Develop a Plan, Prepare for the Baby Boomer Retirement Surge

Most employers would be in trouble if half their staffs suddenly walked out the door. But without the right retention strategies, succession plans, and training programs in place, an exodus of that magnitude could strike any number of businesses in a few short years.

It's a fact: Many employers are ill-prepared for the impending exodus of 78 million baby boomers from the workforce. And with 25 percent of all U.S. employees nearing retirement age, there's not a lot of time left for companies to develop solid long-term strategies.

While some employers still are doing little to prepare, others are starting to take a closer look at the potential impact of these retirements on their workforce. In a recent survey of 140 mid-size and large employers, for example, Hewitt Associates found that 55 percent already have evaluated the impact that retirements could have on their organizations. And of those surveyed, 61 percent said they have developed or will develop special programs to retain employees nearing retirement.

Up until about three years ago, Madonna University in Livonia was one of those employers without a formal plan, even though 40 percent of its workforce is nearing retirement age, said Ernie Nolan, vice president for academic administration.

After taking a closer look at the demographics of its workforce, the university decided it was time to act. Now, Madonna University has a long-term plan in place with a number of programs designed not only to retain older workers, but also to help them transfer knowledge and organizational culture to newer, less experienced employees.

But the planning is far from over, Nolan said. “We've really decided that it's kind of a multifaceted issue, and it's a work in process,” he said. “So we will continue to look at the needs of individuals and the institution and try to meet those needs as well as we can.”

Here are a handful of approaches that are working for the university: a formal mentoring program that pairs more experienced workers with new hires for one year, a phased-in retirement option that allows retirement age employees to work on a half-time basis for two years, an enhanced retirement benefits package, medical coverage for retirees, and training sessions to help educate retirement age employees on financial and other issues.

Like Madonna University, many employers are tackling the retirement issue from several angles. An increasing number of employers are offering phased retirement programs that allow older workers to enjoy the benefits of a traditional retirement by scaling back hours and working more flexible schedules, said Allen Steinberg, principal and senior design consultant at Hewitt, a human resources consulting firm based in Lincolnshire, Ill. In fact, recent findings show that 47 percent of companies provide the option of phased retirements to their employees.

Bottom line? Have a plan and be prepared, Steinberg said. Think about the skill sets you want to retain in your workforce. And start thinking beyond traditional retirement options for employees. The right programs can convince older employees to remain longer and help your organization prepare for the future.

“This is an issue that really should be addressed,” he said. “It might not be a burning issue today . . . but you really shouldn't put it off.”

To help prepare your organization for a surge in baby boomer retirements, Steinberg and Nolan offer the following advice:

• Dig for data: When was the last time you checked the demographics of your organization? It may be informative to read about overall trends, but they don't give you a true picture of what's going on within your organization, Steinberg said. Before devising any plans, do some research and gather data about your workforce. How many employees are nearing retirement age? What does your talent pipeline look like? What skill sets do you need to retain and cultivate in your workforce? Find out – either through an objective study or by talking to key managers who are in the know.
• Ask employees: Historically, employers have made assumptions about what workers want and what it takes to retain them, but that's not a smart approach, Steinberg said. Don't assume. Find out what would make your employees stay longer at the company. Ask employees directly or find out through other channels with as few intermediaries as possible, he said.
• Send the right message: Do your programs and retirement benefits encourage employees to think about staying at your company beyond the traditional retirement age? Be sure to take a hard look at policies and practices that might be sending the wrong message to employees, Steinberg said. For example, does your company have financial incentives or retirement programs that encourage employees to retire early or at an age that once was historically appropriate? People are staying longer in the workforce, so make sure your programs and policies line up with the message you want to send about when people should consider retirement, he said.
• Evaluate existing programs: Be sure to evaluate your retirement benefit levels to make sure they're competitive enough to attract and retain employees, Nolan said. For example, Madonna University used to provide a 5 percent match to employees' 401(k)s if workers contributed 5 percent of their salary. Now, the university offers a 12 percent match. And in contrast to a few years ago, the university now offers medical insurance coverage to its retirees.
• Offer flexibility: Retirement used to mean that an employee left a company for good after years of service. Today, the definition of retirement is changing, and employers increasingly are finding ways to provide older employees with some of the flexibility of traditional retirements, while still retaining older workers' expertise and experience, Steinberg said. Consider flexible arrangements, such as allowing employees to work part time for a specified period, or on a seasonal or contractual basis. Madonna University's phased-in retirement program has been very effective, Nolan said. It has allowed older employees to work fewer hours while training less experienced employees – an approach that is helping the institution retain its teaching culture.
• Transfer knowledge: Make sure that you have some formal programs in place that allow older workers to transfer their knowledge to new hires and less experienced employees, Steinberg said. If all your older workers were to simply walk out the door, what knowledge and skills would they take with them? “What do you need to do to capture that knowledge before they walk out the door?” Madonna University's mentoring program, in conjunction with the phased-in retirement option, has worked out well for the organization, Nolan said, “particularly in areas where the human resources are fairly scarce.”
• Provide education: Providing baby boomers and other employees with information about retirement-related topics is a good idea, Steinberg said. Some people are retiring before they should, and employer-provided training helps employees make more informed decisions. Madonna University, for example, has hosted a number of training sessions for employees about various retirement issues, Nolan said. Employees also are able to meet one-on-one with financial advisors to help plan for retirement.
• Recruit right: It's important to retain the right older workers, but it's equally important that managers know how to hire the right new employees, Nolan said. Recruiting right helps ensure that your company culture remains intact even after older employees retire and leave your organization.

Written by Jenny Cromie, certified human resources specialist (CHRS)