Tension between younger and older workers in UK businesses may weaken growth, according to a survey from KPMG. Many young workers felt that the late retirement of older workers was damaging their career prospects, the Big Four firm found.
The problem is particularly acute in accountancy firms as partners tend to retire later and are blocking career development for workers in their thirties and forties. Younger accountants are leaving firms and "buying out" clients to start their own practices, according to one expert.
Official figures recently showed that the number of workers in Britain aged over 65 or more has risen above one million for the first time
KPMG surveyed 1,500 people aged between 17 and 70 in different industries and found that many of the UK’s youngest workers felt that older colleagues were stifling their career prospects by retiring later.
The survey also found:
- Younger workers don’t feel they need to learn from their more experienced colleagues
- Today’s entrants to the jobs market are more willing to make career choices based on the ethics of their employers.
The survey suggests that many people believe the interests of younger employees are could increasingly become pitted against those of their older colleagues. Nearly half (46%) agreed that older members of staff need to retire so that younger workers have a genuine chance of career progression. Nearly half of those surveyed agreed that a much older workforce would drain productivity.
Yet while younger employees feel they may bear the brunt of their older colleagues’ extended stay in the workplace, there is also a growing acceptance that older workers will have to continue working for longer, the survey found. Most respondents believe that insufficient pensions will become more commonplace due to longer life expectancy, with 81% saying that as a result of living longer, more people will end their lives in poverty. As rising long term care costs drain retirement funds, two thirds also believe that people will be forced to work until they die.
“As people remain in the workplace for longer, older workers will inevitably constitute a larger proportion of the workforce. Although this may breed the pernicious perception that the younger generation will lose out, this does not have to be the case. Far from it – an older workforce brings a wealth of experience and baby boomers can potentially adopt the invaluable role of coach or mentor to those entering the workplace. The companies who succeed will be those who take advantage of what older workers can bring to the table, in a way that is both innovative and inclusive," said Robert Bolton, partner and co-lead of KPMG’s HR global centre of excellence.
Phil Shohet, a director at Kato Consultancy, which advises accounting firms, says that partners at many of his client firms are retiring later. "This is creating a domino affect right down employees. Senior manager and manager can't get promotion."
Falling profits for many firms and the fact that senior partners are often on second marriages and have children's private-school fees to pay, means that they can't afford to retire early, Shohet said.
Younger workers are "getting cheesed off" and either leaving for another firm or starting up their own one. Some buy clients from their former employer when they leave. Shohet knows one accountant in his mid forties who left his previous employer because he was frustrated at not being made an equity partner. The accountant paid his former employer about £200,000 over a few years to take some clients with him and set up his own accountancy firm. He earned about £80,000 at his old employer. He now earns about £500,000, according to Shohet.
The challenge for accountancy firms is using the experience of older partners to train younger staff, says Richard Mannion, national tax director at Smith & Williamson. He reckons for decades there has always been "healthy tension" between young and old workers in accountancy firms.
The issue, of course, has wider implications for all businesses. Robert Downes from the Forum of Private Business commented: “With the retirement age increasing, the introduction of new legislation outlawing firms from enforcing a default retirement age, and of course tougher economic times, we are going to see more older people in the workplace.
“This shouldn’t be necessarily seen as a bad thing though if managed properly. Done well, there’s opportunity here for younger workers to learn much from the older ranks of employees.
“This research also highlights the need for firms to have in place legal cover when conflicts do arise. If sparks fly, then businesses need to make sure they not what to do – nobody wants a tribunal situation.”