CHAPTER SEVENTEEN
Overage Executives
Keeping Firms Young
MOST COMPANIES, ESPECIALLY LARGE ONES, still assume that age sixty-five is the normal retirement age for managers and executives. But more and more of them, especially in middle-management ranks and in highly specialized work, take early retirement, some as early as age fifty-two. An even larger and faster-growing group is beginning to exercise the legal right (of all but a small group of executives in “decision-making positions” with very large retirement pensions) to delay retirement until age seventy. And the compulsory retirement of federal employees and of employees in California who aren’t decision-making executives with very large pensions isn’t permitted anymore at any age. Therefore, unless the employer plans for the retirement of aging executives, he is likely to find that the people he would most like to keep are the ones taking early retirement while the ones he would most like to get rid of are staying on the payroll until age seventy and beyond.
So far employers, as a rule, are handling these problems on a case-by-case basis. They still think they have freedom to decide whether they want executives to stay or to leave when they are in their fifties or to ease them out when they reach sixty-five. But that practically guarantees being accused of age discrimination.
“We haven’t been sued yet for age discrimination by any of our managers or professionals,” the personnel vice-president of a big insurance company told me recently. “But only because we backtrack immediately when anyone as much as hints at challenging us—we must have caved in at least thirty times in the last few years.”
Indeed, planning for the retirement of executives should begin when they are still in early middle age. For the law now defines the onset of aging—at least for purposes of nondiscrimination—as age forty-two. After that, any decision affecting an individual—a new assignment or the lack thereof, a raise or a promotion or their denial, even a lateral transfer—can, and will, be challenged as age discrimination unless the employer has a clear, well-documented policy to ensure equal treatment of all employees based on performance and its appraisal.
A lot of early retirements these past few years were involuntary and the result of employment cutbacks. But a much larger number were voluntary—and the number is rising. A sizable proportion are people who do indeed retire, or at least plan to do so, especially those with health problems. But many more only “retire” to do something else, for example, to start their own small business. Modern Maturity , the publication of the American Association of Retired Persons—the third-largest magazine in the country—is full of stories of successful second careers and successful business start-ups by people who are officially “retired” and “on pension.” A good many of these nonretiring retirees have only waited to quit their jobs until the kids were grown up and their pensions vested. But many more—some personnel people believe it to be a substantial majority—would have liked to have stayed on but felt that their talents weren’t being fully utilized or felt that they had advanced as far as they would go. Many of them are right, and they should have been encouraged to leave much earlier. But many people who take early retirement because they feel unneeded and unwanted are plain wrong, only no one tells them.
What is needed is systematic analysis of a company’s executives and managers in their early or mid-forties. Which ones does the company really want to keep until they reach retirement age, that is, for an additional twenty or twenty-five years? Which ones have already peaked or are about to reach the point beyond which they are unlikely to advance and are unlikely to make any further contribution? And which ones—the most critical category—are productive, valuable people, but only within a fairly narrow, specialized range?
We know what to do about the people who have already peaked in their early forties. They should be helped to find a job elsewhere, and at an age at which they still can be placed easily, that is, before they reach their late forties. If they stay an additional ten years, they only block the advancement of younger people. The other group, the people who should be encouraged to stay rather than to seek early retirement, are the challenge. They are likely to leave unless something is done to hold them. Yet they are precisely the people who find it easiest and most tempting to take early retirement, only to move to smaller companies, to start their own businesses, or to join consulting practices. These are typically the people who want to continue what they are doing and want to continue where they are—but feel that the company no longer appreciates them, or needs them, or respects them. They are the people who need career planning the most, and before they have begun to feel rejected and superfluous: that is, before they reach their late forties.
The time to start is now. By 1990 the first group of the baby-boom children will be past forty, and the young executives of today will become middle-aged. Then employers, especially large employers, will suddenly find themselves with a “bulging midriff” on their executive bodies. They will suddenly have large numbers of still-young people who have had years of rapid promotions and who suddenly find themselves stuck in a terminal job. By then, a policy of identifying the ones who should stay and the ones who should leave should be in place and working.
By then also, any employer should have in place a policy for the over-sixties in managerial and professional ranks. Before the end of the 1980s, the people who began their executive and professional careers in the first big hiring wave after 1929, that in the early 1950s, will reach and pass age sixty. Unlike their predecessors, however, they won’t disappear automatically five years later. The person who has switched to a “second career” at age forty-five or even fifty knows how to find and develop a third one, twenty years later. But to go out and start anew at age sixty-three or sixty-five if one has never done this earlier is difficult and discouraging.
The basic rule, and one that should be clearly established and firmly enforced, is that people beyond their early sixties should ease out of major managerial responsibilities. It is a sensible rule for anyone, and not only for the executive, to stay out of decisions if one won’t be around to help bail out the company when the decisions cause trouble a few years down the road—as most of them do. The older executive should move into work one performs on one’s own rather than be the “boss,” work where he or she specializes and concentrates on one major contribution, advises, teaches, sets standards, resolves conflicts, rather than work as a “manager.” The Japanese have “counselors,” and they work very effectively, sometimes well into their eighties.
One good American example is an old executive in one of our major banks. Until age sixty-three, he was head of the bank’s Asia-Pacific division and built it into a major moneymaker. Then, ten years ago, he moved out of operations and became the policymaker, strategist, and adviser on the bank’s problem loans to the Third World. Now his associates have persuaded him to stay on for a few more years—but he no longer travels and no longer negotiates. The secret, as this example shows, is to identify the specific strengths of a person and to put them to work.
Isn’t all this a great deal of work? Yes, but there is really no alternative. Employers in treating the aging executive will find themselves increasingly caught between the proverbial rock and the hard place. The rock is the law under which the employer has to prove that a personnel decision—any personnel decision—affecting an employee over forty-two does not discriminate against age.
But also, until well into the next century—until 2015 or so when the firstborn of the baby boom will themselves reach their mid-sixties—employers will be under heavy pressure from their younger people.
The baby boom did not end until the 1961 “baby bust.” The baby boom’s last cohorts are therefore only now coming out of the graduate and professional schools. For an additional ten years, until the babies born in 1960 reach their thirty-fifth year, we shall have very large numbers of young people in the managerial and professional ranks. And for another ten years thereafter, we will have very large groups in “the best years,” the years between thirty-five and forty-five. These younger people will be highly schooled and ambitious and will expect the rapid promotions of their immediate predecessors. The company that cannot or will not satisfy this hard place , the expectations of the younger people, risks losing its most valuable human resource; the ambitious ones will quit and the ones who stay behind will retire on the job.
What is therefore needed are policies that satisfy both the legal imperative of keeping the aging executive on the job and the demographic imperative of creating promotional opportunities for the younger people. And, to keep the enterprise healthy, both the aging and the young have to be focused on performance, challenged, and productive.
(1984)