Senior-Level Retirement Gridlock in a Pandemic
By Tom Wilson
Author: Next Stage: In Your Retirement, Create the Life You Want (Balboa Press, 2019)
Well before the emergency of the Covid-19 pandemic there was a crisis forming in many organizations. This is a demographic crisis where highly experienced, senior level people who in the past would move on with retirement, are now staying put. This has created a conundrum and conflict between them and those seeking to rise in the organization – ones who want to take on increased responsibility and be in charge. These senior level people have provided great value over many decades and need to be treated with respect. The next generation is eager and ready to move up and take the organization to new levels.
Even before the pandemic came crashing into our world, a major gridlock was starting to form at senior management and highly experienced levels within organizations. The gridlock was simply this: many people within an organization are entering the stage of life customarily referred to as “retirement” – they leave the organization with a sense of pride, appreciation and accomplishment – and enter their “Next Stage” of life. Then, organizations would promote individuals in their mid-50’s with experience, wisdom and passion to take over and lead. The problem, however, is that the older generation is not moving on and the next generation is running out of patience.
Now enter the pandemic into this context. The demographics of the workforce has not changed. There are over 10,000 people per day turning 65 and this will go on for another 18 years. There are now two forces holding them back. First, “sheltering-at-home” gave them a taste of what retirement life is like and many do not like it. It is boring, they feel restless, and each day starts out like the day before (like being Bill Murray’s character in the movie Ground Hog Day). Secondly, their nest egg for retirement income has been reduced between 15% – 20%, and the volatility of the stock market has made individuals more fearful of letting go of their monthly paycheck. The 50-somethings are still there, waiting and ready to move up the organization. If the opportunities are not within their current organization, they may have realized that their “value” in the market is high and they may have seen other opportunities while they were “sheltering-in-place.” Hence, this is called the Retirement Gridlock.
Several research studies have shown that individuals do not want to leave the organization as a cliff-jump into retirement, but they want a gradual transition that may last from six months to 2 years. However, most organization’s retirement (or early-retirement) programs provide a celebration gathering, a final paycheck, and “leave you keys on your desk as you head out the door.” They want you out. This is because it is easier for the company to move on from a loss of an individual than a gradual transition where the work moves from one person to another. This conflict is continuing to fuel many issues with executive and senior experienced staff member succession.
Consequently, individuals often plan their own transition and seldom tell their manager or Human Resources of their intention. They fear they may be “encouraged out” or excluded from important meetings, information or assignments. So, when they finally announce their decision, for some it is a shock and for others it is what they suspected. The current process does not recognize reality and fosters games and deceit. In an era when people are starting to realize what really is important in life, it is time for a little more honesty.
Presenting a problem without alternative solutions is not being responsible in these times of significant change and uncertainty. Consider the following thoughts which will hopefully stimulate additional ideas and a strategy on what might just work for your organization.
- Identify where the gridlock/logjam is. The first step is to identify which positions, functions or areas within the organization are facing (or may soon be facing) this gridlock issue. This means there are people who should normally be moving on and others who are ready to move up. This implies you have sufficient bench strength or people ready to assume these leadership roles. Also identify the potential risks or consequences of the situation related to retention of the next generation, issues with adapting change, or priorities to reduce total compensation costs.
- Create the ramp. This applies to senior level individual contributors, high level managers/directors and executives. This means an individual identifies that they are “ready” to move on, and the organization works with them to make this transition over a time period that benefits the individual and the transfer of knowledge, experience, contacts and tasks to others. It is time to acknowledge and provide ways to celebrate and assist in the transition. The time should not extend beyond 2 years and should probably not be less than six-months. How this works depends on the unique needs of the organization, the readiness of talent, and the emotional maturity of all those involved.
- Prepare and assist the transition. A core issue most people want is strong financial planning. Given these times of serious uncertainty about the value of one’s assets, professional consulting is critical. Providing some effective financial planning will help the individual determine what they need, what they have, and how to make it work financially. In many ways it will help them determine the lifestyle they can afford and what is needed now to sustain financial security for their lifetime. For many, this is a core step, but it should not be the only assistance the organization provides.
- Help the individual create a vision and Master Plan for their life’s next stage. There are other core issues to consider while moving into the “to be determined” stage of life. These include:
- How to spend my time? — this means how does one create a sense of purpose and an exciting vision for themselves.
- How will relationships change? — this means how to rebuild a community to replace the one they left behind at work.
- How to stay healthy? — this involves engaging in daily healthy habits so that this core “infrastructure” of life enables them to do what they want for as long as they can.
- Who am I now? — identity and the lifestyle that goes with it are also critical. Taking time to address this question effectively facilitates the individual from a life built around their career or family, to one that is focused on what they really want (before it is too late).
These are not easy questions! Resources, education, workshops and support can enable the person to truly prepare for their life after work in a manner that makes the most of their time both at work and post-employment.
- Create alternative post-working relationships. There are many ideas and relationships companies can utilize to retain a relationship, albeit distant, with former leaders and highly experienced talent. These include:
- Create a Master Class where these individuals are brought back to the organization for orienting new employees, serving as a “substitute XXX” (like a substitute teacher) for a period of time, and to serve on a special project or task force.
- Create long-term consulting or advisory roles for these people, where they are working a few days per week or month that gradually declines over time.
- Create a Reserve Unit, similar to retired military personnel, these individuals can be part of a “Reserve Unit” that serves on special assignments as needed by the organization, and are brought back for special briefings every six to twelve months, depending on their relationship.
When a valued resource or leader leaves the organization, it does not mean that they will not be heard from again. There is opportunity to facilitate the transition and departure of individuals when they know they can continue to belong and provide value to an organization where they spent many years of their life. And the organization can continue to benefit from their wisdom, experience, connections, support and values.
The bottom-line for resolving this Retirement Gridlock is to become aware of the problem, understand the costs, implications and risks associated with “no action” and then develop strategies that provide meaningful benefits to those leaving the organization and those remaining with the organization. You are building creative off-ramps that untangle the traffic and open alternative roads to different locations. Even in a pandemic, when the world has changed and will continue to change, flexibility and movement are essential elements of success for today and the future.