Area Economy and Human Resources

HR professionals face challenges with aging work force

September 4, 2012
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For those of you who have been around the business environment for a while, you might recognize the evolution of that functional organization that deals with employee matters. Its name has changed over the years to reflect its role. The common label today is human resources, or HR. It has evolved from a person with pure administrative responsibility who kept track of employee addresses, job assignments and pay rates into an instrumental part of the organization with a place at the table in the C Suite. This, of course, depends on the organization and how these matters are viewed and treated.

If you are looking at the world around you, you won’t be surprised when I say that the function is likely to make another dramatic transition and likely with greater organizational impact. Those organizations that want to compete in the world economy will need to get their act together and be sure they have the horsepower to compete. That also means having HR professionals who can be instrumental in driving the organization from a strategic perspective.

Without taking a political position, one can’t help but see how matters that dominate the news are the same topics that dominate the activities of the HR function. The whole economic picture boils down to people and jobs.

HR is involved in both the termination and the recruitment of staff — retaining or obtaining the people who have what is needed to create and produce the products or services essential to the organization. There are also the development demands for those who are instrumental for the future of the business. Some things are obvious, such as engineers with the experience to develop new products. But who will think to bring in programs that will increase cultural awareness to maximize the impact of new employees with diverse backgrounds, or sensitize senior managers who work with the Chinese or the Indians or the Brazilians?

Now let’s look at another news topic: the issues surrounding medical care. The intense feelings aroused with the matter of the Patient Protection and Affordable Care Act make it a highly important matter for HR. Navigating the balance between the issues of cost, protecting the health of workers and making sure the regulations are managed properly only begin the list of HR requirements. Add to the list the heightened awareness of the value of health care by employees and the increasing portion of the premium they are required to pay, and it becomes a hotter button than in the past. This, of course, is amplified by the fact that it is expected to be the fastest rising cost in business for the next five years.

The makeup of the work force is not helping matters for HR. Older workers are a much more significant part of the labor force as they stay on instead of retiring due to economic matters. They drive up medical costs because they become injured or ill more frequently than younger workers and take longer to recover, regardless whether the illnesses and injuries are industrial-related or not. Some statistics even show that disability pay and indirect costs are costing more than the actual cost of treatment for the primary issue.

The issues of the post-employment environment are another HR issue. Each political candidate explains they have the answer to management of Medicare and that the others’ strategies are going to change the program as we know it. Hard to tell before any legislation gets passed, but people and companies have to live with the anxiety and uncertainty. That makes it hard for HR to plan and educate folks about the best way to proceed. When some of the numbers floated say the average couple over age 65 will have to pay $240,000 for health care during the remainder of their lives, it is a problem. Should HR be sure that they all have health savings accounts instead of 401(k)s? It’s just another minor HR matter to address. But don’t forget that many of these people have less than $50,000 saved for retirement.

However, we might consider how fortunate we are to have the Social Security system as the foundation of income for the post-retirement employee. That is unless the system goes under, as the political soothsayers predict on a regular basis, because whoever is in power isn’t managing it effectively. Of course it’s HR that will have the responsibility to educate these folks so they can make informed choices.

But what’s not clear is whether we want them to go or stay. Can we teach these older workers today’s skills, or can we afford to lose their knowledge base and let generations X and Y take over? That’s the solution of the younger crowd, which is a different type of bird and who, word has it, don’t give a hoot about the organization because they bring a different set of priorities and values to their employment. Seems like a new challenge for the training function of HR.

To solve or manage all these issues is going to require that HR thinks strategically and is in a position to integrate the necessary steps into the organization objectives and collaborates with leadership to make it happen. It is a tall but necessary order.

It seems the best solution is to have an organization that does not have employees, because then you don’t need an HR function to work things out. But, what about the welfare issues of all those unemployed people? An alternative is to have someone inside the organization be the one who has the knowledge and skills to facilitate the game plan and bring in what you need when you need it.

Ardon Schambers is principal at P3HR Consulting & Services LLC in Grand Rapids. He can be reached at aschambers@p3hrcs.com

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