Making up roughly 20 percent of the American public, Baby Boomers have played a huge role in the American workforce for decades. But the most impactful Baby Boomer economic milestone is yet to come: retirement. While Boomers hold the majority of significant leadership positions, nearly 10,000 will be suitable for retirement by turning 65 each day until the year 2030.
Many organizations have begun gearing up for this mass transition, but of course, the recession has changed everything. Now, of those Baby Boomers eligible for retirement, a whopping 65 percent plan to work well past age 65 or do not plan to retire at all.
This is creating a lose-lose situation for organizations, which face higher costs as a result of keeping legacy personnel who require higher pay, and Millennials yearning for a shot in the corporate world.
For some, the solution lies in phased retirement: A revolutionary concept that emphasizes a mentor-to-apprentice relationship between a seasoned, retirement-eligible executive and an eager, new hire with a modern skillset and fresh perspective.
Phased retirement is defined as a comprehensive plan to reduce one's time working at an organization over the course of several years. Its success is the balance between the Baby Boomer still receiving the paycheck and full or partial benefits they depend on, while mentoring a younger employee who will eventually take their place.
In most organizations, the human resource department will be charged to lead such an initiative. There are some important considerations to take into account when deciding if phased retirement is right for your organization. Here are a couple of first steps and potential challenges:
• Identify who in the company is planning to retire within 3-10 years. This is the obvious first step, but it can be more complicated than you think. Companies need to be aware of potential issues involving discrimination, specifically based on age. To determine if an executive is planning to retire, you can simply ask, "Where do you see yourself in the next five years?" Even if the answer isn't retirement, it will still spark a conversation that will give you insights into an employee's goals.
• Determine a succession plan through workforce analysis. Once you have identified who is planning on retiring soon, complete a workforce analysis by examining these professionals, their responsibilities and who might be able to fill their shoes. Doing so will help you determine if you can develop an existing employee, or if there is a need to hire from outside the organization.
• Formulate a process to develop entry/mid-level employees into leaders. Often, the talent organizations seek is already in-house. To find out, gather input from the executive on their potential successor. What qualities should they have? Is there anyone who stands out to them immediately? If hiring outside the firm is necessary, invite executives to sit in on the interviews.
When it comes to training new hires and existing employees for management and executive positions, consider implementing shadowing or other apprentice programs. When aiming to preen younger workers for higher positions, the key is to gradually increase the responsibility of the employee taking on the leadership role, while reducing the amount of time the executive is spending at work.
• Know the financials. It's important to note that phased retirement is an intricate process that initially runs largely on trial and error. It's time- and labor-intensive, which can get expensive. Aside from the cost of developing the training program, compensation plans need to be reworked according to employees' new roles: both for the retiree and employee moving upward.
• Leaders seeking retirement might wear several hats. Most executives have numerous responsibilities that can span across divisions of the company. This makes it more complex to train one employee to fill a leader's many roles. Identify other co-mentors to help with training, who can also be a resource for the new leader once they step in.
With phased retirement, younger employees can implement their fresh, innovative perspectives while receiving training and wisdom from veterans of the business. As a result, many organizations report a stronger sense of camaraderie and trust among employees. without having to present substantial growth costs. It's a win-win-win.
Christopher A. Szpryngel is the acting dean of the Malcolm Baldrige School of Business at Post University in Waterbury.