Science Research Management

Science Research Management ›› 2021, Vol. 42 ›› Issue (2): 138-148.

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Age structure and business performance of talents: An empirical study based on 50 listed companies in GEM

Kuang Guilin   

  1. Changsha Yutaishu Management Consulting Co., Ltd., Changsha 410205, Hunan, China
  • Received:2019-01-28 Revised:2019-06-12 Online:2021-02-20 Published:2021-02-23

Abstract:

Can age measure the human capital level? This issue has not received the attention of academia but been recognized by the business world in a long time. In recent years, it is not difficult to find that enterprises have more and more restrictions on ages of talents. Age requirements are reflected both in recruitment conditions and average age requirements or maximum age limits for management level or specific positions. For example, in 2017, it was rumored that Huawei was going to dismiss over 34-year-old delivery maintenance personnel and 40-year-old programmers in China. Similarly, many people over the age of 40 are facing a re-employment dilemma, which has also led to a variety of professional anxiety and professional crisis.
     Why do enterprises do this? Age, which may be similar to education, partly measures the level of skills and knowledge acquired by people, and may also measure factors such as physical strength, health, and enthusiasm, which constitute an essential part of human capital. The so-called "Young is Capital" may refer to the human body, enthusiasm, and learning ability. If not, it is difficult to explain this behavior of enterprises.
    As people grow older, their levels of human capital may also be changing. The difference in human capital is a crucial factor in explaining the difference in economic performance, which has been revealed both at the national level and at the enterprise level. If people of different ages perform differently in terms of human capital level, the influence of people of different ages on economic performance will inevitably appear different. This effect can be revealed through marginal contribution. In this way, we can establish a connection between the marginal contribution of the age and the enterprise. Then, we can judge the human capital level of people of different ages through the marginal contribution of people of different ages.
   Therefore, this research divides employees into four categories according to different age groups: 30 years old and below, 31-40 years old, 41-50 years old, 51 years old and above. Based on the 2010-2014 panel data of 50 GEM listed companies, the study uses the random effects model to explore the relationship between age and human capital level by analyzing the relationship between employees of different age groups and business performance (operating income).
   Through the analyses in this research, we can draw the following conclusions:
  In the first place, age can measure the human capital level to a certain extent. People at different ages have significant differences in marginal contribution rates, which demonstrates that age can be an important measure of human capital levels.
  In the second place, the paper also finds that during the whole career cycle, the marginal contribution curve of enterprise performance with age increases shows an inverted-U shape. This conclusion has the vital practical implication, which means that in the context of the gradual loss of the labor dividend, enterprises can obtain human capital dividends by investing people in a reasonable allocation of resources. This human capital dividend comes from the saving of labor costs and the increase of marginal contribution rate through reasonable human resource arrangements and investment arrangements.
   However, we cannot rule out that the inverted-U shaped marginal contribution curve is affected by the differences in education at different ages, because there is a reality in China: older people are less educated. This may also be an essential reason for the marginal contribution curve to fall. In this case, age can also measure the level of human capital, but it has its particularity.
   In addition, when we consider people of all ages at the same time, people aged 41-50 will have a “crowding out effect” on others. This conclusion also has the critical practical implication, which requires enterprises to guide the people who produce the crowding effect to self-transform and transform to maximize enterprise profits.
   Lastly, the research also found that employees who are 51 years old and above will still have greater value in enterprises with large R&D investment. This means that older employees can become developers or act as communicators of corporate proprietary knowledge within the post-career stage. The transformation of older employees from human capital to intellectual capital is not only beneficial to the enterprise, but also beneficial to employees.
   To sum up, based on the above findings, this research can introduce another conclusion, and this constitutes a central idea of this article: enterprises can improve business performance by optimizing the overall age structure of employees.
   The conclusions of the research have functional practical implications. In fact, since the development of management science, in the field of human resource management, enterprises still lack effective and quantifiable management methods, and they only focus on the personnel management stage, which is not much to improve people′s economic value and human resources investment return rate. In recent years, there has been more and more dissatisfaction with human resource management. One of the most critical issues is that human resources management is out of line with business needs. The chief human resources officer cannot associate employees with the business like the chief financial officer. Thus, human resource management cannot effectively serve the value creation of enterprises. In human resource planning, enterprises are only roughly based on their development strategy.
    Therefore, these conclusions can guide enterprises to manage human resources rationally and allocate resources to invest in employees effectively to achieve their final goal of maximizing profits. These also can help the individuals make more thoughtful career planning and arrange human capital investment.

Key words: human capital, age, business performance