Training Older Employees – What is Effective Training Older Employees – What is Effective? Thomas Zwick, LMU Munich and ZEW Mannheim Cedefop Conference “Learning Later in Life“ Brussels, 21/22 September 2011

Motivation Literature on life-long learning concentrated on declining participation rates by age and the reasons for that (Lois, 2007) Given employees participate in training, its effectiveness seems to decline by age ► Training of older employees does not increase relative productivity of this employee group on establishment level (Göbel and Zwick, 2010) ► Personnel managers think that training of older employees is not effective (Boockmann and Zwick, 2004) This contribution compares training motivation of older and younger employees, their training patterns and their (self-assessed) effectiveness Training for Older Employees 1

Differences in Training Motivation by Age Motivation for long-run and abstract investments declines with age and motivation for activities that prevent losses increases with age (Hertel and Stamov-Rossnagel, 2010) ► Training effectiveness is higher if training is practical, internal, on the job, and not concentrated on new skills Older employees have disadvantages in fluid cognitive ability and they do not like direct comparisons with younger employees (Kanfer and Ackerman, 2004) Older employees are more interested in improving the quality of work than their relative position in the working group ► Training effectiveness is higher when it demands crystallised skills and improves working climate (social and managerial skills) and lower when it demands fluid intellectual abilities and mainly offers long term career chances (new information technologies) Training for Older Employees 2

Empirical Strategy to Assess Training Efficiency Analyse various dimensions of training patterns by age Older employees differ from younger employees with respect to training-related characteristics – for example qualification, tenure or health (Gallenberger, 2002) ► Include only employed ► Multivariate approach to identify role of age including individual and establishment characteristics ► Differentiate between training contents, forms, and effectiveness ► Take into account firm-specific effects Training for Older Employees 3

Data Professional training as part of lifelong learning data set (WeLL) Detailed questionnaires for employees in firms that indicated in representative establishment panel that they are active in training Two waves 2007 and 2008 Combine both waves and take one observation per training participant, final sample consists of 6349 employees from 149 enterprises Use four age group indicators and concentrate on differences between oldest age group (about 56 years or older) and other age groups Dependent variables: training goals and effectiveness, training characteristics and contents Explanatory variables: qualification (3), tenure (4), health, high probability to quit working during the next year, East Germany, employer size (3), and sector (2) dummies Adjust for employer clusters Training for Older Employees 4

Older employees (reference group 55+) have modest training goals Higher Productivity Adoption Promotion Higher Earnings Job Security New Orientation Realschule 0.12*** 0.11*** 0.03 0.02 0.05*** 0.01 Gymnasium 0.24*** 0.21*** 0.08*** 0.04*** Female -0.00 -0.05*** -0.04*** -0.01 Birth years 1952-61 0.06*** 0.08** 0.07*** 0.02* Birth years 1962-71 0.04** 0.10*** Birth years 1972 and younger 0.09*** 0.16*** Tenure 2-5 years 0.06** 0.04* Tenure 6-15 years 0.03* Tenure more than 15 years Good health High probability to quit working -0.11*** -0.08** -0.08*** -0.12*** -0.03 East Germany -0.02* 0.00 Employer 200-499 employees 0.03** Employer 500-1999 employees 0.05* 0.05** Services sector R-squared 0.04 Comments: OLS regressions, clustering adjusted for 149 enterprises, number of observations: 5303, reference categories: Hauptschule, birth year 1952 or older, employer with less than 200 and more than 50 employers, tenure less than 2 years Training for Older Employees 5

Older employees assess training efficiency worse Effects of training Higher Productivity Adoption Promotion Higher Earnings Job Security New Orientation Realschule 0.09*** 0.06 0.01 0.00 0.03** Gymnasium 0.17*** 0.04*** -0.00 0.02 0.07*** Female -0.02*** -0.01*** -0.02* -0.01 Birth years 1952-61 0.05** 0.04** 0.02** 0.02* Birth years 1962-71 0.03 0.03* 0.05*** Birth years 1972 and younger 0.06** 0.11*** 0.06*** Tenure 2-5 years 0.04 Tenure 6-15 years 0.08*** Tenure more than 15 years Good health 0.02*** High probability to quit working -0.10*** -0.09*** -0.04** -0.06** East Germany -0.02** Employer 200-499 employees Employer 500-1999 employees 0.05* 0.03*** Services sector R-squared Comments: OLS regressions, clustering adjusted for 149 enterprises, number of observations: 5303, reference categories: Hauptschule, birth year 1952 or older, employer with less than 200 and more than 50 employers, tenure less than 2 years Training for Older Employees 6

Self-assessed effectivity of different training forms by age Effects of training Higher Productivity Adoption Promotion Higher Earnings Job Security New Orientation Seminar Birth years 1952-61 0.08* 0.09** 0.03* 0.01 0.09*** 0.07*** Birth years 1962-71 0.11** 0.10*** 0.13*** Birth years 1972 and younger 0.04 0.09* 0.15*** 0.05* 0.21*** Training on the job 0.02 -0.01 0.04** 0.00 0.06** 0.07* 0.11*** 0.05*** 0.12*** Self-managed learning 0.01* 0.03 0.08 0.05 0.08*** 0.07 0.06 0.17*** Comments: OLS regressions, clustering adjusted for 149 enterprises, covariates identical to previous regressions Training for Older Employees 7

Self-assessed effects of different training contents by age Effects of training Higher Productivity Adoption Promotion Higher Earnings Job Security New Orientation Information and communication technology Birth years 1952-61 0.04 0.08* 0.01 0.02 -0.02 -0.00 Birth years 1962-71 0.03 0.09** 0.04** 0.03** Birth years 1972 and younger 0.13** 0.10*** 0.05 Technical contents 0.09* 0.10** 0.05** 0.00 0.07 0.11** 0.06*** 0.06** 0.07* 0.11*** 0.15*** Management and communication -0.06 -0.01 -0.12** -0.04 0.06 Comments: OLS regressions, clustering adjusted for 149 enterprises, covariates identical to previous regressions Training for Older Employees 8

Training effectiveness by age and training characteristics For almost all training contents lower effectiveness for oldest age group Exception: group and communication training – here same effectiveness except for promotion and better productivity assessment of older employees More abstract training forms (formal seminars) are less effective for older employees More practical training forms (self-managed training and training on the job) are more effective for old age groups But: Incidence of training contents and extent offered similar for all age groups (for group and communication training just two percent higher incidence for oldest group) Significantly more seminars and significantly less training on the job for oldest age group Training for Older Employees 9

Conclusions No age differences in crucial training characteristics (number of training spells, training duration, initiative, cost sharing) Some differences in contents and training forms (positive age correlation: general human capital, seminar; negative age correlation: internal training, training on the job) On average older employees are as satisfied with training as younger employees, They have more modest training goals and they are more sceptical with respect to training efficiency Training efficiency is higher for group and communication training, for internal training, training on the job and self-managed training Training for Older Employees 10

Lessons training older employees Lower training participation and training effectiveness might be a consequence of wrong training contents and formats instead of lower trainability or interest in training Far more establishments include older employees in training than offer specific training measures for older employees (Göbel and Zwick, 2010) Manager should take into account: age shift in motivation from building a career to loss aversion and labour quality/flexibility disadvantages of old employees in fluid cognitive skills and advantages in crystallised cognitive skills ► offer personalised training measures by age Training for Older Employees 11

No differences between training extent by age Descriptive Differences between Training Dimensions and Age Groups Training Dimension Entire Sample Birth Year 1951 or older Birth Years 1952-1961 1962-1971 Birth Year 1972 or younger Duration in hours 44.57 (104.32) 41.71 (87.87) 47.77 (115.28) 43.30 (101.07) 42.36 (97.79) Period in months 2.32 (1.89) 2.29 (1.87) 2.31 2.34 (1.91) (1.93) Number of trainings 1.77 (1.12) (1.39) 1.74 (1.13) 1.78 (1.26) 1.80 (1.25) Costs borne by participant 0.16 (0.36) 0.15 (0.35) (0.37) 0.17 (0.38) Initiative by participant 0.41 (0.49) 0.42 Initiative by employer 0.23 (0.42) 0.22 (0.41) Training necessary by law 0.18 (0.38 Training satisfaction 5.74 (2.64) 5.58 (2.77) (2.69) 5.73 (2.60) 5.92 (2.50) Training for Older Employees 12

Some training characteristics differ by age Self-induced learning Seminar Training on the job ICT Training Technical Training Birth years 1952-61 0.01 -0.01 0.04* -0.00 Birth years 1962-71 -0.02 0.08*** Birth years 1972 and younger -0.04** 0.12*** -0,01 R-squared 0.03 0.08 0.00 Obs. 5590 Comments: OLS regressions, clustering adjusted for 149 enterprises, number of observations: 5303, reference categories: Hauptschule, birth year 1952 or older, employer with less than 200 and more than 50 employers, tenure less than 2 years Training for Older Employees 13