Table of Contents

1.0 2.0 2.1 2.2 3.0 3.1 3.2 3.3 4.0 4.1 4.2 5.0 6.0 Introduction ......................................................................................................................... 1 Age diversity in workplace................................................................................................... 1 Older employees and Baby Boomers .............................................................................. 2 Generation X and Y .......................................................................................................... 3 Age and Productivity ........................................................................................................... 3 Age, interrelations with training ..................................................................................... 5 Age, experience and learning .......................................................................................... 6 Age, productivities and wages......................................................................................... 7 Human Resource strategies in managing age diversity....................................................... 8 Learning, training and development practice ................................................................. 8 Flexible working arrangements ....................................................................................... 8 Conclusions .......................................................................................................................... 9 References ......................................................................................................................... 11

ELEMENTS OF SUCCESSFUL HUMAN RESOURCE MANAGEMENT TO ADDRESS AGE DIVERSITY AT THE WORKPLACE.

1.0

Introduction

Diversity can be defined as the variety that exists in the workplace and the social environments. In other words, diversity in the workplace can be referred as a broad range of human qualities. From James (2008), these qualities includes age, culture, disability, educational background, employee status, family status, gender, organizational role, physical appearance, race, religion, sexual orientation, and thinking style. The diversity in an organization may be a component to make the organization succeed, but it is a vital factor. According to Causon (2008) diversity has a second very important business benefit. The ability of diverse employees to build strength is the key component that propels the organization into new dimension of performance. The diversity in company may attract people to join the company or help with the recruiting new employee (James 2008). Employees that have diverse work background can provide quality customer service. Diversity may have negative effects on productivity. This situation can be occur when the employees utility and work performance depend negatively on the share of employees that are different in terms of age, gender and etc (Ilmakunnas 2011). When the situation is opposite where as the employees regard diversity as social good, the consequences will be opposite.

2.0

Age diversity in workplace

One component of the diversity is age diversity. Age diversity is a reality in todays workplace and it will increase in the future. The employees of all ages are asset for the organization and add tremendous value to the organization. The organizations must develop effective strategies to retain and retrain their best employees whether the employees are young, midlife or older. In addition, the age diversity is important components in the future for the organization to compete with other organization. Older employees are another prime source of talent who face obstacle to getting into the workplace and sometimes difficult to staying in the workplace (Causon 2008). From Morales and Marquina (2009), age does not have greater relationship with the team performance. According Lazazzara and Bombelli (2011), the age stereotypes are stronger in certain industries and jobs. For some kinds markets or products, age give additional value. Age dose not represent obstacles. Seniority and experience are considered synonyms with confidence, strength and maturity (Lazazzara and Bombelli 2011). The industries that have higher level of age discrimination include insurance, retail,

finance, information technology and high technology. The sectors that are the age not as marked include manufacturing, production and traditional services (Lazazzara & Bombelli 2011). In a workplace, there are four generation that is working in a organization. The four generation includes traditionalists that are born before 1946, baby boomers that are born in 1946 1964, generation X that are born in 1965 1981 and generation Y or Millennial that are born in 1982 2000. From Bell and Narz (2007), a generation can be defined as demographic and key life events that shape, at least to some degree, distinctive generational characteristic. The generations that are working in an organization have different values, experiences and perception. 2.1 Older employees and Baby Boomers

Older employees or Baby Boomers are pictures as loyal and hardworking. So, the organization needs to recognize the need to retain the older skilled and experienced people in productive employment. Thus, the organization must manage them effectively. The organization must need to avoid losing of skills and knowledge the older employee when the organization want to manage out the poor performing older employee by unwanted attrition. However, the older employees are usually to consider first for redundancy. It is because the wages for the older employees is much larger than young employee. Thus, the organization tends to focus on employing the younger employee but they lack of experience in their work. The young people are cost less than older people but they easily to be train than older people. The organization usually makes early retirement strategy to downsize their organization. The productivity of older employee is favorably and the output is higher compared than to other age group. It is because the older employees have their experience and have greater organizational commitment. The rate of turnover for the older employees is less than younger employees. The positive contribution of older employees is often overshadowed by negative stereotypes (Lazazzara & Bombelli 2011). These negative stereotypes affect the strategic choice and general replacement policies in an organization. Older employees are considered as less flexible and willing to adapt to new environment and new procedure. In addition, older employees are also view as, have poorer health, less creative, less interested in technology and less trainable. The negative stereotypes that are persist in relation to senior employees includes the older employees expected to be cognitive and physical deficiencies in relation to job requirements, inability to manage and adapt change, the older employees have inferior performances and they are focusing on their retirement (Lazazzara and Bombelli, 2011). The common stereotypes about older employees are about the poor performance of the older employees. This negative stereotype gives bad effects to older employees. The older employees come across as having lower ability, lower motivation and lower productivity than

younger employees (Posthuma & Campion 2009). Other common stereotype is that older employee is difficult to change and learn something new and less potential for development (Posthuma & Campion, 2009). The negative stereotypes make bad effects to older employees because it can create Pygmalion effect to supervisors in an organization. Supervisors will believe that older employee are less motivated to learn something new, less flexibility and do not want to participate in training programs (Lazazzara & Bombelli, 2011). Hence, the organization does not invest the training or development programs for the older employee. The older employees skills become outdated and lack of self confident due to lack of training (Van Vianen et al. 2011). 2.2 Generation X and Y

Generation X and Y are pictured as innovative but disrespectful, lazy and egocentric. Gen X-ers have high value of entrepreneurship and they tend to working for themselves. In addition, they are quick to capitalize on job oppurtunities elsewhere (OBannon 2001). Gen X-ers have the ability to keep learning and can increase their skill to highest level. From Bell and Narz (2007), the Gen X-ers are the children of the Baby Boomeers and they saw the toll that having both parents trying to have it all took on the family. Thus, they are working to change it. According to Bell and Narz (2007), there are small generation that are called the baby bust. The characteristics of baby bust are self-reliant, optimistic and confident. In addition, they value education, independence, and parenting above work. However, they do not have strong loyalty to employer. The newest employees that entering workplace are from generation Y (Bell & Narz 2007). Gen Yers are better educated, familiar to new technology and more creative compared than other generations. Gen Y-ers know what they want in life and their outlook if fundamentally different from any other group of young people in the last 50 years. In addition, Gen Y-ers did not have problem telling people what they want. If the organization wants to retain the Gen-Yers, the organization needs to meet their demand to entertain and to do work in short time. Gen Y-ers want creative challenges and projects with deadlines so they can build up ownership of their tasks (Bell & Narz 2007).

3.0

Age and Productivity

Aging of labor is a phenomenon that could not be avoided. As human, aging is a process that everyone will have to experience. One of the key challenges face by most developed countries today is the shrinking and aging population which results from low birth rate and the increased longevity (Kunze et. Al 2011). The impact of the aging workforce in certain countries could be felt in the socio-economy structure

(Dong-Wook 2011). It is believed by some researchers that there will be not enough younger workers to replace the workers in baby boom generation in the next 15 years (James et. al 2011). The implications of these have force companies to retain their older and experience workers, in addition for certain countries this will combined with the potential rise of legal retirement age (Kunze et. al 2011). One of the relevant issues relating the aging to the workplace is labor productivity (Ilmakunnas 2011). Ilmakunnas (2011) stated that on average, older workers will be less productive as compared to the younger workers. Older employees are less productive, these people can lower economic growth and decrease fiscal sustainability (Skirbekk 2003). One of the reasons is that most of younger workers especially baby boomers will likely to dominate the age structure ( Ilmakunnas 2011). It was also found that individual job performance decrease from around 50 years of age, which is in contrasts with the almost life-long increases in wages (Skirbekk 2003). In addition, one of the suggested perception about the older employees is the belief that these older employees are no longer interested in getting themselves into the training and development, as they are grouped into a bias perception that they are "checked out", or "slow to learn" (James et. al, 2011). However there is no single age that indicates when age-related changes start to happen (McMahan & Skurtz 2006) Some other stereotypes of aging workers other than productivity are the mental decline, physical decline, inability to cope with change, and performance (Maurer et. al 2008). For example, physical demanding work will have men reaching the peaks earnings in their early 30s, and the wage rating will decline from around 40 years of age (Skirbekk 2008). As age increased, reduction of physical strength generally believed to be hazardous, especially in jobs requiring exertion of high muscular forces, such as lifting, lowering, and carrying of moderate to heavy loads (McMahan & Skurtz 2006). In addition to the reduction of physical strength, it is concluded that the cognitive abilities reasoning such as speed and episodic memory will declines significantly before 50 years old and more thereafter (Skirbekk 2003). The cognitive abilities changes with aging process thus training is essential for the aging workforce to meet the needs of older workers (McMahan & Skurtz 2006). Even though with all stereotypical beliefs about older workers' ability and desire for development, in positive side, the ageproductivity peaks earliest in business services, where this is due by the raising educational level of the work force and experienced labor (Maurer et. al 2008). As most of older employees have involved years ahead of younger employees and exposed to many situation has made them are more subtle to changes has become benefits to organizations. Another way to relate the productivity to the ageing workforce is by the relating to the extent of wages that reflect the aging workforce productivity. A work by Dostie (2011) found evidence that productivity decline for male workers aged 55 and more due to the consequences on standards of living. In contrast the productivity of female workers aged 55 and more was even higher. From these findings, the contrast between male and female productivity shows no significant deviation on average, thus on the

overall productivity does not deviate significantly from wages. One suggestion to keep the the old workforce employability is to reduce the wages if their wages exceed their productivity levels (Skirbekk 2003). 3.1 Age, interrelations with training

There are common perceptions and stereotypes on old employees. One of the common notions about the older employees is the belief that most of this group of aged people is not interested in training and development opportunities. These old employees are often labeled with the bias notion as they are "checked out', "slow to learn", or difficult to train" (James et. al 2011). Other research also labeled this group of people as less interested in new training, less flexible, and more likely to become weary than their younger colleagues (Maurer et. al 2008). Even worse they are also thought as "old dogs cannot learn new tricks", with the perception that workers age 40 or older can only adapt and learn new situations depending on the type of the person and type of training and education (Perry 2010). There are many other negative perceptions of older workers qualifications for work and desires for opportunities (James et. al 2011). Other scholar have found that older and younger employees desire different work opportunities, their difference range from job flexibility, career advancement, professional development, and monetary compensation (Bright 2010). Bright (2010) also stated that most other similar studies have found that older employees desires range from job flexibility, job security, and monetary compensation more than younger employees. In relating the age and productivity with training, some organization usually will relate productivity with income. As labor costing or wages varies with ages or years of service, and due to the fact that the old employees will retire soon has made these group of people are commonly perceived to cost more than younger workers and are not worth employers investments in training. This fact is even worsened with the addition to the perception of they are difficult to retrain and prone to higher rates of absenteeism and work injuries than younger workers (Brokke 2003). The other factors that affect the organization to provide training to their employees is training costs. Training cost may vary by a range of factors, for example, younger workers higher educational levels and access to training. Some organization would prefer to invest training resources in younger rather than older workers to create promotional and career opportunities (Brokke 2003). As older people are reaching the retirement age, and due to the fact they are looking for substitute for leaving employees has made the older employees often to be left out. The average productivity will decline as the workforce gets older, with possibly adverse consequences on standards of living (Dostie 2011). This is might due to the size of the family for older employee is larger than younger employees thus this means that the older employees will have other

commitment towards their family as well as towards the job. As productivity decline, this could also affect negatively the ability of governments in macroeconomics scale to ensure the funding of pension systems. Due to this problem many are suggesting that more efforts should be put in increasing the incidence of firm-sponsored classroom training for older workers (Dostie 2011). Many of the legal and behavioral literatures in organizational behavior and human resource management have given bias notation to this group of old employees. These unfair differences in treatment by age in the area of training and development literatures have not only be disadvantageous to older workers and their employers, but also that this could be used as evidence of age discrimination. (Maurer et. al 2008). Through all these perceptions have given disadvantages to these old employees. As a result of these perception and stereotypes have made these people are often left out in training and development. This also results the older workers to not participate in training as often as younger adult (Maurer et. al, 2008). Human resource managers should consider the potential of their employee regardless of their age diversity upon the overall productivity. Age awareness trainings for executives should be held to promote a positive view about the potential of different age groups in the company and to emphasize the relationship of an age-discriminatory corporate culture to lowered performance levels (Kunze et. al 2011).

3.2

Age, experience and learning

Experience is one of the most important determinants in evaluating determinants of job performance (Brokke 2003). The advantages of having more extent experience usually will be at the side of older employees. As they have worked years more as compared to younger workers, their experience is an asset for them to maintain job security. Brokke (2003) also indicates that a majority of the sample (55 per cent) perceived older workers to have greater wealth of experience and reliability than younger workers (Brokke 2003). Aging phenomenon could be a dilemma for a certain organization due to the fact that they need to replace the leaving employee. The retirement rates is a dilemma if the rates of retirement is higher than the rate of workforce-entry. In addition, companies will lose the skills and experience of middle-aged workers where they are forced to decide whether to force out middle-aged employees to secure productivity, or retain them to utilize the talents they have built up over many years (Dong-Wook 2011). To extend the productive working life at older ages, a government could follow many different policies. Taxes, earnings and pension systems need to be restructured in order to increase incentives for older individuals to continue to work rather than to retire. However, the question is not only about creating

financial incentives for a long and productive working life, but also about the need to alter norms, beliefs and behavior that affect labor force participation and work effort among seniors. Many elderly would like to continue working when they reach retirement age, while employers are often hesitant to employ them, making it difficult to increase retirement ages. High costs are often seen as the main disadvantage of older. Pension payments and health insurance often increase by age, and as wages may not be adjusted for this, it implies that older individuals are cost- lier for firms. 3.3 Age, productivities and wages

Wages are the compensations implied on the employees by the organization in return of to the service provided to the organization. The most common wage differentials could be based on different levels of schooling or experience (Dostie 2011). Early entry wages into a certain organization will usually depends on the extent of the education level of the new employees. The higher level of schooling reflects on the higher rate of wages implied to the employees. On longer term, wages can be determined based on productivity, seniority and wages are also can be shaped by multivariate influences operating in labor market (Brooke 2003). In understanding age and wages profile, it is essential to determine the common factor that related to the wages in the workforce. As age diversity varies in almost every organization, some literature suggested that productivity should be the term that affects the wages rate. One of the literature suggested wages should be view as the relationship between aging population and economic growth, Skirbekk (2003) stated if older or senior workers wages exceed their productivity level, their wages should be reduced to increase employability. Thus, this means that productivity is the main issue in relating the wages rate. In term of productivity younger employees is more productive as compared to older employees. The job requirement also might differ along with age and ability of the employees. For the physically demanding work, men reached their peak earnings in their early 30s, and wages decreased substantially from around 40 years of age (Skirbekk 2008). Another literature also suggested that both wage and productivity are at their peak for the 3555 age group and diminish afterward (Dostie 2011). Another example, is the Finnish industrial sector, there is shown evidence in literature that age dispersion is positively associated with productivity at the plant level and there is a positive educational effect, but educational dispersion is negatively related to productivity (Ilmakunnas 2011). Wages can be also determined in another extent, wages can be defined by other factors than individual contribution to the firms value-added, including the role of unions, uncertainty about new workers productivity and delayed payment contracts where performance while being young results in higher earnings for those still employed while they are older (Skirbekk 2008).

Another extent on how the cost for labor increased from age is pension payments and health insurance. Both pension payments and health insurance often increase by age, even though the cost for these increased the wages rate may not be adjusted, these fact implies that older individuals are costlier for a certain organizations (Skirbekk 2008). There are many other reasons that effect the wages rate and one of the explanations include incentive compatible wages (Dostie 2011). Incentive could be in form of seniority, the longer the service the more will be the wages. Older paraprofessionals considered wages and the job security of employment opportunities significantly more than younger paraprofessionals (Bright 2010).

4.0 4.1

Human Resource strategies in managing age diversity Learning, training and development practice

Learning, training and development practice represent strategic component for the age management in organization. Usually organization makes training and development programs to the younger employees. It is because of the negative stereotypes that state the older employees do not want to participate the training programs. Training programs provide supportive framework for the good practices. The training programs must be open to all employees. The age limits must be removed for access to learning and training opportunities (Lazazzara & Bombelli, 2011). It is not true that the older employees do not want to learn and participate the training programs. According to Lazazzara and Bombelli (2011), generational issues must be included in managerial and diversity training and entire working life of employees should be involved to raise the awareness of age diversity and ageing issues. These training programs give opportunity to older employees to progress their career or change their job (Lazazzara & Bombelli 2011). Older employees can be deployed as trainers for the younger employees that are lack of skill. The older employees can teach the knowledge, skill and experience to the younger employees. Thus, it can reduce cost for the organization to make training programs. From Lazazzara and Bombelli (2011), the career development is not necessarily hierarchical, but it can also to broaden the skills and knowledge base of older employees. 4.2 Flexible working arrangements

Flexible working arrangements give many advantages in helping organization to compete with others in attracting and retaining valued highly educated employees (Bell & Narz 2007). Flexible working arrangements include flexibility of the working hours, the places where the employee work, the employees access to technology, the professional development opportunities and mentors to help employees adjust to new ways of working (Bell & Narz 2007). Flexible working time is good practice for age management in

term of the flexibility working hours. According to Lazazzara and Bombelli (2011), flexible working arrangements give the employees experience new needs that require a rethinking of the work-life balance. 4.3 Waging strategies Other way on determining the successive human resource management towards the age diversity workforce is by implying the waging strategies, since most of the wages rate relationship depends on the productivity, thus the most relevant strategies is to set the wages rate based on the productivity and less element of seniority. This could be beneficial for both employees and employers, in term of to maintain job security, they will disregard of their age to stay competitive and be more productive. The waging strategies could be also implemented by government, in order to appreciate their contribution instead of giving incentive based on seniority, the government could imply a method such as lowering the taxation rates.

5.0

Conclusions

Aging is a phenomenon that could not be avoided. As human ages the number of older employees increased directly with time, it is a dilemma for a certain organization to face the retiring employees and to find the substitute for the leaving employees. However the main findings for this literature review is not focusing on how to encounter the aging phenomenon but rather on finding the elements of successful human resource management to address age diversity at the workplace. This findings first focused on bigger scope in relating productivity to aging labor then went down to even deeper scope that affect productivity such as training and development, experience and wages. For training and development, it was found that most previous literature have shown bias towards the old employees as the old employees always represented as a group that refused to go on training as compared to younger employees. However this was not all true since some findings shows that these group of people also have shown interest in having job training. The main problem is that the organization did not give their attention to them as they are reaching retirement age and soon will leave the organization. Thus, the focus will have more on younger employee that will substitute them. Yet, the older employee still blamed for less productive as compared to younger employees. Thus in having successive human resource management, these old employee should be given chance to receive training as well as young employee in order to improve their productivity. It is essential to have diversity training in organization to satisfy the needs of individuals to improve based on the age and other criteria. Other factors that affect productivity is experience. Even though old employees are rich in knowledge and experience, their commitment and productivity decline as they aged. The standard of living is one of the factors that affect the commitment toward their job. As older employee have larger family size and have to give other commitment as well. It is important to understand the needs of these people. These

people should be not left out, since their experience is one of the most valuable asset to the company operation it is a need to understand their need and desire. Older people desire varies with young employees; they are more preferred on having job security and job flexibility rather than career track, as contrast to younger employees which are more interested in pursuing the career ladder. Older people also should be taken care of their health as they are aging and their health status are not the same as young people thus. By providing them such benefits will make them more appreciated and this will hopefully will affect their employability. The other factors that affect productivity is wages rate. Since productivity is the main issues thus the wage rate should be based on the level of productivity and less seniority. This is actually both beneficial for both employee and employers. Thus by implying these employees regardless of their age will compete in order to gain more incentive and increase their productivity.

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6.0

References

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