Despite the world’s aging population, there is limited understanding of the relationship between age diversity and organizational performance. As a result, researchers are increasingly interested in the impact of age composition within the workplace. In a timely study, Yaping Gong of HKUST and colleagues set out to explore the impact of age on corporate competitive advantage. Their findings suggest that age diversity can boost organizational performance by strengthening both human capital (the knowledge and skills of employees) and social capital (the knowledge embedded in employees’ social connections).
While aging has been found to impair some aspects of cognition, such a decline is rarely reflected in workplace functioning, possibly due to the benefits of accumulated knowledge in familiar situations and the skills acquired through experience. The researchers suggest that aging employees may use “tactics and technology” to maximize their functioning while compensating for any decline in ability.
Cognitive aging theory suggests that our mental abilities, and indeed our intelligence, are fluid. The authors note that while younger employees may more readily tackle previously unseen situations with novel approaches and solutions, older ones are more “likely to make quicker connections to their prior experience, oversee the broader environment, and perceive problems in a more integrative way.”
The impact of age differences may also be explained through reference to socioemotional selectivity theory. Employees’ perception of time may be important. Younger employees focus on information gathering through developing social connections, while older employees prioritize emotional regulation and “develop close and targeted social connections,” suggest the researchers.
In addition, older workers may focus on information from specific sources, reflecting on such content to maximize their learning experiences. “Younger employees may hold more up-to-date technical knowledge,” the authors explain, “while older employees may possess richer professional skills and expert knowledge.”
The researchers hypothesized that given the variation in the thinking styles, emotional responses, and behavior of employees of different ages; age diversity may enhance organizational performance through the betterment of human and social capital. They also proposed that the extent to which employee functional diversity (i.e., working in functionally diverse areas) and age-inclusive management (i.t., treating employees of all age groups fairly, equally, and inclusively) may further boost the relationship between age diversity and human capital.
To test these hypotheses, the researchers analyzed a large sample of annual workplace survey data collected by the Society for Human Resource Management. The respondents ranged widely in age, gender, and professional status, and their companies spanned diverse industries, including finance, research and development, and manufacturing. The results of the researchers’ analysis suggested that high-performing workplaces had the highest human and social capital and were most significantly impacted by age diversity.
“Our research sheds light on how age-diverse workforces may create value through cultivating knowledge-based organizational resources (i.e., human and social capital),” say the authors. In the right business environment, an age-diverse workforce can help a company achieve superior performance.
Age-inclusive policies and the promotion of functional diversity might help companies capitalize on the advantages of age diversity. “It is important to integrate employees from all age groups into organizational processes,” conclude the researchers, “to improve employees’ perceptions of inclusion and facilitate bidirectional knowledge transfer.”