According to a recent U.S. Bureau of Labor report, 4.3 million workers quit their jobs in August 2021. That’s 242,000 more than in July. Employers in many industries are struggling with this trend, which is being called “The Great Resignation.”
To cope, employers need to take a multipronged approach. One of these prongs might be asking prospective retirees to postpone their going-away parties and agree to a ‘phased retirement.’ This is when, instead of leaving work for good on a given date, they transition into retirement under a reduced schedule or altered work arrangement.
Reasons To Consider It
Phased retirements can work in a variety of ways. A prospective retiree could shift to a four-day work week, job-sharing agreement, or part-time status.
If you already have some older employees working from home temporarily because of the pandemic, you could make this a permanent arrangement with or without revisions to their hours. In other cases, an employee could retire officially but stay on as an independent contractor in a consulting role.
Why consider offering phased retirements? Many employees head into their golden years with vast amounts of ‘intellectual capital’ — knowledge related to the organization and their jobs that no one else possesses. A transitional employment arrangement gives you the opportunity to better preserve this know-how.
A phased retirement also can help preserve key external relationships. Most people inherently dislike change; if a connection with a long-time employee is suddenly broken, customers or clients may decide to take their business elsewhere. A ‘phased retiree’ can serve as a bridge between him- or herself and the new person handling the account or role.
Plus, phased retirements tend to ease hiring pressure and lower training costs. Finding an ideal candidate, winning him or her over with a job offer, and teaching the new employee the ‘ins and outs’ of the position could take months or even years and many, many dollars. You can give yourself more time to hire by keeping the soon-to-be retiree on staff and involved in the selection and training process. Meanwhile, the older employee may be working fewer hours and, therefore, drawing less in compensation.
Risks To Consider
Of course, there are risks. If an employee on the brink of retirement has already ‘checked out’ or is disgruntled, they may not be invested in passing along accurate or thorough knowledge.
Many employers also may be concerned with older workers driving up health care costs. This is a risk to investigate when considering phased retirement arrangements. But keep in mind that, with advances in the medical field and an increased awareness of healthful lifestyles, many people are taking better care of themselves, so a spike in benefits costs may not occur.
Nevertheless, consult an employment attorney about the laws regarding how selective you can be in offering phased retirement arrangements.
A Historic Shift
Granted, many prospective retirees want a clean break from working and won’t want to transition to a different schedule or role. And, obviously, phased retirement can’t help much with the scores of younger workers heading for the exits. Still, it’s one strategy among many to consider when grappling with the recent historic shift in employment dynamics.