Age–rank correlations and firm‐level outcomes : The moderating role of environmental dynamism

Abstract

Traditionally, older employees have held higher positions in the organizational hierarchy. However, today, there is significant variation among firms in the extent to which age is correlated with rank. In this study, we integrate the career timetable and social exchange theory to propose that age–rank correlation is related to organizational performance, serially mediated by the perceived age discrimination climate and organizational innovation. We further suggest that the direction of this indirect relationship depends on firms' environmental dynamism. We find support for our moderated serial mediation framework using multisource data from 12,829 employees, 68 top HR representatives, and 229 top managers in 68 firms. Under lower levels of environmental dynamism, age–rank correlation was negatively related to perceived age discrimination climate and had a positive indirect relationship with organizational performance. Under higher levels of environmental dynamism, age–rank correlation was positively related to perceived age discrimination climate and had a negative indirect relationship with organizational performance. Our study provides a more nuanced view of the fading link between age and rank, which has typically been viewed negatively and from an individual perspective only. Additionally, our results have important practical implications for organizations navigating a shifting workforce demographic in increasingly dynamic environments.