The 'D-word'
The issue is that the older employee and his employer are not yet convinced that working longer is actually a good idea. This is in our view due to the taboo surrounding the concept of demotion, the D‑word. In fact demotion is typically considered some kind of mental condition, which is to be avoided at all times.
In our practice we see employers face challenges raising the discussion on demotion of older employees and adjusting the employment terms and conditions accordingly. In the event the demotion does finally take place, the adjustment of position looks and feels like a penalty rather than an enabler of a longer working relationship. In fact it is a penalty because the employer is by then fed up with the less productive and slower employee. The demotion is then issued by the employer rather than agreed upon by both parties. No wonder the employee is not overly enthusiastic about the changed role and terms & conditions.
Not surprisingly the results are of a negative nature: neither employer nor employee is happy with the new situation, and a potentially fruitful discussion on employability whereby parties continue the employment relationship by slightly adjusting the position and employment terms leads in most cases to a debate on the terms of an exit.
This is also causing the bad press around demotion, which is a shame. Older employees are not only still a valuable asset for the company but are in general also willing to continue at a lower level and pace, in an adjusted role with less tasks and responsibilities and a comp and ben package that reflects this. In other words, the concept of demotion is worth to explore but how to manage this for both employer and employee?
Let´s take a look at the United States of America, where it is much more common for the older employee to take a step back but at the same time continuously stay involved in the company. A classic win-win situation: the experience and knowledge stays onboard and can be used by the younger employee for growing into his role. The senior employee does not feel sidetracked or redundant but appreciates that less responsibilities also mean less compensation.
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Make demotion discussable
If we take that to the Netherlands, one can say that in any event it does not help if the employer enters the demotion discussion like a bull in a china shop. On the contrary, if the competencies and skills of the older employee are truly recognized, chances are that the employee is willing to consider a different position. For the employee the upside is that adjusting the role will not only enable a longer working relationship but it may also take off some of the pressure the employee may have been experiencing in the original role. In this respect it seems reasonable to accept a lower pay check, especially if the pension accrual and number of vacation days stay as is or even increase.
A bit more time off and shorter working days facilitate the employability of older employees. In this respect it is a shame that most of the arrangements for older employees have vanished, that the life-cycle scheme provided by the government was not the success it was meant to be and that collective labor agreements or companywide arrangements do not yet provide any guidance.
This means that you, employer, have to do it yourself together with your employee. Make arrangements, not when it is time to change but already during all career levels of the employee. When the older employee is given a promotion confirm in writing that every five years an assessment will be done in order to see if the job still fits the person and vice versa. Implement a policy to keep older employees.
We would therefore make a plea for a discussion around the employability of older employees, on two levels: not only on an individual level but also on a company- and sector wide level, possibly through collective arrangements. In this respect, it would not hurt for the government to address the employability of elder employees. But foremost: let’s take the emotion out of demotion, because that serves the interests of all parties.
