Old but not out: How savvy organisations meet the new face of retirement
Age inclusiveness gets easier when flexible approaches are already in place
The old one-size-fits-all model for retirement is rapidly becoming obsolete, but when it comes to rethinking how and when people end their careers, some employers are more imaginative than others.
Organisations are facing an ever-shifting environment when it comes to retirement.
Posing the question of how long a person should keep working today is like asking how long is a piece of string. The traditional cut-off age for retirement at 65 no longer applies as people are staying active and living longer. Half of today's 60-year-olds will live to at least age 90, report Lynda Gratton and Andrew Scott in their book, The 100-Year Life.
Faced with the looming economic threat of the baby-boomer demographic bulge, governments across the world have already taken action. Mandatory retirement has all but been abolished in Canada and the US. Norway and Sweden have moved retirement age from 65 to 67, and Australia is incrementally ratcheting up to 67 by 2023.
Individual attitudes range widely. Not all eligible retirees are eager to quit the workforce. Some people look forward to escaping to a life of leisure, while others are keen to keep using their skills, sharing knowledge and maintaining their relevance in increasingly diverse workplaces. Still more are opting for a hybrid model – less work, more time out, please.
Employers are in a pivotal position, at the coalface of managing and adapting the exit process for how and when people actually retire.
"Finding approaches to retirement that work for the individual as well as the organisation is critical," says Leisa Sargent, a professor and Senior Deputy Dean at UNSW Business School. Sargent is one of a team of researchers that has been exploring organisational approaches, from strategic to haphazard and unresponsive, for the best part of a decade.
Increased abilities
For organisations, there's a strong business case for keeping mature-age workers on board due to the baby-boomer talent drain. Another compelling reason for employers to rethink retirement is the competitive advantage that mature-age workers bring, writes Sargent in Organizational, Adaptation and Human Resource Needs for an Ageing Population, a paper co-authored with Atsushi Seike and Simon Biggs for the World Economic Forum's Global Agenda Council on Ageing Society.
According to the authors, the value older workers deliver to their employers is often overlooked. "Organisations that recognise this phenomenon benefit in a range of ways," they write. For example, contrary to popular belief, performance doesn't decline over time. Certain abilities such as crystallised intelligence and accumulative knowledge actually increase.
"The capacity to engage in problem solving with customers and co-workers promotes innovation and supportive workplace practices," they note.
The focus is on HR managers and line managers to create age-friendly workplaces.
"Both play invaluable roles in being tuned into organisational and employee priorities and in building relationships to retain mature-age people," says Sargent.
'People who wanted to keep working were often referred to by HR as hangers-on'
LEISA SARGENT
Simply leaving
In an early study, Sargent and co-authors Mary Dean Lee, Jelena Zikic and Sung-Chul Noh interviewed employees and managers in 24 companies across three industry sectors – financial services, extractive natural resources (oil, gas, mining) and high-tech manufacturing – in Canada and Australia.
The researchers found employers fell into four clear groups – gatekeeping, improvising, orchestrating and partnering – and some were more imaginative than others.
Gatekeeping firms put emphasis on pensions and their HR managers main theme was how older employees leave organisations.
"They took a flash-cut approach – with a tendency to early retirement packages. People who wanted to keep working were often referred to by HR as hangers-on," notes Sargent.
In improvising firms, employees decided when to go and simply informed HR they were retiring. HR managers talked about leaving, but also about employees returning – usually on an ad hoc basis when awareness arose of the need to retain a certain skill set, experience or competence after the employee had retired.
"In this group a strategic conversation around talent mapping was missing," Sargent says.
"Employees hadn't had a conversation with the line manager about whether it was a good time for them to leave or if there were ways they could stay. Frequently they had to rehire them because they couldn't replace the skill set."
Natural resources firms who participated in the study were all gatekeepers or improvisers.
'There's a failure to think through possibilities on both sides. What might the employee like to do? This could change over time'
LEISA SARGENT
Customised arrangements
Orchestrating firms focused on policies for various ways for employees to stay or leave, for example, by moving to part-time or reduced workloads, compressed working weeks, job-sharing, mentoring programs or phased retirement.
Conversations between HR and employees or between employees and line managers resulted in these firms systematically retaining employees when appropriate.
In partnering firms, HR managers talked about very comprehensive, creative approaches for mature employees to stay, leave or return. Their focus was on ways for mature employees to pass on knowledge, experience and wisdom, while also continuing to contribute, belong and learn.
"Partnering was certainly more innovative," confirms Sargent. Employees, line managers, and HR professionals were involved in discussions of timing and mutually beneficial arrangements so skills shortages were anticipated.
In these win-win solutions, everyone benefited from customised retirement arrangements – in terms of individuals' personal and career fulfilment, while the company had extended access to unique expertise and knowledge.
"There was a range of different flexible processes around much more phased retirement. Finding ways to better use the skill sets of individuals, people were able to cherry-pick the things they liked about their roles, like coaching, mentoring and thought leadership," Sargent reports.
Conversations and cooperation
The researchers were keen to learn who sparked retirement conversations. "Employees would start talking with HR or with the line manager. The line manager might go to HR for clarification on policies and practices to see what's possible," says Sargent, who calls out the 'gatekeepers' for not engaging in conversations and "not thinking more carefully about the workforce".
"There's a failure to think through possibilities on both sides. What might the employee like to do? This could change over time.
"While orchestrating companies were very proud of their HR practices and policies, the partnering ones didn't have strong policies – what they had was strong training and development for line managers to have the conversations. What was much more important was managing the relationship and open conversations about what they wanted to do and how they wanted to do it," Sargent says.
A resounding outcome from the study points to best practice involving ongoing conversations and cooperation between HR managers, employees and line managers. The topic of retirement typically arose in chats on broader career development, managing knowledge systems and HR policies, for example.
Financial services firms were clustered in the more conversational orchestrating or partnering categories. In one, a manager noted that his firm had conducted a study with employees over 45, asking what they would like the company to offer; 81% wanted the opportunity to pursue phased retirement, and 82% wanted flexible hours. An HR manager in another financial firm told of a colleague who had given two years' notice that he would like a phased retirement.
More indicators for best practice emerged from a later study published in Harvard Business Review (June 2016) in which Sargent and fellow researchers discovered three-way job sharing, two weeks on/two weeks off, part-time or contract work and leave of absence among the preferred mature-age work options of a group of 100 executives and managers.
In the big retirement rethink, Sargent, Seike and Biggs in their World Economic Forum paper suggest policies should dangle the 'carrot' of age-friendly working environments – wellbeing promotion, continuous learning and flexible work practices are recommended.
After all, as the authors note, when flexible approaches are already in place in organisations, age inclusiveness gets easier.