Etydhv

I'm asking about companies'/managers' reasoning in general, rather than about the policy of a specific company. This is something I've come across a number of times, in/about various different companies.

Typically where the work being done by a particular 'role' is no longer needed, ceases to exist etc then the role/employee holding the role would be laid off / made redundant.

However... several times I've observed companies where an employee at the older end (e.g. age 60+) is in a role that would normally be laid off / redundant (legitimately, i.e. that role is no longer needed in the company and the person wouldn't be replaced) but the decision makers at the company opt to "wait for the person to retire" rather than lay them off.

The longest time period I've seen this happen over was about 5 years! (i.e. the person was 5 years from retirement but their position was already obviously no longer needed, due to changes in the company (mergers and acquisitions, 'synergies', etc).

• There were several rounds of layoffs where numerous other people ended up leaving the company, but this person was not, surviving several rounds of layoffs, even though it was apparent to everyone that their role wasn't actually needed any more. (Not very good for motivation for those left behind!)


• When the person eventually retired, they indeed were not replaced. There wasn't even any need for handover of any tasks (as the person wasn't completing any at that point).


• (Edited to add, from discussion in the comments) There were several reasons the role was (in my view) obsolete, including: duplication of workload with the (acquiring) parent company; obvious lack of day-to-day tasks; my previous experience of seeing similar roles laid off; a "re-structuring" that preserved this role (and this one only) as an "exception" with no justification; job title/responsibilities had no bearing on actual responsibilities e.g. a "purchasing manager" who didn't have any purchasing workload.

My background is the UK, but this may apply to other countries as well.

Question: Why would the decision makers at a company "wait for the person to retire" rather than lay them off?

Things I've considered:

• cheaper to continue paying their salary than severance payments? (but unlikely unless they have very long service and exceptionally generous contracts) - e.g. their salary may be another £30,000 (for example) * 2 years plus overhead for employers costs which could easily be nearly £100,000 - I'm sure almost no severance payments are that high!


• compassion for the employee who would then struggle to find another job 2 (or so) years before retirement?


• what about the effect on morale of the remaining staff members, who have seen colleagues laid off or lost their own jobs, when the company seems to be 'carrying' someone who is ostensibly not contributing anything.


• I'm confused because layoffs are supposed to be about "the role", rather than "the specific person holding the role".


• (edited to add:) perceived age discrimination? Laying off someone because they are 'older'? (but surely easy to disprove based on the facts about their actual responsibilities etc?)

In case it matters: my experience is mostly with "medium size" companies e.g. 50-200 people, the parent company mentioned above had over 1000 people.

It's challenging to speculate about why particular decisions are made, even if you're able to observe directly - so, as a potential frame-challenge to your question, it's worth considering that you may not be correctly attributing a given decision to the right factors.

But generally, there are lots of reasons why management might make these decisions:

• Keeping someone on payroll is a lot cheaper than dealing with a wrongful termination lawsuit. Even the most obvious redundancy has the risk of turning into a lawsuit, but people who will be especially angry about a layoff ("you're laying me off right before I retire!"), or who may fall under a protected status ("you're only laying me off because I'm old!") may be seen as too risky to lay off.


• Keeping someone on payroll may change the regulatory requirements your employer needs to comply with. In many jurisdictions, there are laws that dictate how layoffs must be handled, and in some cases the requirements change depending on the number of layoffs - so, some "obvious dead weight" may be retained simply to keep the layoff under those cutoff points


• Keeping someone who will retire soon on payroll may be a humanitarian decision, from the perspective of ensuring that employee doesn't have issues with healthcare coverage or access to a pension or other retirement benefit - in many cases, getting laid off only a year or two before naturally retiring can be devastating, compared to getting laid off when you're a long ways from retirement and have time to recover. This challenges your assumption that layoffs are "about the role, not the person" but decision makers don't always heed the assumptions of their employees.


• Even if it appears that there's redundancy, or overlap, between one person's responsibilities and those of another employee or team, there may be reasons to keep the extra capacity - maybe there are performance issues with the other party, or the work is seen as risky so it's worth keeping extra bandwidth, or some other extenuating circumstance that justifies more capacity than it takes to complete the actual tasks on hand.

You seem to be thinking of this from a very cold perspective. That's probably a good way to get into the "mind" of a corporation, but since the decision-makers are actual people they may not respond quite that way.

For example, your point on morale suggests that morale would be higher with larger and more intense layoffs than with smaller, less aggressive ones. People are unhappy with huge layoffs. With those two options, I know that I'd be happier working for one making the former choice rather than the latter.

Anyways, there will be lots of potential reasons and they will vary by employer and situation. Some possibilities:

• Optimism about transferability of skills. Some employees may have a bit more flexibility in what they
  can offer the company for their salary. A decent manager probably has
  some broadly applicable skills and can transition to new work still
  useful to the employer, while a coder specializing in legacy systems
  using an otherwise deprecated language might not be as easy to
  reassign if those legacy systems are retired. Whether or not those transitions are executed successfully isn't relevant to the expectation that they might be at the time of deciding who gets laid off.


• Decency. This varies a lot from person to person, but on average if
  someone is a couple of years away from retiring (at the typical
  retirement age), laying them off may be a death sentence for their
  career. It's hard to get hired as you near retirement age, and
  suddenly losing stable income and being forced to take whatever
  stopgap jobs might be feasible can be the difference between a
  comfortable retirement and an unstable, hand-to-mouth end of life. These issues are not as acute for younger workers, though other issues may exist.


• Legal exposure. Whether or not the conclusion is actually correct, a
  layoff that forces out a disproportionate number of older employees
  can be credibly described as age discrimination. Since job
  responsibilities and department roles can be changed to suit the
  employer's needs, it's hard to prove that age discrimination wasn't
  the reason. Even if such a thing could be proven, the costs of a
  lawsuit can quickly become exorbitant.


• Institutional knowledge. Employees that have been with a company for
  a long time (not necessarily near retirement age) are likely to have
  gained a lot of institutional knowledge, information about how the
  company operates under various circumstances, what it's needs are,
  and so on. Even if it doesn't touch on their old job description very
  much, it's possible that their insights could be more valuable due to
  that knowledge.


• Personal loyalty. People build relationships over time, and if an
  executive with influence over distributing layoffs likes someone,
  they may put their thumb on the scales to protect that person.


• Imperfect efficiency and fungible needs. Companies are not perfectly efficient, before
  or after layoffs, and even if it's possible to make a case that an
  additional job could be cut that doesn't meant that that job must
  be cut. If you could justify cutting positions A and B, but the needs
  the layoff is addressing require only one of them to be cut, then
  the laid-off person will have a valid-enough complaint that the other
  position remains. That person would not be better off with both
  positions being cut, and the company itself might not be either.


• The purpose of layoffs. Layoffs are not about "the role" or "the
  person". They are about overarching financial and competitive needs,
  which a layoff may help address. The company is cutting staffing in
  pursuit of a specific goal, and as above that goal does not
  necessarily involve minimum possible staffing. Reaching that goal may
  or may not involve eliminating those jobs and employees which you,
  user104682, happen to value the least.

There exist many possible other reasons, including exotic ones like "the employee has blackmail material on the person that can lay them off". The generic answer to this question is that "those companies feel that the best decision involves not laying off such individuals, for reasons that are specific to that company".

Basically, because not all business decisions are made with a ruthless eye on only the bottom line: some are made with a sense of compassion and humanity. If keeping the obsolete worker on roll would bankrupt the business, of course the old guy would generally be out of luck. But in human terms that desk and that salary may be worth a lot more to him than it is to the company. He’s not hurting anything, and he might contribute experience or tribal knowledge. Some managers would be glad to just let him run out the clock.

To add to dwizum answers, a couple more suggestions :

• Perhaps he or she might have political support higher in the company for keeping him or her in the payroll




• Perhaps he or she is expected to resign ? A sadly common practice in France for employers with older staff, in order to avoid paying costly packages, is simply to shunt aside employees leaving them with no work to do and expecting they would give up and resign (this is considered harassment, but doesn't prevent the practice to exist).