Bridgepoint   |   The Point   |   May 2019   |   Issue 35
Business

Age old story

There is little doubt that older and younger workers behave differently and have their own priorities. Assessing how best to use these differences can have a tangible effect on business success, particularly in an ageing society.

For those who question the mental acuity of older generations, Ronald Reagan had the ultimate riposte. When grilled about his age during the 1984 US presidential race, the 73-year-old politician promised not “to exploit, for political purposes, my opponent's youth and inexperience”.  

 

In the political field, voters often appear to value silver-haired experience. But convincing employers and economists of the merits of older workers is a tougher sell. Top financial institutions routinely warn that the global economy is at risk from a “silver tsunami”. In 2018, the World Bank, for example, declared that ageing populations will curb the supply of labour and sap productivity growth.

 

Employers, meanwhile, often seem eager to guide older workers gently to the door. A recent survey from US interest group AARP found that two-thirds of employees aged 45 to 74 believed they had seen or been subject to age discrimination at work.

 

Better together

But a growing volume of research suggests that such prejudice is causing many businesses to miss out on the advantages of a multigenerational workforce. A skilful mix of younger and older workers can provide the optimal outcome – blending the dynamism and creativity exhibited by many newcomers with the experience and social skills of seasoned employees.

 

“There is emerging evidence that mixed-age teams can outperform both exclusively-young and exclusively-old groups,” says Paul Irving, chairman of the Milken Institute Center for the Future of Aging. “The first step to achieving this generational blending is to ditch the false assumptions that cause many firms to marginalise older workers or underinvest in them.”

Younger hires can be “laser-focused on advancement” which may provoke tension and reduce workplace loyalty. A blend of older workers can help to diffuse these strains 

Mind the gap

Placing a higher value on older workers makes a virtue of necessity, too. Whether employers or economists like it or not, populations are greying. By next year, 13 countries will be “super-aged” – defined by the United Nations as having more than 20 per cent of their populations over the age of 65. They will include the UK, Italy, Germany, Finland and Greece. The US is on track to hit this threshold by 2030.  

 

“Companies that want to avoid skills shortages in coming years need to develop a strategy for retaining and hiring older workers,” says Dr David Lain, a lecturer in employment studies at Newcastle University Business School. “Fortunately, the stereotypes of older workers – notably that they lack energy and are resistant to change – lack merit on closer examination.”

 

Lain’s views are echoed by Laura Carstensen, professor of psychology at Stanford University and director of its Center on Longevity. “Our research shows that experience more than compensates for the declines in speed and efficiency at new learning even into the 60s and 70s,” she argues. “Virtually no evidence links such declines to degraded work performance.”

Taking the weight off

Much the same can be said about physical ageing. While strength and visual acuity can gradually ebb, employers can take steps to offset many of the problems faced by older workers. BMW has been a trailblazer in this regard. As far back as 2007, executives at one of the firm’s plants in Bavaria concluded they were facing a demographic time bomb and needed to take steps to retain older workers.

 

To reduce joint strain and jolts from static electricity, new wooden flooring was installed and workers were issued with weight-adapted boots. And, as part of this sweeping ergonomic overhaul, barbershop-style leather chairs were added so that workers could take short breaks. A later Harvard Business School study concluded that the direct investment of €20,000 increased productivity by seven per cent in a year, putting this group on a par with younger workers.

Over the past 20 years, spending by Europeans over the age of 50 has grown three times faster than that of the rest of the population. And in the US, people over 50 now control more than 80 per cent of household wealth

The role of “cobots”

The implication of this research was not lost on rivals. Nissan has made adjustments to accommodate older workers, while developments in robotics should further reduce the performance gap between young and old in physically demanding manufacturing jobs. The advance of collaborative robots, or “cobots”, is a case in point.  

 

“Cobots can play a growing role in reducing workplace injuries for older workers, enabling employers to capitalise on their skills and experience for longer,” says Helmut Schmid, a general manager at Danish firm Universal Robots.

 

Having minimised the limitations of older workers, companies can focus on building intergenerational teams. Research in academia and in the workplace highlights the synergies that can be created by mixing the qualities of younger and older workers.

 

Old dogs, new tricks

“While making definitive judgements about an employee’s qualities based on age can be misleading and harmful, some generalities can hold true,” says Irving. “Younger workers on average are likely to learn new tasks faster and bring more technological savvy to them. They are also often characterised by high levels of ambition and creative thinking.”

 

Mixing them with older workers can help to mitigate some of the drawbacks that frequently characterise less-seasoned employees. Younger hires, says Irving, can be “laser-focused on advancement”, which may provoke tension and reduce workplace loyalty. A blend of older workers can help to diffuse these strains. “More experienced workers often come to care more about meaningful contributions and less about personal advancement,” says Irving. “With more experience at resolving social dilemmas, they can promote cohesion, and they are more inclined to share information and ideas.”

 

When older workers mentor their younger colleagues, the result can be a more collaborative and productive working environment. “It can be crucial for a business to have some workers who are sometimes willing to play second fiddle, provide mentoring, support and encouragement,” says Paul Owen, operations director at The Age Diversity Forum in the UK. “Very often – though far from always – it’s the more seasoned workers that serve this function.”

Diversity along a wide range of metrics – including age – limits group-think and introduces a wider range of perspectives. Multigenerational teams can often identify opportunities that a narrower group would miss 

Consistent output

Having experienced more setbacks – from personal failures to systemic crises, such as recessions or financial meltdowns – older workers are often more attuned to risks and can provide a crucial counterbalance to the daring and creativity of younger employees.

 

At an even more basic level, an age-diverse workforce tends to generate a more consistent output. A study by insurance company RIAS found that workers aged between 20 and 29 took twice as many sick days as their colleagues aged over 50. This turns on its head the cliché of enfeebled and doddery older workers.

 

Generational blending can also help companies to understand the needs of a wider range of their potential customers. Over the past 20 years, spending by Europeans aged over 50 has grown three times faster than that of the rest of the population, according to the UK’s National Endowment for Science, Technology and the Arts. And in the US, people over 50 now control more than 80 per cent of household wealth.

 

Managers at America’s PNC Financial Group, for example, believe that building multigenerational teams helps them to better understand their target audience. Older workers can help to pinpoint financial priorities for the elderly – such as legacy planning and preparing for long-term care costs – that millennials might be less likely to spot.

The super-aged population by 2020

Source: The United Nations

Super-aged

Aged

Aging

Not aging

Succession planning

“Diversity along a wide range of metrics – including gender, ethnic background and age – is positive for performance,” says Owen. “It limits group-think and introduces a wider range of perspectives. Multigenerational teams can often identify opportunities that a narrower group would miss.”

 

An additional benefit of age diversity is that older workers can pass on contacts and relationships acquired over many years.

 

“Companies often have staff who have been dealing with the same client for decades, building up a deep understanding of their needs, history and personality,” Owen suggests. “This is not something that can be passed on overnight to a younger employee. Instead, companies need to consider a form of very gradual succession planning, pairing the older and younger workers to ensure continuity and preserving valuable institutional knowledge about key customers.”

 

Despite the clear advantages of such strategies and the looming demographic shortfall facing companies in Europe and the US, many firms have been slow to put in place a longevity strategy, says Irving. Ignoring reality, however, will become increasingly costly, he warns. “Senior executives need to recognise the potential in their ageing workforce, challenge the assumption that older workers are less productive and refrain from putting only younger workers on new initiatives. Failure to do so will make the perceived drag from an ageing population a self-fulfilling prophesy.” n  

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