphasize that teamwork with physically demanding work can be more successful with younger age-homogeneous than heterogeneous-age groups (Seitz & Wagner 2009). The researchers do not mention what kind of teams they consider and how they get to their results. This work contains some interesting aspects, but its credibility is not easily assessed as it lacks methodological detail.

When distributing work to individuals Belbin (2010a) assigns the criteria of age to the pre-industrial era, as well as sex, tribe and class. During the industrial era work is assigned by qualifications. The subsequent post industrial era is characterised by personal orientation and Belbin’s approach of team roles. Therefore Belbin (2010b) does not specifically consider the factor age or increasing average age, but his work contains an approach that can be integrated in this research. His subject is teams with different structures, particularly related to the team members’ personalities, in order to gain knowledge about features and structures that lead to success and failure in the team. Managing teams successfully means to design teams (Belbin 2010a). The strength of a team is determined by how well the team roles are combined (Belbin 2010b). Belbin defines nine clusters of team role types (2010b) which exist in teams. He calls them: plant, resource investigator, coordinator, shaper, monitor evaluator, team worker, implementer, completer finisher and specialist. If the team is incorrectly assembled, team performance decreases. Belbin’s explanations match the two studies above. Team composition is determined by the team roles. In turn, team roles are assigned on the basis of person shape (Belbin 2010a). Assuming that increasing age knowledge and skills may change, so does the person shape which the individual offers to the organisation. Thus, in the course of professional life the individual can change his/her team role. A review of the assigned team roles is always necessary to ensure a successful team composition which is responsible for the success of teamwork. The success of teams depends on the design of the team which means that they are composed well-balanced in relation to the different team roles (Belbin 2010a).

A different approach to explaining successful teamwork offers the theory of group interactions and team success (Stock-Homburg 2010). At the beginning of the chain of action which leads to team success different charateristics are present. Person-related charateristics such as expertise, social competence or team orientation have a direct effect on team success. On the other hand team-related charateristics affect performance indirectly. They characterize the team as a whole and initiate process-related features. These process-related features are reflected in the behaviour of the individual team members. Cooperation, communication and dealing with conflicts and decisions are actions which are key factors for team success. Figure 7 shows the chain of action which leads to team success.

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Figure 7: theory of group interactions and team success (Stock-Homburg 2010)

The team performance and therefore the team success is determined by the mixture of person-related and team-related characteristics. The chain of action is made up of direct and indirect effects. Also in this theory the team composition is the influencing factor for the success of the team.

2.2.5 Summary

The effects of increasing average age in work teams are represented by different indicators such as team performance, team productivity, team quality or team effectiveness (see figure 8).

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Figure 8: Effects of a higher average age on performance

The factor of age is also involved or included in various unspecified dimensions like mixed-age groups, team composition or team roles. The previous literature review shows that there is no clear consensus regarding the performance effects of the changing work team composition. The results for age are mixed. Most research studies suggest that the characteristic of age in general and a higher average age have effects on team performance, productivity and outcome in general. But the impacts are not uniform. They can be either positive or negative, occasionally also weak. Table 3 gives an overview of the investigations mentioned and their affects on performance.

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Table 3: Studies dealing with the factor of age and its effects

Beyond this, some researchers found no relationship between age diversity and innovation or performance (Bantel & Jackson 1989; O'Reilly et al. 1997; Wiersema & Bantel 1992).

There are still too few systematic studies to be able to make a final statement (Staudinger 2006). But it is important to summarize that effects between a higher average age and team performance exist. This chapter provides a contribution to the answer to the first research question which deals with the effects of changing work team demographic composition on team performance. It is important for the development of the model of pay that - similar to the group dynamic processes and communication – the individual - and not the team as a whole - influences the effects of age and performance.

2.3 The interrelation between performance and pay

The previous section shows that most research studies identify that the characteristic of age in general and increasing average age have effects on team performance, productivity and outcome but concerning the direction or intensity there are no uniform statements. Therefore, the next step of the literature review examines a link between team performance, productivity and outcome, and team-based pay or pay in general. A pay system is primarily no motivational instrument. It creates rules for performance and pay. In general, pay follows performance (Weißenrieder 2014). Below, some significant theories and models are analyzed that deal with this topic. At the end of this section there is a summary of the findings.

2.3.1 Performance in anticipation of pay

In his VIE-model Vroom (1964) explains that an employee is motivated to perform to a certain extent if his expectations will be fulfiled. He defines motivation ("the force to perform act") as a process in which the employee may decide to give high or low performance. Valence is the result of the multiplicative combination of expectancy and instrumentality. The valence denotes the strength of the preference with which the employee joins the outcome. It is influenced by individual needs, goals and values. Pay in form of wages could be an outcome received for purposes of performing. High valence increases the motivation of the employee to carry out this act. Vroom understands expectancy among the subjective assessment of the probability with which the employee reaches the result. If the employee estimates it as low, motivation decreases. The third determinant is the instrumentality. It represents the employee's assessment of the action and its result to achieve the target. This factor is the link between performance and outcome. Vroom considers the factor of pay both in satisfaction with work roles as well as in performance with work roles. He distinguishes individual performance and performance in groups. Employees perform effectively if they work in smaller groups (Vroom 1964). This model shows a relation between performance and pay including work roles. It can be stated that pay is identified as a result of performance if the individual perceives this as desirable.

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