Succession Planning: Leverage Employee Retirement Plans to Achieve Objectives
By including personnel management concerns in your employee retirement plans, you can support valuable succession planning at your organization.
Effective succession planning is multi-faceted. It ensures the continuity and viability of the organizations from multiple perspectives. People — and their identification, development and placement — are the largest component of a strong succession plan.
In that vein, employee retirement plans are not just about pensions and 401(k)s. They also need to include personnel management. As employees who have been with the organization for long periods retire, the knowledge base leaves with them. However, it does not need to be that way.
"Many organizations are finding their older employees are continuing to work past the traditional retirement age...partly because they are financially unable or otherwise unable to retire," says Dr. Susan Hanold, Vice President of Talent Strategy at ADP. "On the other hand, I'm seeing organizations offering early retirement packages due to cost-saving measures and the benefits are getting too expensive. The tenure of CEOs and other top executives has shortened significantly due to a number of factors…[including] shareholder pressures [or] consolidation."
To allow for a relatively smooth transition from your highly tenured workers to newer employees, there are several actions you can take.
Understand Your Organization's Statistics
First, you need to understand your organization's demographics. If you have a large percentage of your workforce preparing for retirement, you need to take action immediately. Dr. Hanold strongly encourages senior HR professionals and other leaders to "know your turnover/retention stats [and] know where you're going to be losing people." Use that information to create a staffing plan and workforce development plan.
Be Creative With Your Workforce Development Plan
Instead of using the usual training methods, be creative.
"Build a knowledge transfer culture or mentoring program," Dr. Hanold says. "Start doing that now before you start having the exits, the early retirements, or you have people you know are going to be leaving. You can start building that knowledge sharing culture now."
If you're off to a late start, you can do what some other businesses are doing and hire back retirees as part-time or contractual workers.
Be Aware of Compliance Issues
Be very careful when handling compliance issues related to age. Releasing more tenured employees simply because the presumption is they cost the organization a lot of money is a no-no. Have a system with a strongly documented performance review procedure and use that as the guide for releasing or cultivating employees.
"From a compliance standpoint…do you have a consistent enterprise-wide process around performance reviews?" Dr. Hanold asks. "In this performance review process, are you having good conversations? Are you engaging the managers to have really good touchpoints with their front-line positions?"
If you have engaged employees, you avoid compliance issues because you're talking to them about their development, path and opportunities within the firm. According to Training Industry, "Coaching or career growth conversations focused on skills and strengths, rather than titles, will ensure longevity." It will also support employees at all levels and all ages. Doing this shows that your organization cares about the growth and development of its employees.
Leverage Your Employee Retirement Plans
For succession planning, employee retirement plans are important for organizations of all sizes, but especially for smaller businesses. According to US News and World Report, business owners often spend much time thinking about current cash flow and employees and little about their own retirement. To ensure owners and other senior leaders have the funds they need to retire and feel good — i.e., no financial stress — their HR personnel must help them identify and utilize the plans optimally.
By looking at employee retirement plans from a fresh, broader perspective, organizations can successfully develop and implement succession plans that support their long-term viability and the achievement of their objectives.
