09.06.2020

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The age structure diagram, an HR management tool

The age structure diagram is a useful addition to the HR management toolbox. It provides valuable information on the structure of the company’s demographics and on the assets offered by this workforce. How do you interpret an age structure diagram and use this data for strategic workforce planning?

 

 

What is an age structure diagram?

 

A company’s age structure diagram is a graphical representation of its workforce’s composition by age and gender. It visually represents the company’s employees at a given moment. The vertical axis in the middle of the graph represents age: the higher you go, the older the age group. To the left of this axis is the male population, to the right the female population. The horizontal axis gives the number of people in each age group.

 

 

Interpreting the age structure diagram

 

Depending on the company’s demographics, age structure diagrams will have different shapes. These can be grouped into five main categories.

Mushroom

 

The mushroom-shaped age structure diagram reveals a high average age within the company. This is often explained by massive hiring over a short period of time in the past. The mushroom shape is indicative of strong skills in the hands of experienced employees. It also implies a large payroll – and in some cases lower adaptability. Moreover, simultaneous retirements could cause a sudden loss of know-how that would be damaging to the company. Identifying this situation makes it possible to anticipate and organise the transmission of skills.

 

Related: How wan we assess skills?

 

 

Spinning top

 

An age structure diagram shaped like a spinning top shows that the company has, at some point, hired massively to respond to temporary conditions (rapid development, market growth, tax windfall, etc.). The situation of employees in the largest age groups could be unenviable: they may be under pressure to make room for younger replacements. In the long term, while the accelerated departure of employees in these age groups will bring in younger talent, it will also lead to the loss of skills and know-how. This age distribution can also create a surplus of employees and calls for the deployment of a career-planning policy.

 

Squashed pear

 

This shape is characteristic of a company that had stopped recruiting for many years. The risk of losing skills is high. The workforce’s low average age can lead to production issues or to difficulties in renewing technological knowledge in high-tech industries, for example. While the payroll may be lighter, it will be necessary to invest in training.

 

Related: Skills management: 3 key moments to launch a skills mapping project

 

 

Hourglass or violin

 

The hourglass-shaped age structure diagram is a possible evolution of the “crushed pear” configuration. It reflects a strategy of counterbalancing the disequilibrium through active recruitment. While this brings down the average age within the company, the arrival of many young employees can cause a shortfall in middle management. What’s more, it could lead to intergenerational friction.

 

Cylinder

 

This shape is the illustration of a regular hiring strategy, aiming to achieve a healthy balance between age groups. It makes it possible to define a progression in each employee’s career and to regulate the flow of arrivals and departures.

 

 

Age structure diagrams and strategic workforce planning

 

The age structure diagram is a useful tool for human resources management. It enables retirement forecasting and therefore the anticipation of the need for skills transfers. It can also be a tool for the development of the company’s compensation policy. Considering that workforce ageing goes hand in hand with payroll inflation due to seniority, a staff renewal policy leads to a decrease in this cost. The age structure diagram is therefore a tool for strategic workforce planning.

 

Beware the pitfalls

 

For some human resources managers, age is a factor of integration or exclusion – conscious or subconscious – in the management process. Older employees are stigmatised as less efficient, with reduced individual capabilities, unsuited to the current conditions of production. However, the oldest employees are not the least competent. On the contrary, they possess a huge capital of skills and know-how at the service of the company. In the context of strategic workforce planning, it is therefore better to focus on skills rather than age. Consistent SWP will determine the skills that are indispensable to the business and ensure the transfer of such skills from experienced employees to younger recruits.

 

Related: Decoding #2 – “GPEC”: pitfalls to avoid

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Illustration credits: https://www.istockphoto.com/fr/portfolio/dmitrii_guzhanin