Being relatively young, I’ve never really given much thought to if and why older workers tend to be laid off first during an economic downturn. Perhaps due to the availability heuristic, the technical term referring to the assignment of higher probabilities to events more easily recalled, I seem to recall it being so.
I’m currently reading Jack Welch’s book Winning. In one of the chapters, he talks about this thing called differentiation. Some of you may be familiar with the term as it is used in marketing, meaning to compare the differences between groups of products or ideas, emphasising these differences, and putting them through different treatments.
In his book he calls out for two types of differentiation: “software” (people) and “hardware” (products). He focuses on “software”.
I suppose in a nutshell, you could also say that what he calls “differentiation” in terms of people is also what people more often refer to as a meritocracy, in that the returns that you get (in terms of salary or bonuses or other job perks) are based on merit, like your on-the-job performance.
One of things that he points out is that many companies do not carry out such differentiation. People are often treated the same — it doesn’t matter if you’re a stellar performer bringing in most of the sales for the company, or if you’re a soon-to-be-expired worker going through the motions and waiting for retirement.
Many companies, he says, keep their under-performers because of emotional reasons. It may just be that the employee is “such a nice person”, or that the employee may have been at the organisation for such a long time that it becomes very difficult to fire him.
And because there’s no honest performance evaluation (since people are not rewarded due to merit, but given the same benefits), everyone’s evaluation comes back as “good” or “great”, and no one really knows where he or she stands. No one, that is, until an economic downturn.
During an economic downturn, because there’s no room for sympathies, employers tend to release these under-performers first.
I’m thinking that a great proportion of these under-performers of whom the company is reluctant to release is made up of older workers, people who have been with the company for a long time and who may have built many social networks within it.
The younger ones, no matter how nice, are easier to lay-off during times of economic normalcy (or upturns), if they’re found to be under-performing.
Might this then be a contributing factor to higher-than-normal lay-offs for older workers during economic downturns?