There are several blocks to open retirement/transition planning including legal HR issues which can limit open conversation, and a predominant business culture which is bottom line numbers focused rather than people focused. For most companies, if you can’t show it on a spreadsheet, it’s not worthy of attention.
Why should a company care about helping a retiring employee create a bridge to their next chapter of life? Isn’t it the employee’s business to handle their own retirement? They are leaving and won’t be contributors to the company anymore, so why should I as a business owner, Human Resources executive, board member or part of a managing executive team care?
Here’s why….when it comes to a retiring high level employee, the tangible and intangible costs are high. The bad news is that according to a CAP Study, the cost is:
“Up to 213% of annual salary for highly educated executive positions.” For example, the cost to replace a $500K CEO is $1,065,000. This doesn’t include the many intangible and often untracked costs.
In the intangible cost category is the loss of institutional knowledge which can impact many areas including processes, employee productivity, and company profits. Business is done through relationships. This is a key point that is lost in the day-to-day management of the revenue and expense of a business. Those relationships are both inside the company, within and between departments, and with outside partners and vendors, impacting productivity, product quality, delivery, customer retention, profits and more. Multiple studies show that Baby Boomers are retiring at a rate of 10,000 a day.
With more high level employees leaving due to retirement and mid-career transition, this should be of high concern to any company.
The good news is that these costs can be mitigated through proper planning that includes:
- succession planning
- institutional knowledge transfer
- targeted mentoring pre-departure
- post-departure planning that includes mentoring and consulting
Once an action plan is in place that includes the four key topics above, it can be integrated in the day-to-day interactions and operations of a company at low cost. In developing your plan, make sure to incorporate clear outcomes and milestone check-in conversations. This is such an important topic, we will be devoting several blog posts to it, so stay tuned for more specifics.
Life Reinspired specializes in the next chapter of life transition and planning. Contact us about how we can help you and your company.