ageing workforce

Working too hard? Go shopping

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nickel_and_dimed_1600_wht_6554The japanese government are worried about people working too hard and killing themselves from overwork, called karoshi, from which 200 people died last year.

Its chief spokesman Yoshihide Suga said Japan must “end long working hours so people can balance their lives with things like raising a child or taking care of the elderly“.

Almost 1 in 4 Japanese employees work over 50 hours a week compared to 1 in 8 in Britain and the US and 1 in 12 in France. On average Japanese workers take only half their paid holiday entitlement as taking time off is considered an “inconvenience to their colleagues”

So they’ve introduced Premium Friday. On the last Friday of each month employees will be encouraged to leave the office at 1500 and make an early start to the weekend.

The purpose is two-fold: to enable people to recover from working the longest working hours in the world and to give the retail sector a much-needed boost by encouraging people to go shopping. It’s been estimated that if everyone takes advantage of this it could generate £900 million extra consumer spending every month.

The Japan Business Federation (Kaidenren) is urging its 1300 members to take part and the Trade Minister has promised not to make any appointments on Premium Friday afternoons.

However Mitsubishi Electric is currently under investigation for allegedly forcing its staff to work excessive hours and it’s not known how many people will break the habits of a lifetime in a period of economic uncertainty and job insecurity.

Also people might just go home to rest or shop on Friday instead of Saturday. After all if they are cutting down their hours they won’t have the money they earn with overtime to spend will they?

Getting work-life balance right is never easy when people have to work long hours to maintain their standard of living.

Japan has the longest lived people in the world and also the most rapidly ageing society with a quarter of the population over 65. This is not without its problems.

Because of the declining birth-rate this proportion will increase to 40% by 20160.  However scientists have now declared that for healthy people old age should be classified as 75, not 65. 

So will the government delay pensions and extend people’s working lives? They probably will otherwise there will be no-one working and paying tax to support the elderly in future years.

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Companies with older workers less productive

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j0415797They’ve been called a “drag on productivity” in a study that examined the performance of hundreds of companies in Britain and Germany.

It found that the more over-50s a company employed the less likely it was to increase productivity over a two-year period. Even a 1% increase in the proportion of older staff led to a greater chance that the company would stand still rather than improve its output.

The situation was much worse in Germany than Britain. There 57% of the companies had workforces with at least 20% of the staff over 50, compared to 41% in the UK.

Productivity was not reduced by older workers working more slowly but by the company’s reluctance to invest in training them.

The less successful companies also had weaker appraisal systems meaning that individuals were not held accountable for their productivity levels. Well appraisal systems have come in for a lot of criticism lately and in this case it suggests that it might be management not doing their job rather than the workers.

Certainly there are companies, such as BMW, that look after older workers better.

And they need to because there are more older workers around. Three quarters of people aged over 50 are in employment in the UK according to the ONS compared with two-thirds in 1994. And one in eight aged over 65 is still in work.

Discriminating against older workers is counter-productive. Often older workers have the unwritten knowledge about the company; their attendance is usually better, and they generally have a more positive attitude and are more loyal. Here’s an American take on this.

Coping with an ageing workforce

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elderly_man_holding_a_custom_text_sign_12871Many companies with an ageing workforce worry about declining productivity.

BMW decided to do something about it. They set up a programme which has been so successful it is now being rolled out in Germany, Austria, and the USA.

BMW realised that the average age of workers would rise from 39 to 47 by 2017 (that doesn’t seem that old to me but then I like the definition of middle age being someone older than me). Because older workers tend to have longer periods of sickness and need to work harder to maintain their output, BMW worried that this would undermine their strategy of enhancing competitiveness through technological leadership and productivity improvements.

Of course this is a trend all across the developed world. Comparing over-65s now with 2020 shows that in the USA that group will grow from 12.5% to 16.6%, in Japan from 17.1% to 26.2%, and in Germany from 16.4% to 21.6%. In the UK the figures are 18% rising to just under 20%. Another concern is that healthcare is three times as expensive for over 65s than for 30 – 50 year-olds.

In the past older workers were either dismissed or forced into early retirement but this was not an option for a company like BMW which prides itself on being a dependable employer – vital in a world where employee engagement is at an all-time low. This is also bad for the country. Past waves of early retirements has increased the numbers of retired workers leaving fewer people in the workforce supporting retirement costs.

Moving older employees to less physically demanding jobs is also not an option if there are no younger workers coming in to replace them, and in many countries this would also be seen as discriminatory.

So BMW chose a production line as a pilot and staffed it with a year 2017 mix of workers ie with an average age of 47. Then the foremen, supported by senior managers and technical experts, developed changes to improve productivity including managing health care, enhancing workers skills and the working environment, introducing part-time policies and change-management processes.

Initially there was resistance to the “pensioners’ line“: from the younger members of that team (42 people) who thought they would suffer a drop in productivity because of the older workers, and from older workers elsewhere in the factory who thought they might become less productive if they were moved from their comfort zone to the new line.

Even the foremen were worried that BMW might reduce work-speed rates and dumb down the IT systems to accommodate perceived deficiencies of older workers (See “Old doesn’t mean Stupid”). So they referred the project to the Workers Council who in turn referred them back to an earlier study that identified a basic framework for change on 5 dimensions.

These were: health management, skills, the workplace environment, retirement policies, and change processes. (I’m not sure why they didn’t know this before they started the pilot programme).

They used a standardised questionnaire, the Work Ability Index (WAI), to assess the fit between a worker’s ability and the demands of the job. They found that whilst productivity decreased on average there were wide variations with some workers suffering a steep decline whilst others remained fully productive. The foreman explained that the pilot line was not a soft option and also appealed to the workers’ pride, telling them that their experience was needed to secure the future of the plant and save jobs.

In the end 20 of the 42 workers stayed on the line and they recruited 22 more with a promise they could return to their old jobs after a year. So in 2007 the line was finally staffed with an age mix reflecting the projected 2017 demographics. They piggy-backed it onto a health initiative and introduced a self-diagnostic tool that awarded positive points for good habits like regular exercise and negative points for bad habits like smoking or being overweight. They also asked the workers about their aches and pains and what they could do to improve things.

To facilitate this they also simplified communications. Rather than using the old “continuous improvement” paperwork, people wrote ideas on postcards and stuck them on a notice board. These ideas were then allocated points by the team so they could be prioritised and the managers and foreman didn’t intervene in this process – it was bottom up and this increased buy-in from the workers.

After the introduction of a wooden floor – which dramatically decreased aches and pains – sceptics were won over and the workers took charge assisted by an ergonomists, a safety officer, and process engineers. Most of the work however was done by the workers themselves, often in their own time. In addition to the wooden floor they introduced special footwear, seating, flexible magnifying lenses, and adjustable height tables which reduced back strain.

They also changed work practices. Work was categorised and, depending on how physically demanding it was, was time-limited for each worker and job rotation was also introduced to balance the load on the workers’ bodies. And a physiotherapist developed stretching and strengthening exercises for them to do each day.

The end results? £40,000 of investment including workshops and expert input produced a 7% productivity improvement in one year, the same as achieved by other lines with younger workers.The target output was increased from 440 gearboxes per shift in 2007 to 500 per shift in 2008 and to 530 in early 2009. 4 workers were re-assigned but no-one wanted to leave.

They achieved a 10 defects per million quality target within 3 months and currently the target is zero defects.

Sickness related absenteeism in 2008 was the highest in the plant at 7% but typical of that age range but has since dropped to 2% which is below the plant average.

BMW now promote this 2017 line as their model for productivity and quality. Perhaps management took a risk letting the production managers experiment and allowing line workers to create the solutions. But it paid off for them and may be the answer in a world where the demographic time bomb is really ticking.

Source: HBR March 2010