Workforce Aging and Firm Performance: The Moderating Effects of HRM and Organizational Culture

Abstract

Little is known about the effects of company-wide workforce aging on different firm performances, although the relationship between individual aging and job performance and between top management demography and organizational outcome is relatively well verified. Employing theories regarding abilities, motivations, and opportunities of employee, I theorized that workforce aging is positive for firm sales performance, but insignificant for firm profit performance. I also suggested that the relationship between workforce aging and firm performance is moderated by performance-based pay system and externally oriented cultures – adhocracy and market cultures. The theoretical arguments are tested by using data from 229 Korean firms in the manufacturing sector, and the hypotheses were generally supported. The results indicate that workforce aging is an ambivalent social trend which has both of advantages and disadvantages on firms performances, and that the disadvantages can be overcome by contextual factors such as Human Resource Management (HRM) practices and organizational cultures. Future research can test the relationship between workforce aging and firm performance by using various indicators of workforce aging and organizational outcomes within different contexts.