Many companies with an ageing workforce worry about declining productivity.
3 years ago BMW did 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