Older Managers and Executives of increasing importance in corporate life

New study shows that within ten years one third of applicants for executive and senior manager roles will be over 50.

In co-operation with the Institute for the Study of Labour (IZA) in Germany, Odgers Berndtson Germany carried out a study on the demographic gap in leadership potential in Germany. By 2020 the proportion of those over 50 will have increased drastically.

To secure their capacity to remain innovative and competitive, companies should consider utilising the talents of older employees.

Today only a quarter of applicants for our assignments are over 50, but within ten years at the latest,  33% will belong to that age bracket. By 2025 the pool of executives and senior managers under 50 will have contracted by 600,000; this represents a relative decline of 20% in numbers. By 2050, the figure is projected to drop by a 33% as compared to today. These are the findings of a study* first carried out in 2006 and updated in 2008 by the IZA and Odgers Berndtson.

‘Companies in Germany are not well prepared for this dramatic development. Many of them think the solution is to intensify the competition for well trained, young “high potentials”. This strategy alone will, however, not be sufficient’, said Odgers Berndtson partner Franz-Josef Nuss.

As well as the promotion of young “high potentials”, keeping older staff in the company for longer periods of time, encouraging women back into the workplace and increasing efforts to recruit foreign specialists and managers are all initiatives to fill the demographic gap.

‘While 50 (years old) has frequently been the cut-off age for new hires to fill executive positions, an increasing number of companies are now purposefully seeking older managers with specialised knowledge and life experience’, noted Kajus Rottok, Director of Odgers
Berndtson Germany. ‘Opportunities for those over 50 are therefore improving noticeably. In the financial sector, for instance, which is currently undergoing a difficult period, managers with experience in handling crises are in great demand.’

Focusing on older executives also brings Management Audit more strongly to the fore to analyse the potential of current staff. ‘Demand for Management Audits increased significantly during the last year’, Franz-Josef Nuss explained. A Management Audit, such as Human Asset Review, by Odgers Berndtson, also analyses long-term staff with clarity and objectivity to find management abilities that are not being used effectively. ‘So audits clients find executives on their staffs with unused potential, making external recruitment unnecessary. In view of the demographic development, this is a special advantage“, said Nuss.

However, sourcing and opening up the potential of older managers requires creative approaches in order to minimise the discrepancy between the level of compensation and performance with older staff. Project oriented contracts and consultant roles represent options that will become more important in the future. They will also be able to motivate younger upwardly mobile executives, who might otherwise have to wait longer for an opportunity to be promoted if older managers simply remained in their positions.

* The study by IZA and Odgers Berndtson "Personalpolitische Strategien deutscher Unternehmen zur Bewältigung demografisch bedingter Rekrutierungsengpässe bei Führungskräften" (German Corporate HR Strategies for Solving Demographic Recruitment Bottlenecks in Executive Search), Bonn/Frankfurt 2006 as well as its updated short version "Talente finden, halten, entwickeln“ (Finding, Keeping, Developing Talents), Bonn/Frankfurt 2008, is available on demand as a free file or hard copy at presse@odgersberndtson.de.