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 a greater likelihood of a more experienced workforce, new research has shown that older workers are often not being used to their full potential when it comes to passing on knowledge, experience and training to their younger colleagues.
Roger Moore, General Manager of Bond Teamspirit, therefore illustrates how now that older workers are likely to remain within the business for longer, companies must ensure that the experience that they hold is actively transferred to the younger workforce through dedicated internal training programmes, for fear of losing the knowledge and having to retrain the new employees from scratch.
The times they are a-changing
There can be little doubt that the long-term impact of the Pensions Bill 2011 will bring about one of the most significant demographic shifts in the workforce. Pushing the State Pension age to beyond 65 years, will inevitably mean more men and women have to remain in the workforce 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 it will have, nor 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. The attitude to older workers in the UK though means that neither the mindset or structures exist to ensure 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.
The above is evidenced by a Chartered Institute of Personnel and Development (CIPD) survey that found fewer than half of those workers aged over 65 had received an annual appraisal compared with two thirds of the total workforce. This would suggest that a person reaches a certain age and training and other developmental opportunities cease. OK, they may have long learnt what they need to do their job well and indeed be expert at it but all of us know that in life there are always things we can learn and areas on 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 they are being treated the same 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 since it cuts 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 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 so require investment in them. If employers aren’t shedding from the top in the same way as they used to but because of costs still have to recruit at the bottom, it is likely to be the middle tier that suffers and consequently decides to seek opportunities elsewhere.
Happy to share
So there are two broad challenges for employers today and they are inter-linked. They must find ways of engaging older workers so they remain happy and therefore productive in the workforce rather than feeling they are merely killing time waiting for retirement age. And they must find ways of transferring their knowledge and the benefit of their experience to younger workers. Conveniently, the latter will help promote 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 and cascading information and experience from the older workers is also 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 time taken to complete tasks and improve results.
No-one says 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 feeling 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 a person has the physical ability or mental agility to still 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 haven’t. The women’s State Pension age will be equalised to men’s in 2020 and then both men and women will have to work until they are 66 by 2026. This means the first changes will happen within a 15-year timeframe and 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 head in the sand when it comes to the issue of older workers though and 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 it may mean you survive the downturn, you will be unable to stay competitive in the long-term.