Why do you need to worry about job security? (Beware of job insecurity stress)

Worrying about job security and increasing job insecurity stress are new norms for employees working in regular jobs. Organisations big and small, all around the world, are now constantly restructuring, trying desperately to cut cost in order to save money and to survive in a competitive world.

Older and over 40 employees are generally the first to lose their jobs during such restructures, cost-cutting measures, and organisational changes. They have naturally risen up the corporate ladder to the level of their redundancy.

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There’s no shortage of organisational restructures

Organisational restructures are becoming so common that employees are becoming more insecure about their job, income, and employment. They worry about job security more.

Here are some of the restructures we read in the news.

“Coca-Cola’s sales declined in the first quarter as it restructured its business, and the world’s biggest beverage maker said it will cut 1,200 jobs starting later this year as it deepens its cost-cutting.” (The Star, April 2017)

“Hewlett Packard Enterprise Company HPE is planning to slash 5,000 jobs in a desperate bid to contain costs and take restructuring efforts to the next level. This is almost 10% of the total staff employed by the company.” (Nasdaq, September 2017)

“The reorganisation also includes staff layoffs of about 40%, which will save around $6.5 million a year after a one-time cost of around $1.1 million. This will allow Genocea to extend its cash runway to the middle of 2018.” (BioPharma, September 2017)

“Alexion is slashing its workforce by around 20% and closing sites in a bid to save $250 million a year, with R&D bearing the brunt and accounting for around two-thirds of the cost-cutting.” (FierceBiotech, September 2017)

So, what does it mean for older employees working in regular jobs or employment earning a fixed salary?

If you are a Gen X or Baby Boomer, the picture is often bleak

Organisations will have to prioritise who will be the first to leave. The obvious choice will be the ones who are paid the highest if the cost is the main motivating factor to restructure.

Unfortunately, it’s a numbers games.

There’s no prize for guessing that generally older employees will be featured more on the top of the restructuring list. It’s those Gen X or Baby Boomers who are more likely to be impacted. They are more likely to be made redundant during organisational downsizing.

Age discrimination is very real in today’s workplaces. It will become more prevalent as organisations search to cut cost over the coming years.

It’s without a doubt that employees will increasingly face four types of age discrimination as they get older: (Australian Human Rights Commission, 2016)

• Unable to get an interview or secure a job.
• Becoming stuck or constrained in their job.
• Being targeted for redundancy or restructure.
• Subject to discriminatory culture or management.

The result is that job security will no longer exist and older employees will be at risk.

Here are some concerns from older employees.

“Older women are often the first out of the door when an organisation restructures. Strangely, none of the men in my team was let go when I was made redundant for the first time, at 53, from a senior management position in a heritage organisation undergoing public sector cuts.” (DailyMail, May 2016)

“But it turns out the labour market views people in their mid-40s as old because when we start to work, we plan on a wage increase. And that’s not a bad plan, at 25 to 30 to 40, you do see people getting wage increases. But this new Federal Reserve Bank study has shown that wages start to decrease after that … The Federal Reserve study has shown that wages stop increasing at about the age of 45. And so, from 45 to 55, wages decrease by 9 percent.” (PBS Newshour, January 2016)

“I simply hadn’t realised that in the modern workplace, 50 is considered old. This is not a unique story. The tentacles of age discrimination reach into every facet of Australian society and nothing we are now doing is working.” (Sydney Morning Herald, March 2016)

“I have become ‘overqualified’ for many jobs, ‘too experienced in a niche field’ for others, and ‘too old’ for younger team members to be comfortable working with, in almost all cases. In other words, it’s all over for me because I am of a certain age.” (Sydney Morning Herald, March 2016)

People are personally affected by age discrimination

At the ground level, I personally know of people who have lost their permanent jobs because their employers have intentionally restructured their teams.

Take Nick for example. He has been working for a government agency for more than 15 years. At age 57, his team was restructured and his job function no longer exists. His workmates at the same pay grade and age group also found themselves in the same boat. Their jobs have also evaporated in the restructuring.

Without a choice, Nick was forced to accept a job at a lower-paying job grade in another government agency. He no longer qualifies for the same pay-grade job function. To keep his cash flow going to pay his bills and outgoings, he reluctantly took on this job. Some may say that he was lucky to even get a full-time job at age 57. But it’s a job he really hates. It’s now coming up to the two-year mark since he actively started looking for a job.

In another case, David has worked for a large international oil and gas company for 35 years. At age 53, his team of four was downsized into two. It doesn’t take a genius to guess which two employees were retained. David was at the top of that list because of his natural progression up the corporate ladder over time through higher pay-grades.

These are just two of many stories that I have heard about personally where older employees have been targeted for restructuring, just to save money for their previous organisations.

Older workers at high redundancy risk

The reality is that older employees, earning much more, will be the first to be made redundant. For them, it’s a high redundancy risk.

Naturally, as an employee climbs up the corporate ladder or progresses through their career path, his or her salary will increase (most of the time). They have become more costly for their employers to keep them.

Let’s that a look at the Peter Principle. It states that the selection of employees is based on their performance in their current role rather than on their abilities relevant for intended or future roles. This means that employees are not promoted once they can no longer perform effectively in their current role. They have reached or have been promoted to the “level of their incompetence”.

Similar to this principle, older employees will no longer be promoted at some stage of their future career or working life.

In fact, they are more likely to be targeted for redundancy where jobs rather than employees are being made redundant. That’s the official reason given. There’s a higher chance for older employees to be made redundant as they age.

Older employees will most often climb up the corporate ladder to the level where they are more likely to be made redundant. They will naturally rise up to the level of their redundancy.

Interestingly every career and job has a ‘use-by’ date. (The Age, 2000)

Employees face natural ‘trip wires’ in their careers. Unfortunately, these ‘trip wires’ exist long before retirement age. If employees don’t make it to the top of their careers by age 40, the climb up the corporate ladder is over (or harder).

You may argue that they can find another higher paying job elsewhere. But employers have a choice for younger candidates who are expecting a lower salary and have more working years to contribute.

Preferences over cheaper employees

Younger employees are generally paid less than older employees. This is a fact.

If cost is the main driver for making older employees redundant, then it has nothing to do with their performance.

Or is it?

In terms of performing on the job, you may want to try out the following strategies to stay relevant.

1. Make a financial impact on your employer or add value to your employer.
2. Know what people get paid in your line of work and stay on top of salary surveys.
3. Know what contractors and consultants charge their clients to perform the same kind of work you perform.
4. Brand yourself for specific jobs.
5. Keep your network alive and active.
6. Know which employers could employ you if your current job goes away.
7. Have an up-to-date and powerful LinkedIn profile and resume/ CV.
8. Stay up to date with advances in your industry.

Let’s face it. As we get older, our bodies will not function as well. We will not be able to perform as well over time as we naturally age.

In fact, our brain, lungs, and skins start ageing at 20, our muscles, hair, and bones start ageing at 30, our heart, eyes, and teeth start ageing at 40, our kidneys, hearing, gut, and prostate start ageing at 50, our taste and smell start ageing at 60, our bladder and voice start ageing at 65, and our liver starts ageing at 70. (DailyMail, July 2008)

When we do not perform well over time due to natural ageing, the harsh reality is that employers will want to find someone else younger who can perform at their peak. This natural selection process will inevitably mean that younger candidates will always take preference over older candidates. What’s more, they are cheaper too for the employer.