Wednesday, August 6, 2008

Beating the ‘brain drain’ with phased retirement

With 25 percent of Americans nearing retirement age, U.S. employers are bracing themselves for an “unprecedented” talent shortage. To tackle the issue, many companies have implemented phased retirement programs to transfer knowledge and help older employees transition into an “easier and more affordable retirement.”

Hewitt Associates, a global human resources consulting and outsourcing company, surveyed more than 140 mid-size and large employers revealing some key findings:
  • 55% of those surveyed have evaluated the impact potential retirements could have on their organization.
  • 61% have developed or plan to develop special programs to retain targeted, near-retirement employees.
  • Only 21% believe phased retirement is critical to their company’s human resource strategy today, but 61% believe phased retirement will be critical to their strategy five years from now.
  • 47% of companies said they have some type of phased retirement arrangement available to employees, but only 5% have formalized their programs.

As the Baby Boomer generation retires, companies will lose some of their most loyal and long-standing employees. Along with their 401(k)s, retirees may be leaving with important corporate knowledge and insider information if companies don’t do something about it now.

"With the rising tide of boomer retirees, employers will be losing key talent at a time when attracting and retaining skilled workers will be more important than ever," explained Allen Steinberg, a principal at Hewitt Associates.

Surveyed employers said the top benefits of implementing a phased retirement include:
  • Retaining the experience, knowledge and skills of older workers. (72%)
  • Easing the difficulty of replacing key skills. (52%)
  • Helping with transfer of key skills from experienced to inexperienced workers. (50%)

In order to retain workers close to retirement, more than half of companies (65%) offer part-time employment on a year-round basis. Other strategies include continuing health care benefits, flexible hours and a guaranteed salary.

Read one of our past posts on how to beat the retirement “brain drain” with advice on how to transfer important company knowledge and skills from retiring employees.

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