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How CEOs Can Combat the Costly Problem of Age-Based Discrimination

As an increasing number of baby boomers approach retirement, the issue of age bias in the workplace has never been a more pressing one for CEOs to consider.

istock-510697150-compressorPrevious studies have shown that disengaged workers cost the U.S. economy alone more than $300 billion a year. And older workers tend to occupy more senior or highly-paid positions, potentially causing an out-sized drain on productivity should they be failing to reach their full potential.

Now, a new Australian study—published in the December issue of the New York-based Academy of Management Journal—has demonstrated a clear a link between a display of aged-based stereotypes and falling workplace productivity.

Researchers from the University of Melbourne and the University of South Australia questioned more than 600 individuals between ages 45 and 75 about their work experiences. They found that those working in less friendly environments had engagement levels around 20% lower than those at organizations where seniors were more respected and better looked after.

“Age stereotypes are notoriously persistent in organizations,” the paper said. “Mature-age employees are commonly perceived to be less productive than their younger counterparts. They also are viewed as lacking initiative, disinterested in learning or developing, and resistant to change.”

“Managers’ attitudes matter, but organization-level practices matter more and are also more enduring.

Several studies in the U.S., including this one, also have identified growing evidence of discrimination against older workers at a time when their participation is needed most to avoid strain on the retirement system.

To deal with the issue, the research above indicated companies’ most common approach was to try and change individual managers’ hearts and minds, rather than establishing organizational-level practices that formally recognized and encouraged seniors.

“Unfortunately, organizations have been slow to adopt mature-age practices, even though our research shows them to be highly effective in reducing stereotype threat and increasing job engagement among older workers,” Professor Carol T. Kulik of the University of South Australia said.

For CEOs wondering what kind of practices to introduce, here are 4 suggested by the study:

1. Create opportunities for older employees to take on challenging and meaningful new roles or work assignments.

2. Establish reverse-mentoring programs where junior staff help upgrade seniors’ skills. These can be conducted in addition to mentoring programs.

3. Allow flexibility for jobs to be redesigned or employees to be transferred to less stressful or less strenuous work.

4. Consider introducing phased retirement programs that allow employees to ease into retirement.

The time and resources required to take such initiatives may seem onerous at first. But with a recent study by human resources researcher McClean & Company estimating a disengaged employee costs an organization around $3,400 for every $10,000 in annual salary, it could be well worth the trouble.

“In sum, managers’ attitudes matter, but organization-level practices matter more and are also more enduring,” Kulik said.

About Ross Kelly

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.