Cutting older staff may have unintended consequences

“Ours is a prejudiced industry.” What a way to begin a discussion! Do you believe that? Wanda Kenton Smith made the assertion in her marketing column in the June issue.
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“Ours is a prejudiced industry.” What a way to begin a discussion! Do you believe that? Wanda Kenton Smith made the assertion in her marketing column in the June issue.

She was, however, quoting Bob Pappajohn of M&P Mercury from his comments in Miami to an industry diversity task force. The statement refers to a preference for customers. However, could it not also apply to the work force?

Changes are occurring rapidly in today’s labor market. People are still losing jobs, and yet more people are also being hired. New hires generally earn less than people losing jobs. That is a combination of normal labor market functioning and power and greed.

The unemployment rate continues to decline slowly. Generally in 2014, the reductions in employment are not the mass layoffs of the past 5 to 6 years, but targeted layoffs. Such targeted layoffs or reductions in specific areas suggest, on the surface, a normal labor market operation.

Traditionally this has meant that in a production operation, as sales decline, people in production are laid off because it is not typical to overbuild inventory. As advertising has shifted emphasis with IT technology, some traditional print staff has been reduced. This type of targeting always has been an element in the labor market.

In our post-recession economy, however, the focus often is being changed. The targeted positions are often held by experienced employees at above-average compensation levels. This is what may be called silent discrimination. Discrimination by gender or race has been the major complaint area in the past decade. Has there been an invisible discrimination trend? Why would this be the case, and what are its implications for you as a manager, as well as for you as an employee?

The signs pointing to silent discrimination are usually not apparent at first, and a manager may not be seeking to openly act in any inappropriate manner. The moving force today behind many employment actions often is, plain and simple, cost reduction. The target is to reduce the budget and squeeze improved financial results to the bottom line.

So because personnel costs are the greatest part of most budgets, how can you not examine them? More important, how can you target most effectively? Logically thinking, you would look for the higher-paid staffers who may appear to be replaceable at lower costs. The difference between the current staffer and a replacement staffer in today’s market could be thousands of dollars.

Consider several scenarios that could occur in this search for personnel cost savings. Which would you most likely find yourself in?

• Assume a manager decides to eliminate the experienced worker’s position to save costs. In the absence of a labor union or a state code that limits such actions or a personnel policy that may offer rights to a worker occupying a reduced position, the worker ordinarily has no recourse but to accept the employer’s action.

The manager’s secret plan is unknown to the reduced employee; however, the manager plans to create an almost identical position soon and transfer most of the former employee’s duties to the new position at a much lower rate of pay. Cost savings drive the bottom line. Mission accomplished.

• You “observe” that the experienced employee seems slower to get the job done lately or you are able to find errors in the work done. You develop a case so as to be able to discipline the experienced employee. Ultimately you find the opportunity to discharge the employee on technical grounds. You then work to replace the discharged worker with a new person, probably someone with less experience, but at a lower rate of pay. Same result: Mission accomplished.

• You are younger than the experienced employee. In fact, you are quite a bit younger and consider yourself very technically savvy, even beyond your current job requirements. The experienced employee(s) do not seem to be very current in the field and rely on old ways of doing the work. A younger person would be able to use newer technology and finish the work faster and with less stress on you as the manager.

You meet with the experienced employee(s) separately and let each know they must better utilize the new technology in the company or they will not be able to continue. In 90 days you terminate one or more employees for not maintaining currency in their field. The positions now can be filled with younger workers, and likely much cheaper workers, given the labor market in 2014. Mission accomplished.

• As a recently minted MBA, you are hired as the new chief of the largest department. You immediately notice that none of the senior employees have what you believe to be essential certifications for their positions. You know that one of your jobs is to reduce costs, and you see this as a significant opportunity for doing so.

You announce the new requirements as being essential within what you believe would be a reasonable time period. Anyone not properly certified at that time would be terminated. You see no reason to offer any remedial “training” because it is the employee’s responsibility to have the basic essential skills. Most do not meet the timetable and are released from the company. And yes, you were able to hire a quality group of young employees, all with the certifications called for. Mission accomplished.

Do any of the scenarios seem familiar in your company? The older we get in life, the more we see that actions have consequences. The consequence expected in each of the above cases (and we could have many other scenarios), was, at least, a pat on the back for reducing labor costs and simultaneously having younger workers with anticipated greater enthusiasm. But are there other consequences? What ideas might you jot down before continuing to read further?

One consequence, in all of the cases, likely will be in productivity, not only for the younger workers, but also for many others who were unaffected directly. Older, experienced employees typically are the teachers of the “culture.” They translate the policies, rules and regulations into real world workplace behavior.

A new employee may not only learn technical skills from a continuing orientation, but also learn about cultural guidelines. This is the real essence of workplace orientation, and without senior (older) employees to do this, how will it get done? Productivity probably will suffer until the new people can be brought up to par.

Another consequence of the potential managerial actions may well be reduced productivity among employees across the board as they see management’s actions as unacceptable, given the company’s culture as they have seen it develop over time.

There may be anxiety, even anger, toward the company for allowing newer and younger managers to take advantage of older, experienced employees. All of these reactions may be invisible at first or could be explosive. There will be a reaction, and at the very least there could be increased turnover.

Lastly, the potential managerial actions toward older employees could well be in violation of federal (and likely state) legislation; and actions under the Age Discrimination Act could be much more detrimental to the company over time. Increasingly, younger managers are not welcoming to older employees. A company suddenly receives a letter and must try to figure the next step. Be on the alert for this silent discrimination. Many employers have not been.

Perhaps begin the preventive campaign even before the hiring of new managers. And a good positive tool is the recognition by all of the value that older, experienced workers bring to the bottom line each day. If you managed to read “The Next Generation” (Paul Taylor, Public Affairs Press, 2014), as suggested in the June issue, you would also know about many other problems when you mix generations today. You still have time to read it.

Jerald F. Robinson, Ph.D., is professor emeritus, international management, at the Pamplin College of Virginia Tech in Blacksburg, Va. He can be reached at (540) 449-5870 or by e-mail: JFR@vt.edu.

 This article originally appeared in the August 2014 issue.

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