Retirement policies for the 21st century

Retirement Policies for the 21st century

Benson Rosen and Thomas H. Jerdee

As we rapidly approach the 22st century, current human resource management policies emphasizing early retirement may prove shortsighted. Changing demographics and pro- jected labor shortages it;r certain critical occupations may require a reversal ofpresent early retirement policies. This article reports the views of a national SampZe of897 executives on work and retirement. We report their rendions to pressures for early retirement, their responses to proposed incenW to delay retirmeent, and finally, their planned post retirement actimties. Their responses have important implications for revising human resource policies in the years ahead.

INTRODUCTION

As we rapidly approach the 21st century, human resource managers must develop new policies governing work and retirement. Current policies emphasizing early or "on time" retirement will soon become obsolete. New policies will be needed, encouraging lifelong career management and greater flexiiility in determining the timing of retirement.

Currently, human resource policies in many organizations encourage early retirement. In some instances, early retirement policies have evolved out of economic necessity. Senior employees have been offered early retirement as an alternative to layoffs during economic downturns. In other instances, senior employees with low job performance have been offered the option of retiring as an alternative to possible termina- tion. And in still other instances, early retirement, has been seen as a way to unclog career channels and create affirmative action promotion opportunities. Accordingly, for many years, organizations have coupled a variety of creative economic incentives with other pressures to ease out many senior employees at relatively young ages (Walker and Lazer, 1978).

Looking toward the future, however, the policy emphasis on early retirement might prove quite shortsighted. With changing workforce demographics, organizations are likely to encounter critical shortages among technical, professional, and managerial personnel (Business

Human Resource Management, Fall 1986, Vol. 25, Number 3, Pp. 405-420 0 1986 by John Wiley L Sons, Inc. ccc 009(F4&18/86/030405-16$04.Ca

Week, 1984). The baby boom generation will be nearing traditional retirement age, and the inflow of younger talent will be limited.

Human resource planners and policy makers will need to address some tough questions. Will present policies encouraging early retirement prove too successful? Will there be a sufficient number of seasoned executives and administrators to manage tomorrow's organizations? And what will it take to reverse the early retirement trend?

The preceding questions focus on the impact of retirement policies on labor supplies, particularly at the managerial level. Important as these questions are, another more fundamental issue must be addressed by human resource policy makers. This is the issue of the quality of human experience in the later years. Kahn (1984) has pointed out the need to address the optimal allocation of productive behavior throughout the entire life course, the need to abandon the notion that life consists of paid employment and a ". . . great undifferentiated residual." Pointing out that many younger people find their lives almost completely domi- nated by their jobs, while many older people find themselves completely at sea in the "undifferentiated residual," with no work-related anchor, Kahn has advocated policies that increase flexibility in work time and maximize individual choice. Specific to retirement, he has advocated modular work schedules that would enable individuals to self- define their gradual reduction in working time. A similar view with regard to career lock-in has been articulated by Sarason (1977). Others have advocated a variety of approaches to enabling older people to continue in paid employment. These include changes in pension policies, job sharing, phased retirement, annuitant pools (hiring back retirees), job redesign, job transfers (called "strategic repositioning" at Xe- rox), and retraining (Coberly, 1985).

In summary, two major concerns about retirement policy have been identified. One concern is that current trends toward early retirement will contribute to a shortage of seasoned executives and administrators to manage tomorrow's organizations. The other concern is that current retirement policies do not adequately address the life adjustment needs of older employees.

In order to develop retirement policies that address these concerns, accurate information is needed about the perceptions and intentions of people nearing traditional retirement age (Beehr, 1986). What do they perceive to be the current policies and norms in regard to retirement related issues? How do they respond to these perceptions? What do they perceive as desirable and possible for themselves as they look ahead toward retirement?

Seeking answers to the foregoing questions, we recently conducted a survey among a national sample of executives. Their responses contribute to a foundation of knowledge upon which future retirement policies can be built.

406 I Human Resource Management, Fall 1986

Table I. Profile of survey participants.

Age Under40 22% 40-49 33% 50-59 32% 60andover 3%

Male 86% Female 14%

Married 85% Single 15%

Sex

Marital Status

Kind of Organization Banking, investment, insurance, real estate Broadcasting, publishing, advertising Education or social service Government Management consulting, legal or accounting Manufacturing or processing Mining, oil/gas extraction, construction Nonprofit organization Other professional or business service Transportation, public utility Wholesale/retail trade Other

Accounting Engineering IR&D Finance General Management Personnel or employee relations Production Public Relations other

10,OOO or more 1,OOO to 9,999

loo to 999 Fewer than 100

Functional Area

Size of Organization

12% 2 9 6 6 36 3 4 5 4 4 9

4% 7 7

10 10 2 1 17

34% 28 23 15

THE SURVEY

We mailed questionnaires to randomly selected subscribers of a well known business periodical. We received a total of 879 completed questionnaires by our cut-off date.

Table I shows a profile of survey respondents. About 55 percent were under age 50,32 percent were in the 50-59 age category, and 3 percent were over age 60. Breaking the sample down by gender, 86 percent of

Rosen and Jerdee: Retirement Policies / 407

the respondents were males and 14 percent were females. A large majority (85 percent) were married.

As shown in Table I, respondents worked in a variety of organizations. The largest proportion of respondents (36 percent) worked in manufacturing or processing, followed by banking, investment, insurance, and real estate (12 percent), and education and social services (9 percent).

Employees of both large and small organizations were represented in the survey sample. Thirty four percent of respondents reported working in organizations with more than 10,000 employees, while 15 percent worked in organizations employing fewer than 100 people.

It appears that our sample of respondents is quite representative of executives, managers, and administrators in both mid-career and latecareer stages.

In this article we report their views on work and retirement. We look first at their reactions to pressures for early retirement, then at their responses to proposed incentives to delay retirement, and finally at their planned activities for the post-retirement years. Throughout, we sug- gest implications for human resource management.

PRESSURES TOWARD EARLY RETIREMENT

During the last three decades, the labor force participation rate for people in the 55-64 age category dropped from 90 percent to 75 percent. (Employment and Training Report of the President, 1979). Our findings on the retirement intentions of managers and administrators are consis- tent with this trend toward early retirement. Fully 86 percent of respondents plan to retire on or before age 65. The average planned retirement age is 61.5. Almost 40 percent plan to retire on or before age 60. Only 14 percent plan to postpone retirement to age 66 or later.

A series of questions probed more deeply into the reasons behind early retirement intentions. Several factors seem to influence retirement plans, including corporate policies that discourage extending careers, financial considerations, and individual circumstances.

Corporate Retirement Policies. Respondents see current corporate policies as neutral or as encouraging early retirement. Specifically, when asked to characterize current corporate attitudes toward early retirement, 50 percent stated that corporate attitudes are neutral with respect to early retirement. However, 43 percent reported that corporate attitudes favor early retirement.

Perhaps unwritten corporate norms regarding the appropriateness of early retirement play a more important role in determining retirement intentions than has been recognized previously. A youth oriented corporate culture sends a clear signal to older employees. Conversely, a corporate culture that recognizes and rewards accomplishment and


Table II. Organizational practices to extend work life. Percent Indicating Company Would Be Willing to Offer

Organizational Practice the Practice

Arrangements for gradually phasing into retirement 29

22 Opportunities for special training 16 Redesign of jobs 15

10 Arrangements for two workers to share

Special career maintenance counseling for senior employees (not preretire-

Part-time work arrangements 55%

Transfer to more suitable jobs

Arrangements for working at home

one job 9

ment counseling) 4

commitment from employees in all age categories communicates an entirely different signal.

In a series of follow-up questions, we asked executives about their organization's willingness to provide special arrangements in order to help senior employees postpone retirement and extend their careers. Respondents perceive very little organizational flexibility to encourage individuals to continue working, except for the possibility of part-time employment. Note that respondents were particularly pessimistic about the prospects for career counseling, job sharing, work at home, or retraining. Fewer than 20 percent of respondents perceived that their organizations would offer these career extending options. Executive perceptions of the availability of flexible work arrangements are summarized in Table II.

Given these perceptions that human resource poliaes are relatively rigid and unable to accommodate special needs of employees for cutting back on their work load or transferring to a less demanding job, early retirement may represent an attractive alternative. Pension Consideratiolrs. We also questioned respondents about pen-

sion arrangements. Only a third of the respondents reported that their employers will continue pension contributions for employees working beyond age 65. Less than one fifth reported that for work past age 65, employers will increase monthly pension benefits to reflect shorter life expectancy. In other words, a majority of respondents who wish to continue beyond age 65 must postpone pension benefits and forego company contributions to their pension plans. For many, this represents a sigruficant financial incentive to retire at 65. Note that rulings by the EEOC may soon require employers to continue pension contributions for employees who elect to continue working beyond age 65 (Abolishing Mandatory Retirement, 1981).

Respondents are also quite receptive to financial incentives or "buy-

Rosen and Jerdee: Retirement Policies I 409

outs" designed to encourage early retirement. We included a series of questions that posed hypothetical financial incentives for early retirement and asked what effect each incentive would have on hastening their retirement plans.

Retirement policies frequently specify that pension payments are reduced for each year of retirement before age 65. Pension benefits for an employee retiring at age 55 could be as little as half what they would be at age 65. Therefore, it is not surprising that 52 percent of survey respondents said they would speed up their retirement plans under a guaran- tee that payments would not be cut for employees opting to retire at age 55. Similarly, cost of living increases for pension payments and continuation of medical and life insurance coverage for early retirees proved to be strong inducements for hastening retirement. Thirty eight percent would hasten their retirement plans by one or

more years if promised an automatic cost of living adjustment to their pension benefits. Employer promises to extend medical and life insurance coverage from date of early retirement to age 65 would hasten retirement by a year or more for 36 percent of survey respondents.

When the economy turns sour, a common corporate strategy for trim- ming the work force but avoiding layoffs is to offer a cash incentive for early retirement. These are sometimes referred to as "open window" or "golden handshake', incentives. For example, the Consolidated Rail Corporation (Con Rail) recently offered as much as $20,000 to induce train crew employees to take early retirement. Slightly over a third of the respondents indicated that a cash payment equal to two years' salary would be a strong incentive to move up their retirement dates.

It appears that human resource planners have considerable leverage to encourage senior employees to retire early. Coupled with the disincentives for postponing retirement, the financial incentives or "buy- outs" are particularly effective ways of encouraging early retirement.

JOB PRESSURES FOR EARLY RETIREMENT

We asked executives to evaluate the influence of various job pressures on their retirement intentions. It appears that retirement is hastened by pressures such as working under tight deadlines, interpersonal con- flicts, and travel demands. Whatever the source, job stress is associated with early retirement intentions for 39 percent of the survey partiapants.

Several other organizational factors proved to be less important, being selected by no more than 15 percent of participants. These were rapid changes in assignments and reporting relationships, fear of managerial or technological obsolescense, and heavy physical demands.

Pressure to Make Room. We asked respondents about a personal sense of obligation to create advancement opportunities for younger


employees. About 15 percent of respondents indicated that their own planned retirement is based on a sense of obligation to step aside and make room for others.

Helping EmpZuyees Set u Retirement Date. We examined current corporate practices designed to assist senior employees in determining the timing of their retirement. We were surprised to learn how little companies do to help senior employees evaluate their options. About 40 percent of the companies represented in our survey provide retirement counseling, but only 10 percent of survey partiapants have actually participated in preretirement counseling. Less than a third of represented companies conduct formal performance appraisal and feedback sessions, or assist employees in evaluating their health as a consider- ation in planning for retirement. It appears that in a majority of organizations, retirement planning is viewed as a personal decision, with little feedback or guidance from management.

Effect of Current Pressures and Incentives. To summarize, a majority of survey respondents plan to retire well before they reach age 65. Per- sonnel policies and practices with respect to the timing of retirement can be described as either neutral or encouraging early retirement. Few companies offer flexible work arrangements to accommodate the special needs of senior employees, and pension systems often provide economic disincentives for working beyond age 65. Finally, very few companies make an active effort to help senior employees evaluate their performance and health situation with respect to the timing of their retirement.

In the past, the advantages of encouraging early retirement may have outweighed the disadvantages. Early retirement creates promotion opportunities and provides a way to sidestep problems of managerial and technological obsolescence. Early retirement policies also help avoid em- barrassment and conflict associated with confronting poor performance among senior employees. Early retirement policies help contain payroll costs by ensuring that high-salaried senior employees exit each year. Finally, early retirement is compatible with individual preferences of many senior employees who eagerly anticipate opportunities to pursue other activities. Accordingly, it is easy to understand the evolution of corporate attitudes and policies encouraging early retirement.

Although policies encouraging early retirement may have many advantages, they also entail several important costs. For the retiree, the psychological costs of abrupt removal of work-related sources of rein- forcement can be high (Kahn, 1984; Bradford and Bradford 1979). For the employer, costs associated with recruiting, selecting, training, sociaIiz- ing, and motivating younger employees may outweigh the costs of retaining and, when necessary, retraining senior employees. The problem is compounded when scarcities develop in critical managerial, professional, and technical specialties. Often the most talented senior employees opt for early retirement, confident that they can find highly paid


Table 111. Corporate programs to extend careers.

Percent Likely to Delay Retirement by One

Employment Options or More Years Phase into retirement by cutting back to a

four day week, and later to a three and two day week 60%

Work at home on projects, reporting in by telephone or computer terminal 52

Job redesign to reduce mental and physical

Transfer to jobs requiring less physical

Job sharing program 24 Career planning and individual counseling

Special training opportunities to combat managerial and technological obsolescence 20

Continuation of pension contributions for workers over age 65.

Increase monthly pensions benefits for workers continuing beyond age 65

pressures 34

activity, travel or stress 33

for senior employees 20

Financial Incentives

36

19

positions elsewhere. In addition, early retirement policies can create economic strains on pension programs and health care systems (Stolnitz, 1982). Perhaps as we move toward a new century, more flexible retirement policies will work to the benefit of both senior employees and their employers.

EXTENDING WORK LIFE

We next examined a variety of work arrangements and financial incentives designed to make delaying retirement an attractive alternative to early retirement. Our goal was to idenbfy the kinds of policy changes that will provide corporate planners with a basis for creating more flexible retirement programs.

As noted earlier, when an organizational culture encourages early retirement, individuals are more likely to speed up the timing of their own retirement. When asked if they would alter their retirement plans if their organizations encouraged healthy, productive employees to continue working longer, 29 percent of survey participants said they would consider delaying their retirement. What encourages people to stay on longer? Participants indicated the effects of various corporate arrangements to extend careers. The effects are shown in Table III.

Phased Retiremenf. In the majority of organizations we have studied,


work is an "all-or-none" proposition. Employees elect to work full time or to retire, with notlung in between. Almost two thirds of our executive respondents, however, report that a phased retirement option in which employees can cut back gradually on their workweek represents a very attractive alternative to early retirement. Companies could scale back salaries and benefits commensurate with employees' reduced schedules, while phasing in pensions.

Work a t Home. More than half of the respondents indicated that a work at home arrangement would also be a popular alternative to com- plete retirement. In jobs where employees can work independently, coordinating with others by telephone or computer terminal, work at home arrangements are Seen as an attractive option for encouraging delayed retirement.

Job Redesign and Trunsfer. As noted previously, many individuals retire to escape from job stress. Options that enable senior employees to work under less mentally and physically stressful conditions appear to encourage delayed retirement. About a third of survey participants said that they would postpone retirement a year or more if given the oppor- tunity to change stressful job requirements or to transfer to less stressful jobs.

Career Planning and Individual Training. While only a small number of respondents (8%) indicated that rapid technological changes play a significant part in their retirement planning, about one-fifth indicated that corporate efforts to maintain their employability and productivity through individualized career planning, counseling, and training would encourage them to delay retirement by a year or more (see Table HI).

Financial Incentives for Continuation. At the managerial and executive levels, financial considerations may be less important than other factors in determining the timing of retirement. However, about a third of survey respondents indicated that increases in pension benefits for employees who extend retirement beyond age 65 and continuation of pension contributions for employees who work beyond age 65 would encourage delayed retirement. Perhaps for the subset of employees who are concerned about their post-retirement financial situations, revising pension contribution and payout policies could provide a strong incentive for postponing retirement. From the corporate perspective, the costs associated with these policy changes would be partially offset by pension fund income and the shorter payout period for late retirees.

Being Needed by the Organization. Running through respondents' written comments is a willingness to delay retirement because of a personal feeling of being needed. A bank manager said he would continue working beyond his planned date of retirement "if my services were needed and no qualified replacements could be found." Similarly, a manufaduring vice-president would postpone retirement based on a feeling "that I was needed and could make a better contribution than others." Survey respondents cited a strong personal request from a

Rosen and Jerdee: Retirement Policies / 413

superior, promotion opportunities for senior employees, freedom and power to act, and challenging new work situations as reasons for extending their careers. Finally, a sales executive noted a desire to keep going "under a progressive company attitude toward seasoned management." It appears that many respondents are ready to push back their retirement if they feel that their contributions are valued and appreci- ated.

In order to develop more flexible retirement policies that encourage delayed retirement for employees whose performance and health are good and who can continue to make valuable contributions, corporate human resource planners might experiment with a variety of employment options. Moving away from an all or none conception of work and retirement toward alternative work options such as phase out programs, work at home arrangements, job redesign and transfer options, and individual career planning and training will contribute to extending the work life of many senior employees (Rosow and Zagar, 1981). Providing financial incentives for delayed retirement will also help. Combined, these policy revisions may help organizations retain and capitalize on the experience, training, and expertise of senior employees.

POST RETIREMENT PLANS

In another section of the survey questionnaire, we asked participants to share with us their post retirement plans. The stereotype of a bumed- out executive whiling away his or her retirement on the golf course or at the bridge table has no validity, according to the reports of post-retirement plans by survey participants. Most participants reported plans that include some form of paid employment after retirement, a variety of voluntary organization activities, and intentions to pursue hobbies, special interests, and further education. Post-retirement plans are summarized in Table IV. Paid Employmenf. Two-thirds of respondents reported plans to seek

some type of paid employment after retiring from their present positions. The picture that emerges is of senior employees pursuing a variety of activities including consulting, entrepreneurial ventures, teaching, and writing. Note that the pursuit of these activities requires less than a full-time commitment. Teaching and consulting, for example, may be particularly attractive post-retirement pursuits because they enable retirees to use their skills and experience, while maintaining flexibility and control of their time commitments. These options are seldom available prior to retirement, since few companies encourage or permit flexible work arrangements.

Very few managers see themselves returning to fulItime employment in an entirely new field. Only a small minority plan to pursue post- retirement full or part-time work in a similar capacity, with another organization.

414 / Human Resource Management, Fall 1986

Table IV. Post-retirement plans.

A. Employment Plans 1. Likely to seek paid employment after retirement 66% 2. Kinds of paid employment

a. Consulting 46%

d. Part-time employment in an entirely new field

b. Start a new venture or small business 32 c. Teaching 31

21 e, Part-time employment in a similar capacity with

another organization 14 f. Professional writing 14

7 h. Full time employment in a similar capacity with g. Full time employment in an entirely new field

another organization 1

voluntary organization 74%

a. Work with charitable organizations

8. Voluntary Activities 1. Plans to become actively involved in some type of

2. Kinds of voluntary activities 53% 26 18

77%

b. Work on a voluntary basis with business organizations c. Work with political organizations

C. Other Post-Retirement Plans 1. Hobbies and special interests 2. Relocation 38 3. Return to school 19

Voluntary Activities. For many, post-retirement plans include a healthy balance of paid employment activities and other interests, including a variety of voluntary pursuits. Almost three quarters of respondents plan to become involved with some type of voluntary work. Char- itable work is the top priority for about half, followed by voluntary work with business (26 percent) and political involvement (18 percent).

Other Post-Retirement Plans. In addition to pursuing paid and un- paid employment, most partiapants plan to pursue a range of hobbies and special interests. Nearly 40 percent plan to relocate after retirement and 20 percent expect to return to school.

In a series of open-ended questions, we asked survey participants to comment on what they most looked forward to after retirement. Oppor- tunities to travel led the list. Freedom from time constraints and schedule restrictions ranked second. More family time, incluhg the chance to enjoy the grandchildren, was also frequently mentioned.

Post-Retirement Quality of Life. We posed a series of questions to elicit expectations about the quality of retirement life. Participants expect to be in sound financial shape. Eighty-two percent anticipate that their postretirement income will be adequate or better than adequate. Eighty- five percent expect a post-retirement income from all sources in excess of $25,000, and 61 percent look forward to either the same or a higher

Rosen and Jerdee: Retirement Poliaes / 415

standard of living in retirement. In written comments, however, several respondents noted the dangerous effects of continuous inflation on post-retirement income.

Much has been written about the link between work and health (Bar- field and Morgan, 1969; Parnes and Westel, 1974; Hall and Johnson 1980). Anecdotes are frequently cited suggesting that boredom, idle- ness, and feelings of frustration and isolation in retirement are associated with failing health. This may be an exaggeration according to the expectation of survey participants. Forty-nine percent expect no change in their health status and 39 percent predict an improvement in their health and well-being after retirement. In written comments, many readers cited their determination to stay mentally active and maintain a sense of purpose and vitality in retirement. How well these expectations are actually realized, of course, remains to be seen. As Beehr (1986) has pointed out, longitudinal studies are needed to determine this.

AGE OF RESPONDENT AND RETIREMENT PLANNING

When we break the sample down on the basis of age, some additional insights emerge. Comparing respondents age 50 and over with their younger colleagues suggests that as the retirement date approaches, plans become more certain and corporate efforts to hasten or postpone retirement lose much of their clout.

Older respondents are more firm about their planned age of retirement. They are less likely to delay their retirement even if encouraged to go on a phase-out program, change jobs, work at home, or participate in special training and development activities designed to combat obsolescence.

Older respondents are also less likely to take advantage of financial incentives designed to hasten their retirements. Early-out incentives such as promises of cost-of-living increases for pension benefits or paid life and medical insurance are less attractive to older respondents. Older respondents are also less likely than others to speed up their retirement because of employer offers to pay full pension benefits as early as age 55.

This tendency for older respondents to be locked in to retirement plans has important implications for organizations. Actions are needed before lock-in occurs. Programs of continuous career management focusing on alternative career paths at every career stage should help employees evaluate the full range of latecareer options including early retirement, on-time retirement, and delayed retirement well in advance of when decisions must be made. Assuming that flexible retirement policies are in place, efforts to stimulate advance planning could pay dividends in several ways. Employees considering early retirement will have adequate time to prepare financially and psychologically for their future. Employees with particularly valued skills and experience can be


persuaded to postpone retirement under special financial and Schedul- ing arrangements. Greater flexibility combined with long range career planning increases the chances of satisfymg both individual retirement preferences and organizational human resource needs.

As they approach retirement, older participants compared to younger participants are either less ambitious or more realistic about their post- retirement activities. For example, a smaller proportion of older respondents indicate that they are likely to seek some type of paid employment after retirement. A smaller proportion of older respondents plan to con- sult, teach, write, or start a new venture after retirement. Finally, a smaller proportion of older respondents plan to relocate after retirement. Perhaps as a result of direct experience with the aches and pains of aging, older respondents anticipate a more favorable impact of retirement on their health and well-being. In short, as participants in our sample come closer to the actual day of retirement, they plan to do less and enjoy it more.

IMPLICATIONS FOR HUMAN RESOURCE MANAGEMENT

The fastest growing segment of the population, according to Labor Department statistics, is the 35-44 age group. During the past five years, this group grew by over 19 percent compared to a 4.2 percent population growth rate. According to our survey findings, under current corporate retirement policies a majority of these people will retire well before age 65. What are the implications of these trends for long range human resource planning? Personnel planners need to determine the answer now, while there is sufficient lead time to make necessary adjustments to present retirement policies.

The “if it ain’t broke, don’t fix it” school of human resource management would argue that the current trend toward early retirement is good for both companies and senior employees. Early retirement provides a means for organizational rejuvenation. It also provides older employees the long awaited chance to pursue second careers, voluntary activities, travel, and family activities. Because early retirement seems to be in the best interests of both the company and the older employee, many would conclude that a retirement policy emphasizing preretirement counseling and lucrative incentives for early retirement should be followed. As we look toward the 21st century, however, economists see some

significant problems on the horizon if the current trend toward early retirement continues. According to one university business director, the low birth rate could result in a 26 percent decline in 20 year olds, which translates into a shortage of over 4 million workers by the year 2000 (Wall Street Journal, 1984).

There is also a possibility that future attitudes will be more receptive to later retirement. With increasing life expectancies, more senior em-


ployees will feel mentally and physically able to extend their careers. Some might share the sentiments of one respondent who "plans to work right up to the day of my funeral." A sudden jump in the rate of inflation could also trigger changes in the retirement plans of those senior employees already concerned about their post-retirement standard of living. And tough enforcement of age discrimination laws coupled with the abolition of mandatory retirement in many states will protect the rights of these senior employees to continue working.

If shortages of younger qualified people materialize and the potential supply of older workers increases, human resource planners may need to rethink retirement policies. Rather than continuing to have both corporate and individual interests focusing on early retirement, we may be moving toward the possibility of corporate needs to retain senior employees along with a growing number of senior employees who will be receptive to extending their careers under the right circumstances.

Can human resource planners reverse course and be ready with policies encouraging older employees to postpone their retirement? Our survey findings provide some insights on how this might be accom- plished.

Respondents who indicated a preference for early retirement empha- sized their desire for release from rigid schedules and job related stress. Yet an overwhelming majority plan some type of paid or voluntary work after retirement. They want to stay active and involved. Most said that they might extend their careers if their employers felt that they were making a sigruficant and valued contribution. A majority also stated a definite interest in continuing in their present companies under more flexible work arrangements.

These arrangements start with the implementation of systematic an- nual performance reviews to diagnose possible performance problems early. Next come training and development opportunities aimed at com- bating managerial and technological obsolescence. These efforts should be integrated with career counseling to help employees at all ages to consider all of their career and retirement options.

A wide range of late career options are possible, including job sharing, internal temporary help pools, retirement phase-in options, and training and mentoring roles for senior managers.

Job sharing allows two or more employees to divide duties and re- sponsibilities of a job and enjoy reduced work schedules. Coberly (1985) cited a recent example of job sharing among older employees in the Wichita, Kansas school system. Teachers over age 55 were permitted to shift to a half-time schedule at half pay, while retaining full fringe benefit coverage. Similar job sharing programs for senior employees have been implemented by Northern Natural Gas Company, Atlantic Rich- field, and Santa Clara County, California.

Creation of an internal temporary help pool creates opportunities for senior employees and retirees to cut back on their work schedule, filling

418 I Human Resource Miznagemenf, Fall 1986

in for others as needed. Travelers Life Insurance uses a temporary help pool to place its own retirees into temporary part-time positions. Brush- up courses help smooth the transition for retirees whose jobs have changed. Similar temporary help pools have been created by IBM and Chase Manhattan Bank. Temporary help agencies such as Olsten and Manpower have recently initiated special programs to recruit retirees for temporary assignments.

Moving older employees into consulting or mentoring roles capital- izes on their experience, yet permits greater scheduling flexibility. Some companies assign senior managers the task of designing workshops on problem solving and other critical managerial skills for junior management (Kaminiski-da Ron, 1984). Pairing experienced senior managers with younger employees in mentor relationships creates opportunities for capitalizing on senior managers’ expertise and contacts.

Trial retirements allow senior employees to phase gradually into retirement. Often phased retirement programs permit senior employees to reduce their work year by one or more months for several years prior to full retirement. R. H. Macy, Polaroid, and Wrigley Company have ex- perimented with phased retirement plans.

An excellent source of information about alternative work arrangements is the University of Michigan’s National Older Worker Informa- tion System (NOWIS). Containing information on over 300 programs developed and implemented by 190 organizations, the NOWIS data base provides details of actual company experiences with part-time employment arrangements, job redesign efforts, retraining programs, and various retirement transition programs. NOWIS contains information on model programs categorized by company size and location, employee skill level, and type of program. In addition, the NOWIS files provide extensive documentation on organizational payoffs for providing alternative work arrangements, including increased productivity, improved morale, reduced start-up costs, and enhanced quality of work life.

While all of these programs may not be feasible in every organization, human resource planners have the challenge of developing flexible programs that fit well with company circumstances. The payoffs for experi- menting with flexible retirement policies are many. Payoffs for senior employees include keeping mentally active, enhancing self respect, earning income, and having the satisfaction of making an important organizational contribution. Corporate payoffs include lower pension costs, lower turnover rates, longer paybacks for training investments, enhanced corporate reputations, and full utilization of valued human resources.

One final point: Our results show that people begin to formulate their retirement plans many years in advance, and they become more resolute about these plans as time passes. The time to present employees with flexible and progressive retirement policies is in mid-career, before they

Rosen and Jerdee: Retirement Poliaes / 419

begin to suffer the mid-career plateau symptoms of burnout and disillu- sionment, and before they reach a point of no return in their thinking about retirement. With more flexible work options open to them in mid- and late-career, their career and life adjustment may be improved. Clearly, now is the time to develop flexible retirement policies for the 21st century.

Benson R o w and Thomas Jerdee are professors of business administration at the Graduate School of Business of the University of North Carolina. They have recently co-au thored Older Employees: New Roles for Valued Resources (Chicago: Dow Jonesllrwin, 1985), which offers strategies for maximizing the contributions of senior employees.

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Documents

Retirement policies for the 21st century