In June 2011, the Pensions Bill passed its way through Parliament, resulting in the state pension age now moving closer to beyond 65 years of age. But, despite the increased likelihood of an older workforce, research has shown that older workers are often not used to their full potential, says Roger Moore, general manager of Bond Teamspirit.
Companies must ensure that older workers’ knowledge and experience is actively transferred to the younger workforce through dedicated internal training programmes, otherwise that knowledge may be lost and new employees will need to be trained from scratch.
Times are changing
There can be little doubt that one of the long-term impacts of the Pensions Bill 2011 will be a significant demographic shift in the workforce. Pushing the state pension age to beyond the age of 65 will inevitably mean men and women remaining in work for longer. While Parliament has put in place the trigger for this seismic change, neither Government nor many employers seem to fully understand the impact that it will have or the issues it will raise. Nor do they seem to fully appreciate that we need to start planning for this change today.
Experience versus youth has always been a much-debated topic when it comes to the workplace. Common sense tells us that a mix of both is the best formula for success, with younger workers learning from more senior colleagues. But the UK’s attitude to older workers means that neither the mindset nor structures exist to ensure that this happens as often or as effectively as it should. Moreover, there is still a lack of recognition of the value that older workers and their experience bring to the workplace.
This is evidenced by a Chartered Institute of Personnel and Development survey that found that fewer than half of workers aged over 65 had received an annual appraisal compared with two-thirds of the total workforce. This would suggest that training and other developmental opportunities cease when a person reaches a certain age. They might know how to do their job well, but we all know that there are always things we can learn and areas in which we can improve.
Engaging the right gear
For a worker of any age, a lack of interest or investment in them can be extremely demotivating. Unless older workers feel that they are being treated the same way as younger colleagues and have a value, they will not be engaged. And, as countless management studies have shown, a lack of engagement leads to poor performance and reduced productivity.
There is another consequence of the legislation that may have more immediate resonance with employers as it relates straight to their bottom line: youth is cheap compared to experience, and in the past employers have been able to control salary bills by recruiting younger people as older ones leave. Because they will be forced to retain older and more expensive employees, however, they lose this control and face a rising wage bill.
Furthermore, they could find that this in turn leads to a dangerous skills gap in the middle tiers of their organisation. Middle-tier workers can also be expensive: they are still moving up the ladder and expect a progressive career path that requires investment in them. If employers are not shedding from the top in the same way that they used to and still have to recruit at the bottom because of costs, it is likely to be the middle tier that suffers and consequently seeks opportunities elsewhere.
Happy to share
There are two broad, inter-linked challenges for employers today. They must find ways of engaging older workers so that they remain happy and productive in the workforce, rather than feeling that they are just waiting for retirement. And they must find ways of transferring older workers’ knowledge and experience to younger workers. Conveniently, the latter will facilitate the former.
One of the keys to employee engagement is making people feel valued. Showing that the organisation needs to preserve their knowledge in the long term demonstrates this in abundance. Intra-company training programmes involving passing information and experience from older to younger workers is one of the most cost-effective ways to increase productivity and improve performance. This is of particular importance in industries such as manufacturing, where experience and prior knowledge can reduce the time taken to complete tasks and improve results.
No one says that managing these changes in the workforce is going to be easy and there will be a number of practical, cultural and management challenges. For a start, employers need to understand what motivates a 55-year-old compared to a 25-year-old. Much is written about the workplace needs of “generation Y” and the incoming “millennials”, but very little is ever said about what drives an older worker.
The societal attitude of supposing that people are on the scrap heap at 50 also needs to change. Depending on the role, there will be important factors to take into account, such as whether or not a person still has the physical ability or mental agility to perform well in their role, but these can be handled via key performance indicators and other mechanisms. There may also be times when sensitive management is required to redesign a job role to better suit an older worker and managers may have to explore the use of more flexible working arrangements. An obvious potential solution is looking at how part-time roles could become a stronger part of the mix.
While key dates in the legislation might make employers think that they have plenty of time to adjust to any changes, in reality they have not. The women’s state pension age will be equalised to men’s in 2020, with both men and women having to work until the age of 66 by 2026. This means that the first changes will happen within a 15-year timeframe: those men and women affected are already well-advanced in their careers and likely to be planning how long they have to work to fund their retirement.
At the moment, the burning issue for many organisations is how to survive and stay competitive in a struggling economy – and this is understandable. Employers cannot put their heads in the sand when it comes to the issue of older workers: they must set aside time to consider what the changes will mean to them. They must also demand more help and guidance from the Government, unions and other parties. Ignoring the issue is storing up major problems for the future and while you may survive the downturn, you will be unable to stay competitive in the longer term.