Building pre-retiree loyalty

Today, few companies feel the need to build the loyalty of employees at the end of their careers. Only some organizations in sectors particularly affected by the labour crunch, such as universities in Ontario, have implemented such programs. And yet, with a growing shortage of candidates, retaining pre-retirees is shaping up to be a challenge in the long term. Here are a few tips on tackling this big issue.

What measures should be taken today to meet the labour needs of companies in addition to the expectations of employees approaching retirement? It’s a thorny issue that a talk organized by the Ordre des conseillers en ressources humaines agréés (CRHA) tackled head on in early June. René Beaudry and Normand Fafard, respectively founder and partner of consulting firm Normandin Beaudry, were the guest speakers.

The first thing to understand before getting started is that companies and employees do not look at phased retirement in the same way at all. Phased retirement only make sense for companies if it are postponed, in the event that they need to retain their workforce after the originally determined retirement date. On the other hand, workers are often tired of working or of their environments. For them, phased retirement becomes interesting when it is moved forward, enabling a gradual departure before the scheduled age. From the point of view of companies, fulfilling these expectations is equivalent to reducing their labour force. In such a context, it is essential to compromise.

Employees’ expectations

Finding solutions that meet employees’ aspirations and business needs requires a good understanding and knowledge of what employees are seeking at the end of their careers. The various studies on this topic reveal a number of key employee expectations:

• Facilitate the transition towards a definitive withdrawal from the job market
• Continue to feel useful and active
• Maintain existing standard of living
• Earn extra income
• Continue to enjoy job-related benefits
• Start a second career
• Maintain a social network
• Enjoy recognition with respect to one’s status

Quite lofty expectations, which are not likely to decrease with time and the labour crunch.

Companies’ needs

With these expectations in mind, organizations also need to study their own needs, which vary depending on the context:

• Maintaining expertise
• Transferring knowledge
• Developing talents via training and coaching
• Fighting the labour crunch
• Strengthening the measures against natural attrition (e.g. resignations, leaves, sickness)

A five-step battle plan

1. In-depth analysis

Implementing an employee loyalty program for pre-retirees requires an in-depth assessment of the company’s needs—not just a general one, but based on each job category. An organization may want to retain the expertise of certain specialists, as well as be facing a shortage of junior employees.

2. Review existing incentives for early retirement

Before launching new programs, what already exists within a company should be examined. This means reviewing certain departure allowance programs.

3. Identify the tools likely to retain the targeted employees

Once again, tools that are already in place could be developed, before trying to set up new ones. These tools include the following:

• Province-specific registered retirement plans
• Supplementary employee retirement plans, which have fewer legal constraints and are thus more flexible
• Direct compensation, in the form of a salary adjustment, or performance or retention bonus
• A period of non-work that can take the form of extra vacation, a reduced work week, a more flexible unpaid leave mechanism or job-sharing
• Group insurance plans
• Certain departure allowance programs can also be reviewed to promote keeping people on the job
• Continuing education programs remain a strong incentive even for pre-retirees

4. Analyze the effort involved in implementing these programs

Determine who will be eligible for the actions implemented and who will not be. Since many employees consider phased retirement to be a benefit that should be uniformly applied, it will be important to be transparent about the company’s needs in order for everyone to understand the choices taken.

Another major challenge: Put the cost of executing these actions and the costs generated by the status quo into perspective. Doing nothing may turn out to be more of a burden on a company in the long run than making efforts to retain employees.

5. Develop the selected tools

Last but not least is the development phase of these tools. Based on the selected retention measures, the company may have to reorganize the schedule and workload of some jobs, optimize non-permanent job opportunities or overhaul some duties.

While retaining pre-retirees is not easy, it is quite feasible. There are a variety of different ways of going about it, and it is up to each company to find its own path.