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14th October 2011

Older workers – the myths and benefits

The concept of automatic retirement at 65 ended on 1st October 2011, when the Default retirement Age was dropped. This action has given rise to much discussion, some of it negative from the older workers point of view. There are some facts but many myths regarding older workers, and it is worth looking at some of them.

Now we cannot get rid of anyone over 65 who is not performing.

Look at the statistics for dismissal and losing employees in general.  There is no evidence of an age element in “being up to the required performance”.  At least as many employees under 65 as over 65 , and many at the other end of the employment age scale, are “got rid of” because their performance does not meet the employers standards.  Nothing stops the employer from having performance standards and managing their employees to meet those standards, including dismissing them if, after support and training, they are not able to meet the standards.  If an employer is sheltering behind the 65 retirement age in order to get rid of underperforming workers, it is very likely that it is the employer/manager who is underperforming by not having in place effective performance management procedures which are implemented irrespective of age.

They can’t keep up with our fast paced workplace.

  1. It is said that the tempo of all workplaces has increased in recent years, as a result of many factors, including competition and globalisation.  It is sometimes said that older workers cannot cope with this new workplace, and that their pace is too slow.  Leaving aside the fact that employers have been saying that their workplaces have speeded up for decades at least, the evidence says different.  There is no evidence that older workers work less hours in total than younger workers.
  2. There is no evidence that the output of older workers is less than that of younger workers. US government research has shown that older workers in non-manufacturing jobs are more productive than younger workers for 60% of the time, the same for 35% of the time, and less productive for 5% of the time.  In manufacturing, the results are less favourable to older workers, as they only out-perform younger workers for 35% of the time.

Peter Cappelli, Director of the Wharton Centre for Human Resources says “Older workers have less absenteeism, less turnover, superior interpersonal skills and deal better with customers. “The evidence is unbelievably huge," he notes. "Basically, older workers perform better on just about everything."

The key factor for employers to examine is not how much their employees appear to rush around and how lively they are, but how effectively they meet the employer’s objectives.

People near retirement age lose interest in their jobs.

Research shows the opposite to be true.  The Sloan Centre for Ageing and Work reports that their research shows that workers above retirement age become more and not less satisfied and engaged with their work.  Paradoxically, given the stereotypes of older workers, this is because they report that the challenge of the changing job and mastering new techniques is what interests them and makes the job more rewarding.  And other research shows that older workers may need more time to take on board new knowledge, but that they retain it and deploy it better than younger workers, and are more prone to effectively complete a course of study.

Older workers prevent younger workers from advancing.

The answer to this myth lies within the economy at large, rather than the individual employer.  Forcing retirement, or engaging in early retirement schemes, forces up the cost of pensions.  Rising pension costs causes employers to experience higher costs either directly through their pension schemes or through industry or state pension levies, which in turn makes them less inclined or able to employ anyone, including younger people.  Retirement and early retirement therefore causes more unemployment for younger people, not less.

Older workers will not share their knowledge with younger workers because they are insecure in their jobs.

There is evidence throughout many organisations of a failure to disseminate information and skills.  There is however not evidence of an age bias, which is understandable given that it is far more likely that this effect is caused by an organisational culture which promotes and rewards individual achievement as opposed to group or team achievement, than it is to be caused by one age group retaining information and influence for their own age related purposes.

Older workers cost too much

It is said that older workers cost more in pension costs, salary levels, holiday time off, sickness time off.

Few topics related to the older workforce have received more scholarly and analytical evaluation. The flaw in this traditional analysis is that it considers only the out-of-pocket or visible cash costs of employment - and even then, the information is only selectively analysed.

Employers have traditionally added up incremental pay costs, incremental pension costs, and incremental paid time off incurred by older workers and, unsurprisingly, have concluded that older workers are more expensive and are therefore prime targets for labour cost reduction. This superficial approach disregards several meaningful economic considerations.

First, higher pay costs for older workers reflect in part at least their accumulated value in terms of knowledge and skills gained over a working life.  They are the result of, not the subject of, the extensive training that younger workers need in order to make them effective employees, and therefore their training overhead costs is low.  As shown above, older workers are more productive 60% of the time, thereby lowering their real costs as opposed to their per hour costs.  Older workers are shown by research to be more reliable, having less time off, allowing reduced disruption and management costs.

A wider view of the total costs, as opposed to the simplistic hourly costs, of employees produces no evidence for there being any significant difference between the costs per output of older and younger workers.  If anything, the research points to increased value added from older workers, dependent on which industry is examined.

Isn’t it undignified to dismiss an older person for lack of performance and more dignified to simply retire them at a stated age?

There is no dignity in being forced out of a job at an arbitrary age with no regard to actual abilities, simply because the employer is not capable of implementing and managing an effective performance management system.  To quote the Department of Work and Pensions, “Where workers expect to be treated equally regardless of their age, the issue of ‘loss of dignity’ doesn’t tend to arise.”

Older workers are not flexible enough in terms of working hours.

In many industries, and it is certainly true of the care sector, a flexible workforce able to work flexible hours to cover the working day is essential.  It is certainly true that older workers may have different requirements and wishes in terms of their own personal time, which sets limits to their availability for work, but that is also true of workers of all ages.  The creation of a standing roster for a care service requires the skilful blending of employees with differing working preferences in order to fill in all the gaps in the roster.  It is likely that a mix of older and younger workers will be more effective in creating what is in effect a giant compromise, than trying to use workers of one age or type.  When the roster is in use, the inevitable short term gaps are more likely to be effectively filled at short notice by a part time older worker, with few if any family responsibilities, than they are by a younger employee already stretched by full time work and with heavy and inflexible responsibilities outside of work.

Aren’t older workers more of a health and safety risk, and more accident prone.

All employers have a responsibility to ensure that all employees, and individual employees, are not placed at risk in the workplace.  Therefore all employees, regardless of age, should be assessed for their risk profile.

The DWP state, in an answer to this question, that JD Wetherspoon have not had a retirement age, and report that any preconceptions there may have been about raised accident levels in older workers have been unfounded.

Investment in training is wasted on older workers.

Research shows that the productivity of workers does not decline until at least 70, where all workers have had the same training.

How long the employee remains with the employer in order to deploy the skills imparted by the training is not one of age, but one related to staff turnover.  An employer would need to demonstrate that younger employees stayed with the firm longer than older employees in order for this myth to be true.  It is more likely that the reverse is true, given the proven employer loyalty of older workers, making them in fact the best receipts of training investment.

And think of all the mentoring possibilities contained within a workforce with a mix of skilled and knowledgeable older workers and information hungry younger workers.

*All information is correct at the time of publishing

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