The alternative to the ‘Great Resignation’ — phasing retirement
Challenges to today and tomorrow’s workforce supply and growth are growing everywhere. The catchphrase “Great Resignation” describes millions fleeing work because of poor treatment, low pay, limited childcare or poor development. Chilling reports abound of historically low and plunging birthrates and the end of traditionally large immigration flows to staff our growing economy.
Calming labor market turbulence
Now also comes the recognition that hidden in this massive COVID-inspired turmoil is the unexpected and highly unusual early retirement of millions of aging workers. Washington Post Columnist Helaine Olen observed, “Goldman Sachs estimated last fall that more than half of those who had left the workforce during the COVID era’s Great Resignation were over 55.”
“Many older employees, however, say they would like to stay connected to their jobs in retirement, but worry that they won’t be able to do so. In a recent survey conducted by the Harris Poll … a vast majority of respondents expressed interest in semiretirement, where they could either work a flexible schedule or reduced hours or consult — but only one in five of their employers offered up such an option,” she added.
So what novel proposals are suggested to stem this dangerous tide of departure? Pundit after pundit falls back on an outdated “solution” — the decades-long contractor option dubbed by its critics as “retire and rehire” without benefits or other values of regular employment. But times have changed — and quite dramatically. This new systemic challenge demands bold, new, enriched solutions. While the old deals have likely lost their luster, a relatively straightforward fix is at hand.
Enter phased retirement
Enabling regular employees with benefits to reduce their schedules from full to reduced time over an agreed-upon trajectory can meet the employee desire for so-called semi-retirement and the employer need for retention of mature labor and the transfer of critical knowledge to development-seeking younger employees.
Phased retirement programs are not the idealistic stuff of HR think tanks, but business-beneficial initiatives that pioneering companies have had in place for years with great success. Successful programs have been operational for more than a decade at companies ranging from furniture manufacturers Herman Miller and Steelcase to pharmaceutical giants Abbott and AbbVie.
A 2017 US Government Accountability Office report, “Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers,” documents the feasibility and desirability of this approach to the challenge of retaining older workers. The report observed that “eight of the nine employers GAO interviewed said they were able to address various design and operational challenges and cited program benefits related to worker retention, knowledge transfer, transition into retirement and workforce planning.
Habit trumps innovation
If such an obvious solution is available, why is this option rarely mentioned or adopted? In my consulting firm’s experience, several factors have helped keep this practice a well-hidden secret. An underlying and pervasive age bias, along with the widely shared — and short-sighted — assumption that older workers are just too expensive to keep frames much business thinking about this option.
Further, myths abound about the complexity of these programs and formidable legal barriers that make them nearly impossible to implement. These outdated assumptions are rooted in challenges once posed by the now virtually non-existent pension systems that did require intricate and costly redesign. With the virtual extinction of pensions and the near-universal adoption of 401ks, such issues and obstacles no longer exist.
But the simplest challenge — and the hardest to overcome — is the power of habit above all else. Simply put, the reigning view at the top is: We don’t do this because we’ve never done this.
We have a great lesson of this principle in action with the recent mass adoption of remote work. This successful practice that had been allowed only sparingly to a small number of high-performers for decades was suddenly force fed to employers by a once-in-a-century pandemic. COVID-19 and the survival imperative accomplished in months what far-sighted consulting could not achieve. In a matter of months, the uncommon became common sense.
Perhaps the force of demographics, chronic labor shortages and the need for an age-friendly workplace will combine to adopt practices that support a “longevity agenda.” Far-sighted employers will consider:
- Ending the habitual “sell-by” dates of age 55, 60 or 65
- Provide robust flexible scheduling, including phased retirement initiatives
- Guarantee career-long training and development, regardless of age
- Strengthen pension and 401k options
- Add ongoing, individualized financial wellness counseling to benefits packages
However, employers seek to pursue this valuable source of mature and reliable labor, their failure to do so would be a grave error. Creativity and determination in this effort will be amply rewarded. There is no reason that 2022 cannot be the year that phased retirement moved from rare success to obvious solution to a serve and chronic problem.
Paul Rupert is CEO of Rupert Organizational Design, has been a consultant on workforce recruitment and retention strategies for four decades. His clients include hospital systems, health care organization and major corporations.
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