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By naming Janet Truncale, 53, as its next global chief executive, EY hopes to put behind it a nasty wildfire sparked by a rival candidate over the ultimate leadership taboo: old age.
During his campaign for the top job, Andy Baldwin, 57, warned executives discussing his candidacy that they risked violating age discrimination laws if they made too much of the fact that a four-year term at fronting the professional services firm would take him beyond the age of 60. This is when EY usually requires its partners to resign.
Sixty seems an absurdly and arbitrarily early age to ask executives to hand in their lanyards and badges. Except in the case of a few physically demanding jobs, mandatory retirement also seems like an anachronistic setback. Most countries are forcing workers to work longer before they can claim a state pension. Companies are also striving to become more inclusive.
Tension is likely to increase as companies and staff try to reimagine work for 50-year careers. Speaking at the recent Anthropy conference on the future of the UK, Jeremy Hughes, who is helping to develop a new charity aimed at closing the demographic gap, Intergenerational England, described the workplace as the “key forum where people come together.” the generations”. But the workplace is also where generations could break out.
The career that Baldwin and his EY colleagues have had is already difficult for people in their 20s to imagine. On the same panel, youth ambassador Ladajah Wilson made it clear that she didn’t want to go down the four-week-a-year 9-to-5 vacation path of her elders. She preferred a career that was varied and flexible (even if she complained that it would be difficult to afford, given what she would inherit from the previous generation, both financially and environmentally). These “wavy careers” do not benefit from traditional leadership selection processes.
Age is just a number, they say. But succession planning is dominated by another number: Typically, there is only one position at the top. That tempts companies to force changes to alleviate leadership obstacles.
Mandatory retirement ages are legal in the UK if they represent a proportionate means of achieving a business objective. That could include freeing up senior jobs or, in the case of EY UK, partnerships for younger colleagues. At a level where men still dominate, it could also serve to achieve the corporate goal of greater ethnic and gender diversity.
In the United States, mandatory retirement for CEOs is an exception under age discrimination law. But an increasing number of large companies have begun to abandon or renounce their mandates. This year, Chevron lowered the 65-year-old age limit for CEO Mike Wirth, now 63, to ensure continuity at the oil and gas company.
Meanwhile, the average age of American CEOs continues to rise. According to headhunter Crist Kolder, in 2013, the average age of CEOs at the time of his hiring was 51.3 years old. It now stands at 55.6.
Publicly traded companies seem more reluctant to keep their CEOs well into their seventies and eighties. When I ranked the world’s leaders of publicly traded companies by age in 2011, Warren Buffett, then 80, was only the 16th oldest corporate boss. At 93, he now tops a global ranking, prepared by BoardEx for the Financial Times, that contains only two octogenarians. Among American bosses, he is 11 years older than the next oldest on the Fortune 500, Robert Mehrabian of Teledyne Technologies.
Buffett might seem like an exception. But he is living proof that some older CEOs amply justify extending their tenure beyond what used to be considered retirement age. Younger, more capable executives should also be able to advance sooner. Only 31 of the Fortune Global 500 companies are led by CEOs under the age of 50.
Research has shown that shareholder wealth declines each year as CEOs age. Many leaders stay longer than expected due to overly lenient boards or poor succession planning. Another study suggests that leaders become more risk averse as they age, with negative consequences for stock performance. The researchers found this was particularly true when the two most influential executives were older. The best outcome might be for younger couples and older colleagues.
I prefer an age-blind approach that eliminates age-related stereotypes. It could also help assess the capabilities and potential of younger people like Wilson, if he ever wants to run a multinational.
This is another area where technology could level the playing field. At a Financial Times conference on artificial intelligence last week, Tomas Chamorro-Premuzic, author of Why do so many incompetent men become leaders?He said AI could help humans “focus on the qualities that make people better leaders, while ignoring the noisy signals that make them more toxic and inept.”
In other words, the solution to “bed blocking” by bosses is not automatic expulsion, based on age, but rather more rigorous evaluation, based on competency.