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Demographic Change and Consequences for Businesses


Ulrich Heitzlhofer


Vienna University of Economics and Business

October 1, 2008


Abstract:     
Businesses continually face critical challenges: the global economic crisis of 1929, the oil crises of 1973 and 1979/80 and the bursting of the dot-com bubble in early 2000 are all examples of historical significance. What these external influences have in common is that they were, to a greater or lesser extent, unforeseen and therefore difficult to manage. Moreover, they had a short- to midterm influence on the global economy and certainly changed the way of understanding and conducting business nowadays. This change directly corresponds to the purpose of this master's thesis, which in great part results from an increasing need to rethink different aspects of human capital. Nevertheless, there are great discrepancies concerning the predictability and the chronological impact of demographic change. According to Thomas A. Stewart who published in the Harvard Business Review, "the necessary information had been baked into the demographic pie long before," and "is almost always visible for years before it hits" (Stewart 2004: 10) Realising this particular issue it seems that there are mainly two possible reasons why most businesses, although aware of the significance, do not factor the demographic change into their decision-making process. Firstly, companies within their foresight might not consider the demographic change capable of severe impact within the next years. Secondly, addressing this subject matter may provoke tension, rejection, or even insurgency from senior employees. The latter issue is a rather heated subject in America, as "employers are also often afraid to discuss retirement plans for fear of lawsuits under age-discrimination legislation" (The Economist 2006: 67). Whether it is not yet perceptible or simply unpleasant and difficult to address, organisations will have to face both an aging workforce and consequently also a labour shortage within the next decade. Hence, visualising these two interconnected aspects in all their facets is of great importance for economic survival and, even more evidentiary, for a comparative advantage.

Over the past years, different publications clarified that many older employees will have to stay in the workforce because they simply cannot be replaced due to a lack of qualified, or even existing, young workers. Moreover, "future leaders are likely to face not simply a labour shortage, but a knowledge shortage, as organisations bleed technical, scientific, and managerial know-how at unprecedented rates" (DeLong 2004: 18). It therefore is of utmost importance that businesses start emphasising special retention strategies for retaining older employees such as constant provision of good training as well as motivation and energy. The aim of this master's thesis comprises of the evaluation and comparison of different strategies to cope with demographic challenges. In this regard, literature with a specific focus on an ageing workforce has been examined thoroughly. Furthermore, three diverse companies situated in Austria, Germany, and Scotland were investigated in order to ascertain current organisational approaches towards a changing workforce. Finally, recommendations from literature and organisational measures and plans were compared and contrasted in order to pinpoint the discrepancies between the two. Findings will show that literature and organisational measures relating to demographic changes are equivalent in large part. Those topics that do not occur in literature but in the conducted interviews and vice versa, those issues occurring in literature but not in the conducted interviews represent further findings of this thesis. Ultimately, the combination of aggregated literature and the topics only occurring in interviews provide a clear spectrum of promising measures that will lead organisations to overcome the impacts of demographic change in the future.

Number of Pages in PDF File: 123

Keywords: demographic change, phased retirement, employee retention, age structure analysis, workplace health promotion, work ability index, aging population, senior employees

JEL Classification: J11, J21, J26, J30, J70, J82, M12, M51, M52, M53, M54, O15, O57

working papers series


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Date posted: December 11, 2008 ; Last revised: June 10, 2009

Suggested Citation

Heitzlhofer, Ulrich, Demographic Change and Consequences for Businesses (October 1, 2008). Available at SSRN: http://ssrn.com/abstract=1313712 or http://dx.doi.org/10.2139/ssrn.1313712

Contact Information

Ulrich Heitzlhofer (Contact Author)
Vienna University of Economics and Business ( email )
Welthandelsplatz 1
Vienna, Wien 1020
Austria
HOME PAGE: http://www.wu-wien.ac.at/
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