According to research from the Chicago-based outplacement firm of Challenger, Gray & Christmas, employers’ concerns are focused on the ability to properly gauge potential retirement activity within their organization.
“Simply because more workers expect to remain employed beyond the traditional retirement age of 65 does not mean they will. Nor does it mean that they will stay with their current employer. With the leading edge of the Baby Boomer generation reaching age 68 in 2014, it is critical that companies understand their exposure to brain drain related to retirement,” says John A. Challenger, CEO of Challenger, Gray & Christmas.
A survey of human resource executives by Challenger finds that 20% of companies say that as many as 50% of their workers are age 55 and older. About 30% of companies report that workers 55 and older accounted for 11% to 20% of their work force. Twelve percent of respondents say their companies do not track the portion of their work force nearing retirement age.
“The latest data from the Bureau of Labor Statistics’ job openings and labor turnover survey show that on average 366,000 American workers are voluntarily ‘separating’ from their employers each month due to retirement, disability or death. Workers who do stay in the work force may decide to leave their current employer for a new industry, a new geographic location, to work part time or volunteer. The point is, employers cannot count on their most experienced to stick around based on some national surveys,” says Challenger.The Challenger survey also finds that 59% of employers rely on department managers to stay informed about their staff’s potential retirement plans. Only about 6% use employee surveys to gauge possible retirement activity. Thirty percent don’t take any steps to anticipate retirement activity, opting to learn about retirements only when employees initiate the process.
For companies that do track retirement, only 6% expect more than one-tenth of their workers to retire within the next two to three years. Nearly a quarter said that 7% to 10% of their workers are set to retire with three years.
The biggest concern by employers, according to survey results, is not the number of workers retiring, but the skills they take with them. Nearly 24% of respondents say their companies are very concerned with the coming retirement surge due to the fact that those planning to leave are in key, hard-to-fill positions. Another 30% are somewhat concerned with the potential increase in retirements.
However, 35% of respondents say they are not very concerned, due primarily to the fact that they have a large employee base from which to promote and fill positions being vacated by retirees.
“Small to medium size companies will probably feel the biggest impact of any retirement surge that comes to pass. Their size means that they are less likely to have a deep pipeline of talent to feed into the positions left by retirees. These companies may need to do more to retain their most experienced talent,” says Challenger.
He adds that instead of letting these workers leave for less demanding job opportunities, employers may want to find a way to cut the individuals hours and responsibilities. “Employees may be willing to accept lower pay and benefits in exchange for more flexibility to travel, volunteer or enrich their lives in other ways. Meanwhile, the company can continue to benefit from the continued employment of someone who can mentor younger employees and ensure the succession of specific corporate knowledge from one generation to the next.”However, says Challenger, companies cannot determine what steps to take to address their retirement risk until they actually determine the extent of that risk. He recommends that employers look at the age breakdown of their work force and find ways to measure possible retirement activity for immediate future, as well as for five, 10 and 15 years out.