‘Out with the old and in with the new’, a suitable maxim for many areas of life, could also describe UK employment practices. Dynamic organisations often work upon a constant influx of bright new talent as more mature and established figures in the industry look towards retirement at 60.
This attitude is increasingly unsustainable. Legally and demographically, UK companies will have to re-evaluate their employment practices and the implicit age assumptions on which these practices are based. Accountancy firms are by no means an exception.
By October 2006, the government will have enacted new age discrimination legislation in line with Article 13 of the European Employment Directive. Within three years, British employers will be acting illegally if they let age prejudice influence their employment policies and practices.
The legislation has huge implications across many key employment areas.
It is not simply about companies’ recruitment, selection and promotion policies and practices. It also spans direct and indirect age discrimination in employment and vocational training, different treatments on the grounds of age, mandatory retirement ages, unfair dismissal law and even redundancy payment rules.
Most organisations do not believe they discriminate on the basis of age.
But delve below the surface and the facts soon show otherwise. Between 13% and 27% of organisations admit to using age as a selection criteria, with one in eight specifying age limits or ranges in recruitment adverts.
The rationale behind such selection criteria is often unknowingly based on stereotypical attitudes regarding age. Older workers, some assume, are less effective employees because their age means they can’t hack it any more; younger people on the other hand lack commitment, loyalty and staying power let alone solid experience.
These stereotypes are unsubstantiated. Yet research by the Chartered Institute for Personnel and Development shows that people only have five years in their entire working life in which they are unlikely to be judged too young or too old for a job. You are safe if you are no younger than 35 and no older than 40.
In some types of work, you can be regarded as past it earlier than in others. But in a tight labour market, such thinking, and the stereotypes it is based on, is self-destructive. Access to the best talent will be hampered if employers cannot modify their pre-existing mindsets on age groups and abilities.
Legally, therefore, companies need to take steps now. If they don’t, they not only face possible prosecution and punitive fines, but also risk seriously compromising their reputation and staff relations.
The demographic case for age diversity is equally clear. The ageing UK population is a reality that dictates by 2050, the average age will be 49. Added to the current dilemmas in pensions and personal savings, and it will no longer allow for the fixed retirement age to remain at 65.
Indeed, CIPD research has found that on in three employers have either raised their retirement age in the last two years or plan to raise it in the next two.
People will need to work beyond the increasingly irrelevant mandatory age of retirement and businesses will need to recognise the added value that could be gained from older people with relevant experience.
What can large organisations do to address something which, to many, must seem like the natural state of affairs and the ‘way things are’?
Barclays is one company that has identified that by losing staff over the age of 50 through early retirement, it was haemorrhaging knowledge and valuable experience. The bank also recognised that its future average customer, as well as its staff, was likely to be older as time progressed.
In response, Barclays produced an inclusion charter to iron out age bias in all its policies and trained all its customer-facing staff in the importance of diversity and the very real significance it has for the business.
By increasing the employment of older workers, a company can achieve significant savings in recruitment and training costs – indeed the average cost of replacing staff is £3,500 per person. By extending the retirement age, a company retains valuable knowledge and presents an outward image that can appeal to older customers and thereby capture an increasingly bigger slice of this growing market with a very high spending power. Barclays’ extended retirement age resulted in more than 220 people staying with them who would otherwise have left.
Changing work practices and the weight of demographics will necessarily have huge implications for British business and management. Employers must make sure they do not award jobs in favour of age and the assumptions that surround particular age groups. Both young and old must be defined by their merit, with jobs offered to younger people without unjustifiable objections and older people allowed the option of later retirement and continued job development.
If organisations approach such change positively and proactively they will be taking great strides towards solving the recruitment dilemmas of the future. Focusing on age diversity will result in an inclusive and rounded workforce, while simultaneously reflecting the changes in society.
The business case for action across the board is clear.
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