Retention of aging employees and organizational performance: Comparative study EU countries and US

Abstract

Both the developed and the developing countries face problem due to the aging employees (i.e. those aged 50 and above). It is expected that by 2020, people in the 50-64 age group in the U. S. labour force will be 25.2% and in European Union countries the number of people in the 50-64 age group will increase by 25%, while those in the 20-29 year age group will decrease by 20%. A further factor contributing to an aging workforce is the fact that employment rates among older workers are increasing. The reason for these changes is due to two demographic trends: decreasing fertility levels and higher life expectancy. This development will affect the performance of organization next decades. The aging employees will mainly affect the organizations ability to be productive. Although growing number of older workers are willing to extend their working career, but the evidence suggests that employers favour early retirement rather than retention of older workers. This paper address a comparative study of European Union countries and United States on the importance of aging employees to current and future labour markets, relatively about the ways in which employers' attitudes, policies and practices influence their recruitment and retention. It is essential to retain the aging workforce in an organization in order to avoid the labour shortages and also to retain the knowledge and expertise of the employees. When older experts leave the workforce, they take with them significant experience and critical knowledge essential for the smooth management of organizations. Employers, however, are often unaware of who possesses expertise, or the nature of that expertise. Strategies such as workforce development, altered workforce policies and practices can be implemented to retain the senior employees in an organization. The policies should be changed in order to manage the aged workforce like increasing the retirement age, altering the retirement incentives to meet the expectations of greater longevity, flexibility and old-age pension agreements. Also, cultural and legal efforts should be taken to avoid age discrimination issues between the aged and the youth. Moreover, training can be provided to meet the labour shortage and to ensure professional development among the senior employees. Approaches to recover or recreate knowledge after it is lost are not sustainable in terms of prudent knowledge management. Organizations need to develop a deeper understanding of where expertise resides and how it is retained. This paper present the retention processes of an individual expert.