By 2030, more than 20 percent of U.S. residents are projected to be aged 65 and over, reports the U.S. Census Bureau. This expected avalanche of baby boomers seeking retirement will severely impact businesses, many of which continue employment policies that don’t reflect this changing demographic. The most successful companies will be those that develop new policies to keep these seasoned and skilled workers.
Many employers are already experiencing a shortage of qualified workers. In fact, a third of employers expect staffing problems to continue in the coming years reports a 2016 Society for Human Resource Management survey. The report also shows that only 14 percent of U.S. companies offered either a formal or informal phased retirement program this past year.
A phased retirement strategy offers flexibility. Employees approaching normal retirement age can reduce hours they work or work for their employers in a different capacity after retirement. They can job share, telecommute or do consulting work.
“There’s a need for more companies to do this if they want to preserve their best practices, innovations, and customer relations,” says Paul Irving, chairman of the Milken Institute Center for the Future of Aging. “And there’s receptivity among older workers, a majority of whom want to stay engaged and keep working, but in new ways.”
By providing potential retirees with a phased retirement option, organizations won’t experience the sudden loss of needed skills.
Some companies are beginning to phase baby boomers into retirement. One example comes from AP reporter Matt Sedensky, who told the story of David Warsen.
Warsen has refurbished hundreds of machines at Steelcase’s Kentwood, Mich., plant. When a press stopped operating recently, the 39-year veteran and principal electrician at the office furniture maker diagnosed and fixed the problem in minutes. So his boss was relieved when Warsen, who turns 65 in February decided to take advantage of the company’s phased retirement program rather than simply end his career.
Another example comes from Stanley Consultants, a global engineering firm in Muscatine, Iowa. Dale Sweere, Stanley’s human resources director, noted that “phased retirement gives employees a way to maximize their retirement savings and [offers] the company a way to retain an experienced employee who often has built close ties with clients. It also slows costs and productivity losses tied to turnover, and responds to a desire from employees who want to remain engaged in work, just not as much.”
Implementing appealing work arrangements that attract and retain workers 50 plus—who were one-third of the U.S. labor force in 2016—may become increasingly important in an organization’s bid to survive in today’s marketplace. At the same time, it’s important to note that keeping older employees does not take away jobs from younger workers. “There’s no evidence to support that increased employment by older people is going to hurt younger people in any way,” said Alicia Munnell, director of the Center for Retirement Research.
Economists say the macroeconomic view gives a clearer picture. Having older people active and productive actually benefits all age groups, and spurs the creation of more jobs. At the same time, experienced workers are able to mentor and train younger employees, and help them get on a faster track toward achievement and higher-level positions.
The projected labor and skills shortage poses a pressing need for change that employers need to plan for today. To keep prized, seasoned employees from leaving their jobs, companies need to institute policies and programs that attract and retain them. These workers need to know their employers want to accommodate them by involving them in customizing their “new jobs.” The companies also need to offer attractive benefits.
“It’s like maintenance on a piece of equipment: You can’t just close your eyes to the problem and wait for it to break down,” claims Steve Kempner, manager of skilled trades at Steelcase.
What is your company doing to ease the potential impact of unfilled jobs and declining productivity due to the loss of retiring employees?