STRA TEGF

AN ANALYSIS OF SMALL BUSINESS HIRING OF SENIORS

Robin T. Peterson
Andreas W. Stratemeyer

New Mexico State University

ABSTRACT

This study investigated small business hiring ofsenior citizens. lt found that older persons make
up a moderate percentage of the small business work force. The respondents reported
dependability, possession of the work ethic, respect for authority, experience, and company
loyalty as advantages ofseniors. The mjaor disadvantages were physical limitations illness, slow
work, and costs of medical benefits. Most respondents plan to hire larger numbers ofseniors in
future periods.

INTRODUCTION

The United States population is steadily growing older and many small and large companies are
finding profitable markets in the senior citizen segment (Peterson, 1995).They are discovering
that older consumers represent a desirable target market (Lee, 1997; Wolfe, 1994). By the same
token, they are finding that seniors are becoming an increasingly important component of the
labor force (Gayle, 1990).

Advances in medical care, exercise habits, and eating patterns have led to a situation where there
are large numbers of older persons, many of whom enjoy superior mental and physical health
than their predecessors (Wolfe, 1994). Many of these individuals like the idea of extending their
working lives beyond normal retirement ages, either in a full or part time capacity.

Seniors do not always experience success in obtaining jobs. In fact, some find that managers are
reluctant to hire them. It is possible that United States cultural attitudes and norms may account
for some of the neglect of older individuals as potential employees. Seniors in the United States
do not enjoy the status that they do in many other societies. In this country seniors are otten
perceived as lacking mental and physical competence, status, and power (Kluckhohn,1987).
Hiring decisions may be mirroring this cultural norm, whether or not it is accurate.

Firms can sometimes benefit, of course, because seniors will often accept employment at lower
wages than younger workers. This allows the firm to obtain valuable expertise, at a lower cost.

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Journal ofSmall Business Strategy Volume 9, No. l Spring /998

It is possible, of course, that small businesses avoid hiring older persons because of perceived
weaknesses of these individuals as participants in the labor force. Some managers may have
discovered or believe for other reasons that seniors are not physically or mentally able to carry
on duties as ably as younger persons. Medical and insurance costs may be substantial for the

elderly. They may lack critical computer skills or insist upon inflexible hours. One of the
purposes of this study was to uncover views of small business managers regarding these and
other possible shortcomings of older individuals as employees.

Specifically, the current study was undertaken to address four objectives:
1. To measure the degree to which small firms in the United States hire seniors.
2. To ascertain the advantages which small firms perceive in older employees.
3. To determine the problems which small companies perceive in including older workers

on the payroll.
4. To derive estimates by small firm managers as to anticipated hiring of seniors in the future.

THE STUDY

The researcher mailed 20 questionnaires to a randomly-chosen set of 50 college and university
Small Business Institute directors located in 50 states. Therefore, the total number of
questionnaires mailed was 1,000 (50 x 20). The geographic dispersion of the sample was
undertaken in order to produce results that were reasonably representative of the population of
small businesses at large. Accompanying the questionnaires was a letter explaining the purpose
of the study and asking that the SBI director distribute the questionnaires to 20 past and present
SBI clients and to collect the questionnaires once they were completed and forward them back
to the researcher. Follow-up letters were sent to non-respondents.

The effort yielded a sample size of 368 usable returned questionnaires-aresponse rate of 36.8%.
The questionnaires had previously been pretested on a sample of 20 small business managers
located in the city where the researcher worked. Since the managers making up the final sample
were all past or present SBI clients, they satisfied the requirements for classification as a small
business, according to the criteria set forth by the small business administration.

The respondents were asked if they hired seniors (defined as individuals 65 years of age and
older) and, if they did, for the proportion of the work force that were seniors. They were also
asked for perceived (A) advantages and (B) disadvantages of hiring older workers. Further, they
were requested to forecast if they would hire more or less or about the same proportion of seniors
in the future as they had to date. Demographic data (sales revenues and industry specification)
were also solicited.

The respondents were asked to specify their 1995 sales revenues. The median figure was
$643,200, reflecting the fact that the study focused only upon small firms. Since the survey
covered only small business, its findings and conclusions cannot be extended to encompass the
entire universe of firms.

RESEARCH RESULTS

The industry makeup of the sample was examined. Table I sets forth the results. Retailing makes
up the largest grouping, followed by manufacturing, service, wholesaling, and "other" category.
In this case, the percentage of service firms was lower than is sometimes encountered in studies

40



Journal of Small Business Strategy Volume 9, No. I Spring /998

of small business. Chi Square tests were employed for Table I and the following tables, since
comparisons between frequencies were sought. The Chi Square tests indicate cases where
frequencies exceed those of others. In all cases, .05 levels of significance were employed.

Table I
Indust Com osition Of The Sam le

Industrn ~Fre uenc
N s ~PT

Manufacturing 85 23./u
IVholesaling 22 6.0
Retailing /89 5/.

4'ervice43 I/.6
Other 29 7.9

Total 368 /000%

sSigniftes a frequency that is significantly larger than the column frequency, according to a
Chi-Square test at the .05 level.

The questionnaire asked the respondents if their companies hired senior citizens. The results
appear in Table 2. By far the greatest percentage is in the "none" category, followed by the I-
4.9% and the 5-9.9% groupings. It is evident that most work forces contain a relatively small
proportion of older workers. In contrast, over eleven percent of the U.S. population is of age 65
and older.

Table 2
Percenta e of Res ondents'orkforces Made U of Seniors

Percenta e of Workforce ~Fre uenc
N s p~uf

None /68 45. 7u
l-4 9% 84 22.8u
5-9.9% 48 l3. I
IO-/4. 9% 36 9. 7
/5-/9. 9% 22 6.0
20% and over /0 27

Total 368 /00. 0%

*Signifies a frequency that is significantly larger than the average frequency for the column
according to a Chi-Square test at the .05 level.

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Journal ofSmall Business Strategy Volume 9, No. I Spring i998

The members of the sample were asked to specify the advantages of employing seniors, based
upon their experience. Table 3 sets forth the frequencies associated with each category of
response. The total frequencies exceed the sample size, because most respondents cited more than
one advantage.

Those advantages which received the greatest frequencies were that seniors were dependable,
possessed the work ethic, respected authority, were experienced, and were loyal to the company.
Other important advantages were flexible schedules, mature behavior, stability, punctuality, and
willingness to train. Less frequently reported were responsibility, honesty, character, customer
orientation, trustworthiness, and limited family.

As the columns in the table indicate, there are some differences between industries. In retailing,
for example, the work ethic was reported more frequently than dependability. The reverse is true
in the other industries examined. The "experience" advantage received more frequencies than
respect for authority in retailing and in the "Other" industry. In manufacturing and service,
however, respect for authority was mentioned more oflen. A flexible schedule was reported as
an advantage by a large number of retailers. These differences between industries reflect desired
characteristics and behaviors of employees in these industries, as well as the performance of
seniors in these roles.

Further, the differences between industries suggest different rationale for hiring older persons,
from one industry to another. A retailer who sought to employ those with the work ethic might
be especially highly motivated to hire seniors, for example. Conversely, a service firm desiring
dependable employees might find seniors to be especially useful.

When the data in Table 3 are converted from frequencies to ranks (based upon the number of
frequencies in each cell), it is possible to measure the degree to which the respondents in the five
smail business industries agreed upon the importance of particular advantages. With ranked data,
it is possible to perform a Kendall Coefficient of Concordance test, designed to assess the degree
to which members of a set of (m) distinct ranks offerings of (n) things tend to be similar.
Basically, this indicates the extent to which the rankings agree with each other. The coefficient
which was computed in this case was .79. This indicates a high degree of concordance between
the industries, since the variance of the rank sums is 79 percent of the maximum possible.

Table 4 presents the disadvantages of hiring seniors which the respondents reported. In terms of
raw numbers, the advantages outweigh the disadvantages-sixteen advantages and twelve
disadvantages were cited. Further the frequencies associated with the advantages were 1,476,
while those mentioned for disadvantages were 381, furnishing some evidence that small
businesses are satisfied with the performance of these individuals. Disadvantages which have
frequencies significantly higher than those in their columns, according to Chi Square tests at the
.05 level of significance are labeled with asterisks.

For the sample at large, the significant disadvantages are physical limitations, illness, "too slow",
and cost of medical benefits. Other frequently-mentioned disadvantages were diflicult to train,
opinionated, forgetful, and "only part time". Finally, some respondents mentioned inflexible
hours, unsociable, complain, lack computer skills, and other topics.

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Table 3

Industry g
~O

Retail Manufacturing Service Wholesale Other Total
hdxantgge Number % ivumber % Number % Number % IVumber % ivumber

Dependable 74 /0. 4'6 12.6'6 14.9' l 11.5'2 /0. I v 169 I l. 5*
Work ethic 82 11.5'3 I /.8' 4.6 7 7.3 6 5.0 146 10.0v
Respect for authority 54 7.6v 37 10.2v 12 6.9 13 /3.5v /6 /3,4v 132 9 Ov

Experienced 56 7.9'6 9.9'2 6.9 9 9.4'8 15.1'31 8.9v
Loyal to company 68 9.5" 27 7.4 /5 8.5v ll I/.5v 8 6.7* 129 8.8*
Scheduleis flexibl 65 9.1v 22 6.0 15 8.5v 4 4.2 5 4.2v III 7.5

w Mature behavior 51 72 24 66 13 7.4v 9 94 10 84v /07 73
Stable 50 7.0 23 6.3 /I 6.3 7 7.3 6 5.0 97 6.6

Punctual 38 5.2 2/ 5.9 9 5./ 6 6.2 9 7.6 83 5.7
Willing to train 3/ 4.4 22 6.0 8 4.6 7 7.3 8 6.7 76 5.2

Responsible 26 3.7 /7 4.7 8 4.6 5 5.2 5 4.2 61 4.2
Honest 34 4.8 9 2.5 9 5./ 3 3.1 2 1.7 57 3.9
High character /8 2.5 /6 4.4 7 4.0 I 1.0 4 3.4 46 3.2 4!

Customer oriented 22 3.I 4 l. I 8 4. 6 I l. 0 3 2.5 38 2.6
Trustworthy 19 2.7 6 1.6 7 4.0 0 0.0 3 2.5 35 2.4
Limited family 17 2.4 6 /.6 5 2.9 2 2.1 3 2.5 33 2.2
Other 7 1.0 5 /.4 2 /. I 0 0.0 I 0.8 15 1.0
Total 712 100.0 364 100.0 175 100.0 96 /00.0 119 100.0 1466 100.0

*Signifies a proportion that is significantly greater than the average proportion for the row,
according to a Chi-Square test at the .05 level



Table 4.
O

0
Industry

Retail Manufacturing Service Wholesale Other Total
9lsttdy/tntttge iVumber % ivumber % Number % Number % Number % Number

Physical limitations 24 14.5a 23 19.8a 5 I i. Iv 4 Il. /v 7 2/.2'3 /5.9v to
illness 32 19.3a ll 95v 7 /5.7* 6 lb.7a 2 6.1 58 /4.6*
Too slow 19 11.4a 16 13.7' 178' /4.0' 3.0 49

12.5'ost

of medical benefits /4 8.5a 16 /3.7v 2 4.4 4 II. /e 6 /8.3v 42 10.7a
Dificult to trai n 9 5.4 14 /2.1' 13.3' 5.6 4 12.1'5 8.8
Opinionated 20 /2.1' 5.2 2 4.4 2 5.6 5 15.1'5 8.8
Forgetful /3 7.8 8 6.9 5 I I.l' 8.3 3 9.2'2 8.1
Only part time II 6.6 9 7.8 4 8.9' 16.7v I 3.0 31 7.8
Inflexible hours 7 4.2 6 5.2 4 8.9' 0.0 I 3.0 18 4.5
Unsociable 4 2.4 3 2.6 0 0.0 3 8.3 I 3.0 /I 2.8
Complain 3 /.8 0 0.0 I 2.2 I 2.8 I 3.0 6 1.5
Lack computer skills 3 1.8 i 0.9 0 0.0 0 0.0 0 0.0 4 L0
Other 7 42 3 26 I 22 0 00 I 30 /2 30 e+
Total 166 100 116 100 45 100 36 100 33 100 396 100

'Signifies a proportion that is significantly greater than the average proportion for the row,
according to a Chi-Square test at the .05 level



Journal ofSmall Business Strategy Volume 9, No. l Spring /998

The disadvantages for each industry that have frequencies significantly larger than their columns,
according to Chi Square tests of frequencies at the .05 level are identified with asterisks. The
Kendall Coefficient of Concordance for the disadvantages was .73, slightly less than that for
advantages, but still substantial.

There were some interesting differences between industry categories. For instance, manufacturers
and "others" found seniors difficult to train, while retail, service, and wholesale firms did not.
Retail and other companies reported "opinionated" as a significant disadvantage, while the other
categories did not. "Other" was the only industry citing significant numbers in the forgetful
category. Service and wholesale companies found that only part time was a significant
disadvantage. Finally, only service firms found inflexible hours to be a significant disadvantage.

The respondents were requested to specify if they planned to hire different percentages of
seniors in their work forces in the future than they had in the past. Fifly two percent indicated that
they did plan to hire a larger percentage, thirty eight percent that they planned to hire about the
same percentage, four percent that they planned to hire a smaller percentage, and six percent that
they did not know.

DISCUSSION

This study was designed to measure the degree to which a sample of small firm managers hired
senior citizens, their perceived advantages and disadvantages of hiring these individuals, and
their future employment plans for seniors. Many sample members hire seniors, although the
percentage of the work force is moderate. When queried about advantages, the members of the
sample set forth a number of these, emphasizing dependability, the work ethic, respecting
authority, experience, and loyalty to the company. There was substantial agreement among
industries on the ranking of the importance of the advantages.

The major disadvantage mentioned by the sample was physical limitations, followed by illness,
being too slow, and the cost of medical benefits. As in the case of advantages, concordance
between industries was high. Finally, a large proportion of the sample plan to hire larger
percentages of their work force from the senior group in the future.

IMPLICATIONS

Certain implications for small business managers emerge from this study. It appears that these
companies should experience a number of advantages, as well as some disadvantages, as a
consequence of hiring the elderly. They can be expected to hire even larger numbers in the future
than they have in the past. For some this will mean continuing to use current employees past
normal retirement ages. For others it will mean recruiting new employees from the ranks of the
elderly.

The large number of advantages set forth by the respondents suggests that small businesses who
are not recruiting and retaining seniors may be failing to take advantage of a high potential pool
of managerial and operative talent. This is particularly the case for those small businesses which
are currently experiencing high caliber personnel shortages and shortcomings in the abilities of
current employees. Recruitment programs targeted at elderly job seekers may hold considerable
promise for them.

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Journal ofSmall Business Strategy Volume 9, No. I Spring l998

Small business managers who are considering the employment of seniors should take into
consideration the advantages and disadvantages uncovered by the study. If, for instance,
dependability, possession of the work ethic, respect for authority, experience, and company
loyalty are of substantial importance to the recruiter, seniors may be a very good source of
applicants. Conversely, if the job in question would not be appropriate for those with physical
limitations, those unable to work because of illness, those who work slowly, or those with
considerable medical problems, the employer may be well-advised to approach the senior
applicant pool with caution, unless modifications, such as changes in the nature of the work, can
be accomplished.

Recruiting seniors sometimes necessitates different sources of job applicants than recruiting
younger persons. There are organizations, such as Aging in America, that specialize in placing
older job applicants. Some senior citizen centers are active in placing members who seek
employment. Various employment agencies are active in this field. Employers who seek older
employees may be well-advised to consider these alternative sources.

CONCLUSIONS

When seniors are hired, small businesses may find it advisable to make certain changes in
methods of supervising employees and arranging their work. Since seniors are dependable,
experienced, and have the work ethic, they may require less close supervision. It may be
necessary to convert some jobs to part time or job sharing and to employ flextime, if this is not
already available. Certain job responsibilities may have to be redesigned, so they are less
physically demanding.

Training methods and procedures may, of necessity, require deviations from those used for
younger employees. Since many seniors are experienced, their desired training may be less
extensive. In some cases, adjustments may be needed in the training format, as by presenting
ideas at a slower pace. A positive phenomenon is that the training benefits to the firm may accrue
for a long time period for seniors, since their turnover is less and they are less likely to move on
to other companies afler they have been trained by the current employer.

REFERENCES

G Tl .M(199D) T d h 21MC B~AD I 6 I .30(l)566D.
Kluckhohn, C. (1987). Mirror for Man. Greenwich, Conn.: Premier Books, 189-192.6, 0 A (1997) Th 7 h Bl I Ad 11 g A~iG mu . 1)99(l)465D.
Peterson, Robin T. (1995). The Depiction of Senior Citizens by Banks in Newspaper

Advertisements: A Content Analysis. Journal of Professional Services Marketin 12 (2),
95-106.

W IB.G IdB.()994). T g I g h M Ml d. A I 0 ~HI6(2),32.36.

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