There’s an old joke about a young bull and an old bull. Recruiters on the horns of a dilemma are not laughing. By Crispin Wood
My role is to give the team a point of view – Felipe Cortes
Youth versus experience – the age-old debate is taking on a new piquancy in management circles. The managers coming up through the ranks are better educated than many of their predecessors. They are well grounded in management theory and generic management techniques, but does that make them a proper replacement for more mature managers?
In the age of empowerment the old-style hierarchies – influenced by a generation in which many managers had been through military training – are inappropriate. Studies have shown younger managers to be more flexible, more consultative and grounded in consensus-style decision making rather than top-down decisions. The type of manager that directs and controls is no longer required. Such people are being replaced by “doers” those who are team players.
Unfortunately for the drill-sergeant types, this means youth. Careers are now multi-disciplined. As companies adopt more horizontal management structures, there are no obvious ladders to climb. The days are over of moving from factory floor to supervisory role to management. People are making their career ascent by moving from company to company, industry to industry and country to country. Again, this means a willingness to be flexible, and being able to pack one’s bags and move on.
One chief executive says: “When I look at one of my 50 or 55-year-olds, I know that if I ask them to move to Jakarta then I am asking for trouble. They have a wife and a handful of kids. But I need that flexibility now that my business is multinational. My younger executives can move. It is cheaper to move them, and they can become culturally attuned more quickly.”
There is evidence of the shift in management demographics. Although the profile of the broader population is “greying”, the reverse is evident among Australia’s high-income earners. According to the Australian Bureau of Statistics, 4.1 million people (22.1% of the population) qualify as “baby boomers”, having been born between 1946 and 1960. The next largest age group, 60 and over, represents 16% of the population. Nearly one million people, about 12% of the workforce, are managers and professionals. Of 300,000 such positions created over the past decade, 189,000 have gone to people aged 40 54. With retirement ages dropping, they are drawing a second generation into the positions being vacated. Women are also helping to reshape the workforce. They have taken about 120,000 of the 300,000 new positions. The proportion aged 40 54 holding such positions has risen from 31% to 40% – a net increase of 90%. This compares with 26.5% for all other age groups.
Who are some of the most successful younger managers? David Higgins, 42, is managing director of Lend Lease Corporation, one of Australia’s oldest and most successful companies. Peter Stancliffe, 48, is managing director of Australian National Industries, and he came to the position when the company was at a crossroads. Heavy losses had sapped investor confidence and investment markets were demanding rapid change. The full consequences of Stancliffe’s strategies are yet to become apparent, however the troubled European businesses have been sold and the share price has improved substantially. Allan Moss, head of Macquarie Bank, is 46 and at this enterprise is counted as one of the old hands. The former chief executive of Optus Communications, Ziggy Switkowski, 47, lost that position in June but was swiftly snapped up by the rival Telstra. Successful TNT senior executive Barbara Ward, 42, oversaw the sale of the group’s shareholding in Air New Zealand.
But has the pendulum swung too far? Anecdotal evidence suggests that some managers are even resorting to plastic surgery to create the aura of youth. Leo Rosner, a plastic surgeon based in Melbourne says that 20% of his clients are men. Other plastic surgeons believe this is a conservative figure and the actual numbers are growing exponentially.
A number of middle managers aged over 50 are trying to get jobs. The key is to look young, energetic and enthusiastic. The face can work against this: sagging eyelids can make a man look tired and unmotivated. A plastic surgeon says: “if you look across the chief executives in Australia aged over 50, the amount of work they do should make them look 65. Some of the most successful look about 40. Without pointing the finger, I would say the scalpel has been there in some cases.”
What is the cost of the quest for youth? Too many employers consider wrinkles a sign of old ways of thinking. Often the old ways are highly relevant to modern management. Many of the younger executives now working for Australian companies have probably lived as adults through only one economic recession. Many were still in school during the stockmarket crash of 1987. They have not worked through major industrial disputes, oil-price shocks or war – problems likely to resurface at some point in their working lives. Are companies losing a pool of experience that can provide support for the up-and-comers?
It is the human resources “experts” who are sometimes cited as the biggest offenders. They take a didactic, textbook approach to recruitment that excludes anyone over 55. They may look askance at someone over 45: if potential recruits have not made it by that age, will they ever?
The director of Hart Consulting, Chris Hart, says: “There is undoubtedly a bias in favor of younger individuals, and it has been around for a fair while. Since the recession of the early 1990s and the dumping of a lot of experienced people, some companies have started to rethink that process, although rethinking and fundamental change are two different things.” Hart says the labor market still has a tendency towards youth, driven by perceptions that younger managers are cheaper and better skilled technologically.
“The reality is, if you don’t hang on to knowledge and experience, the business loses out. It is the whole mentoring issue. Some businesses have lost their mentors.”
Nonetheless, headhunters and recruitment consultants lament the dogmatic beliefs and policies that still dominate the hiring policies of big corporations. They acknowledge that the spate of recent appointments of chief executives still in their 40s partly reflects the rising demographic bubble of baby boomers, however the beliefs of personnel managers are also a block to older managers. Hart says there may be a need for a shift in employment practices. He advocates that instead of executives retiring at 55, they should continue in part-time consulting and mentoring positions. “Why go from working five or six days a week, 12 hours a day to working no days and no hours? There is a need for more flexibility by employers.”
Employers also acknowledge that some people who are unsuited to managerial positions at the age of 30 will still be unsuited at 60. Others will be ready to take on managerial positions at an earlier age. There are plenty of examples of early career advances based on merit. Ingrid Maynard, of a training and development section of Bodyshop, was recently named Victorian young retail executive of the year by the Retail Traders Association of Australia. Maynard and her employer acknowledge the importance of continual training in career development.
Some prominent failures by young executives have been due to appointments to senior positions on the basis of family ownership of a company, or when they have taken responsibility for operations over which senior management or the board have had little knowledge or control. Financial-markets operations are the obvious victims or potential victims. Hart says: “It is the classic thing of having the whiz-kid trader, who has not worked through a stockmarket crash and does not know that markets do not always go up.” In these volatile positions mentoring programs – and the wisdom of experience – can be vital.
However, the trend towards recruitment of younger executives will be countered by the overall ageing of the population. Projections by the Australian Bureau of Statistics a couple of years ago suggest that between 1993 and 2011, the proportion of people aged 15 24 will fall from 22% of the workforce to 18%. The 25 35 group will fall from 26% to 22%. At the same time, the 45 54 group will expand from 22% to 34% of the workforce and the 55 64 group from 7.5% to 10.8%.
The ageing population means that corporate boards, the average age of which has decreased in recent years, will have to lift their sights. With boards responsible for the appointment of the most senior managers, there is likely to be a flow-on effect throughout management ranks. The recruitment consultancy Korn/Ferry International says the average age of the non-executive director has fallen; 47% of them are under 55, compared with 43% in 1995. In a recent analysis of Australian board structures the consultancy said: “Looking at the so-called desirable age of non-executive directors, while they should clearly not be so old as to be out of touch with current marketplace challenges, there is an argument for the wisdom that comes with experience.” Many companies encourage senior executives to pursue external directorships to broaden their experience and business contacts. However, Korn/Ferry – specialising in recruiting non-executive directors – believes it is no longer realistic to aspire to such a position before the age of 45.
Another trend is a greater turnover in executive ranks. A decade ago, a chief executive or divisional head could expect to serve 10 years or more in the position. Today the rule-of-thumb is about five years. Two factors are driving this. With flat management structures, companies like to “churn” promising managers as much as possible; that is, expose them to a broad spread of operations. Additionally, the demands placed on senior executives, including much longer hours, mean that there is now a shorter “life expectancy” in jobs. Once executives have reached what they perceive as their career pinnacle, they are less willing or less able to stay in the position more than a few years.
So stamina in itself is seen as a virtue of youth. This is why recruiters increasingly focus on a job candidate’s broader range of interests rather than qualifications and experience alone. Does the candidate keep fit? Does the candidate have a stable home life to act as a counter to workplace stress?
An international study by Korn/Ferry and the Economist Intelligence Unit, Creating the Future: Developing Leadership in the 21st Century, suggests that young executives serious about reaching the top need to expose themselves to as many disciplines as possible. Marketing, it seems, is essential. This reflects changing corporate values: surveys of executives in Latin America, Asia and Europe showed that customer satisfaction is expected to be the key measure of corporate performance in the future. North American executives ranked customer satisfaction second, behind long-term shareholder value. Korn/Ferry’s Jan Buck says the lessons apply equally to Australia. “It is an international market place,” she says.
Survey respondents were asked which career paths were now the fastest way to the top. Consistently across all continents exposure to marketing is ranked as most important, followed by International experience and then finance. Interestingly, the survey found that executives regard on-the-job experience as more important than mentoring, sports and social activities, university and seminars on developing leadership skills. (Childhood was rated as important as job experience.)
The study says: “This convergence regarding international experience stands in stark contrast to the result of an earlier Korn/Ferry Columbia Graduate School of Business survey US respondents consistently downplayed the importance of language skills or international assignments. Today the importance accorded to international experience by the North American-based sample is right in line with Asian and European respondents.” This is an important development for Australia, as management thinking here tracks US trends more closely than elsewhere.
Recruitment, surprisingly, is ranked fourth in its importance in cultivating leadership. The executives surveyed rated identification of talent at the recruitment stage as important, but rated higher succession planning, the exposure of high-potential employees to a variety of experiences, and “fast-tracking” this high-potential pool.
Teamwork is also seen as an important quality. Executives rank broader decision-making responsibility, more co-operation across functions and highly effective team building as three of their most important leadership goals. This is also evidenced by the comments of several executives cited in the study. The chief executive of the Japanese group Shiseido, Yoshiharu Fukuhara, says: “Although I think individual leadership is important, I still want to create consensus. So instead of top-down decisions going straight from the chief executive to the head of each responsible division, I would like to think of my position more as part of a box – a box in which all the top managers get together and develop a consensus.”
The president of the Mexican group Hylsamex, Felipe Cortes, says: “My role is to give the team a point of view. As leader, I must analyse and give my team constant feedback on market trends; competitors; emerging opportunities; government and investor relations; market threats and issues related to our parent company. This way, I provide the long-term strategic balance to their energies and efforts in keeping the current operations running well.”
There is also an emerging backlash against the obsession with youth, perhaps more evident overseas than in Australia. The British supermarket chain Tesco has operated a mature-entrant program since 1988, which has been used to employ more than 5000 staff aged 55 and over. The program was applied right across Tesco’s operations, and it encapsulated the company’s approach to executive recruitment. The older recruits have tended to be more stable. The British hardware chain B&Q decided to staff some of its outlets with mature workers only. After one year, revenue from those stores had risen 18%; older staff could relate better to their customers.
Technological changes and the internationalisation of market places are skewing the workplace stakes in favor of youth. One of Australia’s most regarded industrialists, Stan Wallis, when appointed to head the national inquiry into the financial system, admitted he had never had a personal computer on his desk. For the generation behind him, such an admission could be the death knell of a career. Surveys consistently show that younger executives are viewed as more technologically adept and adaptable to change. This is important in a fluid labor market. A greater propensity to have a second or third language also assists the transition into overseas postings, now often seen as a crucial element of career success.
In spite of everything, some top managers are prepared to experiment with a range of talent and ages. The chief executive of GE Corporation, Jack Welch, said in an interview with The Financial Times: “Make bets with people and dollars. And make mistakes.”