Myths About Older Workers Cost Business Plenty

America is aging: In just two years, the baby boomers start turning 50. By 2005, some 30% of the population will be 50 or over. Workers 55 and above are the fastest-growing sector of the labor force. From 1990 to 2005, their ranks are expected to jump 43.7%.

Such figures send a sobering message to employers caught in a wave of layoffs and early-retirement programs that are thinning out older workers: To stay competitive, they must make better use of graying talent.

Beginning that process means getting rid of stereotypes about older workers. Too many companies today assume that workers over 50 are less flexible and productive, more expensive, and just not as "with it" as their younger colleagues. In fact, the opposite is true: Older workers consistently receive high ratings on key job skills, loyalty, reliability, and lack of turnover and absenteeism, according to a recently completed five-year study by the Commonwealth Fund in New York, as well as other research.

YAWNING GOLF. Companies that dismiss older workers are often losing superior employees. For her new book, The Longevity Factor: The New Reality of Long Careers and How It Can Lead to Richer Lives, Lydia Bront , a Manhattan gerontologist, interviewed 150 people 65 to 102 who have stayed at work. She found that almost half of them had their most productive years at 50 or later. Another taking-off point began around 65, when one-third of the group had a major achievement. "It makes no sense to early-retire people in their early 50s or treat them as if they are old," says Bront . "They aren't old. No way."

To take advantage of such workers, companies must face another myth: that anyone over 50 is marking time until retirement and so isn't worth developing or retraining. But many older workers--whether forced to retire or not--want to keep working for personal and financial reasons. Take James D. Moore, 50, of Alexandria, Va. With 26 years in, he exercised an early-retirement option from BellSouth Corp. But Moore wanted to keep working--for two reasons: He had a pair of kids in college. And he just wasn't ready to pack it in. "I couldn't see myself playing golf," says Moore. He's now vice-president for training and development at Northern Telecom Inc.

Instead of laying off older workers wholesale, employers can create arrangements that benefit both them and the employee. For example, companies could cut back on hours or pay: Older employees could still contribute but enjoy greater freedom. Such arrangements also would let employers protect their talent base and avoid millions in costly severance packages.

Or employers could look for places in-house to exploit their experience. Recognition International Inc. in Dallas, for one, has been downsizing for the past four years. But of the 250 workers who have lost their jobs, as many as 100--more than half of those who were over 40--found other positions within the company, says Wilemia Shaw, vice-president for human resources. Through a practice known as "in-placement," Recognition gives workers the chance to take on other assignments at the same salary and benefit level. While the work is usually only temporary, the hope is that it will turn into something more lasting. "These people probably have a special skill that we just can't get on the market--not at the price we could give," Shaw explains.

Before companies can fully utilize the graying work force, older workers must make changes, too. Despite the tight job market, too many still believe the world owes them a living because of all the years they put in, and so they don't bother to update their skills. Others assume--rightly or wrongly--that age is a problem and take themselves out of the running. Ultimately, both employees and employers must become age-neutral. That way, older workers can rise or fall on their abilities and not on outdated notions of what age means.