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February 17, 2003

Proactive Strategies for Countering Baby Boomer Retirements

The last issue of Astronology explored the general business implications of impending Baby Boomer employee retirements. Baby Boomers are employees born between 1946 and 1964. Today we examine key strategies to ensure your organization is proactively prepared for this upcoming transition.

The transfer of knowledge from retiring to current employees is essential for an organization's continued success. The Employers Group, a California based non-profit human resource association, calls this issue "continuity management." They recommend a systematic method of "knowledge harvesting" and dissemination, to ensure that knowledge is not lost as Baby Boomers retire. Such a system requires Human Resources to assemble and administer a questionnaire to "harvest" information from Baby Boomers, and to train new and continuing employees to ensure continuity. This approach assumes, rather than addresses, unchecked retirements and chronic turnover.

A second strategy to consider is encouraging Boomers to continue working beyond normal retirement age. A Cornell University study found that 48% of workers age 54-74 currently working in their career occupations would prefer to work fewer hours. They work more hours because of workload and job demands (41%) and financial factors (28%).

The University of Michigan Health and Retirement Study, an ongoing study of 20,000 Americans over the age of 50, found most respondents would prefer to retire gradually, working fewer hours with less responsibility. However, the same study found the most common pattern was a complete switch from full-time work to full-time retirement.

In light of the looming shortage of workers under age 65, it is good news that the majority of Boomers want to continue working after they reach retirement age.

Yet there is bad news. Currently, the opportunities for older workers to stay are extremely limited. There are many barriers at the employer, government, and cultural levels that must be overcome.

The Cornell study found job requirements and company policy were common reasons for older workers to work more hours than desired. An employee's position within the company was related to their perception whether or not reduced work hours were possible. Those in managerial or professional roles were far more likely (64%) to believe the company would allow them to work reduced hours, compared to 31% of production and service workers. The researchers concluded, "either rules or awareness vary by position within an employing organization."

Many employers have not yet taken steps to retain or attract older workers. A 2001 William M. Mercer, Inc. survey of 232 large US employers found that 55% have no specific goals for employing older workers. Some target retention efforts towards workers with special expertise or key relationships (30%) or towards workers with hard to replace skills (29%). Just 16% encourage all older workers to continue working.

Research presented by Workforce.com stresses that employers must consider creating an environment that encourages employees to spend their career with one company, and remain with it past traditional retirement age. Workforce suggests the following options in this initiative:

Flexible work schedules
More part-time positions
Job sharing opportunities
Flexible benefits
Seasonal work
Compressed workweeks
Expanded or reduced shifts
Voluntary demotions
Job rotation
Job redesign
Continued education and development
Active recruitment of older workers
Accommodations for workers with physical limitations
Incentives that appeal to older workers, such as longer vacation time
Treating employees better
Giving employees a sense of cause and partnership
Developing competitive vacation plans

"Retooling," or training in new technology, is essential to keep older workers involved in workplace changes.

According to research reprinted by WorldatWork, 26% of current retirees work full- or part-time after retirement. A survey by AARP finds 80% of Boomers expecting to work after retirement, either because they want to remain active, or because they will have no choice. Many plan on phased retirement.

Phased retirement, or gradual retirement, refers to a reduced work schedule before full retirement. Some retirees seek a "bridge job" with another company after leaving their career position, while others are offered reduced schedule employment with their current company. Current laws support employees changing jobs in a phased retirement scenario in order to access pensions.

According to a study by The Center for Organizational Research, an organization's past experience with flexible work arrangements, for example, part-time work, working from home, or job sharing, is likely to influence initiatives it uses to facilitate phased retirement.

Has the organization already developed policies that enable employees to request such treatment?
Are flexible work arrangements used for other purposes, such as caring for dependents or going to school?
If such programs are in place, how do managers and employees perceive them?
- Are they seen as fair?
- Are they used?
- Are they effective in meeting the needs of both the organization and the employee?

Organizational history with flexible work arrangements influences how older workers, their managers, and co-workers respond to phased retirement initiatives. It is important, therefore, to heed lessons learned before attempting to implement new programs.

Another aspect of organizational culture to be recognized is attitudes toward older workers. What do organizational practices, including retirement policies, recruitment and retention strategies, reward systems, and new employee orientation, convey about the value of older workers? Employers must recognize current organizational culture and identify beliefs, attitudes, and practices that undermine the objective of retaining and attracting senior members of the workforce.

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ISSN Number 1549-0467