Month: July 2016

Age discrimination in executive recruitment

Discrimination is never an acceptable form of selection behaviour although based on some recent research it would appear that some types are more acceptable to recruiters than others. A couple of recent surveys undertaken by TCMO, a career management organisation, seems to indicate that age discrimination at executive level is the most dominant type of discrimination in senior management recruitment. Link to the surveys are included at the bottom of this post.

The initial survey was not particularly clear on whether it is older managers being discriminated against because of their seniority or aspirant younger managers seeking their first senior management appointment. Some further analysis is provided in their more recent survey with additional gender related insights provided.  It also must be stated that they are surveys, and that being surveys they are a collection of perceptions of treatment rather than totally objective evidence on whether age discrimination is actually taking place. There may be some contributors who are able to support their opinions with something concrete although in most cases it may well be more suspicion based. However, perceptions are a reality to those who feel they have been discriminated against so we have to treat the exercise seriously and at face value. Recruiters also do not help matters by aligning to the growing trend of refusing to explain the basis of decisions. This lack of transparency is bound to breed suspicion in candidates, more so in the final stages of a selection process.

The initial survey suggested that nearly 46% of people at an interview stage felt that had been discriminated against on the basis of age, usurping gender at 21% by quite a wide margin. This pattern of age discrimination being the most prevalent form was repeated in the other survey questions to a lesser amount but it was still the dominant type.

As with other types of discrimination age discrimination is illegal, and as the summary comments rightly points out it is important to follow the rules to avoid potential penalties and corporate reputational damage. Perhaps it should also be added that not only should the rules be followed but they should be seen to be followed. In other words more transparency in the hiring process and less litigation ‘risk avoidance’ actions.

It does feel something of a stretch to believe that anywhere near 46% of recruiting managers and Human Resources staff have an inherent age prejudice, although the current domination of agency involvement in the hiring process might well be a problem. HR people are professionals who generally have a sound understanding of the law, exercise good judgement and usually provide sound advice and guidance to hiring managers. The more established recruitment agencies may also fit into this category although the volumes of start-up agencies entering the hiring industry must inevitably attract individuals who are far more interested in generating commissions than in providing sound customer service and a fair and transparent filtering and selection process. It must be frustrating to the truly professional agents to see masses of new entrants with a limited or absent pedigree in recruitment entering the industry and arguably tarnishing its reputation with cowboy practices and other reputation damaging behaviours.

The first survey covered later stages of the recruitment process although it would be more than interesting to see results for the initial stages of recruitment including the CV filtering mechanisms used by agency staff and corporate recruiters. We can only guess at these at this time although I suspect the numbers of recruiters requiring a declaration of age, for whatever reason, as an integral element of the application process will do little to allay suspicions.

Age prejudice is also a major change management challenge. The demographics of many Western states suggest an ageing profile which many organisations have yet to take on board. In 2016 it may still be fairly easy to recruit people with a broadly younger profile but in the coming decades it will likely be far more difficult and probably damaging to an organisation’s reputation to avoid hiring older people. It is interesting to note that skill shortages are still promoted as a reason for lower productivity and yet we see limited enthusiasm by businesses for hiring and retraining older people. There may now be less propensity to ‘let go’ of older people simply because of their age but there still seems to be a perception that age is a barrier to learning.

Many organisations seem to adopt a policy of employing older people but not actually hiring them, especially in more senior positions. A sixty year old can be a prime minister and a seventy year old an American president but an over fifty year old being recruited into a middle or senior management position in business seems to be a completely different proposition. This perception of people in their fifties simply looking for roles that allow them to ‘coast into retirement’ is going to have to change, especially as state retirement ages are heading for seventy in the coming decades. Discriminating against the very groups that are likely to be the backbone of your customer base will not be good for business and the sooner this is recognised the better.

In searching for some legitimacy for these unwritten hiring policies it may well be that older people are staying with organisations for extended periods are effectively ‘blocking’ progress for younger managers who aspire to more senior positions (the career version of ‘bed blockers’?). Perhaps by filtering out older candidates recruiters believe that they are ‘levelling’ the ground for candidates in other age groups. Then there is the view that older workers are more expensive than younger ones. Without sifting through volumes of data, this would nonetheless make some sense given that on the whole older workers are more likely to have progressed into higher paying senior positions. Thus the premise that on average they are probably more expensive may well be true although why it should be used as a generic reason for filtering out candidates for what are likely to be roles with a specified salary band is unclear.

Hard evidence of discrimination of any nature tends to be difficult to come by. We know it does exist but the legalistic nature of today’s hiring conventions appears to have increased the difficulty of promoting transparency during the recruitment process. Candidates are often required to complete on-line surveys during the application part of the process recording age, ethnicity, gender and many other potential discriminatory attributes. Positioned as a method of ensuring that there is no overall discrimination they are then asked to ‘trust’ that these details are not used in the initial filtering process. If an interview follows hiring managers are instructed to be very careful about what they write down about candidates, and if positions are not offered the reasons given often rank amongst the blandest of the bland. ‘Another candidate was better qualified’ or perhaps deemed more ‘suitable’ but no actual analysis of why ‘X’ was preferred over ‘Y’. How exactly was ‘X’ more qualified than ‘Y’? The reasons for a lack of detail are no doubt associated with a lack of time and an unwillingness to invite a challenge. This may be entirely reasonable from a hirer perspective but it is unlikely to promote a sense of respect or trust among prospective candidates. If anything the recruitment process is even more opaque than it was a few decades ago. The discriminatory practices that were once more overt seem to have gone underground and may well be masked by the implications of fifty years of anti-discrimination legislation. Perhaps the law of unintended consequences is in force.

Steps to combat age and other forms of discrimination are typically framed in terms of legal and regulatory frameworks. This is understandable in that politicians react to the pressures of social change by introducing laws which recognise that the boundaries of what is and is not acceptable have shifted. They need to be seen to ‘do something’ and that ‘doing’ generally manifests itself as a law, or set of laws that redefine the rules under which we must all operate. Laws help define the rules but do not necessarily change essential behaviours. Discrimination moves out of sight and hearing often hidden behind spurious and uninformed prejudices, inter –generational rivalry or basic misunderstandings. It is only when fundamental cultural change has been attained can a perception of fairness and reasonableness be achieved. When we look at age discrimination the story is really about what each generation has to offer. It is often presented in generalised terms: older people offer experience while younger workers provide enthusiasm and perhaps more technology literacy. The reality will differ from person to person but even within the context of generalisations it is clear that the obvious answer to any recruitment challenge is to hire the best person for the job and don’t allow a general perception of an age group to evolve into a prejudice. Older workers can be enthusiastic and just as technically aware and younger ones need to be given a chance to progress, and perhaps be allowed to make the odd error.

Beyond legislation the steps that socially responsible organisations might include the following:

  • Promoting retraining initiatives particularly targeting older age groups.
  • Increasing transparency publishing an age profile of current employees and those hired in the previous years.
  • Encouraging mentor schemes, pairing older with younger workers.
  • Developing and issuing educational notes for recruiters and hiring managers on the implications of a steadily ageing population and what that means for the workplace.
  • Actively promoting the concept of age diversity and ‘balanced teams’.

The TCMO study clearly suggests that there is still a problem of age discrimination in the hiring process despite several decades of legislation and its application. More laws are unlikely to be the answer. It will be far more helpful to work with what we have and promote age education and diversity through increased transparency and carefully designed anti-discrimination initiatives. Senior hiring managers must also step-up and ensure that their own decisions are an example of the sort of behaviours they expect others in the organisation to follow.

What shadow does your leadership cast?

 

TCMO Research: Discriminating Executives

http://www.tcmo.co.uk/discriminating-executives/

TCMO Research: Age, gender and flexi-working discrimination at executive level

http://www.tcmo.co.uk/age-gender-flexi-working-discrimination-executive-level/

Let’s blame it on Brexit

The 2008 banking crisis had far more financial and economic implications than Brexit is ever likely to deliver. Indeed, you could argue that it was just another effect of 2008 rather than an event on the same scale. It is not difficult to build an argument that 2008 acted as a trigger for the economic conditions that ultimately led to a lot of very unhappy people voting against what they see as a monolithic and remote organisation threatening their cultural identity. Thus Brexit becomes another symptom of a cyclical change in the world condition, another manifestation of what Strauss & Howe describe as ‘The Fourth Turning’ in their book of the same name.

The markets are not the economy but you can’t ignore the fact that the FTSE is up significantly after the nervousness of the first few days. Somewhat perversely, anyone who has a private pension has probably benefited to the tune of 10% or more in recent weeks as a result of valuations adjusting themselves to a lower GBP. Imports are likely to be more expensive although exports should be far more competitive. Thus an exporting business will do very well over the next two or three years and could even increase exports to the EU, at least while still a member. The effects on non-UK EU based businesses are likely to be somewhat less benign. With exports to the UK more expensive, EU businesses will find Great Britain a far tougher place to generate trade. It is not therefore surprising to find the recent DAX and CAC performance somewhat weaker than the FTSE.

There is however a significant risk that the many in the UK media and (fortunately) a shrinking cohort of political doom porn peddlers would still like to see their pre-vote predictions of economic Armageddon come to pass. This daily barrage of negativity risks the prophecy of recession becoming self-fulfilling, some years before the impacts of an unknown exit arrangement are likely to have any tangible effect on the process of selling goods and services to the EU. It really is execrable journalism and bad politics but that’s what we seem to have.

There may or may not be a recession in the UK. If there is, and notwithstanding the last point, it is far more likely to be the result of the structural financial and economic changes unleashed in 2008, demographics, global politics and of course new technologies which are being introduced into the workplace at an accelerating pace. Financial drivers tend to be the premier cause of recessions and the biggest one around at the moment is the state of the credit markets. In other words ‘Debt’. It is humungous already, still growing and is arguably the primary cause of the malaise in global trade. We like to talk about ‘deficits’ in the UK rather than the ‘national debt’, to avoid scaring the horses. Deficits are merely the annual additions to our national debt (we don’t do reductions these days) and are already relatively small compared to the £1.6 trillion we owe to the rest of the world. It is somewhat fortunate that other Western economies are in a similar state and are similarly trying to find ways of managing their own financial challenges. In trying to help repair faltering post-2008 economic conditions central banks have reduced interest rates, including the UK. Rates are now the lowest they have ever been which is just as well given the size of our debt and our annual interest payments. To put our interest payments in context UK PLC pays around £50bn a year against £1.6bn of borrowing, and that is at record low rates. The referendum debate was all about saving £8.5bn or £10bn of EU contributions, a sum easily wiped out should interest rates revert to long term ‘normal’ trends.

The implications of debt are far more likely to be the cause of a recession than Brexit. Brexit and the media reporting on it are masking real issues in the world which are more related to global debt and trade than whether the EU will be difficult to deal with in negotiating an exit deal. Away from the daily headlines, the IMF worries about Deutsche Bank, highlighting it as the highest risk bank on the planet, and the Italian banking system edges closer to a collapse. Confidence in Deutsche Bank is already faltering. Undercapitalised and with an opaque $72 trillion worth of derivatives on its balance sheet its failure would be systemic and potentially freeze-up not only the European banking system but that of the entire world. As we saw in 2008 credit market failures cause recessions, big ones. The Italian banking system collapse has already started as Italian politicians try to deal with the thorny question of ‘bail-in’ vs. ‘bail-out’. EU rules requires the former which of course would affect the deposit accounts of millions of Italians. That particular piece of political theatre has yet to play out.

At the sovereign level Greece remains saddled with decades worth of disproportionately high repayments, and Portugal, Italy and Spain remain in an economically oppressed state. At least two of those three are likely to be threatened with breaching EU spending rules in the coming months, and potentially fined. A sovereign debt crisis in a European state could yet be a catalyst for market revulsion before the year is out. Over in China debt is again the issue. The slowdown in global economic activity has created losses in dozens of state enterprises most of which will require bailouts in the billions of Yuan. At least ten major enterprises are reportedly affected by the problem and will need major injections of capital.

But back in Blighty our financial press are still pushing the Brexit line. The US markets have already forgotten about it and the senior UK market could well hit new highs later this year, especially if a new round of monetary easing initiatives are launched to address recessionary risks. In the UK it looks like 25 basis points off interest rates and/or another round of Quantitative Easing are likely to be the favoured policies. We are not yet at the stage of ‘Helicopter Money’, the term derived from Ben Bernanke’s (former US FED Chairman) revived suggestion that if there really was a Doomsday like deflation crisis the FED could always engineer “a money-financed tax cut” which would be “essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.” In other words printing money and giving it away.

In the meantime let’s not worry about the real reasons for an uncertain economic outlook. Forget sovereign debt woes and the prospect of a major international banking crisis. We have the political pageant of a ‘BoJo’ (Boris Johnson) led foreign policy to watch and the spectacle of Brexit strategy formation unfold, both of which will be clinically parsed by the media’s ‘Bremoaner’ contingent.

And if there is a recession later in 2016 or in 2017 you can always blame it on Brexit…