As
companies seek to cut costs and downsize, it is often the mature worker who is
invited to leave – via early retirement measures or simply by a mass reduction-in-force.
But the world is getting older, and the pool of younger workers is getting
smaller. Leah Larkin reports
In the industrialised nations of Western Europe and North America, longer life
spans and shrinking birth rates make the ageing population a critical issue for
business and, consequently, HR.
There will be a shortfall of 20 million workers in Europe within the next 20
years, predicts Nigel Nicholson, a professor of organisational behaviour at the
London Business School.
And Goran Hutlin, executive director of the International Labour
Organisation (ILO), calls the ageing workforce "a global issue". It
may be more critical in the industrialised world, but the developing world is
catching up, he notes. "It has a lot of ramifications at the political,
economic and operational levels."
Research by DBM finds that by 2008, those aged 45 and older will increase
from 33 per cent to 44 per cent of the workforce, and those aged 24 to 44 will
drop from 51 per cent to 41 per cent. By 2012, more people will be leaving the
working world than entering it.
The greying workforce is a hot issue in HR circles as consultancies and
companies are beginning to see the writing on the wall and realise changes must
be made. Older workers need to be retained, and, if necessary, retrained. As
the ranks of the retired swell, programmes need to be developed for those who
want to remain in the workforce in some capacity. Some firms are already on the
bandwagon with proactive programmes for mature workers; yet, they are the
exception rather than the rule.
"We need to recognise that as more people are better educated, live and
stay healthy longer, older people can – and do – make greater contributions
than ever to society before," UN secretary-general Kofi Annan told the UN
Second Assembly on Ageing in Madrid this April.
In the US, much attention is being focused on the ‘baby-boomer’ generation –
the 76 million Americans born between 1946 and 1964. Many will soon be taking
early retirement, but surveys indicate the majority want to remain in
employment – paid or voluntary – after they retire. For many, continuing paid
work will be a necessity.
A survey by the American Association of Retired Persons (AARP) found that 80
per cent of ‘baby boomers’ expect to work after retirement, but more than half
for a better quality of life rather than real financial need. Two-thirds say
they enjoy working and want to stay involved.
In the UK, a recent report by Penna Sanders & Sydney revealed that 79
per cent of employees want to keep the same level of responsibility at work as
they approach retirement, "suggesting a determination to continue
contributing to the success of their company".
The report went on to say that employees’ views on retirement change at
different stages in their careers. Before they turn 50, for example, more than
half of the employees surveyed said they looked forward to an early retirement.
That figure reverses to less than half, however, once employees are past that
age.
Of those employees who said they did not want to work beyond retirement into
their seventies, 77 per cent in the Penna Sanders & Sydney report said they
would change their minds if they could work part-time or more flexibly. The
most favoured options include a shorter working week, part-time work and
benefits geared towards maximising pensions.
Georgina Churchlow, a consultant with Hay Group in the UK, finds that
"baby boomers have a very high emotional attachment to work as part of
their being", and cites herself as an example. She took six years off to
have children. "I lost a big part of my identity," she says.
When it is time to retire, she wants to avoid the abruptness of ‘cliff
retirement’, by continuing to remain active in the workforce. She speaks of
‘phased’ retirement, gradually cutting back to less days per week.
"The career life cycle is a concept that employers have yet to
grasp," says Sally Davis, director of Penna Sanders & Sydney. And Axel
Klopprogge, senior manager of the HR department at the European Aeronautic
Defence and Space Company, which employs 100,000 people globally, says: "I
am convinced that the definition of age and retirement will change. I believe
that we will use part-time retirement more actively to support a smooth
transition from work life to pension," he notes.
Manager of economic security and work for the AARP Deborah Russell foresees
baby boomers redefining the workplace "in the same sort of way that women
did". In the same way that large numbers of women entered the workforce
and demanded benefits such as maternity leave and day care, Russell believes
the boomers will expect, for example, more flexibility, telecommuting and job
sharing. "They will look at benefits such as healthcare and pensions more
carefully," she says.
Erin Brownfield of the New York City-based Families and Work Institute
points out that if American baby boomers continue to retire at the same ages
and rates as their predecessors, there will be a significant ‘labour crunch’,
where the country’s economy may begin to suffer from their absence. "This
could push organisations to rethink their attitudes toward older
employees," she writes in her report.
From the US to Uzbekistan, attitudes about the elderly are clouded with
myths and untruths. It is assumed that older people are slow, can’t learn new
skills, resist change and are less productive than younger workers.
Brownfield and others point out that thanks to better healthcare and a
growing awareness of how diet and physical activity affect well being, today’s
senior citizens do not fit this stereotype. "The argument that older
people don’t want to learn new things is a load of rubbish," says
Churchlow. "There is no evidence that when people turn 55 they switch off
to learning."
In his book, Rewired, Rehired or Retired? Robert Critchley, executive
vice-president of global relationships and acquisitions for DBM, states that
"intellectual ability rarely declines seriously before the age of 70, and
even that boundary is probably receding". He quotes from Age Power by Ken
Dychtwald, who found that people are much healthier in their 50s, 60s and 70s
than ever before.
Despite the good news about mature workers, Brownfield feels the crisis of
the ageing workforce "is just not something that is capturing the
imagination of people yet". In the US where the unemployment rate is not
that high, there is a false sense of security, she says. "The climate
right now is more employer-friendly than employee-friendly. Holding on to older
workers is not at the top of an employer’s list, yet the demographics will
change in a few years."
Dianah Worman, adviser for the UK’s Chartered Institute for Personnel and
Development, calls it a "ridiculous situation". When organisations
get in tight corners, they let elderly workers go under favourable
circumstances, but it leaves "great holes in the knowledge base and
experience of the organisationÉ a loss of corporate memory," she says.
At Deutsche Bank in Germany, efforts are under way to prevent this. In its
private banking division, it launched the ‘advanced professionals’ programme in
April 2001. It has also started a series of workshops for employees over 40.
Barbara Schramm of the bank’s HR department, said the private banking sector
has many experienced workers who have taken care of customers for a long time.
To keep this know-how, the bank devised pairs of young and old who work
together. The younger employee learns from the older one, while at the same
time the older worker can profit from his younger counterpart’s skills.
"In the bank there are many products the older workers know about. The
young can learn without going to a seminar. It’s more effective and far less
expensive than sending them to a course." The programme benefits not only
the participating employees, but the customers as well, she points out.
"It is important to convince our colleagues that the experience of
older workers is important for Deutsche Bank, and that we must make all efforts
to keep their knowledge in the company," says Ute Drewniak, a psychologist
in the bank’s HR department.
She mentions the bank’s IT sector where "we have older people with
knowledge that younger people don’t learn at university." Bringing the old
and young together counters the prejudice the young often have against the old,
she adds.
"They see that older workers are flexible, motivated, innovative and
performance-oriented. I am optimistic that in five years we will have a new
culture of inter-generational learning and working together." Age
diversity, she notes, "is an important prerequisite for high performance
and motivated teams – and for the future success of Deutsche Bank".
The bank’s Kompass programme for employees over 40 was designed with the
Munich consultant Hans Heusgen, who developed a similar programme for Siemens.
Siemens had found that the largest group of dissatisfied employees were between
the ages of 40 and 50, and asked Heusgen to develop a programme to "keep
employees motivated and efficient".
Ralf Bruemmer, head of employment models for Deutsche Bank, says the bank’s
Kompass programme – a series of seminars – helps employees set personal goals
and provides the motivation to achieve them. "They approach their old job
with new energy," he says.
It is not enough to keep older workers on board just because of their age
and their need to work, Bruemmer points out. Workers must be kept employable.
"They must be up-to-date in their skills and have energy." That’s the
object of Kompass, and according to Bruemmer, "the feedback has been very
positive".
Lufthansa has a similar programme called Pro 40. The airline is aware that
in future it may have to employ people longer as the German birthrate is very
low, says Monika Ruehl, general manager for change management. If the pension
age in Germany increases – now at 65 – Lufthansa and all other companies in
Germany will let employees work until the age of 70 if they wish, but offer
them a different role within the company.
Citing the example of a station manager at a major airport who has a
demanding high-stress job, Ruehl pointed out that the employee could be given a
different job at a reduced salary with reduced working hours. "We know we
have to deal with this," she says.
In Germany, Heusgen says, forward-thinking firms such as Lufthansa, Deutsche
Bank and Siemens are a rarity. "In the current economic situation,
companies are only thinking of reducing costs and making it attractive for
employees to leave." He foresees problems in the future, when it will be
harder to find qualified workers.
Terttu Levonen, a Finnish journalist who has written a book about ageing,
says the average retirement age in Finland was, until recently, 58 or even
younger. Three years ago the government initiated a programme to keep people in
the workforce longer, and now the average retirement age has climbed to 59.1.
Critchley points out that in Chile, it is common to employ mature workers as
independent consultants. He found the same situation in South Korea.
The UK’s Age Positive campaign promotes the benefits of an age diverse
workforce, as legal experts attest to growing national awareness of the ageing
issue. Other significant developments in the UK include the Code of Practice on
Age Diversity in Employment, which was launched in June 1999 and set standards
for non-ageist policies. In October 2000, the UK supported the European
Directive on Equal Treatment and committed to implementing age legislation by
2006.
The Age Positive website features case studies of ‘champions’, or proactive
companies. At retailer Tesco, which introduced a ‘working beyond retirement
policy’, 16 per cent of the workforce is over the age of 50, and 1,695 workers
(0.9 per cent) are over 65. Blue Arrow, a ‘champion’ company, notes that older
workers "tend to be very loyal and stay with us longer, which contributes
positively to our stability and retention".
Domino Pizza’s delivery driver of the year 2001 was 71 years old. The food
business welcomes applications from older workers who "lend valuable experience
and maturity to teams".
"There is progress being made, yet a lot more needs to be done before
legislation takes effect in 2006," said Lawrence Mahmood, policy manager
for the Age Positive campaign. And Critchley agrees. When promoting his book, he
often speaks to groups of 100 to 200 HR personnel. When he asks the audience is
any of them are developing strategies for the older members of their workforce,
"maybe two hands go up. Companies are just not taking notice of this
issue", he says.
The ageing workforce
– By 2050 the number of people over
the age of 60 will rise to 2 billion, from 600 million today
– Also in 2050, the average age in Western Europe will be 47.
Today, the average age worldwide is 26
– By 2010, 30 per cent of working Europeans will be aged
between 50 and 64, outnumbering the 15-29 age group
– In France, the number of 100-year-olds is expected to
increase by more than 3,000 per cent by 2050
– Today in Belgium, Italy, Sweden and Greece, 21 to 23 per cent
of their populations are over 60 years old
– In Japan, the current average age is 41; 22 per cent of the
population is over 60
Sources: the UN, Catholic Medical Quarterly, and European
Research Centre
Steps to success in age diversity
– Age profile your workforce and
consider age alongside other diversity issues
– Audit age out of policies. Ensure employment, training,
communication and other policies are age neutral and do not disadvantage
particular age groups
– Change existing working practices, remove unnecessary age
criteria from day to day practice and procedure
– Ensure top-level involvement by establishing an age champion
to keep age on the Board’s agenda and build age awareness into all aspectsof
the business
– Raise awareness with all stakeholders
– Measure the impact
Source: Penna Sanders & Sidney/Employers Forum on Age
Age discrimination: protect thyself
The number of age discrimination
lawsuits filed in the US has doubled in the past decade – and such litigation
is the most expensive to lose, warns Gerald Maatman, chair of Baker &
McKenzie’s global employment law practice.
Age discrimination lawsuits are also increasing in Australia
and the UK, with the rest of Europe likely to follow once anti-age
discrimination legislation takes hold in the European Union in 2006. Age discrimination
debate is also occurring in Hong Kong, and in Japan – once known for its
tradition of lifetime employment. Maatman says "it is only a matter of
time" before age discrimination cases increase on the heels of rising sex
discrimination lawsuits.
One challenge for multinational companies is the lack of
knowledge some expatriate executives bring to the jurisdiction in which they
are asked to manage, where discrimination laws differ from those on their home
turf.
German executives working in the US, for instance, have found
themselves and their companies in the line of fire after discovering that
processes they used to trim their workforces in Germany – where age can be used
as a factor in determining whether employees stay or go – have exposed them to
age discrimination litigation in the US.
For businesses, Maatman says, "the greatest exposure is in
the process of reductions-in-force (RIF) and in terms of global meltdown. The
process of efficiently selecting employees is going to be different in different
jurisdictions".
In the US especially, typical targets for RIF include high-wage
employees and middle managers, terms which can be viewed as "a proxy for
age and is a very risky proposition in the US," says Maatman.
Once anti-age discrimination takes hold in the EU, Maatman
adds, the focus on age issues there will expand further to include hiring as
well as ending employment. Â
He offers suggestions for employers to limit their exposure to
age discrimination lawsuits:
– Whenever you are making personnel
decisions in a protected category (such as age, gender, ethnicity), ensure
there are legitimate, documented reasons to show you are making that decision
in good faith. Act for the right reasons and make sure they are documented
– In RIFs or mass layoffs, "do not do so in an
ill-prepared fashion". Check all the laws of the jurisdictions in which
you are operating
One concept may help guide the path,
Maatman says: "The goal should be to have happy alumni instead of
disgruntled ex-employees."
Deedee Doke
An AARP survey of employers’
attitudes towards older workers dispels many myths. Employers were asked to
rate older workers on various qualities. They received ratings of ‘very good’
or ‘excellent’ on the following (the percentages indicate the proportion of
employers who gave these ratings):
– Attendance and punctuality 86%
– Commitment to quality 82%
– Loyalty to employer 79%
– Practical knowledge 79%
– Solid experience 74%
– Reliable performance 74%
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Source: AARP
This
article first appeared in the September 2002 edition of GlobalHR. To subscribe click here
