Retirement Planning -
It’s Time to Retire Retirement - Sun and Planets Spirituality AYINRIN
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Summary.
Companies have been so focused on downsizing to contain costs that they’ve largely neglected a looming threat to their competitiveness: a severe shortage of talented workers. The general population is aging and with it, the labor pool. People are living longer, healthier lives, and the birthrate is at a historical low.
During the next 15 years, 80% of the native-born workforce growth in North America—and even more in much of Western Europe—is going to be in the over-50 age cohort. When these mature workers begin to retire, there won’t be nearly enough young people entering the workforce to compensate. The Bureau of Labor Statistics projects a shortfall of 10 million workers in the United States in 2010, and in countries where the birthrate is well below the population replacement level (particularly in Western Europe), the shortage will hit sooner, be more severe, and remain chronic.
The problem won’t just be a lack of bodies. Skills, knowledge, experience, and relationships walk out the door every time somebody retires—and they take time and money to replace. And while the brain drain is beginning now, the problem is going to become much more acute in the next decade or so, when baby boomers—more than one-quarter of all Americans, amounting to 76 million people—start hitting their mid sixties.
Based on the results of their yearlong research project, the authors of this article offer recommendations for gaining the loyalty of older workers and creating a more flexible approach to retirement that allows people to continue contributing well into their sixties and seventies. Companies can no longer afford to think of retirement as a onetime event, permanently dividing work life from leisure.
In the past few years, companies have been so focused on downsizing to contain costs that they’ve largely neglected a looming threat to their competitiveness, the likes of which they have never before experienced: a severe shortage of talented workers. The general population is aging and, with it, the labor pool. People are living longer, healthier lives, and the birthrate is at a historic low. While the ranks of the youngest workers (ages 16 to 24, according to Bureau of Labor Statistics groupings) are growing 15% this decade as baby boomers’ children enter the workforce, the 25- to 34-year-old segment is growing at just half that rate, and the workforce population between the ages of 35 and 44—the prime executive-development years—is actually declining.
Who Will Run Your Company?
In
the United States, the overall rate of workforce growth faces a sharp
drop. After peaking at nearly 30% in the 1970s (as the baby boomers as
well as unprecedented numbers of women entered the workforce), and
holding relatively steady at 12% during the 1990s and again in the
present decade, the rate is projected to drop and level off at 2% to 3%
per decade thereafter. That translates into an annual growth rate of
less than 1% today and an anemic 0.2% by 2020. Meanwhile, age
distributions are shifting dramatically. The proportion of workers over
55 declined from 18% in the 1970s to under 11% in 2000—but it’s
projected to rebound to 20% by 2015. In other words, we’ve recently
passed what will prove to be a historic low in the concentration of
older workers. Just when we’ve gotten accustomed to having relatively
few mature workers around, we have to start learning how to attract and
retain far more of them.
During
the next 15 years, 80% of the native-born workforce growth in North
America—and even more so in much of Western Europe—is going to be in the
over-50 cohort. In the next decade or so, when baby boomers—the 76
million people born between 1946 and 1964, more than one-quarter of all
Americans—start hitting their sixties and contemplating retirement,
there won’t be nearly enough young people entering the workforce to
compensate for the exodus. The Bureau of Labor Statistics projects a
shortfall of 10 million workers in the United States in 2010, and in
countries where the birthrate is well below the population replacement
level (particularly in Western Europe), the shortage will hit sooner, be
more severe, and remain chronic.
The
problem won’t just be a lack of bodies. Skills, knowledge, experience,
and relationships walk out the door every time somebody retires—and they
take time and money to replace. Given the inevitable time lag between
the demand for skills and the ability of the educational system to
provide them, we’ll see a particularly pronounced skill shortage in
fast-growing technical fields such as health care. What’s more,
employees are your face to the marketplace. It’s good business to have
employees who reflect the ethnic, gender, and, yes, age composition of
your customer base—especially when those customers are well off. Baby
boomers will be the most financially powerful generation of mature
consumers ever; today’s mature adults control more than $7 trillion in
wealth in the United States—70% of the total. As the population at large
ages, and ever-more spending power is concentrated in the hands of
older customers, companies will want to show a mature face to their
clientele—and yet those faces will be in high demand.
The
problem is pretty clear. Workers will be harder to come by. Tacit
knowledge will melt steadily away from your organization. And the most
dramatic shortage of workers will hit the age group associated with
leadership and key customer-facing positions. The good news is that a
solution is at hand: Just as companies are learning to market to an
aging population, so they can also learn to attract and employ older
workers.
And
yet, despite irrefutable evidence of workforce aging, many managers may
be marching their companies straight off a demographic cliff. According
to a recent survey from the Society for Human Resource Management,
two-thirds of U.S. employers don’t actively recruit older workers.
Furthermore, more than half do not actively attempt to retain key ones;
80% do not offer any special provisions (such as flexible work
arrangements) to appeal to the concerns of mature workers; and 60% of
CEOs say their companies don’t account for workforce aging in their
long-term business plans. Instead, relying on the mistaken assumption
that the future will be populated by a growing pool of talented and
loyal young workers, companies are systemically offering older workers
the “package” and skimming people out of the labor force from the top
age brackets down.
Little
wonder that baby boomers and “mature” workers (those 55 and above) are
feeling little loyalty to their current employers. These employees are
bottlenecked, with too many people competing for too few leadership
positions. They’re distrustful, fearful, and defensive, knowing that
they’re “too old” to easily find work elsewhere and likely to be pushed
out before the “official” retirement age. They’re struggling to update
their skills, and they’re feeling burned out after 30-plus years on the
job. Meanwhile, they stand back and watch as recruiting, training, and
leadership development dollars, as well as promotion opportunities, are
overwhelmingly directed at younger employees, with little thought to the
skills and experience that the over-55 crowd can bring to bear on
almost any business problem.
In
short, most baby boomers want to continue working—and they may need to,
for financial reasons—but they may not want to work for you. Twenty
percent of those collecting employer pensions are still working in some
capacity, and among people under 60 who are already collecting pensions,
more than 50% are working. Among those age 55 and older who accepted
early retirement offers, one-third have gone back to work. But these
working retirees are more likely to be working part-time or be
self-employed than their not-yet-retired counterparts—in other words,
they’re working on their own terms. That’s increasingly where you’ll
need to meet these older workers if you want to gain access to their
skills. As the labor market tightens, they will have more choices, and
the most capable and accomplished among them are likely to be the most
mobile and financially independent; they’re the ones who are most likely
to move on. The challenge is to find a way to reconnect with these
employees before they’re ready to take a retirement package and
run—perhaps to a competitor.
Most baby boomers want to continue working—and they may need to, for financial reasons—but they may not want to work for you.
We
recently conducted a yearlong research project in which we looked at
the implications for businesses of an aging workforce. Broadly speaking,
our findings suggest an urgent need to find ways to attract and retain
employees of all ages. But of most concern is the potentially
debilitating mass retirement that threatens to starve many businesses of
key talent in the next ten to 15 years. On the basis of our research,
we’ve concluded that the concept of retirement is outdated and should be
put out to pasture in favor of a more flexible approach to ongoing
work, one that serves both employer and employee. In this article, we’ll
describe how companies can retain the skills of employees well past the
traditional age of retirement by moving from a rigid model where work
ceases at a certain age to a more flexible one where employees can
become lifelong contributors.
About the Research
Our
yearlong research project, “Demography Is Destiny,” concluded in the
fall of 2003 and was conducted by the Concours Group in partnership with
Ken Dychtwald and Age Wave. Sponsored by 30 major public and private
organizations in North America and Europe, the project explored the
emerging business challenges presented by workforce aging and other
profound shifts in workforce demographics. On the basis of our findings,
we developed a series of management actions and pragmatic techniques
for anticipating, coping with, and capitalizing on those changes. Member
organizations shaped the focus and direction of the project, shared
their experiences as part of the field research, and participated in a
series of workshops. (For a management summary of our research findings,
see http://www.concoursgroup.com/Demography/DD_MgmtSumm.pdf.)
Create a Culture That Honors Experience
If
companies are to win back the hearts and minds of baby boomers and
other generations of mature workers, they need to start with the work
environment itself, which has become increasingly alienating to anyone
over the age of 50. Human resource practices are often explicitly or
implicitly biased against older workers, and these biases can seep into
the culture in a manner that makes them feel unwelcome.
It
starts with recruiting, in subtle ways such as the choice of words in a
job advertisement. Even high-energy, young-in-spirit older workers, for
example, may interpret an ad stressing “energy,” “fast pace,” and
“fresh thinking” as implicitly targeting younger workers and dismiss the
opportunity out of hand. Mature workers are more likely to be attracted
to ads emphasizing “experience,” “knowledge,” and “expertise.”
Traditional
recruiting channels such as want ads or help wanted signs may not
attract older workers either. Twelve years ago, pharmacy chain CVS
looked at national demographic trends and concluded that the company
needed to employ a much greater number of older workers. But managers
didn’t know how to find them—older people shopped in the stores but
didn’t apply for openings, perhaps believing they wouldn’t be hired. Now
the company works through the National Council on Aging, city agencies,
and community organizations to find and hire productive new employees.
Interviewing
techniques can be unintentionally off-putting as well. Being left alone
for half an hour to build something with Legos or being asked to
perform the type of verbal gymnastics Microsoft became famous for in job
interviews (example: how are M&Ms made?) may be daunting to
candidates accustomed to a more traditional approach to demonstrating
their skills. One major British bank realized that its psychometric and
verbal-reasoning tests were intimidating to older candidates and
replaced these tests with role-playing exercises to gauge candidates’
ability to handle customers. And Nationwide, Britain’s largest building
society, has begun short-listing job candidates by telephone to reduce
the number of applicants who are rejected because they look older.
Training
and development activities also tend to favor younger employees.
According to the Bureau of Labor Statistics, older workers (age 55 plus)
receive on average less than half the amount of training that any of
their younger cohorts receive, including workers in the 45 to 54 age
range. One reason may be that they’re reluctant to ask: As people well
established in their careers and very busy on the job, they may not feel
or want to admit the need for training and development. And yet many
midcareer and older employees require refresher training in areas from
information technology to functional disciplines to nonhierarchical
management methods. The challenge is to make them feel as though it’s
not a sign of weakness to ask. At Dow Chemical, the companywide
expectation is that employees at all levels will continue to learn and
grow; as a result, employees regularly seek training and development
opportunities, readying themselves for their next career moves.
Most
important, mature workers will be attracted to a culture that values
their experience and capabilities—an environment that can take some time
and effort to build. The Aerospace Corporation is a company that has,
over the years, built a reputation for valuing experience and knowledge.
Nearly half of its 3,400 regular, full-time employees are over age 50—a
clear signal to job candidates that experience is appreciated. CVS has
made great strides in creating a company that is more welcoming to older
employees, having more than doubled the percentage of employees over
age 50 in the past 12 years. It has no mandatory retirement age, making
it easy to join the company at an advanced age and stay indefinitely
(six employees are in their nineties). The company boosts its
age-friendly image through internal and external publications. Company
and HR department newsletters highlight the productivity and
effectiveness of older workers, and the company coproduces with a
cosmetics company a senior-focused magazine that’s called In Step with Healthy Living.
Retirement, as it’s currently understood, is a recent phenomenon. For most of history, people worked until they dropped.
Older
workers can see that CVS honors experience. A year ago, after taking a
buyout package from his management job in a major drugstore chain,
59-year-old Jim Wing joined CVS as the pharmacy supervisor for the
company’s southern Ohio stores. What influenced his decision? “I’m too
young to retire. [CVS] is willing to hire older people. They don’t look
at your age but your experience.” Pharmacy technician Jean Penn, age 80,
has worked in the business since 1942. She sold her own small pharmacy
to CVS five years ago and began working in another CVS store the next
day. She was recently given a 50-year pin. (“Turns out they don’t make
60-year pins,” she says.) By giving Penn credit for time served before
she joined the company, CVS once again sent a strong signal about the
value attached to experience.
Offer Flexible Work
While
older employees won’t sign on or stick around if the HR processes and
culture aren’t welcoming, the substance and arrangement of work are even
more important. Companies need to design jobs such that staying on is
more attractive than leaving. Many mature workers want to keep working
but in a less time-consuming and pressured capacity so that they may
pursue other interests. And many baby boomers have a direct and
compelling need for flexibility to accommodate multiple commitments,
such as caring for children and elderly parents at the same time. Flex
work—flexible in both where and when work is performed, as well as
flexibility in the traditional career path—can offer many attractions
and rewards and appeal to employees’ changing needs.
The
concept of flexible work is not new, of course, and many companies
offer it in some form—job sharing, telecommuting, compressed workweeks,
and part-time schedules. But such programs are usually small in scale
and, in practice, are often taken up by new mothers and others with
consuming family commitments. What’s more, the implicit bargain is often
that employees who participate will see their careers suffer for it.
Companies that have successful flex programs not only make these
programs easily accessible to older workers but also structure them so
that people who participate don’t feel that they’re being sidelined or
overlooked for promotions—and so that participation leads to a win-win
for employer and employee.
Look
at ARO Incorporated, a business process outsourcer based in Kansas
City, Missouri. Six years ago, its staff turnover was at 25%, which
limited its productivity as an operator of contract call centers,
back-office and forms processing, outbound customer interaction, and
more. Kansas City hosts some 90 call centers, so employees had numerous
other options, and the applicant pool was shallow.
Michael
Amigoni, the company’s chief operating officer, soon found a way to cut
costs and improve service by upgrading the company’s technology to
allow some 100 teleworkers to remain off-site. He then actively
recruited baby boomers, who were attracted to the flexibility, to fill
these jobs. Employees were not permitted to do the work simultaneously
with child care, elder care, or pet care, and company managers visited
people’s homes to make sure they had an appropriate working environment.
While some younger workers signed on initially, the company found that
these employees missed having an office community and largely dropped
out.
Meanwhile,
ARO gained access to a large pool of mature, experienced employees,
who, on the whole, have stayed with the company longer than younger
employees have. Turns out, they’re also a much better match for the
company’s customer demographics. “ARO has clients in the insurance and
financial services sectors, and a lot of the people we talk to are
older,” says Amigoni. “It helps that the people making the calls are
older, because they are in similar circumstances to customers.” For
insurance companies, a lot of ARO’s work is underwriting, which involves
asking questions about health, among other things. It’s useful to have
workers who are facing some of the same health concerns—their own or
perhaps their parents’—that their customers are. ARO has found that
younger, entry-level workers cannot make these connections as easily.
Turnover is now down to 7%, and productivity is up 15%, partly because
the company now has more seasoned staff. To boot, the company was able
to expand without having to move into a larger facility, which it didn’t
want to pay for.
Other
companies offer flexibility in work assignments to reignite older
employees who have come to find their jobs a bit stale—an approach that
can be of particular value in appealing to highly paid managerial
talent. For example, four years ago, Deloitte Consulting looked at the
firm’s demographics and realized that by 2003, 40% of its then 850
partners would be 50 or older and eligible to retire at 55. The firm
didn’t want to lose this talented group of men and women en masse, so it
created what it called a Senior Leaders program, which enabled partners
in their early fifties to redesign their career paths. (The program,
along with a similar program at Deloitte’s sister company, Deloitte
& Touche, is currently on hold as the two companies reintegrate
operations following last year’s decision not to separate as planned.)
Here’s
how the Senior Leaders program worked: Each year, a ten-member global
selection committee assessed candidates who had made a unique
contribution to the firm and would continue to add significant value.
The committee then sat down with each nominated employee to customize a
second career with the firm, including flexible hours and work location,
special projects, and the opportunity to engage in mentoring, research,
training and development, company promotions, or global expansion.
Deloitte still has about a dozen active senior leaders, most of whom
opted for full-time work in their rejuvenated roles. The partner who
launched the program told us: “The biggest surprise was the prestige the
program gained. Being a senior leader became extremely prestigious both
to the firm and to the clients.”
Still
other companies appeal to older workers’ desire for flexibility by
reducing hours in the years leading up to retirement. The reduced hours
are an attractive option because it gives workers opportunities to
pursue outside interests. At Varian, a leading provider of radiotherapy
systems, employees age 55 and over who have a minimum of five years of
service and who plan to retire within three years can negotiate a
reduced work schedule. The typical arrangement is four days per week the
first year and three days a week thereafter. Half-time is the minimum,
and two half-timers can job share. Participants retain full medical and
dental benefits and can request a return to full-time work if the new
schedule results in economic hardship.
Many people don’t want a life of pure leisure; half of today’s retirees say they’re bored and restless.
We
are strong advocates of flexible work, in all the varieties described
here, not only because it’s a way to entice older workers to continue
working but also because it forms the foundation of a flexible new
approach to retirement, one that assumes people can continue to
contribute in some way well into their “retirement” years.
Introduce Flexible Retirement
Flexible
retirement is flexible work in the extreme—a logical extension of the
flexible work models just described, where the work may continue
indefinitely.
Retirement,
as it’s currently understood, is a recent phenomenon. For almost all of
history, people worked until they dropped. It was only during the Great
Depression that, desperate to make room in the workforce for young
workers, governments, unions, and employers institutionalized retirement
programs as we know them today, complete with social security and
pension plans. When the modern notion of retirement was first
articulated near the end of the nineteenth century, the designated
retirement age of 65 was longer than the life expectancy at the time.
Over the last 50 years, the average retirement age declined steadily; in
the United States, Great Britain, and Canada, the average retirement
age is currently around 62. Meanwhile, life expectancies have increased,
leaving more years for leisure.
But
in fact, many people don’t want a life of pure leisure; half of today’s
retirees say they’re bored and restless. A recent AARP/Roper Report
survey found that 80% of baby boomers plan to work at least part-time
during their retirement; just 16% say that they won’t work at all.
They’re looking for different blends—three days a week, for example, or
maybe six months a year. Many want or need the income, but that’s not
the only motivator. People tend to identify strongly with their work,
their disciplines, and their careers. Many wish to learn, grow, try new
things, and be productive indefinitely, through a combination of
commercial, volunteer, and personal pursuits. They enjoy the sense of
self-worth that comes with contributing to a business or other
institution, and they enjoy the society of their peers. For some people,
the workplace is their primary social affiliation.
For
all these reasons, the notion of retirement as it is traditionally
practiced—a onetime event that permanently divides work life from
leisure—no longer makes sense. In its place, companies are starting to
design models in which employees can continue to contribute in some
fashion, to their own satisfaction and to the company’s benefit. Some
regulations currently restrict our vision of workers moving seamlessly
in and out of flexible work arrangements without ever actually retiring.
The IRS prohibits defined benefit plans from making distributions until
employment ends or an employee reaches “normal” retirement age. And
pension calculations often discourage people even from reducing their
hours with a current employer prior to retirement because payouts are
often determined by the rate of pay in the last few years of work. (For
more on these barriers, see the sidebar “Why So Inflexible?”) But a
growing number of companies have found ways to call on the skills of
retired employees for special purposes.
Why So Inflexible?
In
an ideal world, flexible retirement would allow employees to move in
and out of the workplace seamlessly, without ever choosing a moment to
retire. Employers would offer flexible work, compensation, pension and
benefits arrangements, subject to sensible and straightforward tests of
fairness and merit. Employees would have the option of entering a
flexible work arrangement not at some fixed age but whenever it’s
desirable and feasible, putting together an appropriate combination of
salary and “retirement income.” Health insurance and other benefits
would be portable from employer to employer, and the government would
ensure a health-care safety net for all. Employers would need reasonable
flexibility in selecting employees and legal protection from
discrimination claims from those workers not selected. Flex retirement
would embrace a variety of trajectories—different work for a former
employer, the same type of work for a new employer, a career restart,
variable schedules.
But
in the United States, at least, things don’t yet work that way, and
truly flexible retirement is not yet possible for most employees of
publicly held for-profit corporations. Indeed, according to an
Employment Policy Foundation study, 65% of employers in the United
States would like to offer such flexible retirement, but most feel
blocked by regulatory restrictions. The obstacles start with pension and
benefits regulations:
IRS.
Internal
Revenue Code regulations prohibit defined-benefit pension plans from
making distributions until employment ends or the employee reaches
“normal retirement age.” Coupled with an ERISA provision, this can
prohibit distributions even after normal retirement age.
ERISA.
The
Employee Retirement Income Security Act imposes rules of uniformity in
the treatment of employees and their pension benefits. These rules make
it hard to construct arrangements for the skilled and valuable employees
whom companies most want to retain.
ADEA.
The
Age Discrimination in Employment Act requires equal benefits, such as
health insurance, regardless of age. The implications of this law have
yet to be sorted out, but it raises the question: Can benefits be
reduced as part of a flexible retirement arrangement?
Working
around pension regulations can complicate the design of flex retirement
programs. The regulations may also impel employees, for financial
reasons, to retire altogether (or return altogether) rather than opt for
flex retirement. Legislative changes are required to overcome these
regulatory impediments, and major employers may have to band together in
lobbying for them. The Employment Policy Foundation has outlined the
needed changes:
- Amend pension rules to prohibit reductions in pension benefits if an employee’s pay is reduced owing to flex retirement.
- Eliminate
the 10% penalty on early distribution to employees with 30 or more
years of service, regardless of their age, and allow distributions from
401(k) plans before age 59.
- Allow people ages 55 to 65 to buy Medigap insurance at competitive rates.
- Liberalize nondiscrimination tests for flexible retirement plans.
Recent
attempts to change these laws have stalled, and the gradual raising of
the Social Security full payout age and easing of restrictions on
outside income offer relief only for the already retired. The U.S.
government has yet to face the demographic and economic imperative to
make it easier for mature employees to work.
The
costs of health benefits, which have been rising at double-digit rates
annually, complicate matters further. Employers are motivated to reduce
these costs by reducing coverage for employees and retirees. And because
costs and premiums increase with age, employers have a disincentive to
retain older workers. As the number of retirees grows, their health
benefits become a significant proportion of an employer’s fixed costs.
In response, more and more employers are taking strong, sometimes
draconian, action: Almost everyone is increasing employee premiums and
copayments, some are lowering contribution levels and raising
eligibility requirements, and a few are eliminating retiree health
coverage. Employees are afraid to take advantage of flex retirement
programs if it means their health care costs go up.
From
the standpoint of the employee, these flex programs offer opportunities
to mix work and other pursuits. They also offer personal fulfillment
and growth, ongoing financial rewards, and continued enjoyment of the
society of colleagues. For employers, the programs provide an elastic
pool of staff on demand and an on-call cadre of experienced people who
can work part-time as the business needs them. Recruiting and placement
costs are close to zero because the business is already in contact with
these workers, and training costs are minimal. They know the
organization and the organization knows them; they fit in right away and
are productive without ramp-up time. And they bring scarce skills and
organizational knowledge that can’t be matched by contractors
unconnected with the organization.
Retirees
can also act as leaders on demand. Corporations periodically face waves
of executive retirements, and many have done a poor job of maintaining
the leadership pipeline. A group of experienced executives who can step
in at a moment’s notice can both fill gaps and help bring the next
generation of leaders up to speed.
Typically,
these programs allow an employee to take regular retirement and then,
sometimes after a specified break in service (typically six months),
return to the employer as an independent contractor, usually for a
maximum of 1,000 hours a year. (The IRS imposes the hourly restriction
to discourage companies from substituting full-time employees with
retirees and thus avoiding expenses such as benefits and FICA. Employees
who work more than 1,000 hours per year usually need to be contracted
through an agency and make their services available to other employers
as well.)
It’s not good business to push people out the door just because your policies say it’s time.
While
most such programs today lack sufficient scale to make a difference in a
company’s overall staffing, serving instead as a safety valve and a
source of specific skills and experience, large corporations would do
well to bring these programs up to scale as labor markets tighten. An
example of a program at a scale proportional to the overall employee
population is that of the Aerospace Corporation, which provides R&D
and systems-engineering services to the air force. The personnel needs
of this California-based company vary from year to year and contract to
contract, and its Retiree Casual program helps level the staffing load.
Long-term
employees can generally retire with full benefits at age 55 or older.
As part of the Retiree Casual program, they can then work on a
project-consulting basis for up to 1,000 hours per year at their old
base salaries, sometimes less, depending on roles and responsibilities.
Eighty percent of retirees sign up, and some start back the day after
they retire. About 500 retiree casuals are available at any given time,
while 200 are working. They work various patterns—most work two days per
week, but some work six months on, six months off (the 1,000-hour limit
is approximately the equivalent of half-time). A few (three to four a
year) are so indispensable that they have to be dropped from the program
and contracted via an agency after they hit the 1,000-hour limit. Most
participate into their midsixties, some beyond 80.
The
program assures the company a degree of “corporate memory,” according
to George Paulikas, who retired in 1998 at age 62 as an EVP after
spending his entire post-PhD career with the company. He was off only a
couple of weeks before being asked back to help on a project and has
worked part-time ever since—about one-quarter time last year. “You don’t
want people with enormous experience to just walk out the door. The
Retiree Casual program keeps expertise around and helps transfer it to
others. People often remark that we don’t have many consultants around
here. Actually, we do, but they’re called retirees, and they already
know the business inside out.” Paulikas sticks with the program because
it allows him to keep his association with the organization but on his
own terms. “This program is a pleasant way to keep associated with a
great organization, great people, great work. I get to work less often
and with less intensity.” And because he’s not working full-time,
Paulikas has been able to pursue other professional interests; he works
as a consultant to the Institute for Defense Analyses and is a member of
the National Academy of Sciences Space Studies Board.
Monsanto
has a similar program, which it calls the Resource Re-Entry Center.
It’s open to all employees who leave the company in good standing and
want to return to a part-time position, though departing employees have
to wait six months after leaving a full-time job. Managers are directed
to use retirees for job sharing, for cyclical spikes, and for temporary
positions in the case of unplanned leaves. They’re told not to attempt a
reduction in benefit costs by hiring retirees for long-term work.
Participants are eligible for company savings and investment plans as
well as spot bonuses (though not the normal bonus structure).
Originally, participants were limited to 1,000 hours of work per year to
ensure the program wouldn’t interfere with pension payouts, but
Monsanto recently relaxed the requirement for those people whose
pensions wouldn’t be affected, such as retirees who had received a
lump-sum payout.
Jim
Fornango, who retired from Monsanto in 1996 at the age of 53, has
returned to work on a variety of projects since 1998. He likes the
flexibility: “I spend the amount of time I want doing things I want. I’m
not locked into a structure.” And, like Paulikas, he’s been able to
explore other interests at the same time; he serves as a substitute
teacher and as a counselor to other teachers.• • •
It’s
fashionable to invest heavily in high-potential employees, creating
programs that give these select (and historically young) people the
leadership experiences they’ll need to ascend quickly through an
organization. Why not, then, develop a similar type of program aimed at
older and midcareer workers with the skills, abilities, and experiences
that your organization most needs? A lifelong-contributor or
high-retention program could call on a variety of techniques to reengage
these valuable players. Such a program might include fresh assignments
or career switches, mentoring or knowledge-sharing roles, training and
development, and sabbaticals—all of which have the potential to
rejuvenate careers while engendering fresh accomplishments and renewed
loyalty.
And
yet in our research, we didn’t find a single company that explicitly
created such high-retention pools among over-55 workers. Some businesses
are taking the first step: Sears, for example, has expanded its
talent-management and retention focus to include not just highly
promotable people but also solid contributors and pros with specific,
tough-to-replace skills. Dow Chemical has oriented its human resource
management systems toward “continuous rerecruitment” of its workforce,
in part by encouraging people to move into different roles throughout
their careers. And companies like Aerospace and Monsanto are using their
retiree programs to retain employees with valuable skills. But by and
large, in most companies, the over-55 crowd continues to get very little
attention from management.
That’s
going to have to change. Sixty-five isn’t what it used to be. In 2001,
Bob Lutz, then 69, was recruited to join General Motors as vice chairman
of product development, charged with rejuvenating the product line as
he had done at Chrysler with the Dodge Viper, Chrysler PT Cruiser, and
Dodge Ram truck line. In last fall’s World Series, the winning Florida
Marlins were led by 72-year-old Jack McKeon, called out of retirement
early in the season to turn around the fortunes of a youthful but
underperforming club. Collecting Grammy Awards in 2000 were Tony
Bennett, Tito Puente, and B.B. King—combined age around 220. Al
Hirschfeld’s caricatures graced the print media for more than 75 years,
and he was still drawing when he passed away last year, his 100th. And
then there’s the litany of business executives called out of already
active retirement to inject stability, direction, confidence, and
sometimes legitimacy into major corporations in need of leadership.
Examples include 67-year-old Harry Stonecipher, who recently succeeded
Phil Condit as Boeing’s CEO; John Reed, named interim chairman and CEO
of the New York Stock Exchange; Allan Gilmour, vice chairman of Ford,
who rejoined the company after retirement; and Joseph Lelyveld, who
stepped in temporarily at the New York Times last year.
But then, maybe 65 was never what we thought. Lee Iacocca once told Wired,
“I’ve always been against automated chronological dates to farm people
out. The union would always say, ‘Make room for the new blood; there
aren’t enough jobs to go around.’ Well, that’s a hell of a policy to
have. I had people at Chrysler who were 40 but acted 80, and I had
80-year-olds who could do everything a 40-year-old can. You have to take
a different view of age now. People are living longer. Age just gives
experience. Besides, it takes you until about 50 to know what the hell
is going on in the world.”
What
Iacocca understood was that people don’t suddenly lose the talent and
experience gained over a lifetime at the flip of a switch. It’s not good
business to push people out the door just because your policies say
it’s time. Smart companies will find ways to persuade mature workers to
delay retirement or even eschew it entirely as long as they remain
productive and healthy.
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