Most organisations love to boast about having long-serving staff and employees who prefer to grow and stay with the company. But is this always a good thing?
There are more over 65s in work than there were 10 years ago and this trend isn’t likely to drop any time soon. New research by Portus Consulting found that just 29% of employees in the UK have ruled out working past 65, with younger workers most likely to stay in work beyond 65.
Portus Consulting Commercial Director Steve Watson says:
Working past 65 is becoming increasingly normal with more than 1.1 million over-65s in employment. But if people are staying in work simply because they cannot afford to retire then it becomes a possible flash point for employers and a potential issue in managing their business for the benefit of all employees.
And it’s not just in the UK that senior employees are choosing to stay in work. The same trend is also happening in America, according to this survey.
So why should you encourage the over-65s to retire?
- Attract new fresh talent – While most companies cherish and take great pride in keeping their long-serving employees, they’re doing the company an injustice by not seeking out fresh new talent. Yes, your senior employees may be more mature and wiser but the next generation have a fresh new outlook on life and the way they do things that could completely transform the company for the better. They are also more likely to be tech-savvy, so moving with the fast-paced technology-driven world will be something they are willing to embrace instead of fear.
- Promotion blockage – There’s nothing worse than not being able to reward your best employees for their hard work and dedication by not being able to promote them to a job which they have more than earned. With finances at a squeeze, most companies can only promote another employee if the person doing that job leaves because inevitably a promotion comes with a salary increase and possibly more benefits. Having an employee who loses morale because they don’t see the opportunity for them to progress could end up costing you in the long run.
- Talent movement – This is closely related to point no.2. If an employee sees no chance of progression within the company they are more likely to leave and get it somewhere else. Employee turnover isn’t always good for the business, especially if it’s the top talent that are leaving and not the employees you really want to leave. You can tame employee turnover before it’s too late by having the right conversations with the right people.
Legally a company can’t force an employee to retire but if they are under-performing, taking time off due to ill-health or request reduced working hours, then if it doesn’t fit with the needs of the business then there are certain paths that can be taken. People over 65 should be treated in exactly the same way as people under 65.
There shouldn’t be any special treatment and it is up to employers to decide what is best for their business, as long as it is not the result of discrimination or prejudice. That means employers should be able to make redundancies, dismiss people on grounds of capability or launch disciplinary proceedings – as long as their decision is not based on someone’s age.
Ideally it would be nice if your senior employee can leave on amicable terms instead of just being pushed out, especially if they have served the company for a long period of time.
How can you help senior employees retire when they are supposed to?
- Offer retirement planning for current employees – There are many types of retirement plans like, profit-sharing and pension plans. Each has its own benefits, features, levels of complexity and administrative costs. Some are designed for large companies; others, for smaller enterprises. There may be tax implications, as well. As company, you would take care of your employees through salary, medical care options and paid vacation time and other benefits. So it makes sense to offer a retirement plan that will help them now and in their retirement years. A retirement plan can also benefit you as it is an excellent tool for attracting and keeping valuable employees, as well as helping them attain a more financially sound future.
- Encourage young employees to save for their retirement now – most young employees don’t think about saving for retirement now because for them, that event is so far off. In fact, with decreases in public pensions young people need to invest more in their retirement than their parents or grandparents did. Reinforce the idea that time is money when it comes to retirement; and employees who starts saving in their twenties will have more money than the person who starts saving in their thirties. This means they will have a nice pot of money to retire with when they eventually do retire
- Flexible retirement – It may not be so easy to convince your senior employees to retire, especially if they don’t have a retirement plan in place. But what you can do is consider offering them a phased retirement. About 30 percent of large employers in America offer workers some flexible retirement option, whether it is allowing older employees to work part-time or in job sharing with colleagues, according to WorldatWork. It’s something The U.S. Department of Defense has been doing already. It allows civilian employees to partially retire while remaining on the job part-time to help better manage its workforce needs.
For young people who are just beginning their careers, retiring 50 years from now is impossible to imagine. It might be difficult to persuade them to start saving for retirement today. But you can provide them with the facts. Show them how age is on their side, how budgets build healthy money habits, and how employer contributions will make their money add up and will give them the retirement they may have thought about. As for your senior employees, the change may need to come from you to help them feel like a valued long-serving member of staff who can leave with their head held high when they feel the time is right.