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Analysis of Employment Statistics

Analysis of employment statistics shows that there is a growing tendency for aging of the workforce. During the 1950s, the proportion of working young people (16-24 years old) and older employees (55+) constituted 52% and 41% respectively. Already by the 1990s the gap between the number of older employees and market participation rate of this age group was 30% more than the percentage of working young people (Bluestone & Montgomery, 1990).

This tendency of ageing workforce poses significant challenges for managers and there is a clear demand for specific management and leadership strategies aimed t addressing ageing employees. Managers and HRM professionals have to develop a set of values and approaches which would allow them to successfully retain and motivate ageing employees, and need to create a working atmosphere where all employees will feel comfortable. The purpose of this paper is to consider leadership and management problems caused by the aging workforce challenges and to develop strategies for addressing these problems.

The problem of aging workforce

During the previous decades early retirement was a common issue. However, the consequences of financial crisis have urged many employees to resume working (Dychtwald & Erickson & Morison, 2006). At the same time, it has become more difficult for younger people and recent graduates to find a job because of higher competition at the labor market, and due to growing requirements to the experience and/or education of new candidates. “From January 1948 through September 2009, the labor-force-participation rate of older Americans came within 8 percentage points of the rate among younger people in only one month. Since October 2009, the difference between the two groups has been 8 percentage points or less in every month. One side can’t start working; the other can’t stop.” (Hall, 2009).

The US Bureau of Labor Statistics (BLS) reports that in the period between 1977 and 2007 the employment of workers of 65+ years old increased by 101%, while the total employment rates have increased by only 59% (U.S. Bureau of Labor Statistics, 2011). The number of working men in this age group increased by 75%, while for women this rate is 147% (U.S. Bureau of Labor Statistics, 2011).

BLS states that this effect did not emerge due to the “baby boom” generation, since these employees have not yet reached the age of 65. The tendency of aging workforce is to some extent stimulated by the political and legislative changes, such as the introduction of the ADEA act (Age Discrimination in Employment) and the cancellation of mandatory retirement in 1986.

Also, the trends analyzed by the BLS show that in the 1990s employees of 65+ years old have chosen part-time work, and nowadays their full-time employment rates have increased sharply (U.S. Bureau of Labor Statistics, 2011). According to BLS forecasts, this trend is going to continue: the number of employees aged between 55 and 64 years old is expected to rise by 36.5%, and the number of employees in the 65-74+ age group is expected to rise by 80% (U.S. Bureau of Labor Statistics, 2011).
Management strategies

Surveys of managers and executives (Hall, 2009) have shown that 45% of the believe that the challenge of aging workforce might affect their organizational culture and leadership. The managers are primarily concerned about the changes of organizational culture, possible knowledge and leadership gaps (Kantarci & Van Soest , 2008). It is possible to determine several objectives which should be incorporated in the managerial mindsets in order to successfully manage aging workforce (Leibold & Voelpel, 2006):

  • Older employees should be valued as an important group with enterprise-critical skills and experience
  • Older employees are enthusiastic and motivated similarly to younger employees
  • Older employees have such advantages as wisdom and experience, in contrast with business growth and innovation inherent to younger employees
  • Older employees are a future investment (and not an additional cost to the enterprise)

It is possible to determine a number of management strategies which can be used to address these objectives. First of all, managers have to adjust the work environment – make the workplace comfortable for aging employees, introduce additional work flexibility, facilitate aging employees with appropriate tools and mechanisms and introduce a certain rate of physical mobility (Kantarci & Van Soest , 2008).
Leibold and Voelpel (2006) have created a 5V framework for managing ageing workforce (Fig. 1).

Figure 1. 5V-framework (Leibold & Voelpel, 2006)

This framework describes organizational action fields for managing an aging workforce. This framework integrates the issues of productivity, innovative capability and creativity, demands for the changes of managerial mindset with regard to aging employees, knowledge management, health management, HRM and leadership processes. Details of leadership for aging workforce are discussed in the next section.
Leadership strategies

Among successful leadership strategies for dealing with the aging workforce issue is team working. First of all, team working benefits the organizational culture, makes the environment more flexible and creative regardless of the age of the employees. If there are many aging employees, team working will also enhance knowledge sharing and the incorporation of corporate values. Leaders working in teams are able to train younger members of the team, and raise new leaders. Thus, the benefits of team working are staff development, learning and sharing of knowledge.

Leadership strategies should be developed with regard to the moderating effect of age: changes in the aging process impact employee behaviors and attitudes. According to Cashman and Brooks (Turner, 2008), there are three major stages in the adult life cycle. In the young adult stage (17-32) employees form a mental relationships with their supervisor; employees aged between 33 and 45 years old value recognition of their achievements and alleviation of ambiguity and uncertainty; finally, adults over 46 years old experience the shift of focus from self-development towards interaction with others. This group of employees tends to strive to maintain their social roles, and acts to continue satisfaction-generating activities.

Investigation of transactional and transformational leadership on commitment of older employees has shown that for employees in the 33-45 y.o. age group transformational leadership has positively affected their goal commitment. However, for the group of employees aged 46+ years old, transformational leadership did not produce such an effect. Transactional leadership proved to be equally effective for all age groups. Thus, to adjust leadership strategies to the needs of ageing workforce, it is recommended to pay more attention to transactional leadership style (Turner, 2008) and focus on performance goals, monitoring goal achievement, recognition of success and clearly determine the rewards and benefits for the employees.


Despite common beliefs, aging workforce does not place economic and performance burden on private and public companies. While physical characteristics of older employees decline after 40-45 years, there is evidence that mental abilities may not deteriorate until 70 years (Santora & Seaton, 2008). Among aging employees the rates of absenteeism and turnover are significantly lower; work and life experience of these workers lead to higher customer satisfaction and higher profits for the companies (Dychtwald & Erickson & Morison, 2006).

Leaders have to take into account that older employees are more susceptible to transactional leadership style and will be better motivated by stable working conditions and recognition of their rewards, than by transformation and challenges. Managers should focus their attention on retaining and motivating talented employees, develop team working and knowledge transfer programs, and should be prepared to manage a growing number of retirees (Dychtwald & Erickson & Morison, 2006). One of managerial objectives regarding the aging workforce is creation of supportive culture and elimination of negative attitude towards older workers. Managers also have to pay attention to knowledge management, health management, adoption of new HRM tools and facilitating work environment with regard to the needs of older employees. Overall, aging workforce presents a large number of opportunities for companies, and the purpose of managers and leaders is to adapt their styles to empower their aging employees to bring maximum value to the company.


Bluestone, I. & Montgomery, R.J. (1990). The Aging of the American workforce: problems, programs, policies. Wayne State University Press.
Dychtwald, K., Erickson, T.J. & Morison, R. (2006). Workforce Crisis : How to Beat the Coming Shortage of Skills and Talent. Harvard Business School Press.
Hall, K.J. (2009). Risk Management Strategies for an Aging Workforce. Profits Publishing.
Kantarci, T. & Van Soest (2008). Gradual Retirement: Preferences and Limitations. De Economist, 156, 2; 113-144
Leibold, M. & Voelpel, S. (2006). Managing the aging workforce: challenges and solutions. John Wiley and Sons.
Santora, J.C. & Seaton, W.J. (2008). Age Discrimination: Alive and Well in the Workplace? The Academy of Management Perspectives 22, 2, 103.
Turner, J.A. (2008) Work Options for Older Americans: Employee Benefits for the Era of Living Longer. Benefits Quarterly, 24, 3, 20-26.
U.S. Bureau of Labor Statistics (2011). Spotlight on Statistics: Older Workers. Available from http://www.bls.gov/