Employers Avoid Axing Oldies but Goodies

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Separately, Walgreen, which employs about 237,000 overall, is continuing to work with AARP in a program designed to attract older workers for its stores. Both CVS and Walgreen want to attract and keep older workers, especially on the store floors. "They come to you with the work ethic and the customer-service skills we're looking for," says CVS executive Wing. Customers seeking direction on over-the-counter treatments for minor ailments, he adds, often find comfort in people who have "had that ache or pain." They're also seen as role models for younger workers.

Salvage the Knowledge

Some companies don't have any choice but to let go of younger workers first. "First-in, last-out" rules at unionized companies, for instance, mandate such preferences. Deere (DE) is following such rules this month in announcing an indefinite layoff of some 188 staffers at its Dubuque (Iowa) plant, which builds gear for the hard-pressed construction industry.

But 172-year-old Deere, like a lot of old-line firms, is heavily populated by boomers and prizes their experience. The typical tenure at Deere tops 23 years and quite often stretches well beyond that, executives say. "The more mature a worker is and the longer the time they've spent at Deere, their knowledge goes up exponentially," says Laurie Simpson, director of team enrichment in the company's human resources department.

Experts cite practical and legal reasons to explain why this wave of layoffs has proved less harsh on older workers than prior downsizings have. "It's what we're calling 'workforce optimization,'" says Roselyn Feinsod, a consultant at Towers Perrin, the human capital advisory firm. "It's not blanket cutting across the board, but a much more thoughtful approach. It's a much more targeted approach to RIFs [reductions in force] than there was in previous eras."

Singling out high-paid, generally older, workers for trimming got plenty of companies into legal hot water for age discrimination in past years. So smart companies now know to avoid that risk, says Gerald Maatman Jr., a Chicago lawyer at the corporate labor law-oriented firm Seyfarth Shaw. Companies in survival mode, he adds, "pick the best and brightest people, those who can do more with less." That approach favors time-tested and seasoned boomers, says Maatman.

Volatile Age Issue

Still, companies must tread carefully to avoid showing favoritism based on age. They could wind up facing reverse-discrimination suits from younger workers who feel targeted. Few companies will openly discuss any age preferences or even will release information on the age makeup of their layoffs. Caterpillar (CAT) recently offered a voluntary buyout program to its salaried and management staff, and a spokesman noted that it didn't relate to age or tenure with the company. "Basically, anyone who thought it made sense for them could take the package," spokesman Jim Dugan says.

Still, some organizations are candid about the need to keep boomers in place. Jean Jackson, vice-president for workforce planning for Baystate Health, a 10,000-employee health-care system in western Massachusetts, points to seasoned nurses who can mentor younger recruits in the operating room. When Baystate laid off 55 staffers last November, only 20 were 55 or older (and the system has since hired back nearly half of all those it let go, finding new spots for them). Says Jackson: "Our ability to keep seasoned, longtime employees for longer periods of time will be critical for us."

Joseph Weber is BusinessWeek's chief of correspondents, based in Chicago.