Smarter management of long-serving executives can benefit companies and the wider economy, says Lisa Buckingham
Last month an inside page of the Daily Telegraph carried juxtaposed two stories which illustrated perfectly the conundrum now being faced by business over the issue of older workers.
The first carried the headline, “Older workers must pick their own retirement age”. The article was based around a pledge from work and pensions secretary Iain Duncan Smith that workers over the age of about 50 should not be “thrown on the scrapheap”. It pointed out that the average retirement age for men is now 64.7 years for men and 63.1 years for women.
The term ‘older workers’, together with those pictures of wrinkly geriatrics heading off for a cruise in the sun and talk of the grey pound, typically conjure up images of people of advanced years greedily devouring the inheritance of future generations.
Yet right next to that article was a picture of a fantastically youthful-looking Twiggy – now aged 65 – talking about having no time to worry about ageing because of having so many business interests to look after.
Sadly we can’t all age as graciously as Twiggy manages to, but her undisputed vivacity and energy should give all of us pause to reconsider our views about older workers.
Certainly the main boardrooms of our larger companies have never been short of older, (hopefully) wiser heads. But these represent a tiny fraction of corporate Britain. And, historically, too many of these senior positions have been occupied through inertia – keep hold of an old mate rather than risk bringing in new blood.
Outside top boardrooms it has been easier to sideline older workers, letting them sit out their last few years at work in a kind of suspended workplace animation rather than making the best of this pool of experience.
Much of this has, according to Dr Ros Altmann, the government’s adviser on older workers, been based on the fallacy that business must throw out those of more advanced years for fear of standing in the way of younger workers – a workplace equivalent of bed-blocking, if you like.
But Altmann argues that it is an economic fallacy that increasing the numbers of over-50s in employment will hold back wages and employment opportunities for younger people. She says: “In fact, the increase in older workers is essential for our economic success and if we do not achieve later retirement for all who want it then younger generations will be much poorer.”
According to Altmann, over the coming few years we will have 3.7 million more people between 50 and state pension age but 700,000 fewer people aged 16 to 49. Estimates, therefore, suggest that there will be 13.5 million more job vacancies in the UK but only seven million school leavers. The shortfall cannot be filled by immigration so unless we encourage older people to continue working we will face declining economic growth.
She points to several experiments in Europe where encouraging early retirement has actually led to a fall in output and youth employment. Figures produced by the Department for Work and Pensions predict that the number of over-65s in England will increase by 51 per cent in the next 20 years while the number of over-85s will double by 2030. Clearly, with pressures mounting on the NHS, it is in any government’s interests to keep older people active and earning.
The DWP estimates that the average retirement age will rise by as much as six months every year. People currently in their late twenties will be working until they are 70.
The implications for business managers are complex. How do you get the most out of older workers? How do you ensure that a longer-serving employee doesn’t block the path of younger rising talent? How do you manage the pay expectations of older executives while having enough spare to incentivise and retain younger talent? Can you affordably retain expertise? Do you risk an exorbitant pay-off bill if you eventually have to say goodbye to someone who’s been with you for longer than anticipated?
There are certainly big questions for companies to face. And, as with other questions of improving diversity in the workplace, clever management can ensure it gets the best from the widest possible talent base.
Older workers and executives are more inclined to be interested in flexible working, they have a huge knowledge base to be plundered and tend – if treated properly – to have huge loyalty and an exemplary work ethic to inspire others.
It is clear that as younger people face longer working lives they will be less inclined to stay with just one ‘career’ and will be more likely to step in and out of a particular work path. Continuity of experience will, therefore, become even more important at senior levels. So smart management of longer serving executives will become even more vital for individual companies as well as the wider economy.
Lisa Buckingham is the IoD’s senior adviser on diversity