Flexible Retention Strategies for Older Workers

How to Think About Work in an Era of Longevity

In 1919, the average life expectancy in the US was 54.  By 2019, it had risen to 79.[1] This 25-year gain in longevity over the course of 100 years is unprecedented, and the trend does not appear to be slowing – by 2060, average life expectancy is expected to rise into the mid-80s.   While increased longevity means workers will need to continue working past traditional retirement age in order to stay solvent, declining birth rates mean that organizations will need employees to stay productive for longer in order to fuel growth.

However, simply expecting (or hoping) people will work into their 80s full-tilt and without a break is unrealistic. Already 84% of Millennials anticipate taking significant career breaks along the long road of working into their 70s .[2]  Additionally, the need to continually refresh skills and absorb new paradigms will render traditional methods of education (which more or less cease after high school or college) inadequate; new “leaning out” periods in which workers focus more on learning and less on executing will be necessary.  So how do we shift our mindset away from the model of a three-stage life, in which there are distinct periods of education, work, and retirement, toward a less linear, multi-stage life in which living, earning and learning are more cyclical and better paced for long lives?

The answer is to create flexible pathways in and out of the workforce that enable alternating periods of work, education, and rest. Enabling better transitions among these phases and tighter connections with departing and returning employees will allow organizations access to a larger pool of talent overall, and make it possible to lure previously departed employees back, regardless of age.

In the near term, organizations can do much to flexibly retain older workers and re-imagine the roles they play and the value they bring. Some older workers may want to continue contributing at their current level, both in terms of salary and productivity – others may want to scale back gradually and define their own “glide path” toward full retirement. Still others may want to serve as mentors and teachers, passing on both knowledge and wisdom until they are ready to step down.  Here are four strategies to retain and leverage older workers while providing flexible options that work for everyone, regardless of age:

1. Independent Consultants
2. Returnships
3. Phased Retirement
4. Alumni Engagement

Independent Contractors

Re-engaging key employees who have left or retired as independent contractors is a great way to retain their skill sets and knowledge while providing them the flexibility to determine when and how much they want to work.  The number of people who choose to become consultants after retiring has risen in recent years – 37% of independent contractors were 55+ in 2017, up almost 10 percentage points since 2005.[3] For retirees, consulting can provide the opportunity to stay active in their field and generate income, while allowing them to draw on retirement benefits, such as pensions and Social Security.

Leveraging older workers as consultants can work well for a whole range of scenarios, including:

• Consulting on specific projects
• Filling interim leadership positions during executive search periods
• Covering for the extended leave of other employees such as those on maternity leave or sabbaticals
• Training new (or new-to-the-role) employees on procedures with a high degree of complexity or requiring specialized knowledge with which they are deeply familiar (e.g., STEM roles in advanced manufacturing & utilities, nursing, law, etc.)
• Work that requires access to a specific network of contacts or relationships

While phased retirement programs offer increased flexibility as a means of hanging onto the skills, experience, and networks older workers have spent years developing, retaining workers as independent contractors extends that flexibility along multiple dimensions including time, place, intensity and duration. It’s important to spend some time thinking about what needs your flexible retention strategy is meeting – unique or temporary staffing shortages may be better suited to the independent contracting approach while a defined window for knowledge transfer or building a brand as an employer of choice might be best served by phased retirement programs.

Returnships

Returnships are just what they sound like – internship programs for experienced workers who’ve taken some time away from work and are looking to re-enter (“return to”) the workforce.  Originally conceived as a means of bringing women who had taken time off for childcare back into mid-level, professional positions, the use of returnships has expanded to include anyone who has experienced a career break, many of whom are older and highly experienced.

There are numerous benefits to returnships – both for employers and for returners – chief among them being the chance for both parties to “test the waters” and onboard/ease back into full-time employment.  Additionally, employers can benefit from the expertise, enthusiasm, and work ethic that returning workers often bring to their roles, while returners are afforded the time to get up to speed with what’s new in their profession.

One final note – returnships are a good example of the new kinds of “on-ramps” that are being built to help previously departed workers return to the workforce.  While these types of programs are great for older workers with valuable skills and experience, they can be used to bring workers of all ages back into your organization. Providing flexible pathways back into full-time work after short periods away for childcare, further education, or personal fulfillment can benefit workers throughout the employment lifecycle.

Phased Retirement

Phased retirement programs can range from the formal to the informal, with many variations in terms of timing, incentives, and benefit arrangements; but broadly speaking, the term refers to programs that enable employees to reduce the hours they work as they approach retirement. These programs view retirement as a ramp rather than a cliff, and – along with independent contracting – are the most effective ways to flexibly retain older workers.  In addition to retention, employers also benefit from the visibility into retirement timelines (especially valuable for workforce planning) and the deliberate period for knowledge transfer these programs provide.

Here are the core elements that make up phased retirement programs; each represents a set of decisions you’ll need to make when implementing one.  Regardless of how you design your program, you’ll need to engage your legal counsel to ensure it complies with state and federal laws such as the Employee Retirement Income Security Act (ERISA) and the Age Discrimination in Employment Act (ADEA), as well as the IRS.

• Eligibility – who will be eligible to participate in the program? For example, you could require that participants be at least 55 years old and have worked at your organization for 10 years.  Or you could eliminate the age criteria and simply have a “years of service” requirement.
• Duration – how long will the “phasing out” period last? Some organizations allow for an indefinite phased retirement period, with periodic reviews by both manager and employee, while others cap the amount of time employees can participate.
• Impact to Benefits – how will the reduction in hours impact the benefits employees can receive? Allowing phased retiree participants continued access to health benefits in particular – including long-term care and disability coverage – is highly recommended as an incentive to encourage participation.
• Impact to Compensation – how will participation in the program impact employees’ compensation (base pay, bonuses, stock options) and retirement benefits (401K matching, pension calculation, Social Security)? If your compensation and retirement benefit policies are structured to maximize employees’ earnings in their final years, you may want to tweak those policies in order to lessen any negative impact to program participants.  For example, some organizations, such as St. Mary’s Medical Center in Huntington, West Virginia, have changed their pension calculations to include the five highest years of service rather than the five final years of service.[4]  This helped remove barriers to entry for many of its hospital staff.

One final note – as increasing longevity trends require longer working lives, programs like phased retirement could be tweaked to enable temporary periods of “leaning out” for recharging or reskilling.  In the same way that parental leave policies are beginning to evolve to encompass leave for all kinds of care (including elder care), phased retirement programs could evolve to accommodate multiple “phasing out” situations, some of which end with full retirement and some of which end with a return to full-time work.

Alumni Engagement

The final stage of an employee’s lifecycle with your organization – regardless of their age – is their exit from the company.  However, there is no need to view this group as gone for good.  Building and nurturing relationships with former employees is a smart business strategy on many levels. For one thing, engaged alumni can be some of your strongest brand advocates – both as a consumer brand and as an employer.   Businesses are realizing that engaging with their alumni can help solve talent shortages, close knowledge gaps, provide insight into corporate strengths and weaknesses, and even further business development.

Alumni networks are particularly helpful within the context of a multigenerational labor force.  Millennials change jobs, on average, every 2.8 years. As careers lengthen and the need for intermittent breaks increases, it only makes sense to stay in touch with former employees in order to build new “on-ramps” that enable them to return to the company. Additionally, if many of your experienced workers opt for traditional retirement, they may discover they want to return to work after a period of rest; engaging with them via an alumni network will make it easier to communicate open opportunities for full-time work, part-time consulting, or coaching and mentoring that bring them – and their valuable experience – back.

What You Need to Know

Numerous guides exist online that provide an overview of how to create and foster effective alumni networks, and there are organizations like Conenza (www.conenza.com) that provide digital platforms to help you ramp up quickly.  For the purposes of this chapter, however, here are four ways you can use alumni networks to leverage and engage older workers:

• Consulting and knowledge transfer – alumni networks can be a great place to find retirees with the specialized knowledge you need for consulting work on specific projects. Stanley Consultants, Inc. – a global engineering service provider in Muscatine, Iowa – reached out to their retirees when experienced staff were needed for a few months to help with a large electrical transmission project. A number of staff came back to work to offer their expertise and pass it along to the permanent employees involved in the project.[5]
• Coaching and mentoring – the invaluable experience many older workers have gained in their tenure at your company can be leveraged to provide coaching and mentoring, particularly to rising leaders. You can accomplish this through formal means – such as recruiting mentors from your alumni network into your existing mentoring programs – or informal ones, such as organizing networking and “speed mentoring” events to which you can invite younger colleagues.
• Volunteer opportunities – many retirees have both the time and the desire to give back to their communities through volunteer work, so if you organize volunteer events be sure to let your alumni network know about them. These are good opportunities to keep your older alumni engaged, and in turn leverage them to create closer ties to community organizations and local council work with which they may already be involved.
• Talent acquisition – if you have open roles requiring the kind of experience your alumni offer, advertise those positions with your retirees. You may be surprised by the number of alumni who would love to come back after a break, particularly if you can offer flexible scheduling or allow them to work remotely.

Here are some additional tips for engaging your alumni, regardless of age:

• Be sure to communicate how much you value your alumni – not only to them, but to new and existing employees. Knowing that your organization values employees even after they leave can increase loyalty and engagement with your current workforce as well.
• Stay in touch and update contact info regularly. Depending on the size of your alumni network, this can be challenging, but it’s imperative for maintaining contact and keeping alumni engaged.
• Host events and provide opportunities to network. These don’t have to be frequent, but opportunities to connect with alumni face to face should be part of your strategy.
• Be creative – there’s really no limit to the ways you can engage your alumni network if you think creatively. For example, you could establish communities of practice that involve past and present employees in a shared learning collective, or open your business resource groups to alumni in order to gain their insights into the business or market challenges you are trying to solve.

[1] https://u.demog.berkeley.edu/~andrew/1918/figure2.html

[2] Millennial Careers: 2020 Vision, Manpower, 2018

[3] Nonstandard Work Arrangements and Older Americans, 2005–2017, Economic Policy Institute, 2019

[4] Phased Retirement and Flexible Retirement Arrangements: Strategies for Retaining Skilled Workers, AARP, 2006

[5] Phased Retirement and Flexible Retirement Arrangements: Strategies for Retaining Skilled Workers, AARP, 2006