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Contents
1.0 The Global Situation .............................................................. 3
2.0 The Local Situation ................................................................ 3
3.0 Impact and Implications of the Aging Workforce .................... 3
3.1 The Situation at American Best Brands. .............................. 4
3.2 Circumventing ³Graying Worker´ Issues at ABB .................. 5
4.0 Conclusions ........................................................................... 7
Figures and Tables...................................................................... 9
References ................................................................................ 10
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The Baby Boom generation is nearing retirement, and with it brings ample headaches to
HR managers worldwide - on how to manage a significantly large aging workforce. While the
baby boom after the World War II ended mostly affected the United States, it was also a
phenomenon globally experienced in varying degrees. Through the decades of 1950 to the
beginning of 1970s saw to an exponential increase in global birth rates, which created
generations of workers today of whom the oldest are at retirement age and the youngest having
passed the age of 40. According to an Ernst & Young survey done in 2007 43% of the American
workforce is set to retire between the years 2004 to 2012 (¬
  


 -. The
numbers do not differ to the rest of the world as well. The median age of the Canadian
workforce was at 41.2 in 2006 (Statistics Canada, 2006-. As of 2020 the a third of the UK
workforce will be over 50 years of age (Everette, 2010-. And this pattern will be visible in most
developed nations upon further analysis.

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While the population aging is a global incident currently most affecting developed
nations (according to the World Bank mostly visible among OECD member nations-, Sri Lanka
as a developing nation has been unable to escape this scenario. Not only does Sri Lanka have
the oldest population among the developing nations, Sri Lanka is also one of the fastest aging
nations in the world (World Bank, 2007-. While the percentage of population over 60 years old in
Sri Lanka is currently around the 15% mark, it will reach similar levels (30%- to OECD nations
by the year 2050 as shown in Figure 1(World Bank, 2007-. Therefore problems inherent to an
aging workforce are factors that need to be addressed now itself by the HR managers in Sri
Lanka as well.


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As time progresses, the gradually graying workforce will have a severe impact on
businesses. Some of the key implications of the aging workforce have been identified through
the review of literature by Folliero (2010-, De Long 2004- and Reeves (2005-. Summations of
facts presented are as follows.

1. In an economy which is still experiencing some growth in the work force such as Sri
Lanka (Sri Lanka work force is expected to grow at a declining rate till year 2030.-(World
Bank, 2005-, having a large number of aged workers could become an obstruction for
younger generations to gain employment.
2. At the same time contrastingly as the ratio of older workers Increase succession
planning becomes one of the most important factors that needs to be addressed. HR
managers will have to be ready for a time period where hordes of workers will be
seeking retirement for which competent replacement for theses workers will need to be
found.
3. Multi generational workers will have to function as one team. Different generations will
have different attitudes and behaviors which can be cause of friction among workers of
varying generations.
4. Bias may occur as other employees as well as managers may feel older workers are
more expensive, lack fresh skills, are less flexible, less adaptive, less tech savvy etc.
5. Older workers may be delineated by the work environment by not fully valuing or
appreciating their experience and knowledge, as well as by declining them with training
and development opportunities.
6. A rise in the number of senior workers could cause a rise in the number of age
discrimination lawsuits. Higher numbers in aged work populace may increase the
probability of disgruntled workers looking to play the ³age card´ against employers.
7. Increase in number of aged workers can also result in a heavier healthcare cost for the
business. Because of age related diseases health care costs for older workers can be
costly compared to younger workers

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American Best Brands (Pvt- Ltd (from here onwards referred as ABB- is a company that
deals in the capacity of authorized agents of over a hundred American premium brands such as
Belkin, Dymo, GE, Southworth, Ditek Rolodex, Shelby etc in Sri Lanka. While ABBs major
business is as suppliers to retail vendors it also conduct retail sales through a limited number of
outlets. As a result ABB employs small workforce of close to 100 employees from diverse
backgrounds and generations that operates in varying capacities within the firm.

As a company operating in an aging society ABB is not impervious to the issues that are
inherent to a graying workforce. Furthermore ABB employs a rather disproportionate number of
aged employees within its workforce. But as mentioned before, Sri Lanka is still a country with a
gradually increasing workforce. Therefore the most important issues that HR managers at ABB
will face due to aging workers are mostly unique compared to the global HR situation. Graying
workforce issues that are most relevant to ABB will be discussed in the following chapters.

A large number of ³grey workers´ in ABB can lead to various complications. First and
foremost will be succession planning. How can the company face a situation where hordes of
employees retire during a small period of time? Replacements for theses inevitable mass
retirements or alternate plans have to be devised early. The next factor that needs to be
addressed by the HR managers is on how to get new/fresh perspectives in to the firm. Different
generations have different attitudes and ideas, having a majority of workers in from one
generation can cause the attitudes and ethics of those generations to become the norms of the
firm, instead of an amalgamation of ideas across generations. This has the capability to create
stagnation in the corporate culture if not addressed properly.

There exists a bias among employees as well as executives that older workers can be
more expensive, they lack fresh skills, they are unable to adjust to changing corporate
situations, unable to adapt new technologies etc. These biases have created an environment
where the older workers are not fully valued for their capabilities, experience and knowledge.
These factors can severely affect the motivation levels of the employees and through which
their performance. In order to tackle these issues, human resource planning and changes in HR
policies need to be made accordingly after a thorough analysis of the situation.

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According to industry studies more older workers prefer to remain in employment due to
various reasons such as personal fulfillment as well as financial reasons (Fernandez, 2010-.
This fact seems to hold true among the workers of ABB as well. As Sri Lanka do not strictly
stipulate a mandatory retirement age for employees in the private sector, the current practice at
ABB have been to allow employees to remain within the firm past accepted retirement age when
they wish to do so and are still capable of fulfilling their duties. While this might stall the need to
find replacements for these employees for the time, in the long run this could aggravate the two
issues of recruitment/succession planning and age polarization discussed above.

One method of addressing age polarization will be to introduce a voluntary retirement

scheme (VRS-. VRS can give the opportunity to employees retire early with financial as well as
other incentives. A VRS that gives employees above the age of 45 financial lump sum and
professional skill development (courses in entrepreneurship etc.- can give these employees
opportunity to pursue new modes of financial stability through the skills gained, and thus be able
to retire safely at a relatively early stage. A mass outflow of skilled and experienced employees
from the company creates a substantial brain drain situation. As a majority of the workers that
would take advantage of the VR scheme are longtime employees probability is that they will
vacate many important positions that require specific skills and knowledge in order to function
properly. Therefore for the VR scheme to be successful it would require a proper succession
plan to be in place.

succession planning is necessary not only to counter the outflow of skill due to VRS, in a
firm with high percentage of aged workers such as ABB it is compulsory to have proper
succession planning in order to counter the inevitable retirement of those employees. Through
proper succession planning ABB will be able to recruit/develop superior employees. For
example: ABB as the agent of many foreign products operates a separate department in order
to maintain its shipping, handling and logistic requirements. Most of the employees in this
department fall under the aged workers category and have been operating in these capacities
for a long time. During this time period they have developed many required skills and
relationships (handling of tax issues, immense paperwork related to imports, personal
relationship with customs department etc.- that are crucial in the daily activities of their
department. When these employees retire new recruits will be unable to perform their duties to
the same extent. Therefore the HR managers at ABB have to plan accordingly and create a
system where other existing employees are trained to handle their duties, given opportunities to
create similar relationships etc, whereas they will be able to fill the shoes of the retiring workers.

The next big issue that needs to be addressed at ABB is the bias that is prevalent
towards aged workers. Most of the aged workers have been working at ABB for a lengthy period
of time and thus have been able to accumulate knowledge, skill and experience that are unique.
Nevertheless, younger employees as well as some managers view aged employees as a
hindrance as they believe that aged workers have low motivation, are set in their usual patterns
and are incapable of changing according to the needs of the modern business environment.
Because of this aged workers are not fully appreciated according to their capacity and are
granted less opportunities to develop their skills and knowledge. For example in the last few
years ABB semi annually employees the services of the locally renowned personality training
specialist Dr. Kuma Iddamallena in order to conduct seminars on topics such as time
management, confidence building, sales, leadership etc. The opportunities to attend these
seminars are mostly given to new recruits, thus effectively declining the opportunity to older
workers to improve themselves in such areas.

While facts behind this bias may be true in some cases, according to research done by
Towers Perrin (now Towers Watson- generally employee motivation levels increase with age,
and highest motivation levels were notice among workers age 55 and above (Feinsod,
Davenport, 2006-. Therefore HR managers need to change the attitudes of fellow workers and
management regarding this matter thorough by creating awareness and sharing of knowledge.
Furthermore in order to obtain the optimum of their capabilities aged workers have to be
properly looked after. It is important to be understanding of their needs, give continuous skill
training, inquire about their work requirements, allow flexible schedules etc.

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Given the changing composition of the demographics in Sri Lanka as well as the world
HR managers need to plan now itself to avoid the inevitable issues that are inherent to an aged
workforce. While the issues and action plans discussed above are for the prevailing and most
immediate problems, more and more HR issues will need to be addressed in the future. In order
to successfully face these scenario HR managers will need to be totally aware about the
following aspects of their firms.

P A detailed understanding of employee demographics.

P Identifying the potential of retaining older workers.
P Strategies in order to prevent the hemorrhaging of critical knowledge due to retirements.
P Plans to create age diversity.
 Companies need to be proactive in this situation to remain functional. Only through a
culmination of actions discussed will it be possible for the company to move forward without any
harm.
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Figure 1
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DeLong D.W. (2004- Lost Knowledge: Confronting the Threat of an Aging Workforce . Oxford:
Oxford University Press

Ernst & Young LLP, (2007- The Aging Workforce: Challenges, Issues and Operational Impact
[online]. Available from <http://www.globalhrnews.com/story.asp?sid=1061> [22 April 2011]

Everett, C. (2010- UK unprepared to deal with ageing workforce. [online]. Available from
<http://www.hrzone.co.uk/topic/managing-people/uk-unprepared-deal-ageing-
workforce/106300> [24 April 2011]

Feinsod, R.R., Davenport T.O. (2006- Aging Workforce: Challenge or Opportunity? [online].
Available from
<http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2006/200610/aging_workfo
rce.pdf> [19 April 2011]

Fernandez A. (2010- Aging Workforce ± 10 Key Points on Training [online]. Available from
<http://www.ceoconsultant.com/business/aging-workforce-10-key-points-training/> [22 April
2011]

Folliero, T. 2010 7 ways an aging workforce will affect Human resources [online]. Available
from <http://www.therecruiterslounge.com/2010/06/25/7-ways-an-aging-workforce-will-affect-
human-resources/> [21 April 2011]

Reeves, S. 2005 An Aging Workforce's Effect On U.S. Employers [online]. Available from
<http://www.forbes.com/2005/09/28/career-babyboomer-work-cx_sr_0929bizbasics.html> [20
April 2011]

Statistics Canada, (2006- Canada's Changing Labour Force, 2006 Census: Overview of
Canada's changing labour force [online]. Available from <http://www12.statcan.ca/census-
recensement/2006/as-sa/97-559/index-eng.cfm> [23 April 2011]

World Bank (2007- Demographic Trends,The Profile of Old People, And the Emerging Issues
[online]. Available from
<http://siteresources.worldbank.org/INTSRILANKA/Resources/LKAgingChapI.pdf> [22 April
2011]