THE CONTRIBUTIONS OF THE “ GREY WAVE ” TO ORGANISATIONS AND SOCIETIES

by

Dr Ruan van der Walt
Department of Human Resources Management
University of Pretoria
ruan.vanderwalt@up.ac.za

Organisations as well as societies who do not take the values of older persons seriously do so at their own peril.

The value of older employees to organisations

The long term performance success for any organisation depends on a strong foundation of human capital. Human capital can be defined as the economic value of people with job-relevant abilities, knowledge, experience ideas, energies, creativity and dedication. These qualities are often found in older more experienced employees. 

One of the major concerns for business and organisations in the next two decades will be the aging of the global workforce. Peter Drucker, the well-known management expert is of the opinion that this is the result of the accelerated growth of the older population and the decline in numbers of the younger generation.

Many key industries are already experiencing difficulties to recruit sufficient technically qualified people to replace those who are approaching retirement. In the US half of the aerospace industry’s workforce will be approaching retirement age in the next ten years which will leave a significant gap in the industry as a whole. NASA in the US is reputed to have twice as many workers over 60 years of age than worker under the age of 30 years. This undermines the programme of handing over leaderships roles to the next generation.

Higher education faces a similar situation with many “older workers” i.e. full professors who have worked a whole life time to become experts in their chosen disciplines, preparing for retirement. A recent South African daily news paper highlighted the fact that the majority of top researchers are white males between the ages 55 and 65 years.  They are not being replaced fast enough by young non- whites and/or female researchers. This situation has for examples forces some South African universities to extend the retirement age from 60 to 65 years.

HIV/AIDS has the potential to devastate the South African labour market. The country has the highest infection rate in the world. The age group 15 -25 years, especially females are most affected. These youngsters are the workforce of tomorrow. Some of them do not even make it through high school or tertiary education as a result of this disease.

One of the current aims of training and development in South Africa, is to also give recognition to prior learning and experience. This is particularly aimed at previously disadvantages groups. By not valuing older, experienced workers this aim is negated.    

Despite these realities few organisations are at present making any provision for the loss of experience when these “older workers” retire and neither are these organisations taking active steps to retain these workers. Geller and Stroh point out that this is mainly due to inaccurate perceptions that older workers are of less value than their younger colleagues.

Peterson and Spiker suggest in a recent article in Organizational Dynamics that these flawed perceptions exist in part because organisations do not as yet understand the contributions and value of older workers. They argue that organisational leaders have yet to turn their full attention to attracting, developing and retaining older workers, primary because of the negativity surrounding older workers.

Unfortunately warnings aimed at organisations of the negative legal, social, political and economic consequences associated with the inattention to older workers have not been effective in convincing employers of the value of older workers. A representative of PricewaterhouseCoopers recently noted, “Warnings of the boomer crisis are being ignored primarily because most companies are not in enough pain yet, and are still in the mindset that there are too many people at the water cooler, not too few.”

Peterson and Spiker suggest that a positive approach to the challenge would be better received and more effective. They advocate that older workers may contribute equally if not more value than younger workers, because their overall human capital contribution, defined as the sum of psychological, intellectual, emotional and social capital or PIES is greater than the overall human capital contribution of younger workers.

The first step toward a positive psychological approach to the management of older workers is to accentuate the positive value of older workers by dispelling two myths associated with older workers. The first myth is that older workers are not top learners; traditionally it has been thought that ability and skill decrease with age.  It is further believed that older workers are unable to learn new technological changes, are unable to keep pace, are less flexible and adaptable, have a lower zest for life and are at the stage that they experiencing social and psychological withdrawal from society. These views are fundamentally flawed . In 1999, Harris Interactive conducted a nation wide survey in the US  of 774  human resource directors and found the following with regard to older workers: 80 % have less turnover; 75% have higher commitment levels; 74% are more reliable; 71% have as much ability to acquire new skills as their younger counterparts etc. In response to these findings the Committees for Economic Development concluded that increasing the participation rate of older workers, would only add to the learning and productivity of the workforce.    

The second myth is that older workers are not top performers:

An examination of several meta-analyses, which looked at the relationship between age and performance between older workers and younger workers, found that in many cases older adults appear to have a slightly higher job performance than younger adults. Research has also shown that occupational injuries occur at a lower rate to older workers than to younger ones. Accident frequency declines steadily up to age 64 and then drops even more sharply for workers over 65.

Peterson and Spiker propose the following organisational outcomes associated with older workers. Older workers show increased loyalty towards their employer and decreased turnover. While the cost of staff turnover is enormous, approximately 84% of businesses in the US do not formally record turnover costs. This figure is probably similar for South African organisations. One cost figure used in South Africa is that an employee’s replacement cost can be as high as 60 % of the annual salary of the position in question. What this means is that organisations do not realize what they are loosing in staff turnover costs.  

Older workers have an enhanced institutional memory. As a result of their experience and time within an organisation, older and longer serving workers have more knowledge of the organisation. Organisations that let these workers go before that knowledge is captured or put into institutional memory, are at risk of losing vital information and a competitive advantage.   Delta Airlines felt this first–hand when in April 1994 they retrenched 22 % of their staff. The short term results for the company were positive, but the long-term consequences were less positive. Closer to home the same lesson was not learnt when many of the experienced civil servants and municipal workers where forced out or given severance packages. This could be one of the reasons why service delivery is not taking place as the government has intended.  

Older workers show increased productivity.  According to recent studies people live on average four years longer when they are productively engaged. Harris Interactive reported that older workers are on average 49% more motivated than younger workers. Some of the reasons why high productivity can be expected from older workers are: increased motivation, to be challenged, to remain, connected to other workers, to enhance income and standard of living, and to harness a sense of overall well-being.  Many South African organisational leaders would say this is all very interesting but not really relevant given our high unemployment rate. Unemployment will not be solved by replacing experienced, older workers with new untrained and inexperienced workers, in fact it could cost your organisation more in the long run if older workers are not valued for their contribution to the organisations where they are employed. The knowledge and experience of older workers can be better used to grow their organisations and so create new job opportunities.

The value of older citizens to society

South Africa has a larger percentage of young people compared to persons aged 50-plus. It is perhaps of this fact that South African are less aware of demographic changes taking place in other parts of the world, changes which could impact on the South African society in two to three decades into the future. Some societies tend to regard their aging population, as people live longer, as a major burden on a society. Fortunately there is a move away from this negative perception of the 50-plus age group in societies. In an article in the July/August 2006 edition of the senior citizen publication, Plusmagazine published in the Netherlands, this change in perception is of an aging population is demonstrated by the change description from referring to this group as “the silver generation” as opposed to the more negative description of “the grey wave” in the Netherlands.

The economic value of the 50-plussers’ consumer power should also not be discounted. More mature citizens often have more time and more disposable income now that their children have left home. In the Netherlands it is estimated that senior citizens number will increase to 40% up to 2020 and over the same period this groups income will increase 25% faster than the average household’s income. Many companies in the Netherlands such bicycle manufacturers, holiday travel and leisure time firms can not survive without the senior citizens’ buying power.

In the article referred to above, the role of the 50-plus generation in the total labour market is highlighted. Some sector of the economy such education at all levels, the health sector and the people transport sectors in the Netherlands would simple not be able to function without the 50-plus category of employees.

Many voluntary organisations such as Doctors without Borders and Amnesty International would come to a standstill without the voluntary workers, who are often older persons.

A number of industries and advertising companies have woken up to the economic value that the 50-plussers represent as a marketing segment. This has give rise to new concepts such as Mature Marketing, Best Age Marketing and Babyboomer Marketing.        

An organisation or a society which does not take note of the value which older persons represents to an organisation or a society, misses an opportunity to benefit from the contributions which older employees and older citizens can make as was briefly alluded to.

Used with permission of the author:

Dr Ruan van der Walt

Department of Human Resources Management

University of Pretoria

ruan.vanderwalt@up.ac.za