More training and retention, less pushing out: Pro-active shift in age management
Updated: Mar 30, 2020
Changes in organisations’ approach to older workers in the Netherlands, 2009-2017
Through the last few decades, attitudes of employers and policies implemented in organisations have rarely been supporting longer working lives. Studies in different countries found that instead of investing in and retaining older worker, organisations are more likely to send their older staff to early retirement. One of the reasons is that employers share strong stereotypes about decrease of learning abilities in older age, and consider training of younger workers to be more profitable. However, ageing and shrinking labour markets force companies to adjust their practices to avoid staff shortages and improve firm’s competitiveness. Some more recent studies show, however, that employers are moving away from early exit policies, and show increasing support for longer working lives. Still, a large-scale and longitudinal perspective on how organisations have reacted to the demographic challenges is missing in the literature. Our study, by Konrad Turek, Kène Henkens and Jaap Oude Mulders from the Netherlands Interdisciplinary Demographic Institute (NIDI) fills this gap and shows how the approach to manage and train older workers has changed in Dutch organisations between 2009 and 2017.
A case of the Netherlands
The Netherlands is an interesting case when talking about the impact of demographic changes on labour market relations, in general, and development-oriented age management, in particular. The Netherlands is at the forefront of implementing policies to stimulate and facilitate longer working lives. Retiring early was common until the early 2000s, but the employment rate for 60 to 64 year olds increased from 22% in 2003 to 51% in 2015, and the average age at labour force exit changed from 61 in 2006 to 65 in 2018 (Statistics Netherlands, 2019). This extension of working lives is largely attributable to policy reforms, such as limiting early retirement opportunities in 2006 and gradually increasing the pension age from 65 in 2013 to 67 in 2024 (Sonnet, Olsen, & Manfredi, 2014). The Netherlands is also one of the leaders in development of the knowledge economy (4th position in the World Bank’s Knowledge Economic Index). This would be impossible without strong learning culture, good human resources management and stimulating environment. In comparison with other EU and OECD countries, Dutch companies provide on average better work organisation, more opportunities to learn, have more supportive management and use the skills of their workers more efficiently (OECD, 2017).
However, in 2000s, as in most other European countries, neither investments in human capital nor more general age management approaches were popular in the Netherlands. Studies show that back then employers did not recognise much potential in older workers, and felt no much pressure related to the ageing labour force (Remery et al., 2003; Van Dalen, Henkens, Schippers, 2009; Conen, Henkens, Schippers, 2011). Strategies they used were limited mainly to reduction of the workload and accommodation. Training for older workers was not among the popular measures. Study of Turek, Henkens and Oude Mulders shows that the situation has changed and Dutch companies shifted strongly towards pro-active age management approaches between 2009 and 2017, especially focusing more in investments in training of older workers.
The authors used data from two comparative surveys of employers, conducted by NIDI in 2009 (n=1,077) and 2017 (n=1,358), representative for the Netherlands. They use a latent class analysis (LCA), a statistical method that enables to distinguish between different clusters of organisations with similar bundles of practices that are simultaneously implemented. Further on, they take a comparative approach which allows studying how the prevalence of different types of organisations, based on their implementation of HR practices, has changed over time. In order to specify clusters of companies using similar bundles of practices, the authors looked at implementation of six specific measures: training for older employees, ergonomic measures, flexible working hours, part-time retirement, gradual retirement, and early retirement.
Increasing popularity of training for older workers
Let us first focus on training alone. The results presented in Figure 1 show that the popularity of training dedicated to older workers increased substantially, from 8% (2009) to 41% (2017). The great increase in development practices is striking, since for decades it was common to assume that employers were reluctant to train older workers.
Figure 1. Percentage of companies that implement particular Practices towards older workers
This change accords with evidence that suggests the Netherlands experienced one of the greatest improvements in older-age training attendance in Europe, with the share of people aged 55 to 64 who participated in non-formal education in the previous 12 months rising from 36% in 2007 to 51% in 2016 (Adult Education Survey, 2016). Such improvements would be impossible without changes to organisational approaches because opportunities and stimuli provided by organisations are the driver of training in older age (Hansson, 2008). In the Netherlands, companies finance most – as much as 85% – of training and skills development of workers in the Netherlands (OECD 2017). Previous studies noticed, however, that such investments were very selective and focused mainly on high-skilled and younger workers. Additionally, career advancement opportunities were concentrated in large and developing firms (OECD 2017). The current study shows that compared to 2009, in 2017 training is much more often provided in small and medium firms from different sector, and as such it has become a standard human resources tool.
Change in age management
To better understand the role training, we should consider it in relation to other measures as a part of a general organisational policy to work at older ages. The current study found four general approaches to age management in Dutch companies. Training was a part of the “Active” cluster, in which organisations utilised different measures aimed at retention and stimulation of work (e.g. ergonomic measures and flexible hours). A very different way of dealing with an ageing staff was represented in the “Exit” cluster, which includes organisations that focus primarily on part-time, early and gradual retirement. The third group was characterised by a diverse policy strategy with application of practices from both active and exit group (“All”). The lest cluster of organisations was characterized by no specific practices towards older workers (“None”).
Figure 2. Share of companies using specific age management approach (%)
Between 2009 and 2017, the popularity of active policy largely increased, while exit-oriented policies and passive strategies reduced (Figure 1). The largest pro-active shift occurred in small organisations, firms with a high share of older employees, and knowledge-intensive companies.
A pro-active shift in age management
Employer-provided training is a core element of the so-called developmental approach in age management. The goal here is to increase workers’ levels of functioning by improving their human capital. A common argument is that continuous acquisition and adjustment of workers’ skills is as important to extending working lives (Picchio & van Ours, 2013) as improving an organisation’s productivity and competitiveness (Barabasch, Dehmel, & Loo, 2012). Surprisingly perhaps, for long decades economists have not considered a possibility that individual’s productivity can do something else than decrease in older age. The most prominent theoretical approach in this respect, human capital theory, saw investments in training of workers approaching retirement age as ineffective, costly and not beneficial for the company (Lazear, 1979; Hutchens, 1988). Only since late 1980 these assumptions have been more commonly undermined by psychology and management studies as too general and simplistic. Contrary to the cost-reduction focused human capital approach, age management models were developed and popularised in 1990s which suggest active ways for retaining the ageing staff (Walker, 2005). Nevertheless, the evidence so far suggested that older people were offered fewer opportunities for training. Besides a cost-benefit calculation, another reason for employers’ aversion were prevailing negative stereotypes of older workers regarding their lower willingness and ability to learn (Posthuma & Campion, 2009).
This study suggests that in comparison to 2009, the prevalence of training older workers grew by a factor of five. Combined with a proactive shift, a sharp decline in the prevalence of exit policies indicates that employers adapted age management practices in response to demographic changes and policy reforms in recent years. Similar processes might be observed in other counties. As labour markets get older and supply of the labour force diminishes employers are under increasing pressure to intensify their interest in older workers. Most Western countries are developing policies to deal with the ongoing ageing of their population, including increasing retirement ages. Workers’ retention and development became crucial to organisations’ stability and competitiveness. This study is among the first to show that employers have been changing their approach to older workers in the past decade in a country that is seen as a forerunner in increasing retirement ages. Age management that stimulates work of older workers, with the particular role of training, receives more attention. Employers are more aware of a changing demographic reality and react accordingly.
The article is based on results of a study by Konrad Turek, Kène Henkens and Jaap Oude Mulders (in press) [working version]
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No 748671 – LEEP – H2020-MSCA-IF-2016/H2020-MSCA-IF-2016.
Adult Education Survey. (2016). Database. Retrieved from https://ec.europa.eu/eurostat/web/microdata/adult-education-survey
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