Experience versus youthful vigour
As I fast approach my 45th birthday, the time for a mid-life crisis seems to beckon. Apart from the obvious (and maybe pleasurable) temptations, one begins to reflect on future careers and, more importantly, on the way in which companies seem to value youthful energy against experience, which by definition only comes with the passage of time.
The standard argument goes that the young have a far more creative view, possess more energy and learn new processes faster than older workers. Having swallowed this argument, it is now common for companies to retire staff at an earlier and earlier age. The justification for such discrimination has in the past been that, with adequate pension provision and with opportunities elsewhere, staff terminated well before the normal retirement age would not face financial difficulties. But as we now know, pension funds, through incompetent investment decisions, have lost significant amounts of money following stock market collapses, and in the future pension provision will be significantly reduced. The opinion is being widely circulated that the average EU worker will have to continue in paid employment up to the age of 75, as neither the state systems nor private provision will allow for earlier retirement.
At this stage, I need to state that I do not accept the standard fund manager argument that markets go down as well, as a cover for underperformance. Although clearly the market price is determined by supply and demand, the question needs to be asked why professional investors were willing to pay very high prices for speculative shares, such as e-commerce companies, where the application of some basic common sense would have indicated that the risk was far too great. The remit of fund managers of pension schemes is surely to invest wisely and long-term, and thus surely the age-old adage of buy low and sell high applies.
Where does this all leave employers and employees? How will the major economies reconcile the discrimination against experience with the need for people to work well past what was considered normal retirement age. My own profession is a case in point. When I started training way back when in the City of London, audit teams were made up of us "young'uns" and audit clerks who were often in their mid- to late-fifties. These gentlemen never harboured any ambitions of being elevated to partner status, but made up for any slowing down of their mental processes with years of experience which allowed them to spot a financial scandal or fraud within minutes of looking at a document or balance sheet. The rest of us applied all the qualities that come with being young as part of a balanced team.
Then came the Big Bang in the City, and suddenly all things American became the rage. Firms decided that anyone who did not have partner potential had no place in the new world order and stopped training anyone who was not determined to "make it." As a result, in a relatively short space of time firms lost a valuable resource, and it became customary to sack anyone who had not been successful in promotions by their late twenties and early thirties. Now, my economics degree seems to suggest that spending money on training someone from whom you as the employer will get 35 years of loyal service provides a greater return than spending the same amount of money on someone who will be sacked after five years. Particularly given that many aspects of auditing rely on the ability to spot potential for fraud, which is not a skill that can be taught, but which is acquired through experience.
Maybe, as ever, America will provide the lead. The signs are already there that US employers facing a skills shortage are beginning to look at the "grey-haired" employee again.
Well, let's hope so. Meanwhile, it's back to the more pleasurable facets of a mid-life crisis.
Andrew Kinast is the managing partner of Grant Thornton Poland
The standard argument goes that the young have a far more creative view, possess more energy and learn new processes faster than older workers. Having swallowed this argument, it is now common for companies to retire staff at an earlier and earlier age. The justification for such discrimination has in the past been that, with adequate pension provision and with opportunities elsewhere, staff terminated well before the normal retirement age would not face financial difficulties. But as we now know, pension funds, through incompetent investment decisions, have lost significant amounts of money following stock market collapses, and in the future pension provision will be significantly reduced. The opinion is being widely circulated that the average EU worker will have to continue in paid employment up to the age of 75, as neither the state systems nor private provision will allow for earlier retirement.
At this stage, I need to state that I do not accept the standard fund manager argument that markets go down as well, as a cover for underperformance. Although clearly the market price is determined by supply and demand, the question needs to be asked why professional investors were willing to pay very high prices for speculative shares, such as e-commerce companies, where the application of some basic common sense would have indicated that the risk was far too great. The remit of fund managers of pension schemes is surely to invest wisely and long-term, and thus surely the age-old adage of buy low and sell high applies.
Where does this all leave employers and employees? How will the major economies reconcile the discrimination against experience with the need for people to work well past what was considered normal retirement age. My own profession is a case in point. When I started training way back when in the City of London, audit teams were made up of us "young'uns" and audit clerks who were often in their mid- to late-fifties. These gentlemen never harboured any ambitions of being elevated to partner status, but made up for any slowing down of their mental processes with years of experience which allowed them to spot a financial scandal or fraud within minutes of looking at a document or balance sheet. The rest of us applied all the qualities that come with being young as part of a balanced team.
Then came the Big Bang in the City, and suddenly all things American became the rage. Firms decided that anyone who did not have partner potential had no place in the new world order and stopped training anyone who was not determined to "make it." As a result, in a relatively short space of time firms lost a valuable resource, and it became customary to sack anyone who had not been successful in promotions by their late twenties and early thirties. Now, my economics degree seems to suggest that spending money on training someone from whom you as the employer will get 35 years of loyal service provides a greater return than spending the same amount of money on someone who will be sacked after five years. Particularly given that many aspects of auditing rely on the ability to spot potential for fraud, which is not a skill that can be taught, but which is acquired through experience.
Maybe, as ever, America will provide the lead. The signs are already there that US employers facing a skills shortage are beginning to look at the "grey-haired" employee again.
Well, let's hope so. Meanwhile, it's back to the more pleasurable facets of a mid-life crisis.
Andrew Kinast is the managing partner of Grant Thornton Poland
