Succession Planning - 3 Ways CEOs Can Prepare for the Retirement of Long-Serving Staff

11/29/2016

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How and when valued employees choose to retire can represent a serious challenge for SMEs. As the staff member walks out of the office door for the final time, so too can knowledge and experience that has been gleaned over many years of service. It’s a difficult situation to manage and one that has been exacerbated further by the scrapping of the Default Retirement Age. It means the onus is now on the employee to reveal when they want to go, in turn making their departure more difficult to plan for.

Not that there is much planning going on, according to the CIPD’s 2014 Managing an Age Diverse Workforce report. It reveals that only one fifth of companies surveyed are actually exploring the issue of age-related strategies, suggesting that enterprise is reacting to retirement issues instead of taking a proactive approach.

Considering that by 2020 nearly a third of the workforce will be aged over 50, this lack of strategy poses risks on several fronts, including a potential failure to comply with age-related legislation when a staff member does decide to leave, in turn leaving the company open to legal action – so how should enterprise roll out an effective succession planning programme?

1. Embrace Flexibility

For valued employees who are keen to carry on working beyond their retirement date, forward-thinking companies are rolling out staff retention strategies. These include offering a raft of flexible working options such as the opportunity to leave the company for a few months before rejoining (known as ‘Benidorm Leave’), more flexible working hours and opportunities for job sharing to help manage the strain. Critically, companies are moving away from imposing blanket policies and instead tailoring bespoke offerings that suit the employee’s needs as well as the company’s.

Such a progressive approach helps to make the potential retiree feel valued, instead of simply a ‘cog in the wheel’. In turn, it encourages them to stay on longer, making their eventual departure easier to manage both in terms of knowledge transfer and employee turnover.

2. Transfer Knowledge

Organisational learning should mean not waiting for individuals to leave, but instead should involve a constant process of transferring knowledge throughout the organisation.

The departing staff member can pair up with a ‘protege’ employee, and the two can work together to transfer the former’s expertise to the latter. A practical, scheduled plan that uses flow charts, mind maps and more can capture knowledge and key subject areas.

As well as such practical measures, the retiring employee is also encouraged to sit down and be interviewed by the protege, developing a mentor/student-like relationship that will offer clear insights into the retiree’s unique experience and thought processes. Adopting this two-pronged strategy ensures that when employees do finally retire, productivity-sapping knowledge gaps aren’t left in their wake. Instead, the proteges will be able to step in and effectively pick up the retirees’ wok.

3. Bridge the Generation Gap

At the other end of the spectrum are companies who wish to remove older employees and bring in/promote younger staff in their place for perceived financial and productivity benefits. Research reveals though that this is a self-defeating strategy on several fronts. Firstly, the UK is facing a “recruitment black hole of 7.5 million”, with more jobs coming online than there are people to actually fill them, meaning that attempts must be made to retain existing staff, young or old.

Secondly, the productivity loss associated with employees as they grow older is an ageist stereotype that has no place in the modern workplace. Not only does such a strategy risk falling foul of age discrimination legislation, but according to government research, if older workers receive the same amount of training as younger employees, they remain as productive in many roles up to and beyond the age of 70.

By introducing such far-reaching succession planning, SMEs can retain the invaluable knowledge and experience critical to their operations, while keeping employee turnover to a minimum. And it’s the kind of robust strategy that makes the very most of all available talent. Policy is important, but so is listening to the needs and aspirations of individual staff members. By balancing people issues with business planning, the business can continue to grow while making the most of existing knowledge and nurturing the younger generations to be the valued retirees of the future.

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