15/08/11

By Mary Clarke, CEO, Cognisco

As of 6th April 2011, UK companies were no longer authorised to give notice to employees of their retirement under a default retirement age (DRA) and, from 1st October the DRA will cease altogether. This is a considerable change for businesses and for employees, who can now decide when and if they want to retire.

Although Employment Minster Ed Davey welcomed this reform as ‘great news for older people, businesses and the economy’; not everyone agrees. Some business leaders and lobby groups voiced concerns that businesses may be weighed down with an ageing, incompetent workforce, incapable of performing certain areas of their job roles, but reluctant to retire. The CBI stated that companies will face “huge uncertainty and greater risk of tribunal claims if the government does not tackle the unintended consequences of the decision”. Others argue that if companies have expensive older workers on their payroll, it will harm the prospects of younger workers and aggravate youth unemployment problems.

Whilst some of their anxiety may be valid, these groups have overlooked the fact that older workers can deliver considerable benefits to companies, not least in terms of the knowledge, experience and ideas they contribute. In engineering and manufacturing, (where there is a shortage of talent) one of the current concerns is the impact of the baby boomer generation retiring. Companies in these sectors are looking for ways to retain the knowledge of ‘older’ workers and ensure knowledge passed on to successors to avoid a ‘brain drain’.

Today, there are roughly 850,000 employees in the UK over 65 years old and there is no evidence they have any negative effect on their company’s performance. In fact, it has been proven by companies such as B&Q (who employ many older workers) that older workers have a positive bearing on a company’s performance and culture, particularly when they mentor and train new recruits. Age can be irrelevant in business if the right processes are established to ensure employees are developed in the right way and their skills and talents are used effectively. However, there are some barriers that businesses need to conquer in terms of how they manage older workers.

Recent research from the Chartered Institute of Personnel and Development showed that older workers are at the bottom of the priority list for companies when it comes to training and performance management. The report, ‘Employee Outlook: Focus on an Ageing Workforce,’ which surveyed 2,000 employees found less than half of workers (46%) aged 65 had a formal performance appraisal either once a year or more frequently, compared with 65% of all employees. Also, 44% of employees aged 65 and above had not had a formal performance appraisal in the last two years or never, compared to a survey average of 27%.

It seems that UK companies are neglecting the development of their older workers who are close to the retirement age. This situation needs addressing and certain companies will need to rethink their company’s culture as well as the way they manage older employees.

It goes without saying that businesses need to invest in the skills and development of employees of all ages and at all stages in their careers. Equally important is the need for managers to understand the individual training needs of employees at all levels so that they can deliver targeted training that will improve an individual’s performance.

One effective way of doing this is by regularly assessing the skills, knowledge and performance of all employees using ‘intelligent’ employee assessments. Such assessments test employees in situational or ‘on the job’ scenarios and give managers up to date information on the skills, knowledge and confidence of their entire workforce, as well as the likely behaviour of individuals. Managers can see where skills gaps lie, as well as which training interventions are needed for each individual. Bespoke development programmes can then be established with employees’ benchmarked against specific performance criteria to ensure their ongoing development and improvement.

These targeted assessments can also highlight their employees’ transferrable skills, enabling managers to make accurate decisions about who they can redeploy in other parts of the business. Star performers will also be identified — those employees who are particularly knowledgeable and capable of taking on additional responsibility or ready for a promotion. They may also be the ideal candidates to mentor or coach their colleagues.

From October 1st, businesses will no longer be able to ask employees to retire at a certain age. Companies need to act now and put in place the right performance management systems and practices in place for all employees. By using the right intelligent employee assessments, companies can gain insight immediately into the development needs of each individual, and this information will ensure they get the best out of their staff, irrespective of their age.