The alternative to the “great resignation” – gradual retirement
Today’s and tomorrow’s labor and growth challenges are growing everywhere. The catchphrase “Great Resignation” describes millions fleeing work because of poor treatment, low pay, limited child care or poor development. Terrifying reports of historically low and declining birth rates and the end of the traditionally large influx of immigrants to fill our growing economy.
Calm down the labor market turbulence
Now also comes the realization that lurking within this massive COVID-inspired turmoil is the unexpected and highly unusual early retirement of millions of aging workers. Helaine Olen, Washington Post columnist noted, “Goldman Sachs estimated last fall that more than half of those who left the workforce during the great COVID-era retirement were over the age of 55.”
“However, many older workers say they would like to continue working when they retire, but fear it will not be possible. In a recent survey by Harris Poll, a large majority of respondents expressed an interest in semi-retirement, where they could either work with flexible working hours, reduced hours, or seek advice – but only one in five of their employers offered such an option,” she said added.
So what novel proposals are being proposed to stem this dangerous wave of departures? Pandit after pandit is reverting to an outdated “solution” — the decades-old option for contractors, what its critics call “retire and rehire” without the benefits or other values of regular employment. But times have changed – and quite dramatically. This new systemic challenge requires bold, new, enriching solutions. While the old deals have probably lost their luster, a relatively simple fix is available.
Entry into semi-retirement
Allowing regular employees with benefits to reduce their schedules from full time to reduced time over an agreed period of time can meet the employee’s desire for so-called semi-retirement and the employer’s desire to retain mature workers and to pass on critical knowledge to younger employees who are willing to develop.
Part-time retirement programs are not idealistic stuff from HR think tanks, but business-enhancing initiatives that pioneering companies have been running with great success for years. Successful programs have been running for more than a decade at companies ranging from furniture makers Herman Miller and Steelcase to pharmaceutical giants Abbott and AbbVie.
A 2017 US Government Accountability Office report titled “Phased Retirement Programs, Although Uncommon, Provide Flexibility for Workers and Employers” documents the feasibility and desirability of this approach to addressing the challenge of retaining older workers. The report found that “eight of the nine employers surveyed by GAO said they were able to address various design and operational challenges and cited the program benefits in terms of employee retention, knowledge transfer, transition to retirement, and workforce planning.” .
Habit trumps innovation
If such an obvious solution is available, why is this option rarely mentioned or embraced? In my consulting firm’s experience, several factors have contributed to this practice remaining a well-hidden secret. An underlying and ubiquitous age bias coupled with the widespread – and short-sighted – assumption that older workers are simply too expensive to retain drives many companies considering this option.
In addition, there are many myths about the complexity of these programs and formidable legal obstacles that make them almost impossible to implement. These outdated assumptions are rooted in challenges once posed by now-nearly non-existent pension systems, which required complicated and costly transformation. With the virtual extinction of pensions and the near-universal adoption of 401ks, such problems and obstacles no longer exist.
But the easiest challenge – and the hardest to overcome – is the force of habit. Put simply, the prevailing view at the top is we’re not doing this because we’ve never done it.
We have a great lesson of this principle in action with the recent mass adoption of remote work. This successful practice, which for decades was only allowed to a few top performers, was suddenly forced to be fed to employers by a pandemic of the century. COVID-19 and the need to survive have accomplished in months what far-sighted advice could not. Within a few months, the unusual became common sense.
Perhaps the power of demographics, chronic labor shortages and the need for an age-friendly workplace will combine to introduce practices that support a “longevity agenda”. Far-sighted employers will consider:
- Put an end to the usual sell-by dates of 55, 60 or 65 years
- Ensure robust, flexible planning, including phased retirement initiatives
- Guarantee career-long education and training, regardless of age
- Strengthen pension and 401k options
- Add ongoing, customized financial wellness advice to benefit packages
However, employers are trying to take advantage of this valuable source of a mature and reliable workforce, and failing to do so would be a serious mistake. Creativity and determination in this effort will be amply rewarded. There’s no reason 2022 can’t be the year that gradual retirement has grown from a rare achievement to an obvious solution to a ministry and chronic problem.
Paul Rupert is CEO of Rupert Organizational Design and has been a consultant on recruitment and retention strategies for four decades. Its customers include hospital systems, healthcare organizations and large corporations.