Companies in denial about ageing workforce

Jun 12 2009 by Nic Paton Print This Article

Just because there are suddenly lots of talented, out-of-work people to choose from doesn't mean the long-term demographic pressures of falling birth rates and an ageing workforce have gone away.

In fact, with not even a fifth Ė just 15 per cent Ė of European firms planning their workforce needs more than three years in advance, managers potentially face a severe talent "double whammy" when the recession eases.

Even more worrying, the poll by the US-based Boston Consulting Group and the the European Association of People Management has found that nearly half of European companies do not even plan their workforce requirements more than a year in advance.

What this means is that, once we are through this current recession, the twin pressures of falling birth rates and baby boomers heading off into retirement are likely to resurface with a vengeance, it has argued.

Companies that have been forced to cut costs and reduce headcounts during the recession may well struggle to find the people they need when growth eventually returns, it has warned.

Managers therefore need to be doing more to consider the long-term impact of their recruitment and retention actions, even in times of crisis, it emphasised.

"In 10 years, the scarcest resource for a company will be people," said Rainer Strack, co-author of the report and senior partner in Boston Consulting's Dusseldorf office.

"Companies should understand how their workforce will develop, which job categories drive the business and how demand will evolve.

"With the uncertainty prevailing today, the human resources department should analyse different scenarios to figure out whether and how to find, hire, retrain, outsource or lay off employees," he added.

Stephanie Bird, board member of EAPM and director of HR capability at the UK-based Chartered Institute of Personnel and Development, said this all added up to employers needing to do more to recognised the need to retain top performers, while also planning for the skills and talents they need, now and in the future.

"We know many organisations are weathering the storm by placing greater emphasis on selecting and developing high performing individuals, based on clear and robust criteria," she pointed out.

"Unfortunately, our research also shows this is not yet being felt by employees themselves. For employer strategies to attract, retain and develop the people they need for the future to be truly effective, they need to be well communicated in a way that generates enthusiasm and motivation," she added.

Other priority areas for future action identified by the research included improving leadership development and enhancing or maintaining employee commitment and engagement.

What companies and managers needed to be doing, argued Boston, was calculating how different strategic scenarios might affect the demand for specific job categories as well as determining whether they had an adequate supply of employees now and in the future, either internally or in the job market.

While the recession was currently masking the threat from the ageing workforce, in the longer term firms needed to be doing more to link their people and business strategies together, including making workplace planning a key strategic imperative, measuring their people performance effectively and improving their HR practices, it advised.

The research is not the wake-up call for for managers on this issue. Last month research by recruitment firm Manpower, for example, suggested that nearly a third of managers worldwide were still struggling to fill skilled salespeople and technical positions, despite the fact that more people were now out in the jobs' market.

Boston Consulting also sounded a warning on this issue in April last year, arguing in research with the World Federation of Personnel Management Associations that the combination of ageing workforces in the West and intense demand for skilled workers in developing nations could in time create a global "talent crunch" that could be as damaging to the financial credit crunch.