Five Steps to Create a Transitional Retirement Option For Your Employees
The relationship between companies and their employees has been forever changed by the Covid-19 virus. It’s hard to believe, but it’s true. Since late January, Americans have been shifting from their traditional roles and workplaces toward their home offices. They’re using telecommuting technology and learning new capabilities daily. There’s a shift occurring and the biggest question for companies will be whether this happened to you or for you.
It’s no secret that many workers have been unhappy in their jobs. Many workers are at, or above, what might be considered “normal” retirement age, but for various reasons they have continued to work. Now they’ve been home for months and some of them like the change, even though it has required them to adopt some of the technology that they had been resisting for years. Many workers didn’t necessarily want to embrace new changes and technology, but this health scare meant it wasn’t optional anymore if they wanted to stay connected to coworkers (and family).
Eventually we will be on the other side of this pandemic. We won’t have to shelter in place anymore and hopefully we can hug family members who don’t live in our home once again. That will definitely be a happy day for many people. For others, though, it will be the beginning of the end of working relationships. Unless, of course, companies pivot in the same way that their workers did during the crisis and adopt new strategies that many companies have been resistant to try. Successful businesses will develop a strategy for this transition before they’re forced to react to it.
Here are the steps that companies should take:
- Separate each team member’s essential skills from their “busy work.” The modern workplace has seen increased specialization over the years. As a result of COVID19 though, many workplaces have gotten much clearer on each team member’s most valuable activities. Removing simple tasks from the workloads of team members with unique skills could allow companies more flexibility and employees more time on their specialty.
- Develop official, late career tracks for team members. By creating a path toward retirement, a company can be proactive in a transition that’s natural and inevitable.
- Allow long-term employees to opt into the program. Creating a program that’s optional would give employees the chance to begin a transition on their own terms, without having to worry about a forced or abrupt exit.
- Create mentorship or team programs that pair newer team members with business veterans. Intellectual capital is the most valuable asset that many companies have. It’s also the most difficult thing to transfer from one generation to the next. A well-designed program would offer collaboration with a purpose, that’s a win for all involved.
- Facilitate a transition of hours and responsibilities over time. Many older workers (and some younger ones too) would like more flexibility. There comes a time when workers want less stress and responsibility, but they still have a lot left to contribute. That is the ideal time to shift hours and responsibilities from veteran workers to newer employees.
Under this new structure, companies and employees both win.
Companies win because:
- They retain human capital (which is less expensive to keep than to create or buy). Information is easy to come by these days, but wisdom – which I define as information plus experience – isn’t. It’s much easier and cheaper to retain the wisdom of your current team than to train or recruit new talent.
- They have the opportunity to reduce their overall labor cost. By retaining team members who have more experience, using them for their most valuable skills, and partnering them with next-generation talent, companies can get as much, or more work done, at a lower total cost.
- They improve employee satisfaction and reduce stress. Who doesn’t want a happier team? Experienced employees can stay engaged, while next-generation leaders can acclimate to more responsibility over time.
- Companies can develop a career arc that can last far longer and maximizes the lifetime value of the investment in their team. Your team is your biggest investment and it gets more valuable over time. Designing a long-term transition plan would be far simpler and effective than utilizing outside consultants.
Under the new system, long-term team members win because:
- They get increased flexibility and freedom at work. Most employees don’t necessarily get tired of their work, they get tired of how and when they work. A remixed retirement lets employees continue to do the parts of their job that they enjoy, while eliminating some of their headaches.
- Longer working life allows for continued contribution. Many retirees long to be valuable and miss being a part of a team that’s accomplishing things. A transitional program would give these employees the satisfaction of remaining involved in new innovations.
- They may have the opportunity to defer withdrawals. Our retirement lifestyle is driven predominantly by our available income and assets that we have available to draw upon. By remixing their retirement, veteran team members would have a longer “working life” that allows for both increased income and the ability to wait to draw down on the assets that they’ve set aside.
Charles Darwin said, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” Businesses and employees can’t go through the worldwide shift that we are experiencing without seeing serious changes on the other side. The key is recognizing that the shift is coming and planning for it now.
This guest post was authored by Chip Munn
Chip Munn is a senior financial advisor and CEO of Signature Wealth Strategies. He is the author of author of The Retirement Remix: A Modern Solution to an Old School Problem, and host of The Retirement Remix and Maximum Advisor podcasts. For more information, please visit, www.chipmunn.com and connect with him on Twitter, @chip_munn.