The Hidden Cost of Pushing Out Your Most Experienced People.

Right now, many businesses are doing it tough. Margins are under pressure. Budgets are being cut. Leaders are making tough calls to keep their organisations afloat. Cost savings aren’t optional - they’re necessary.

But here’s the question every board and leadership team should be asking: if you need to save money, is targeting your most experienced people - often those aged 50+ - really the smartest move?

Yes, they often sit at the top of the pay scale. But those higher salaries reflect something priceless: decades of problem-solving, relationship-building, industry knowledge, and leadership under pressure. Strip that out, and you’re not just cutting costs - you’re cutting capacity.

The short-term savings that look good on a spreadsheet can end up costing millions in lost productivity, weakened resilience, and reputational damage that lasts for years.

1. The Illusion of Savings

On paper, letting go of a $120,000 employee delivers an instant saving. In reality, the numbers rarely work out that cleanly

• Research from the Center for American Progress shows that replacing an employee can cost 50–60% of their salary, and total turnover costs (including recruitment, training, and lost productivity) can range from 90% to 200% of annual salary.
• For highly specialised or senior roles - which often belong to people aged 50+ - the cost can reach up to 213% of annual salary.

So, that $120,000 saving could actually cost $250,000+ once you factor in hidden costs. And that’s before you account for lost customers, stalled projects, or the impact on team morale.

Yes, cost savings must be made. But targeting the people who deliver the most value per dollar - simply because they cost more per year - is rarely a decision that holds up to scrutiny.

2. The Knowledge Drain

Cutting experienced staff doesn’t just leave an empty chair. It takes with it institutional memory - the knowledge that keeps organisations running smoothly and safely.

• SHRM research shows that institutional memory lost with a most experienced employee can take 5–7 years to rebuild - if it can be rebuilt at all.
• In complex industries, the loss of this knowledge can increase error rates by 20–40%.

That knowledge is often invisible in a spreadsheet, but it’s deeply felt when it’s gone. Processes slow down. Decisions take longer. Mistakes creep in. And customers notice.

3. The Team Shockwave

Forcing out respected, experienced colleagues sends a signal to the rest of the workforce - and it’s rarely a good one.

• Gallup research shows that when a highly regarded colleague leaves involuntarily, engagement among remaining team members drops by up to 23%.
• This disengagement increases the risk of further voluntary turnover, creating a secondary exodus that compounds costs.

In the quest to save money, you risk triggering an attrition spiral that is far more expensive - and harder to fix - than the original salary line item you cut.

4. The Economic Fallout

This isn’t just a company problem - it’s a national one.

• The OECD estimates that the involuntary exit of workers aged 50–64 (who are still capable and willing to work) costs economies billions in lost GDP every year.
• In countries like New Zealand, Australia, the UK, and the US, skill shortages in critical sectors are being made worse by decisions to exit experienced staff rather than redeploy and upskill them.

If you want an economy that’s competitive, innovative, and resilient, you can’t keep sidelining the people who have proven they can deliver those outcomes under pressure.

5. The Reputation Risk

In an age where company culture is on display, age-based cost cutting carries a reputational price.

• Stories of age bias spread quickly across LinkedIn, Glassdoor, and the media.
• Once a brand is seen as biased against older workers, top talent across all age groups becomes wary - and wary talent is unlikely to apply.

The Edelman Trust Barometer links internal fairness to external trust: brands seen as unfair or discriminatory towards employees lose customer loyalty - and loyal customers are worth up to 10 times their first purchase.

6. What Employers Must Do - Now

Cost savings are sometimes unavoidable. But they should be made with strategic intelligence, not short-term thinking.

Six immediate steps for leaders:

1. Audit redundancy decisions for age bias - check patterns and challenge assumptions.
2. Track the true cost of turnover - include recruitment, onboarding, lost productivity, and team impact.
3. Build cross-generational succession plans - don’t just plan for leadership, plan for institutional knowledge transfer.
4. Invest in upskilling, not replacing - it’s faster and cheaper to update skills than to start from scratch.
5. Hold leaders accountable for retaining experience - make it a performance metric.
6. Report on workforce age diversity with the same seriousness as gender or cultural diversity.

Conclusion

Yes, businesses are under pressure to save money. But if your savings strategy starts with removing your most experienced people, you’re betting your future on the idea that wisdom, capability, and resilience are easily replaced. They’re not.

To every employer, hiring manager, and recruiter: your engine room is not expendable.

Protect it. Invest in it. Listen to it.

Because the day you erase it is the day you start steering blind - and the cost of that will far outweigh any salary you save.

Sources

• Center for American Progress: There Are Significant Business Costs to Replacing Employees https://www.americanprogress.org/article/there-are-significant-business-costs-to-replacing-employees/
• SHRM (Society for Human Resource Management): Research on knowledge transfer and institutional memory loss
• Gallup: Employee engagement data https://www.gallup.com
• OECD: Ageing and Employment Policies https://www.oecd.org/employment/ageingandemploymentpolicies.htm
• Edelman Trust Barometer https://www.edelman.com/trust-barometer

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