Your most tenured employees have dedicated their careers to your company, so as this talent reaches retirement, is it time to get the plaque engraved and start planning the sendoff party?
Not so fast; managers in key departments are finding it takes time to find, retain, and develop quality replacement talent, meaning the valuable intellectual capital held by outgoing retirees is held at that much more of a premium. Many niche industries, especially IT services, energy, biotech, chemical, manufacturing, and agribusiness are finding that they just can’t get the
specialized expert talent
to transfer their knowledge to.
HR Leaders are seeing the need to bridge the talent gap; they are now not only designing programs to prepare retirees for life after traditional employment, they are also helping to change their organizations’ cultural mindset of what it means to retire. This trend is so prevalent that a phrase has even been coined to describe this talent: Boomerang Workforce. “Boomerangers” are not only needed by organizations, they are proactively choosing to work longer for themselves. However, this decision comes with one important caveat: that their engagement is on their own terms.
Retiring employees aren’t generally interested in 60+ hour work schedules. They need more flexibility and time to pursue other interests— perhaps even becoming an independent consultant or starting a business. Rather than being paid hourly, they can be motivated by goal or project-based pay. They aren’t looking to be told where to go, when to be there and what to do; they are self-driven.
So given employers need Boomerangs, and Boomerangs want to continue to be
valued and engaged, is there a way for the employer and worker to each get what they need? As mentioned earlier, many companies have initiated
retiree and contractor alumni programs, disintermediating the traditional staffing company IC acquisition and payrolling model. A great idea if done properly— and dangerous if it’s not.
This document is critical in setting the stage for their return. It should include, at a minimum, specific deliverables, an end date, the agreed payment based on milestones, and a right for you to evaluate project before payment. Don’t forget that their return is more of a project then a continuation of their career.
2. Ensure that your benefits package specifically excludes contract workers
Most of the problems related to re-engagement of retired workers are related to benefits claims. Look at your pension plans, 401(k), severance and even the ACA. If your plan specifically excludes contractors, then the issue really is communications, and that’s one of many things HR does best. Cover that in the exit interview and Cobra Insurance discussion.
3. Never include overtime, vacation, or sick pay in your negotiation
As contractors, these retirees will need to be treated as such, and they may think the same policies apply to their assignment as their job. Negotiate a fair wage for the work, but HR policies and perks are different as a contractor.
4. Do not restrict independent consultants from hiring help
If you engage the retiree as an independent contractor, it is up to him or her to determine how their work will be done, including the hiring of individuals to help complete the project. This includes administrative help or someone to document their work. Try to refrain from assigning other employees to work for them or have anyone internal report to the retiree.
5. Have a knowledge transfer plan and understand intellectual property rights
The retiree’s knowledge needs to be transferred to the upcoming workforce, so have a plan in place and get it documented. In some industries, like manufacturing and energy, these people may have done their jobs without a lot of documentation. The knowledge going out the door can be costly, and if they are going to become a contractor, they can consult with your competition, so make sure you are covered. Keep your General Counsel in the loop; a non-disclosure agreement could be in order.
6. Direction and control should be reserved for employees
Ensure the consultant controls where, when and how they complete their project. Contractors, especially returning employee contractors, can be a co-employment risk, but if you clearly define the work and treat them like your other contractors, this risk is mitigated.
7. Educate your managers before they bring the retiree back to work
HR should include open communications about returning employees. Make this communication part of the worker’s departing interview, and when your managers engage retirees to bring them back, make sure they know to not treat them like employees.
Clearly, the office party and plaque can still be part of retirement plans for your employees, but well ahead of this - foster culture and processes that inform pre-retirees of your Retiree Alumni Program, and their post career-path options as an independent consultant. Be sure to look at that engagement as a project, and not a job. This is the best gift you can give the retiree and their second career.
Don Gillespie is a Senior Enterprise Program Executive with MBO Partners, the leading provider of management services for independent professionals and the clients that engage them. Don may be reached at