Readers will have seen recent redundancies in certain sectors of the commercial world that were unimaginable 12 months ago – redundancies amongst professionals such as bankers, surveyors, architects and solicitors have recently become commonplace.  The property, construction and financial sectors have been particularly badly hit and for those organisations that continue to trade under these adverse conditions, it is critical that they retain and maintain the best possible workforce to remain competitive.

Before embarking on any redundancy programme, it is important for a business to identify why it is doing so. The first step is to identify what the ongoing business needs are and where the reduced requirement for people exists. This will identify the pool of employees at risk of redundancy, and from which a selection exercise must be carried out.

In a cost cutting exercise it might be very tempting to retire the 50 year old worker who is earning £40k and retain his younger colleague who is earning a lesser salary.  However, which of them provides better value and is most suited to the job role?  The selection process must ensure that the retained employee is the best match for the job.

Many organisations have used the LIFO principle - Last In, First Out would be adopted as a means of selection.  However, due in part to concerns that LIFO may give rise to claims of indirect age discrimination and, crucially, to ensure that the remaining business retains the skills essential to its future survival, it is far better to adopt a system using fair and transparent ‘competence based criteria’ which includes ‘fit with the job’. The criteria to be used in each case should be specific to the requirements of the job, and will frequently also include consideration of discipline records.

The mature worker can be vulnerable in times of redundancy.  There has been an attitude within HR circles that the people who want to stay beyond retirement are not always the ones that managers prefer – these are the people who are less motivated and talented.  But this isn’t a politically correct thing to say and might explain why so few firms in the past have been courting older workers?  Many companies are now realising that this attitude is incorrect.

Redundancy should not be used as a ‘label’ for removing underperforming staff or the mature worker in the absence of a genuine redundancy situation. However, where there is a real need to reduce staff numbers, a good redundancy programme will focus on the ongoing needs of the business and will retain the workers who are the most valuable to the business.

So who are the most valued workers?  Senior Executives in Europe, America and Asia have admitted for the first time that older workers are the key to retaining high value within the business.  However, few of those same executives had yet done anything to persuade colleagues to stay on beyond retirement or to recruit other experienced individuals.  Businesses are realising that they have to hold on to older, skilled workers.
Consideration should also be given to the challenges that are presented with the significant change in demographics which is impacting now and increasingly so over the next 20 years and beyond.  It is recognised that there will be a ‘skills shortage’ that will have a worldwide impact – the UN has estimated that the 15-59 age group in the UK will decline 5% by the year 2025 – the over 60 population will increase by nearly 9%.

We are starting to see a fundamental shift in thinking across business. There is an increasing white-collar and professional skills shortage, which means that attitudes have to change. Businesses are realising that they have to hold on to, or recruit older, skilled workers.  As the number of young adults drops in the West, and lifespans increase, the limitations of today’s strategy of importing foreign labour are showing.  Persuading older workers to stay on and luring others back from retirement is now imperative.

The Nationwide Building Society is a pioneering organisation which has embraced the retention and recruitment of older workers.  It raised its age for compulsory retirement from 60 to 70 in 2001, and then again to 75 in 2004, ahead of the 2006 age-discrimination legislation.

“Changing demographics meant there was a clear business case for change,” said Nationwide’s head of human resources, John Wrighthouse, who added that customers were more satisfied with the service they got from older people; older workers stayed longer and recruiting and retaining those workers met the company’s fairness and diversity policies.

Nationwide’s policy change has certainly appealed to employees, with 347 of the 19,000 staff now over 60 – including a manager of 74. Nationwide ran a final-salary pension scheme until recently, so Whitehouse believes that people are working on because they want to and not just because they need the money.

However, the reality is that Nationwide is among a minority of companies going all out to attract older people. It is time the majority woke up to the pending crisis. In fact, albeit very controversial, the recruitment of older workers is now so critical that it merits the introduction of positive discrimination - for example, giving older workers more rights on part-time working. It has to be understood that these days older workers may also be caring for even older relatives.

Benefits of retaining older workers

So why should an employer consider retaining the older worker?  There are a number of advantages that the mature worker has over his/her younger work colleagues.  A study of 26 companies in the UK carried out by the Department for Work and Pensions concluded:

• High retention rates
  Employers report that older workers are associated with high retention rates.  This helps to reduce recruitment costs.  It also means that their knowledge, skills and experience can be retained by the organisation.  These factors contribute to profitability.
• Lower  absenteeism
  Employers interviewed also found that older workers are likely to have few periods of short-term absence.  This is associated with cost savings.  It also enables employers to plan work schedules with a high degree of confidence, thus increasing efficiency.
• Reliability, commitment and dedication
  Older workers were considered to demonstrate high levels of reliability, commitment and dedication. This is a substantial benefit as it helps employers to run their business efficiently and effectively.  Employers interviewed commented that older workers could be relied upon to:
  exhibit good time-keeping
  work consistently throughout the day or shift
  consider the needs of the team they work with when planning holidays, medical appointments and other absences
  give ‘over and above’ the basic requirement of the job because they take pride in their work and wish to deliver a good quality service.
• Flexibility and innovation
  Older workers are considered to be flexible workers.  Employers highlighted the fact that older workers are willing to work constructively as part of a team and to adjust their own role or hours of work to support the team effort.  Older workers can also be innovative in applying their experience to new situations.  The employers interviewed often found that solutions identified by older workers are generally ‘workable’ as they are often based on extrapolations of their wider ‘life experiences’.
• People orientated skills
  Many older workers are considered to have strong people-orientated skills.  This attribute is particularly beneficial to businesses that require high levels of customer contact.  The employers interviewed found that older workers can be skilled at diffusing potentially difficult situations with customers or members of the public.  They often show a degree of calm authority when difficult circumstances arise.  This helps to ensure that the business runs smoothly.  This attribute is particularly valued by organisations that deal with members of the public.
• People development skills
  Employers also recognised that older workers make a positive contribution to the development of younger members of staff. This may be through sharing knowledge and experience; by bringing a sense of ‘balance’ to teams; or by creating a ‘virtuous circle’ whereby all staff are encouraged to display the same level of commitment and dedication as older workers.  All of these factors contribute positively to the overall efficiency and effectiveness of the business.
• Ability to deal with change
  Frequently, older workers have experienced periods of change in the past.  Employers have found that this enables older workers to deal with change in the workplace with equanimity.
• Leadership
  The employers in the study also recognise that many older workers offer leadership in the workplace.  The combination of their knowledge, experience, work ethic, and life-skills can be inspirational to others.
• Generic knowledge of other industries
  Older workers have many years of experience that can be of benefit to business. For example, they are likely to have worked for other employers and/or in other sectors of industry - this generic knowledge can be drawn on to the benefit of their own business.

Generally, the employers in the study found many ways in which older workers can add value to their organisations. They work efficiently, contribute to the overall effectiveness of the organisation, and relate well to colleagues and customers. All of this has a substantial and positive effect on business profitability.  It would be unreasonable to assert that all younger workers will have ‘lower retention rates’, ‘higher absenteeism’, ‘lower commitment and motivation’, ‘less flexibility and motivation’, however, the study has demonstrated some compelling reasons why employing the mature worker has advantages.

What is most important is to ensure that the person is perfectly matched to the job role.  Employers must consider the negatives of engaging the wrong person – the money spent on training, management, garden leave, employment tribunals, advertising and recruitment agencies, and the cost of finding replacements.  Set this against engaging the correct person – improved performance, increased job satisfaction and lower turnover.

So, there are a number of proven benefits to retaining (or recruiting) the more mature worker.  One of the challenges for organisations is to identify these high value people.  Although we have a good idea, it can be very subjective.

A more objective way of determining high performers is to undertake a ‘predictive performance study’ which helps companies isolate the traits and characteristics that demonstrate success in each job position to predict the potential of others to perform successfully in each position.  The system quantitatively assesses the strengths and capabilities of each individual employee.  Using this data, a job match pattern is created for each position that provides companies with valid, reliable information to better understand, select, retain, manage and develop its workforce.

Building a model of top performance can help organisations select great workers.  A predictive performance study requires little involvement from the management team and the process is very straightforward:

• Identify the individuals you want to assess in a specific job or position.  (We suggest three or more top performers and several lower performers)
• Provide each person’s name, gender and email address – a computer-generated assessment invitation is sent to each person
• Once each individual completes his or her assessment online, the software scores the assessments in real time and creates a job match pattern
• A report consolidating all the scores, the initial pattern and the various placement and coaching reports is provided during a review meeting.
• Find out how a predictive performance study can help you select the best people for each position, increase productivity, improve profitability and improve your ability to predict performance.

For more information, contact Angela Stephenson at 0845 600 1556.
Lance Gill