Management madness

The two European court cases we have featured in this 'Special edition’ are only a small part of global circumstances pitting older and younger workers against one another in a jobs arena where senior workers will soon outnumber juniors in the labour pool in many countries worldwide. Mismanaged, the situation could lead to another round of management madness.
The European Union decision on mandatory retirement may not amount to a direct hit on knowledge management, but neither was the business process reengineering (BPR) madness in the early 1990s, which led to downsizing around the world that was antithetic to the concurrent rise in the importance of intellectual assets.
BPR was a fad. The rising value of intellectual capital is a fact.
Soon after the impact of BPR-inspired downsizing, some of the most savvy business leaders woke up quickly and began to lament their mistakes and the passing of a significant portion of their organisational knowledge due to the shortsighted rush to streamline or downsize. And today, businesses around the globe fret over the pending loss of knowledge due to the graying of the baby boomer generation.
Times have changed, but not enough.
While KM is practiced among some of the world’s largest companies as well as not-for-profits and governmental agencies, the vast majority of enterprise has not yet fathomed the profound but mystifying importance of people as a true financial asset. Executives and managers, pressured by the stock markets, are too often focused on short-term gain by reducing the cost of employees as major factors on the liability side of their balance sheets.
It is for these throwbacks of the Industrial Age, and for their employees, that we sound the alarm.
The EU law against age discrimination allows for exceptions. Most notable in view of the knowledge impact: differences in treatment regarding age are allowed where 'legitimate employment policy, labour market and vocational training objectives’ are involved.
Those who celebrate the decision are promoters of full employment throughout Europe, where unemployment rates are in double figures. The employer of Félix Palacios de la Villa is committed to an overall policy of helping to reduce unemployment in Madrid and in Spain. By forcing retirements, the company can hire more of the unemployed.
This is the fact on which the case was decided and it is the fact that alarms us most. The wholesale dismissal of senior knowledge to make way for unemployed, inexperienced entry-level workers is a formula for disaster. If employers are not yet aware of the value of knowledge, they may adopt the policy of Cortefiel Servicios SA (the employer in the lawsuit) and blunder down the path taken by those in the 1990s, where hordes of knowledge holders where discharged through mandatory retirement and buy outs to induce early retirement.
The UK is ripe for such ill-advised policy. Age Concern, the UK’s largest charity working with and for older people, conducted a survey in 2005 to forecast the prevalence and impact of ageism in the UK for 2006. The survey reported that 23 per cent of all people have suffered ageism and 56 per cent of all instances of discrimination against over-55s related to ageism.
Europe is not alone on the mandatory retirement issue.
In British Columbia, Canada, the organisation representing BC’s public university professors is leading the charge to end mandatory retirement. “There is no good reason to continue to deny older British Columbians the ability to choose to work if they want to,” said Chris Petter, president of the Confederation of the University Faculty Associations of BC (CUFA/BC).
“Mandatory retirement is based on the assumption that productivity declines with age because physical ability declines,” adds Robert Clift, executive director of CUFA/BC. This, he says, is a faulty assumption because “older British Columbians are healthier and the economy is increasingly based on industries that do not require physical strength”.
In 2005, a survey by HSBC bank, which is headquartered in London with operations in Brazil, France, Hong Kong, Mexico and the US, looked at attitudes in those countries plus China, Canada, India and Japan. Those 10 countries make up more than half of the world’s population. Responses came from 11,000 people.
In six of the 10 societies surveyed, alternating work and leisure was seen by the majority as the ideal retirement lifestyle. Just 17 per cent felt employers should have a mandatory retirement age while 80 per cent felt people should have the right to go on working as long as they wanted to.
All said, it comes down to a conundrum. Public policy and short-sighted management on the one side, senior workers and the baby boomer exodus on the other. The final judgment will be the one employers make. But departing seniors who want to continue work can do so in an employment marketplace increasingly looking for mature intellectual capital.
Departing seniors won’t necessarily be ending their careers. They’ll be marketing their knowledge elsewhere and there will be a market. Based on the 2005 research by Career Builder.com and America Online, 31 per cent of hiring managers expressed concern over a shortage of skilled workers and intellectual capital lost due to the large numbers of baby boomers approaching retirement. An even greater number – 45 per cent – expect to recruit retirees from other companies or offer incentives for workers at or approaching retirement age.
This scenario will likely play out wherever departing senior knowledge is occurring and for whatever reason.
And so, there is a difference this time. Like BPR of nearly 20 years ago, the EU decision may have declared open season on employees (this time seniors), but behind this threat is a great opportunity for savvy employers and recruiters to capture, not kill, the target – senior knowledge.
If some employers do not assess the value of departing knowledge before mandating wholesale retirement, then the result will be their loss and someone else’s gain - perhaps the competitor.
The existence or absence of knowledge about knowledge, as in all 21st century business strategy, will be the differentiator.

Jerry Ash is KM coach, founder of the Association of Knowledgework, www.kwork.org, and managing editor of Inside Knowledge. He is author of the Ark Group’s Next Generation Knowledge Management series. To order any of the three volumes, contact Adam Scrimshire at publishing@marketing.ark-group.com. Jerry Ash can be reached at jash@kwork.org.