This report focuses on analysis the challenge of ageing population for the company of HuaNeng power group. A high ratio of ageing workforce in HuaNeng lead to negative development such as lock motivation, low productivity. This report will connect the situation of HuaNeng with the leading and managing theory to do an investigation. Transformational leadership will be suggested for HuaNeng’s leader, leader-member exchange model and positive followership build method could support HuaNeng to reduce the negative influence of ageing population. Moreover, HuaNeng should use human resource management strategy to simulate ageing population to improve themselves.
One of the largest of achievements of the twentieth is a dramatic rise in life expectancy. For example, life expectancy in the US has increased from 45 in 1992 to 75.7 in 2004 (Pettinger, 2013). This situation should be a celebration for human, but it also has issues such as people will face the problem of population ageing. Particularly, ageing population gradually become a hot topic for a company or an organization in recent years. This report will focus on the ageing population issues relate with the leaders and managers in a company, a little investigation will be given to analyze the challenges of ageing population in a company, and then the report will transfer the challenges to leadership and followership analyses. In the last of the report, conclusions and suggestion will be offered to the company.
HuaNeng power group is the largest electric power company in China, and it is one of the world’s top five hundred enterprises; however, HuaNeng faces a number of challenges such as ageing population. In China, the current mandatory age of retirement – 50 and 60 for women and men, respectively, in labor-intensive fields, and 55 and 65 for white-collar women and men (Haacke, 2015). HuaNeng as a huge state-owned enterprise must follow the standard of retirement, as a result, the employees whom age over 40 hold 45.7 percent in HuaNeng (Yongling, 2014). Generally, if the average age of employees over 32 in a company that means the company face the ageing population problem, so aging population is turn to a significant burden for HuaNeng.
HuaNeng’s challenge is a huge number of people working longer than people are new recruited. And this part of ageing employees already lead to some negative impacts as follow:
Firstly, part of ageing workforces influence the working enthusiasm of young employees. It is a common fault in company, especially in the sate-owned company, because the ageing workforce trend to seniority than merit during the process of promotion. This idea might be transferred from ageing employees to youngers, as a consequence, it is adverse to the company of innovation and development.
Secondly, the high number of ageing population in HuaNeng could influence the communication between employees. Due to the difference of living environment and times between older employees and young employees, which resulting different values and behaviors. The differences will lead to inefficiency communication in employees, especially consider the virtual communication. Young employees prefer to communicate in virtual society such as QQ (the largest chatting software in China), but the majority of ageing workforce could not realize the skills of virtual communication.
Thirdly, ageing workforce will decrease the labor productivity. Because the low ratio of recruitment, HuaNeng had to re-train and educate the existing labor to do new technology work-package. The problem is that ageing workforces usually are experienced, they have their own work system for a long time, so it is difficult to change ageing workforce to accept new systems, which means a negative development for the company.
Fourthly, ageing population will increase the cost of the company. This is a great realistic problem for every company, ageing population will lead to the company pay more expenses about pension and insurance. So, the project of arranging ageing workforce is important for HuaNeng, it is not only related the profit of the company, but also relate to the reputation and public image for the company.
3.1 Transformational leadership analysis
Leadership could be defined as the process by which a person exerts influence over others and inspires, motivates and directs their activities to achieve or organizational goals (Northhouse, 2010). According to the real situation of HuaNeng, it is necessary to build a new and positive leadership. Because both the senior and junior leader could influence the followers in various ways such as skills, experiences, charisma, ethics etc. (Lowe, 1996)points that transformational leadership is strongly related to work unit effectiveness, especially idealized influence. Based on the point about leading and managing people, HuaNeng could use transformational leadership theory to get out of predicament.
In the first place, HuaNeng should establish a positive leader group to achieve leader’s idealized influence. Under the five forms of power (Coercive, reward, expert, referent and legitimate) which was submitted by French and Raven, HuaNeng could screen the ageing workforce and youngers to define the people who could hold the power and build a new leader group. The idealized influence by leader means leader should use himself or herself charisma to impact the followers to trust and follow the leader. If the leader is positive, and the followers support and agree leader’s plan, the work effectiveness will be increased. This change could help HuaNeng to decrease the negative influence of work attitude by ageing workforce.
Then, HuaNeng shall train leader’s ability of inspirational motivation. In the different stage of HuaNeng’s operation, there are many different goals to be finished. The leader should realize to motivate followers to join in the group and set common goal, in practice, if the employees have same goal that could avoid ageing influence for the communication. (Nanus, 1992)emphasizes that the first goal of a team leader is the establishment of a team vision, and a vision is realistic, credible, attractive future for an organization. The leader in HuaNeng need to set vision for the followers, for example a quarterly production and award plan could be set. Moreover, considering about the virtual communication gap between ageing workforce and young employees, HuaNeng should use its internal chatting system such as blog to explain the vision goal of the company and encourage employees to attend discussion. Effective communication will be created when the employees have same topic and goal.
Next, as previously mentioned, ageing population resulting HuaNeng in a low labor productivity; therefore the leaders in HuaNeng should learn the method of intellectual stimulation. In this process, HuaNeng’s leader should focus on the ageing workforce who are lacked of motivation and innovation, leader should to illuminate the benefits of new technology and methods to followers, encourage followers to accept new values and handle the issues in new methods in work life. Otherwise, (Conley, 1994)suggests that use facilitative leadership to create and operate a tense work environment to stimulate employees work effective. For example, the principal can challenge HuaNeng’s leader to make a contribution towards the management of achieving group task. When the principal focuses intellectual technology, thought, and insight toward build relationship between leaders and followers, the group could have a greater capacity develop, and the followers especially the ageing workforce, generally accepting greater responsibility for their work.
Finally, the majority of ageing workforce face the problem of retirement, so leader should pay more attention of individualized consideration. Because a transformational leadership related with a high mean attribute of individualized consideration sees the value in developing personally or professionally(Bass, 1994). For example, HuaNeng’s leader could build a consultant team to help the ageing workforce solve the problem of retirement and encourage the older workforce teach experience to young employees, maximize the value of ageing workforce. Moreover, an individualized consideration not only make the leader focus on ageing population in HuaNeng, but also realize the new recruitments, the leader could refer Maslow’s theory of hierarchy need to identify employee’s demand and support employee growth in the organization.
3.2 Leader-Member Exchange analysis
Leader-member exchange could be explained as a process that is centered on the interactions between leaders and followers,(Northhouse, 2010)argues, and when leaders and followers have good exchanges, they feel better, accomplish more, and the organization prospers. Generally, Leader-member exchange theory is not common in China, because Chinese company like to use paternalistic management style. HuaNeng as a modern enterprise might be suggested to combine ageing population who has negative influence with positive leaders to build an LMX work group. LMX model could take the ageing workforce from ‘out group’ to ‘in group’ that means during the process of establishing LMX model, the ageing population will be motivated to rejoin the vision of the company, take more responsibility until the group maintains a high quality of leader-member relationship.
Additionally, in the process of build LMX model in HuaNeng, GuanXi as an important concept should be considered. Because GuanXi could be defined as a dyadic, particular and sentimental tie that has potential of facilitating favor exchanges between the parties connected by the tie (Bian, 2006). Generally, GuanXi focuses on non-work related exchanges, but LMX must focus on work related exchanges. For example, when HuaNeng’s leader build LMX group, the sorting process of ageing population should consider organize irrelevant leaders and followers in a group.
3.3 Followership analysis
(Kelley, 1988)points that the ideal follower as participating in a joint process of achieving some common purpose. In HuaNeng’s study, a part of ageing workforce obviously lose the common goal of the company, as a result, the leader should consider helping them to rebuild effective followership. During the long career, the majority of ageing people may work towards personal goals, which lead to low completion ratio of company achievement, so, the key point for HuaNeng is to reintroduce the common goal for ageing workforce, and as (Chaleff, 1995)premises that the key to effective leadership is followership. Interesting to note that there is 45.7 percent of HuaNeng’s employees have a positive correlation on followership of work goal and achievement will improve HuaNeng’s profit.
3.4 Human Resource Management analysis
Human resource management is the process of acquiring, training, appraising and compensating employees, and attending to their labor relations, health and safety and fairness concerns (Dessler, 2006). In the process of solving ageing population issues, HuaNeng shall consider using HRM methods to achieve developing. Firstly, HR manager should place right people in the right job, especially the ageing workforce, who hold rich experience. Secondly, mix the ageing population and others employees to grain creative cooperation, HuaNeng could help ageing workforce to build a good relationship with new recruitment. Thirdly, HuaNeng is regarding to control the cost of labors, which means HuaNeng will do a reduction in force in 2017 (Niu, 2015). The ageing workforce who has negative attitude for the company will be given priorities to quit.
To sum up, ageing population is a new challenge in recent years for each company or organization. Utilizing leadership and followership theory in a reasonable way could help the company to avoid negative influence by ageing population. Transformational leadership as a modern leadership theory is useful to dealing ageing problem, especially HuaNeng as an oriental company could try to use LMX model to do some change on motivating ageing workforce. Finally, both build effective followership in ageing workforce and use HRM methods to do stimulation are supported to obtain a positive leadership in HuaNeng.
Based on the investigation of HuaNeng and theory analysis, here are some suggestions for HuaNeng as follow:
Bass, B. &. A. B., 1994. Improving Organizational Effectiveness through Transformational Leadership. Thousand Oaks, CA: Sage Publications.
Bian, Y., 2006. International encyclopedia of economic sociology. New York: Routledge.
Chaleff, I., 1995. The Courageous Follower. s.l.:s.n.
Conley, D. T. G., 1994. Ten propositions for facilitative leadership. Thousand Oaks, CA: Corwin Press.
Dessler, G., 2006. Human Resource Management. 10 ed. New Delli: Prentice-Hall of India Private Limited.
Haacke, O., 2015. China’s Mandatory Retirement Age Changes: Impact for Foreign Companies. [Online]
Available at: https://www.uschina.org/china%E2%80%99s-mandatory-retirement-age-changes-impact-foreign-companies
Kelley, R. E., 1988. In praise of followers. Harvard Business Review, Volume 66, pp. 141-148.
Lowe, K. B. K. K. G. &. S. N., 1996. Effectiveness correlates of transformation and transactional leadership: A meta-analytic review of the MLQ literature. Leadership Quarterly, Volume 7, pp. 385-425.
Nanus, B., 1992. Visionary Leadership. s.l.:San Francisco: Jossey-Bass Publishers.
Niu, X., 2015. Reserch on State-owned enterprise strategy. Economics .
Northhouse, P. G., 2010. Leadership: Theory and Practice. s.l.:Sage Publications.
Pettinger, T., 2013. The Impact of an Ageing Population on the Economy. [Online] Available at: http://www.economicshelp.org/blog/8950/society/impact-ageing-population-economy/
Yongling, J., 2014. How to solve ageing populations in state control company. Enterpriser World, p. 57.
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