The baby boomer generation makes up approximately one quarter of the current U.S. workforce, and each day about 10,000 reach the traditional retirement age of 65. The potential mass exodus of these retirees is creating a skills gap of millions of workers, but an AARP poll found almost half of employers had not analyzed the likely impact on their companies. Have you planned for the effects of retirements on your business?
The sum of your organizational experience is seldom captured as a reference archive. Much of that collective wisdom resides in the minds of your employees, especially those with years of experience. As they developed their ability to analyze and solve problems, they helped shape your processes and establish your level of expertise as an organization. The capacity to make effective judgments is difficult to transfer as the baby boomer generation retires, especially if you have no strategic plan in place.
The good news
Fortunately, you may be able to retain some of these potential retirees. About two-thirds plan to continue working during retirement, according to the 2018 Retirement Confidence Survey (RCS) sponsored by the Employee Benefit Research Institute (EBRI). Although that choice is partly driven by financial considerations, 80 percent of those who did continue working reported they did so because they enjoyed working or wanted to stay active and involved. An AARP study found that 36 percent of baby boomers predicted that they would never be able to afford retirement.
The LIMRA LOMA Secure Retirement Institute, an organization that provides research and education on issues affecting the retirement industry, reports that 92 percent of surveyed employers were taking steps to keep their potential retirees working. For these workers, delaying retirement by as little as three to six months affects their post-retirement standard of living by an amount equal to 30 years of saving an additional 1 percent of income.
The EBRI 2008 Recent Retirees Survey was taken to better understand what tools and practices might help employers convince these employees to postpone retirement. People tend to retire for one of these four reasons: It becomes affordable; job satisfaction has dwindled; the desire for more personal/family time; and health status.
Employers have an estimated maximum of two years to offer attractive enough incentives to change an employee’s decision to retire. In many cases, the employer should simply ask the person to stay; only 10 percent would have reacted negatively to efforts to retain them. The survey revealed 19 possible incentives that might influence employees to stay at least two more years. Some were especially attractive: Feeling truly needed for an assignment, options to receive a full or partial pension while working part-time, and the opportunity to work seasonally or on a contract basis.
If you are concerned about the cost of healthcare for older employees, remember that as they qualify for Medicare and Social Security, most will appreciate other incentives to continue working. Consider flexible hours, job-sharing, part-time, or consulting arrangements, working remotely, pay raises, seasonal work, and perks such as training, free lunches and gym memberships.
Every employee will retire eventually, so a knowledge transfer plan is imperative. Ideally, you will convince experienced employees to begin mentoring successors and transferring their knowledge 12–18 months before they retire. Phased retirement over a longer period and consulting arrangements following retirement provide other venues for tapping the experience of long-term employees when challenging situations arise. Consult with tax attorneys, benefits experts and retirement plan administrators to ensure compliance with current laws and regulations.
There are information management systems available to capture the components of your organizational process and archive the deep knowledge learned within your company over many years. As you build the archive, pay attention to the future design of your work process. You may need to consider policies to prevent overwork as technology blurs the line between company time and personal time. Concepts such as the “punctuated workday”—in which employees work for several hours early in the day, take a break to run errands or care for elderly relatives, then return in the afternoon or evening—allow for flexibility that appeals to all generations of workers.
Maintaining a larger proportion of older workers in your company ranks necessitates implementation of procedures to ensure that the promotion pipeline does not become clogged, preventing younger employees from advancing. At the same time, recognizing age bias and reducing generational conflict will be critical factors in balancing the talents, skills and experience of your employees to build a smooth-running and high-performing organization of motivated and loyal employees. For more information on issues related to older workers, visit these websites: Society for Human Resource Management and AARP.