The Rising Cost of Senior Workers
Tue, January 24, 2012 at 12:00 
Why do senior workers cost more? Why indeed do older workers cost more? We have grown up for generations believing that just by staying still we would receive more money as our employer applied inflation linked amounts or increments to our salary each year. Since performance pay first came into the equation 40 or so years ago, in some environments this has changed the way individuals think about salary and indeed their expectations of it. In other words, you expect to get paid for performance, not purely paid just for turning up.
In a macro sense the business model for organisations continues to drive for greater efficiency and/or profit and levels of service for the same cost. Increasingly a new model for organisations will be to pay for value rather than for service. Why, for example, in a technology or IT environment, would an employer pay an older worker significantly more than a younger worker who can probably do the work more effectively – in terms of their newer skills and adaptability?
This scenario fits well for the futurists, who believe that employees will be switching their jobs more regularly in future. Organisations will require a higher proportion of flexible labour within the business at any time and individuals, therefore, will be on more flexible contracts.
The impact of all of that will be that there will be a market rate that each individual employee will carry at any moment in their career. The way to enhance your value will be partly to be smart with the work you undertake and also with the drive that you have in enhancing your personal growth; by not only working but also by learning. For example, if you’ve been working as a project manager and you are likely to do more project management, undertaking PRINCE2 training to get that qualification enhances your value.
The rising costs of senior workers will increasingly become less of an issue as organisations restructure, as individuals understand the implications of more flexible workers and where the employers increasingly pay for value and not for the years of service that an employee has given them.
How will this happen? Organisations are changing their shape with increasing speed. The pressure to change comes from market conditions and from competition. Hey may have to reduce in size or consolidate their position by merging with others. New organisations come and go and some really grow very fast in a very short period of time. The Googles and Microsoft are the successes amongst the huge numbers that get started and then have some success or fail.
At each new setting of the organisational dial, keeping the cost base low is critical. Labour costs are for the majority of businesses, the largest cost. Variable and flexible contracts and pay are not new – we will just see more of it in the future.
The senior and older worker will have their place in this new era. Their need to adapt to the new conditions is harder as they have not necessarily grown up with this understanding or intent.
About the Author:
By Simon North, Founder of Position Ignition, one of the UK’s leading career consultancies and late career management companies. Simon has had a 30 year career in HR and works closely with individuals and organisations to help them manage their senior workers effectively.
