The make-up of your workforce is going through many changes with a healthy mix of generations. If you have any nearing retirement – this article is for you!
Every day, approximately ten thousand employees reach retirement age in the U.S. Employers must manage this exodus by considering phased retirement strategies. More often than not, this generation contains the most experienced, skilled, and knowledgeable members of your workforce. You want to make sure you don’t lose that when they leave. After all, it could cause a significant disruption for your business.
Some employers implement phased retirement strategies to encourage enough time for information and knowledge transfer. A phased retirement program can be formal or informal. Generally, it allows a retiring employee the time to transition from full-time employment to retirement gradually while imparting valuable knowledge and skills to those filling their position. It can create a win-win scenario where employees work reduced hours or take on fewer responsibilities while receiving retirement benefits. After all, retirement is life-changing and can lead to social, emotional, and personal upheaval. At the same time, this program gives employers time to allow the retiree to transfer their skills and knowledge to another colleague.
A successful phased retirement program requires a great deal of thought and planning. But, before we get down to those details, let’s look deeper at the top four benefits of this program for employers.
Benefits of a phased retirement program
1) Helps with succession planning and business continuity
The most significant benefit for the employer and organization is the time it allows to transfer the knowledge from a seasoned employee to another. Mentorship programs will enable the retiree to teach younger employees what they’ve learned over the years. It encourages continuity of knowledge and prepares younger colleagues for more senior roles.
2) Creates a productive and inclusive work environment
Phased retirement brings about openness and inclusivity in your business. And this can pay huge dividends. Having multiple generations interact in the workplace allows for diversity of thought, opinion, and ideas. As a result, your workforce’s productivity and creativity grow.
3) Reduces payroll costs
Of course, phasing employees through reduced work hours saves you on compensation costs. You can then invest these resources in the next generation of employees. But, be careful that you and the employee know how reduced hours may affect benefits like healthcare and other insurance programs.
4) Provides continuity for clients and customers
As you can imagine, this is a significant benefit for client-facing roles. The transition time gives clients time to get to know their replacement. The retiree can make the introduction and impart any nuances about the client to the new service representative. Allowing this continuity for your client will solidify your relationship and hopefully encourage longevity or repeat business. The same concept applies to organizational suppliers and other external stakeholders.
5) Supports employees
Retirement is a significant life change. A phased approach gives individuals a transition period to say goodbye to the long standing work routine and ease into a new way of life. Companies can show their support for workers at all stages of life even when they are departing from the workplace. People want to work for companies with compassion and respect for their employees.
How to implement a phased retirement program
1) Create a phased retirement policy
When creating your policy, it’s essential to base it on your business needs. Ensure it complies with state and federal laws, as many regulate how you may treat older employees. But whatever form your policy takes, it should include:
- Who is eligible for phased retirement
- The length of the transition period
- Rules and guidelines on reduction in working hours
- Any mentorship roles to be carried out by retiring employees to aid knowledge transfer
2) Research how phased retirement will affect employee benefits
Because reduced working hours may impact eligibility for retirement, healthcare, social security, and other benefits, it’s important to understand each aspect. You can better provide clarity to a retiree considering participation in the program.
3) Be clear about the knowledge transfer
Identify what knowledge you expect the individual to share. By making a clear plan for knowledge transfer, you’ll ensure that any mentorship programs between retiring and newer employees are effective. You can measure results to ensure this program is successful in the retention of vital skills and knowledge.
4) Make employees aware of the program
It’s never too early to start. Open the conversation before your employees reach retirement age. First, familiarize them with the program and ensure they understand all the options available. Then, give employees a chance to ask questions and share any concerns. After rolling out the program, continue to promote it by including it in your employee handbook and training new managers on the intricacies.
With a large population approaching retirement age, organizations can expect competition for valuable skills to increase. Proactively creating thoughtful phased retirement strategies beneficial to your workplace is crucial. It will help you retain valuable skills and knowledge as the next generation of employees takes you to the next level.