Ageing Workforce in the Global Marketplace
Ageing Workforce in the Global Marketplace
The aging workforce is a global phenomenon that presents new challenges to human resources management (HRM) practices. Countries and firms around the world were grappling with the impact that globalization, technological advancements and increasing power of multinational corporations had on human resources management practices. Considering the difficulty in devising HRM initiatives by companies with a global presence amid the rapidly-aging workforce, this study sought to enhance the understanding of these issues in a global context. The question ‘how can Canadian multinational companies resolve the human resources management challenges of an aging workforce?’ was formulated to generate recommendations that would help multinational firms address the global demographic phenomenon. A qualitative study using secondary data available in publication available online was formulated. The findings revealed that although the aging population inspired HRM innovations, negative age-related stereotypes and bias alongside misalignment of HR practices across cultures hindered the effectiveness of the prevailing HRM practices. An age management approach that individualized the aging workers and incorporated diverse HRM practices and traditions to develop a fit rather than a best practice was recommended.
Table of contents
Persons aged over 65 years (seniors) are the fastest-growing age group in the world’s aging population, according to the United Nations. Currently, nine percent of the global population is above the age of 65, and the proportion is expected to rise to 16 % by 2050 when there will be more than 2 billion seniors (United Nations, 2019). In Europe and Northern America, the figures stand at 18 % currently, with projections for 2030 and 2050 being 22.1 % and 26.1 %, respectively. Similarly, 17.5 % of Canada’s population comprises of seniors (Statistics Canada, 2019). The workforce population is aging fast, especially in highly developed countries, and Canada is no exception.
The aging population is increasingly becoming an issue in human resource management (HRM). This issue is amplified in countries that have a rapidly-aging workforce, particularly the highly-developed ones. Field, Burke and Cooper (2013) observed that the globalization of business, pressured by an aging workforce, will increase the global demand for talent. Notably, countries such as Canada, Germany, the United Kingdom and the United States have relied on immigrants to fill the need for talent, while developing countries such as China and India were coming to these formerly host countries for talent (Field, Burke & Cooper, 2013). As such, human resources experts have devised strategies such as talent management, future-focused recruitment and succession planning to ease the threat of the aging workforce. However, these strategies present new challenges to contemporary multinational companies regarding diversity management, differences in economic, legal and political structures in the different countries, and creating senior-friendly work environments.
This report is structured in sections. Section 1 is the introduction; section 2 is the literature review; section 3 describes the methods, section 4 presents the results; section 5 discusses the findings; section 6 makes recommendations, and section 7, concludes the study report.
The workforce in Canada was aging as rapidly as its population. Statistics Canada (2019) reported that Canada’s population was growing at 1.4%, the highest among G7 nations. Moreover, 6,592,611 Canadians are 65 years old and above, with baby boomers comprising 51.1 % of this population segment. Besides, of its population of 37.6 million, 10,795 were centenarians, and the figure was growing fast (Statistics Canada, 2019). Previously, Statistics Canada revealed that in 2018, the proportion of senior workers in the Canadian workforce was 21 %, up from 10 % in 1996 (Ranosa, 2019). Moreover, the percentage of seniors and those between 25 and 34 years old in the workforce has reached parity, and soon, working seniors may outnumber their young counterparts (Ranosa, 2019). Companies were reacting to these demographic changes in different ways, ranging from automating operational processes to designing work to fit the seniors. Moreover, the workforce demographic changes were influencing the human resources management practices in firms in Canada and globally. Aging workforces present both challenges and benefits to multinational companies. As such, companies are not sure whether to embrace seniors or avoid them in their workplaces. This dilemma is escalated in companies that have an international presence in countries with aging workforces as well. Such companies have to contend with the aging workforce within their countries and in foreign countries where they have a presence. As such, the human resources management in such companies faces dilemmas when the aging population in the domestic workforce presents different challenges from those in foreign locations. Besides, age stereotypes influence human resource management practices, and the work experiences and behaviors of individuals in business enterprises (Field, Burke & Cooper, 2013). Moreover, the influence of the aging workforce on the management of human resources in Canadian multinational companies has not been studied sufficiently. Most studies have focused on the generalized challenges and opportunities presented by an aging workforce in companies. Therefore, how the human resource managers in Canadian multinationals respond to the aging workforce, domestically and internationally, is poorly understood.
This study aims to identify and explain the issues influencing human resource management practices and activities in Canadian multinationals. Understanding these issues will help device approaches that can help these companies address the changing workforce demographics in their international operations.
The aim of this study is to enhance the understanding of the influence of an aging workforce in the global labor market and how this affects human resources management practices in multinational operations. The impact of an aging population on the IHRM practices focuses on Canadian multinationals because Canada is one of the countries experiencing the aging workforce phenomenon. Therefore, this study seeks to answer the question, ‘how can Canadian multinational companies resolve the human resources management challenges of an aging workforce?’
To answer this question, the research objectives are as follows.
- To describe the challenges presented by an aging workforce to organizations
- To explain the effect of an aging workforce on human resource management practices
- To identify the human resources management challenges of an aging workforce in Canadian multinational organizations
- To describe how multinational companies address the aging workforce phenomenon
- To identify the problems that multinational organizations face when addressing the aging workforce issues in the global marketplace
- Recommend solutions for the human resources management of an aging workforce in Canadian multinational organizations.
The significance of the study is premised on the additional information that is added to guide human resources management departments in organizations that have or intend to have an international presence. Describing and explaining the challenges presented by an aging workforce to organizations and their human resources management sets the stage for understanding the emerging challenges in transnational organizations. Moreover, Canadian multinational organizations have domestic and foreign operations and therefore, are exposed to the aging population phenomenon at home and abroad. As such, the HR approaches used in different countries and locations may lack strategic coherence. However, since the aging population phenomenon is inevitable, and Canadian companies will continue expanding internationally, human resource managers could address these issues by developing senior-friendly human resources management policies and initiatives. Such actions would help Canadian multinational firms embrace the aging workforce as a source of competitive advantage rather than a burden to be avoided.
Three theories were selected to guide this research and build the framework around which this study was developed. Institutional theory is anchored in organizational theory that follows the neo-institutionalism paradigm. Imitation is a critical concept in this theory that emphasizes legitimacy, isomorphism and rational myths found in organizations (Theodorakopoulos & Budhwar, 2015). According to the theory, organizations conform to the belief systems and rules that prevail in the environment, to survive (Theodorakopoulos & Budhwar, 2015). As such, multinational organizations with a presence in different countries with diverse institutional settings experience different a variety of pressures that influence their competitive strategies and HRM practices (Theodorakopoulos & Budhwar, 2015). In this case, Canadian multinationals will adopt the HRM practices that prevail in organizations in the different countries of operation to survive the global market.
Selection, optimization and compensation (SOC) theory is one of the lifespan development theories, which explains how workers capitalize on gains and reduce age-related losses (Truxillo, Cadiz & Hammer, 2015). As such, workers select and prioritize goals that maintain their resources and avoid those that divide their resources. Also, employees focus their efforts and resources to achieve their set goals in an optimization process. Besides, age-related declines resources are offset using compensation strategies to maintain a certain performance level. Socioemotional selectivity theory (SST) is another lifespan development theory that posits that workers’ perception of time influences the selection and pursuit of social goals (Truxillo, Cadiz & Hammer, 2015). Emotional regulation and knowledge acquisition are to social goals prioritized by young workers and seniors at different times in their working lifespan. As such, older employees focus more on emotion-related goals because they focus on positive work experiences. These two theories are relevant to this study because they explain the age-related motivational changes that occur in adult development at the workplace (Truxillo, Cadiz & Hammer, 2015). Human resource management should understand these motivations to accommodate seniors in the contemporary workplace.
The resource-based view is an organization management theory that focuses on the internal resources of an organization as a means of organizing company processes to obtain a competitive advantage. The theory postulates that resources can be a source of sustainable competitive advantage if they are valuable, rare, imitable and non-substitutable (Bal, Kooij & Rousseau, 2015). This theory is applicable in this study because it suggests that the senior workforce can be a source of sustained competitive provided it is managed adequately (Bal, Kooij & Rousseau, 2015). In this regard, HR practices should be tailored to the needs of senior workers to derive competitive advantage in an aging-workforce environment.
These theories provide a framework that can explain the changing needs, motivations and pressures that influence senior workers and organizations in an aging workforce environment. They provide the foundation for devising HRM policies and practices that can be used by contemporary multinational Canadian firms confronted by age-related demographic changes in the global labor market (Kollmann et al., 2019).
This section reviews the literature related to the aging workforce that is relevant in a global labor environment. It discusses the causes of the aging workforce, and the advantages and disadvantages of an aging workforce to identify the opportunities and challenges presented by this workforce demographic. It also discusses the literature addressing the influence of the aging workforce on human resources management practices, focusing more on multinational companies.
An aging workforce is prevalent in many industrialized and industrializing countries because the world’s population was aging. According to figures from the United Nations (2019), the world’s population was aging, with people aged 65 years and older aging the fastest among the population age groups. The number of the elderly is projected to reach about 2.1 billion by 2050, doubling the 2015 figures (United Nations, 2018). Seniors outnumbered children aged five years and below in 2018. Already, the number of seniors will grow from 9 % in 2019 to 16 % by 2050, reaching about 2.1 billion and doubling the 2015 figures (United Nations, 2018). Also, a quarter of the population in Europe and North America could comprise of seniors by 2050. Moreover, in the coming decades, Africa, Asia, Latin America, and the Caribbean will experience the fastest growth of the older population, with Africa poised to witness an increased from 64 million to 226 million between 2015 and 2050 (reach about 2.1 billion by 2050, doubling the 2015 figures (United Nations, 2018). Besides, in Canada, 17.5 % of the population is attributed to seniors (Statistics Canada, 2019). This trend in the demographic shift is reflected in the workforce. According to the International Labor Organization (2018), the proportion of seniors in the labor force is expected to grow from 42 % to 55 % between 2017 and 2030 in Europe, with similar trends expected in the Russian Federation and China.
Similarly, according to Statistics Canada (2017), the proportion of seniors in the Canadian working-age population has increased from 30 % to 36 % between 2007 and 2016, and was projected to reach 40 % by 2026. Increased longevity and reduced mortality rates due to the improvements in health and healthcare technologies and services and reduced fertility rates across the world were responsible for the increasing proportion of older people in the world and especially in highly developed and developing countries.
Unique work habits of the working population were influencing the preference to remain working beyond the retirement age. In this regard, the high number of Baby Boomers (born after the Second World War) reaching retirement age contributes significantly to the aging workforce, globally. In the same vein, the number of workers in the Baby Burst Generation is much smaller than that of the Boomers Generation, hence not sufficient to replace the retiring workers. As such, senior employees are staying longer in employment. Besides, Baby Boomers remained longer in the workforce because they enjoyed working and being productive, unlike millennials, who pursued purpose in their work.
Changing dynamics among women contributed to the aging workforce. For instance, Ones et al. (2015) reported that in most industrialized countries, delayed entry into the labor market, increased participation of women, the stability of economic conditions and the changes in family structure contribute to the enlarging proportion of the elderly in the workforce. Similarly, Balachandran et al. (2019) attributed the significant reduction in the birth rate to the pursuance of higher levels of education and successful careers, which delayed parenthood, especially among women, thus delaying giving birth. Besides, Hom, et al. (2009) observed that more women were not only participating in the labor force but were also ascending to positions of leadership and management in their organizations. This reduced the number of women staying at home to bear and rear children.
Lack of sufficient pension and savings by workers reaching retirement age was causing seniors to remain longer in the workforce (Truxillo, Cadiz & Hammer, 2015). Truxillo, Cadiz and Hammer (2015) explained that the recent economic downturn in 2008 and subsequent economic hardships had forced workers to remain working longer to meet their financial needs. This was experienced in virtually all countries globally (United Nations, 2018). Similarly, the lack of specialized skills in the labor market alongside the retention of valued employees was causing seniors to remain longer in employment in some companies and industries (Gerontological Society of America, 2018). Notably, Canadians persisted in employment due to factors related to education, family and demand for skills (Fields, Uppal & LaRochelle-Côté, 2017).
These causes of the aging workforce phenomenon are relevant to this study because they inform on the areas that HRM managers can influence and those that are beyond their scope. Besides, the causes that are common around the globe and those that are unique to countries are identified.
Most publications presented the aging workforce phenomenon in a negative light because of the adverse implication on productivity, financial health, competitive advantage, and the economy. At the country and global level, the aging workforce was associated with rising healthcare burden, increasing pension costs, labor shortages, loss of institutional knowledge, demand for HRM innovation and reforms, negative age stereotypes and poor economic performance (Čiutienė & Railaitė, 2014; Ones et al., 2015). For instance, pension costs were high due to the aging workforce, with the retirement savings difference between retirement needs and actual retirement income being estimated at 70 trillion US dollars and was expected to reach $400 trillion by 2050, globally (Agarwal et al., 2018). As such, the pension needs of the older people were being supported by a small and shrinking workforce. In Japan, Agarwal et al. (2018) reported that the shortage of about one million employees cost the economy about 90 billion US dollars between 2015 and 2015. This shortage was caused by the employee attrition not being replenished by the labor market in the country.
At the organizational level, a high proportion of senior employees presented the risk of loss of institutional knowledge, intergenerational conflicts, lower productivity, absenteeism, presenteeism, (Čiutienė & Railaitė, 2014; Ones et al., 2015). For instance, Ones et al. (2015) observed that some workplace conflicts were caused by negative age stereotypes in which older workers were associated with dependency on others, a decrease in performance, physical decline and cost burden on society. These stereotypes were prevalent in western societies and industrialized countries because of youth-centeredness (Ones et al., 2015). Moreover, the negative age-related stereotypes created an opportunity for discriminatory HR practices, exposing organizations to discrimination-related litigations and hindering senior employees from working at full potential (Ones et al., 2015). Calzavara et al. (2019) discussed the disadvantages of senior employees in the manufacturing industry extensively. They observed that older workers were prone to fatigue and work-related health complications, which lowered their physical and cognitive capabilities, and diminished their productivity (Calzavara et al., 2019). Fatigue was caused by standing, dehydration, noise, and fast-paced processes. Similarly, ill-health was caused by exposure to cold, likelihood and severity of injuries, risk of musculoskeletal disorders. Ones, et al. (2015) argued that these physical attributed presented safety concerns at the workplace. Moreover, older workers experienced slower decision-making and learning capabilities that restricted their cognitive performance (Calzavara et al., 2019). Aging affected complex tasks requiring fluid intelligence the most (Kollmann, et al. 2019; Ones, et al., 2015).
Senior workers presented various advantages to the global marketplace, countries and organizations. For instance, Ones et al. (2015) observed that elderly workers increased job opportunities in the healthcare and service sectors, motivated HRM practitioners to innovate different working models, and inspired research in policy. Moreover, senior workers supported the economy as taxpayers while reducing the pressure for pension payouts (Gerontological Society of America, 2018). Gerontological Society of America (2018) estimated that the economic benefits from elderly working Americans were worth 78 billion US dollars in 2017.
Mature employees had desirable work ethics that saved costs in the short and long term, and improved the bottom line of companies. These qualities include dedication, punctuality, honesty, attention to details, maturity, focus, role modeling, confidence, efficiency, good organizational and communication skills (Bastien, 2006). Besides, their corporate citizenship, prosocial and safety behavior improved workplace climate and organizational performance (Beier, 2015; Calzavara et al., 2019). Moreover, senior employees preserved institutional memory, enabling the transfer of knowledge and skills to the younger employees (Miller, 2018). In summary, the aging workforce was viewed as a burden rather than an asset by many organizations.
The human resources management professionals recognized the implications of the aging workforce phenomenon because it influenced the practices in recruitment, retention, compensation, rewards, promotion and human resource management policies. Strategies such as talent management, diversity management, succession planning and professional development programs have been devised by HR experts and used in many multinational companies to attract, develop and retain valued human capital (Theodorakopoulos & Budhwar, 2015). In addition, HR managers have innovated new approaches to create a workplace environment that is favorable to old workers. For instance, Lavallière at al. (2016) noted that employers were creating a conducive working atmosphere for senior workers by encouraging exercises over the lunch hour and using ergonometric workstations to secure the health and wellbeing. They added that wearable technologies could ensure that senior employees remained productive, healthy and safe, thus extending their working lives. Miller (2018) also found that BMW was improving the ergonomics of its work environment to retain its senior staff alongside promoting age-neutral language at work. For instance, Purtill (2018) reported that BMW, a renowned German automaker, retained its older workers to maintain its competitive advantage. She argued that many companies in the manufacturing sector were retaining their senior employees to preserve institutional knowledge (Purtill, 2018). Moreover, Daimler AG was using and exhibition to conduct an attitude-change campaign (Thomasson, 2018). This reduced the negative stereotypes and biases against mature workers.
An aging workforce was having a negative impact on the economies of countries and financial health of companies. The United Nations (2018) reported that 68 % of the global elderly population receives a pension. However, regional disparities existed with 95 % of people in retirement in Europe getting a pension compared to 23 % in Africa. Moreover, Tan, Viet and Yulianti (2017) reported that in Singapore, the average medical cost for each employee was expected to increase by 108 % between 2016 and 2030. Besides, senior employees were susceptible to health-related absenteeism, which was projected to increase by 89 % between 2016 and 2030. This translates to 5.12 days lost per employee in 2016, increasing to 5.64 days in 2016, or a productivity loss of 1,903 dollars from 1,041 dollars per employee in the same period (Tan, Viet & Yulianti, 2017). Also, companies contend with high medical bills due to the proneness of the elderly workers to accidents, injuries and illness (Gerontological Society of America, 2018).
Senior workers faced various legal hurdles that limited their continued participation in the job market. For instance, Bal, Kooij and Rousseau (2015) argued that the statutory retirement age embedded in the employment laws and human resources policies of many countries including the highly developed hindered the continued employment of seniors. Similarly, Baruch, Sayce and Gregoriou (2014) argued that the default retirement age (RDA) of 65 in the United Kingdom was not tenable in the era of an aging workforce because it relied on the replacement of retirees with younger workers. However, the proportion of young people to replace the retired workers was shrinking while some of those in retirement age were still professionally strong. Therefore, the maintenance of RDA was not only economically expensive due to increased pension costs but also contributed to the shrinking workforce (Baruch, Sayce & Gregoriou, 2014). However, Neumark, Burn and Button (2019) revealed that although many countries outlawed discrimination by age, senior workers continued to experience hiring difficulties because they were treated as class actions in which the aggrieved person needed to sue the employing firm. As such, they prevented dismissal based on age but did not prevent the discrimination of the elderly gains discriminatory hiring practices. Besides, the lawsuits contesting age-based discrimination in hiring were often lengthy and expensive, discouraging the seeking of employment by senior workers (Neumark, Burn and Button, 2019). However, while many countries had specific laws addressing age discrimination explicitly, others had laws that implied such protection while others has no legal framework. the inconsistency in legislations within and across countries hindered the formulation of cohesive IHRM policies and practices. For instance, the age discrimination in employment act (ADEA) in the United States protected workers above 40 years as a protected class, but the retirement and re-employment act (RRA) in Singapore does not protect older employees against training, promotion selection or recruitment (Gonzales, Matz-Costa & Morrow-Howell, 2015). Instead, the Singaporean law advices employers to adhere to the guidelines in the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) (Lin, Ngo & Tan, 2019). Further, Canada had fragmented and contradicting laws addressing age discrimination. Specifically, age discrimination is encoded as a human rights violation under the Charter of Rights and Freedoms (Dinsdale, 2018). However, the laws are fragmented among the federal government and provinces and territories in the country. However, the jurisdictions in the country define age differently with some excluding people above 65 years. As such, some jurisdictions such as Ontario limit the application of mandatory retirement policies while others allow organizations to discriminate against senior workers using HRM policies (Dinsdale, 2018).
Japanese multinationals had successfully retained their valued senior staff using seniority-based compensation and promotion alongside long-term employment contracts and professional development programs (Sekiguchi, Froese & Iguchi, 2016). Although this strategy worked well in retaining talent the miracle economic growth era prior to the 1990’s, it failed after the bursting of the economic bubble in the 1990s. Failure to attract and retain global talent was attributed to the ethno-centric international human resource management (HRM) style and other traditional Japanese human resource practices used by the MNCs. The unique Japanese HRM style was based on kaisha, the corporation organizing principle, hierarchical recognition of senior employees, and a high-context collectivistic culture based on the Confucian tradition (Sekiguchi, Froese & Iguchi, 2016). This business and HRM culture was entrenched so much in the instructional structure of the Japanese HRM such that foreign employees could not aspire to managerial positions. However, increased competition from foreign companies, global integration of research and development, the high proportion of foreign customers and talent shrinkage due to demographic decline presented challenges to the traditional IHRM style, making it ineffective in the contemporary global business environment (Sekiguchi, Froese & Iguchi, 2016).
This section details the research plan and details the method used in conducting the research. The philosophical and theoretical frameworks that explain the reasoning behind the qualitative research are explained in the research perspective. Thereafter, the research design, data collection method and data analysis process are described and justified. .
Qualitative research methodology was used because of its multifaceted nature, which facilitates the development of a holistic perspective of the phenomenon being studied. Besides, qualitative research interrogates the relationships within a system while enabling the understanding of a given social setting (Silverman, 2016). This study aimed at understanding the influence of an aging workforce on the human resource management in the global labor market and particularly, in multinational companies that are headquartered in Canada. Therefore, qualitative research was found to be suitable for this study because it could explore the phenomenon of an aging workforce in the setting of human resources management in Canadian transnational firms. While developing new theory is not the focus, the study intend to device ways to dealing with an aging population in Canadian multinationals from the information already available in the literature and other secondary sources.
A descriptive and explanatory research was adopted to help explain the influence of the aging population on the human resource management practices in multinational organizations (Silverman, 2016). Understanding this influence would help Canadian multinational organizations respond to the challenges presented by the aging population in their different countries and regions of operation. Therefore, a phenomenological research was performed to understand how different human resource managers and experts approach the aging workforce issues in organizations (Silverman, 2016). This understanding would help formulate approaches that human resource managers in Canadian multinationals could use to address the aging workforce phenomenon in the global labor market.
The interpretivist research approach was used in this study. Interpretivism acknowledges the existence of multiple knowledges. Also, interpretivists argue that knowledge in highly dependent on cultural location and time (Silverman, 2016). As such, in this regard, human resource management practices are influenced by the cultural perspectives in different labor markets and the prevailing changing labor demographics.
The study seeks to understand and explain human resource management practices in multinational organizations faced with an aging workforce. The viewpoints, experiences and interpretations of various people reported in publications provide an understanding of the phenomenon. This can help human resource managers in Canadian multinationals to develop initiatives that would help their organizations take advantage of the senior workers at home and in different countries and regions of their international operations.
Secondary research was conducted using existing data from secondary sources. Compared to primary research, secondary research presented various advantages that informed the choice. Firstly, secondary research is cost effective because it utilizes data that is already existing and published (Walliman, 2017). Contrastingly, primary research is expensive because data has to be collected first hand. Besides, secondary research utilizes less time compared to primary research because the required information is already available in publications and online sources. Secondly, secondary research enables the gaining of an in-depth and broader understanding of the research topic. This is because secondary research relies on data from various sources that has been tried, tested, analyzed and filtered (Walliman, 2017). However, sometimes, the data obtained may not be arranged according to the researcher’s requirement. In other cases, insufficient sample sizes and outdated measures may compromise the usability, relevance and reliability of the published findings (Walliman, 2017). Therefore, the researcher has to carefully sift through enormous and fragmented data volumes and information presented in the secondary sources to guarantee quality. Moreover, determining the most appropriate data may be challenging. As such, the research should identify the most relevant information from reliable sources.
Discriminate sampling of publications was undertaken until the different categories of the research objectives were well developed and validated. The theoretical saturation allowed sufficient achievement the different objectives and the answering of the research question (Rudestam & Newton, 2014). As such, archived materials such as published peer reviewed journal articles, publications from the Canadian government and international bodies such as the United Nations, news items from renowned media houses such as Forbes and The Wall Street Journal, and expert opinions from HRM professionals, were retrieved from online sources.
Content analysis was used to unearth the important themes and information from the secondary data according to the research objectives. The information was used to describe the causes of the aging workforce phenomenon, explain the effect of an aging workforce on human resource management practices, and the challenges faced by HRM professionals in multinational settings, and particularly in Canadian multinational firms.
This section details the findings from secondary sources related to the research question. This study seeks to enhance the understanding of the aging workforce within the global marketplace. The results are presented in figures, tables and text.
The literature revealed that the aging workforce was a global phenomenon. The proportion of the elderly in the workforce was highest in highly industrialized countries while the developing and under-developed countries were set to experience the highest growth in the coming decades. The challenges presented by an aging workforce to organizations are summarized in table 1.
Table 1. Economic, legal and sociocultural challenges presented by an aging workforce to multinational organizations
|Economic High pension payouts High health insurance and medical costs Training costs||Calzavara et al. (2019); International Labor Organization (2018);Tan, Viet & Yulianti (2017); United Nations (2018; 2019)|
|Legal Lack of sufficient legal protection Lack of laws and policies promoting the employment of older workers Mandatory retirement age||Bal, Kooij & Rousseau (2015); Baruch, Sayce & Gregoriou (2014); Lin, Ngo & Tan (2019); Neumark, Burn and Button (2019)|
|Sociocultural Intergenerational conflicts Differences in cultural values||Al Ariss and Sidani (2016); Sekiguchi, Froese and Iguchi (2016)|
Countries and organizations had implemented various measures to address the aging workforce phenomenon. Countries focused mainly on the legal frameworks while companies used HRM strategies. The different approaches used by countries and companies are summarized in table 2.
Table 2. How countries and companies address the aging workforce phenomenon
|Raising the retirement age Implementing elderly-friendly policies and employment laws||Dinsdale (2018); Ng and Law (2014); Truxillo, Cadiz and Hammer (2015)|
|Diversity management Talent management Knowledge management Continuous professional development Improve ergonomics in workstations Introduce variable-paced processes and assembly lines Provide exercise and physiotherapy sessions to avoid musculoskeletal disorders Change negative stereotypes and bias||Al Ariss and Sidani (2016); Calzavara et al. (2019), Ones, et al. (2015); Purtill (2018); Theodorakopoulos and Budhwar (2015); Thomasson (2018); Veth, et al. (2019)|
The findings indicated that the aging workforce phenomenon affected contemporary HRM practices in three significant ways as summarized in table 3.
Table 3. How IHRM was influenced by the aging workforce globally
|Influence HRM innovation||Agarwal, et al. (2018); Calzavara et al. (2019); Ones et al. (2015); Stone and Deadrick (2015)|
|Age related stereotypes in HRM practices and policies||Agarwal, et al. (2018); Ciutiene and Railaite, R. (2015); Theodorakopoulos and Budhwar (2015)|
|Misalignment between HRM practices designed for the knowledge/service economy and those that are elderly-friendly||Agarwal, et al. (2018); Dinsdale (2018); Sekiguchi, Froese and Iguchi (2016); Stone and Deadrick (2015)|
The aging workforce inspired HRM experts to innovate novel approaches of accommodating the mature workers in the workplace and changing the workplaces to suit these workers. Notable examples of innovation were found in German companies such as BMW and Daimler AG. Also, HR professionals focused on dispelling the negative stereotypes and bias, which could not be addressed through legislation, yet they poisoned the workplace atmosphere. Further, HR practitioners labored to align the different HRM practices around the world to improve international compatibility of staff.
This section discusses the findings to help answer the research question. The discussion is arranged thematically based on the objectives of the study.
Organizations all over the world were grappling with the aging workforce phenomenon. The results indicated that organizations faced challenges in their finances, organizational culture, workplace design, job design, remuneration and reward structure because of the high proportions of elderly employees. These hurdles were experienced by Canadian multinational as well. Al Ariss and Sidani (2016) insisted that while these challenges cut across different organizations in different countries, HR practices addressing these differed due to country and context specific factors.
While the aging workforce was a global phenomenon, HR practices focusing on elderly workers were not. The HR practices used in multinational firms, including Canadian MNCs, were devised in the West, viewed through an Anglo-Saxon lens, and taken as the best practices. As such, HR managers made many assumptions when their companies ventured abroad without realizing that the strategies may not hold in the different contexts as explained by Ones, et al. (2015). This explains why traditional Japanese HR practices had failed the country’s multinational corporations in the global marketplace. Al Ariss and Sidani (2016) argued that information about the HR practices in emerging countries in Africa, Latin America and the Middle East, was scarce. Moreover, even within Europe, the collectivistic HR practices in Scandinavian countries differed from those in individualistic countries such as (Stone & Deadrick (2015). This means that HR practices in multinational organizations continued to be challenged regional differences in HR culture.
Many HR interventions in firms were aimed at retaining valuable elderly workers but not their recruitment. Besides, HRM focused more on the supply side and ignored the demand side. For instance, HR strategies such as talent management, diversity management, succession planning and professional development programs succeeded in retaining employees the global marketplace. However, their focus was more on the younger workers rather than the old workers. As such, Őnday (2016) argued that these strategies failed because they lacked inclusivity. Moreover, many of these strategies were developed in western countries and therefore were not compatible with non-western countries where multinational companies had presence (Őnday, 2016). The same can be said about pension schemes, which were structured to encourage the exit of elderly workers rather than induce them to remain longer in employment (Sonnet, Olsen & Manfredi, 2014). Moreover, statutory retirement age was prevalent in many countries to let coerce elderly workers to make way for younger employees. This is because the mature employees were not valued as a human capital that needed to be attracted, recruited and retained, leading to low demand. Besides, these strategies did not address the diverse economic, legal, sociocultural and political environments in which multinational organization operated. As such, the strategies failed to address effectively the aging workforce phenomenon in the global marketplace, which is in agreement with Agarwal, et al. (2018). However, looking at mature workers as a source of competitive advantage, as advocated by the resource-based view, may increase their demand in multinational companies (Gerontological Society of America, 2018; Theodorakopoulos & Budhwar, 2015). Indeed, Ng and Law (2014) argued many countries were reviewing their retirement age limits upwards, albeit progressively, or eliminating them altogether, to remove the legal restrictions on the participation of mature workers in the workforce.
While antidiscrimination policies were present in many organizations, workplace environments hostile to mature employees persisted because age discrimination was hard to prove. Ageism, and insidious and subtle discriminatory acts such as verbal, paraverbal and nonverbal behavior were common in multigenerational workplaces (Beier, 2015; Gerontological Society of America, 2018). For this reason, HR initiatives that sought to change age-related stereotypes and bias contributed to an elderly-friendly workplace climate and organizational culture. Companies such as BMW and Daimler AG had succeeded in this area as reported by Miller (2018) and Thomasson (2018). This approach is supported by Al Ariss and Sidani (2016) and Agarwal, et al. (2018) who argued that a best-fit IHRM strategy was more effective than best practices in the global context.
The results revealed that HR practitioners found older workers difficult to define. As such, the performance of these workers was gauged through inappropriate measures that did not capture their unique attributes. Prevailing international HRM practices did not focus on the elderly as a workforce population requiring unique consideration; instead they were appraised like younger workers. Indeed, Truxillo, Cadiz and Hammer (2015) insisted that individuals aged differently. Therefore, more attributes than the age of mature workers needed to be considered in HRM. Moreover, sociocultural attributes of the elderly were often ignored. As such, HRM strategies that worked in the homogeneous home country context were ineffective in a global environment (Sekiguchi, Froese & Iguchi, 2016; Stone & Deadrick, 2015). For instance, older employees had different motives from younger employees, which influenced why they sought and remain in employment. (Kollmann, et al. (2019) provides insights into the motivations of mature employees by revealing that they were less concerned about monetary rewards because they were less materialistic because of their immediate and short-term orientation. According to the socio-emotional selectivity theory (SST), the elderly perceived time boundaries differently compared to young employees. Veth, et al. (2019) agreed when they argued that older workers prioritized present-oriented goals that had emotional meaning. Moreover, aging workers strive to minimize losses due to physical and cognitive decline instead of maximizing gains brought about by developing, growing and expanding horizons. However, mature employees needed support from their employers to seek and remain in employment as suggested by Ng and Law (2014). Ones, et al. (2015) agreed by recommending that employers needed to fit job characteristics to the motives of mature workers to endear their engagement and productivity as recommended by SST.
Multinational businesses stuck to institutionalized HRM traditions because they were projected as the best practices, yet they did not accommodate the lesser-known HR practices from non-western cultures. For instance, some countries like Canada defined age differently, which allowed different HRM practices targeting elderly workers (Dinsdale, 2018). In other countries, especially the undeveloped ones, antidiscrimination laws were poorly formulation and in other cases, enforcement of laws against age discrimination was poor. These legal inconsistencies challenged the application of Canadian HRM practices outside the country. Nonetheless, HR experts were innovating new approaches to entice and retain mature workers to overcome the ineffectiveness of strategies such as talent management, diversity management, succession planning and professional development programs. To overcome these challenges, HRM practices needed to be people-centric despite the growing power of multinational corporations, globalization forces and technological advancements (Al Ariss & Sidani, 2016). For instance, Sekiguchi, Froese and Iguchi (2016) suggested that merging western HRM perspectives with those of non-western cultures through strategies like inpatriation would reduce the misalignment in HRM practices in the global marketplace. Moreover, by understanding the needs of the mature employees and the intergenerational dynamics at the workplace, HR practitioners can create policies and interventions that not only accommodate elderly employees but also drive them to perform at full capacity.
The aging population presented additional challenges to the management of human resources, which was grappling with the transition from a manufacturing to a knowledge-based or service economy (Stone & Deadrick, 2015). Knowledge organizations stressed employees’ skills and knowledge, and designed jobs to encourage participation in decision making, continuous improvement, autonomy and innovation, which influenced new HR practices (Stone & Deadrick, 2015). Therefore, HRM in contemporary global firms needed to develop HR practices that could accommodate old employees who were accustomed to traditional HR practices. Besides, Truxillo, Cadiz and Hammer (2015) argued that mature workers were capable of adapting to the changing working environments as explained by the SOC theory.
Ciutiene and Railaite (2015) proposed age management as a holistic way of addressing the aging workforce phenomenon. They argued that age management is a preferable HR approach because it focused on recruitment, workplace environment and ergonomics, age-related attitudes, flexible working conditions, health management and leaning and knowledge management (Ciutiene & Railaite, 2015). Moreover, looking at the aging workforce as the longevity economy rather than the silver tsunami or the age quake, would facilitate the inclusion of mature workers in IHRM practices (Lavallière, eta l., 2016; Veth, et al., 2019).
To address the human resource management issues presented by an aging workforce in the global environment, the following interventions are recommended. These recommendations apply to Canadian multinationals as well.
- Implement HRM practices and policies that favor baby boomers to encourage them to seek and remain in employment. Recognition-based reward systems, ergonomic work environments, slow-paced processes, training opportunities, mentorship roles and removal of statutory retirement age would attract and retain the aging baby boomers.
- Monitor the health wellbeing of senior workers using technology to maintain performance and guarantee workplace safety.
- Change negative age-related stereotypes using innovative initiatives to reduce intergenerational conflicts and HR biases at the workplace. Age-neutral language and highlighting of the positive attributes of elderly employees could improve the perceptions and attitudes about such workers. Moreover, stronger age-discrimination HR policies can attract old workers.
- Implement HRM practices that accommodate multigenerational work environments to help old employees to work along their younger counterparts and reduce intergenerational conflicts.
- Implement human resource practices and policies that favor multicultural work environments to enable old employees from different cultural backgrounds to work together. Flexible reward systems, work schedules and work design, culturally-sensitive systems and culture-neutral language can improve organizational harmony in the global environment.
This study set out to enhance the understanding of the influence of an aging workforce in the global labor market and how this affects the human resources management practices in multinational operations. The research question was how could Canadian multinational companies resolve the human resources management challenges of an aging workforce? The study revealed that multinational companies such as those in Canada were faced with challenges presented by the globalised aging workforce phenomenon. This was aggravated by poorly developed HR practices to accommodate the transition from manufacturing-based to knowledge and service based economies. Moreover, multigenerational and multicultural international workplaces challenged contemporary HR practices, which lacked evidence-based support. While there was sufficient evidence from western countries, HR information from Asian, South American and African contexts was minimal or lacking altogether, yet Canadian multinationals has operations in these locations. Since the aging workforce comprised of baby boomers globally, it is recommended that HR practices attend to their unique needs and preferences in the light of diverse economic, legal, cultural and political environments in the global marketplace. Besides, multicultural and multigenerational considerations should inform HR initiatives in multinational companies.
Agarwal, D., Bersin, J., Lahiri, G., Schwartz, J. & Volini, E. (2018). The rise of the social enterprise: 2018 Deloitte global human capital Trends. Deloitte Insights. Retrieved from https://www2.deloitte.com/content/dam/insights/us/articles/HCTrends2018/2018-HCtrends_Rise-of-the-social-enterprise.pdf.
Al Ariss, A., & Sidani, Y. (2016). Comparative international human resource management: Future research directions. Human Resource Management Review, 26(4), 352-358.
Bal, P. M., Kooij, D. T., & Rousseau, D. M. (Eds.). (2015). Aging workers and the employee-employer relationship. Amsterdam: Springer.
Balachandran, A., de Beer, J., James, K. S., van Wissen, L., & Janssen, F. (2019). Comparison of Population Aging in Europe and Asia Using a Time-Consistent and Comparative Aging Measure. Journal of Aging and Health, 0898264318824180.
Baruch, Y., Sayce, S., & Gregoriou, A. (2014). Retirement in a global labour market: a call for abolishing the fixed retirement age. Personnel Review, 43(3), 464-482.
Bastien, S. (2006). 12 benefits of hiring older workers. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/167500.
Beier, M. E. (2015). Strategies for engaging and retaining mature workers. SHRM-SIOP Science of HR Series. Retrieved from https://www.shrm.org/hr-today/trends-and-forecasting/special-reports-and-expert-views/Documents/SHRM-SIOP%20Engaging%20and%20Retaining%20Mature%20Workers.pdf.
Calzavara, M., Battini, D., Bogataj, D., Sgarbossa, F., & Zennaro, I. (2019). Ageing workforce management in manufacturing systems: state of the art and future research agenda. International Journal of Production Research, 1-19.
Čiutienė, R., & Railaitė, R. (2014). Challenges of managing an ageing workforce. Procedia-Social and Behavioral Sciences, 156, 69-73.
Ciutiene, R., & Railaite, R. (2015). Age management as a means of reducing the challenges of workforce aging. Engineering Economics, 26(4), 391-397.
Dinsdale, M. (2018). Age discrimination law in Canada. Retrieved from http://www.agediscrimination.info/international-age-discrimination/canada.
Field, J., Burke, R. J., & Cooper, C. L. (Eds.). (2013). The Sage handbook of aging, work and society. Sage.
Fields, A., Uppal, S. & LaRochelle-Côté, S. (2017). Insights on Canadian society: The impact of aging on labor market participation rates. Statistics Canada. Retrieved from https://www150.statcan.gc.ca/n1/pub/75-006-x/2017001/article/14826-eng.pdf.
Gerontological Society of America (2018). Longevity economics: leveraging the advantages of an aging society. Retrieved from https://www.geron.org/images/gsa/documents/gsa-longevity-economics-2018.pdf.
Gonzales, E., Matz-Costa, C., & Morrow-Howell, N. (2015). Increasing opportunities for the productive engagement of older adults: A response to population aging. The Gerontologist, 55(2), 252-261.
Hertel, G., & Zacher, H. (2015). Managing the aging workforce. The SAGE handbook of industrial, work, & organizational psychology, 3, 1-93.
Hom, P. W., Tsui, A. S., Wu, J. B., Lee, T. W., Zhang, A. Y., Fu, P. P., & Li, L. (2009). Explaining employment relationships with social exchange and job embeddedness. Journal of Applied Psychology, 94(2), 277.
International Labor Organization (2018). World Employment and Social Outlook: Trends 2018. International Labour Office – Geneva. Retrieved from https://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_615594.pdf.
Kollmann, T., Stöckmann, C., Kensbock, J. M., & Peschl, A. (2019). What satisfies younger versus older employees, and why? An aging perspective on equity theory to explain interactive effects of employee age, monetary rewards, and task contributions on job satisfaction. Human Resource Management, 1-15.
Lavallière, M., Burstein, A. A., Arezes, P., & Coughlin, J. F. (2016). Tackling the challenges of an aging workforce with the use of wearable technologies and the quantified-self. Dyna, 83(197), 38-43.
Lin, I., Ngo, N. & Tan, E. (2019). Labor and employment: Singapore. Law Business Research. Retrieved from https://gettingthedealthrough.com/area/18/jurisdiction/58/labour-employment-singapore/.
Miller, M. (2018). This is why companies need to embrace older workers. World Economic Forum. Retrieved from https://www.weforum.org/agenda/2018/06/companies-need-older-workers-here-is-why.
Neumark, D., Burn, I., & Button, P. (2019). Is it harder for older workers to find jobs? New and improved evidence from a field experiment. Journal of Political Economy, 127(2), 922-970.
Ng, E. S., & Law, A. (2014). Keeping up! Older workers’ adaptation in the workplace after age 55. Canadian Journal on Aging/La revue canadienne du vieillissement, 33(1), 1-14.
Őnday, Ő. (2016). Global Workforce Diversity Management and the Challenge of Managing Diversity: Situation on World and in Turkey. Global Journal of Human Resource Management, 4(1), 31-51.
Ones, D. S., Anderson, N., Viswesvaran, C., & Sinangil, H. K. (Eds.). (2015). The SAGE Handbook of Industrial, Work & Organizational Psychology: V1: Personnel Psychology and Employee Performance. Sage.
Purtill, C. (2018). Perennials, not millennials, will trigger the next was of talent retention efforts. Quartz at Work. Retrieved from https://qz.com/work/1476842/the-future-of-work-will-be-shaped-by-an-aging-workforce/.
Rudestam, K. E., & Newton, R. R. (2014). Surviving your dissertation: A comprehensive guide to content and process. Sage Publications.
Sekiguchi, T., Froese, F. J., & Iguchi, C. (2016). International human resource management of Japanese multinational corporations: Challenges and future directions. Asian Business & Management, 15(2), 83-109.
Silverman, D. (Ed.). (2016). Qualitative research. Sage.
Sonnet, A., Olsen, H., & Manfredi, T. (2014). Towards more inclusive ageing and employment policies: the lessons from France, the Netherlands, Norway and Switzerland. De Economist, 162(4), 315-339.
Statistics Canada (2017). Impact of aging on labor market participation rates. Retrieved from https://www150.statcan.gc.ca/n1/pub/75-006-x/2017001/article/14826-eng.pdf
Statistics Canada (2019). Canada’s population estimates: Age and sex, July 1, 2019. Retrieved from https://www150.statcan.gc.ca/n1/daily-quotidien/190930/dq190930a-eng.htm.
Stone, D. L., & Deadrick, D. L. (2015). Challenges and opportunities affecting the future of human resource management. Human Resource Management Review, 25(2), 139-145.
Theodorakopoulos, N., & Budhwar, P. (2015). Guest editors’ introduction: Diversity and inclusion in different work settings: Emerging patterns, challenges, and research agenda. Human Resource Management, 54(2), 177-197.
Thomasson, E. (2018). Young at heart? Mercedes cultivates its aging workforce. Reuters. Retrieved from https://www.reuters.com/article/us-world-work-daimler/young-at-heart-mercedes-cultivates-its-aging-workforce-idUSKBN1JF0BW.
Truxillo, D. M., Cadiz, D. M., & Hammer, L. B. (2015). Supporting the aging workforce: A review and recommendations for workplace intervention research. Annual Review of Organizational Psychology and Organizational Behavior, 2(1), 351-381.
United Nations (2018). The report on the world social situation 2018: Promoting inclusion through social protection. Retrieved from https://www.un-ilibrary.org/economic-and-social-development/report-on-the-world-social-situation_ced795ef-en.
United Nations (2019). World population prospects 2019: Highlights. United Nations Department of Economic and Social Affairs. Retrieved from https://population.un.org/wpp/Publications/Files/WPP2019_Highlights.pdf.
Veth, K. N., Korzilius, H. P., Van der Heijden, B. I., Emans, B. J., & De Lange, A. H. (2019). Which HRM practices enhance employee outcomes at work across the life-span? The international journal of human resource management, 30(19), 2777-2808.
Walliman, N. (2017). Research methods: The basics. Routledge.