Traditional Analyses Will Not Be Sufficient
When it comes to retirement analyses, most organizations operate at a level that is simply too generic to be helpful. Others might use more focused approaches, but their analyses are still not specific enough to drive action. Broad studies (e.g., those that determine that x percent of the overall employee population or y percent of managers above a certain level will be retiring) may seem helpful at first, but it is nearly impossible to do anything constructive based on these overly broad results. They are simply too generic to allow you to create staffing strategies and plans that will drive action. Specifically, what would you actually do differently if you determined that the average age in a particular unit was 58.2 or that 11 percent of your employees in that unit were eligible for retirement in the next five years? Compounding this problem is the very nature of an average, which in some cases might include both IT professionals (where the average age might be less than 30) and production workers (which might include a large number of employees at age 55 or more). An average age across these two groups might be in the forties; if you were to rely on this result, you might not see that a serious retirement issue could be emerging in production.
Here are some examples of mistakes that organizations make when trying to better understand and address the implications of their retirement situations:
Overreliance on external data. Many companies focus their retirement analyses on in-depth reviews of external demographics. These companies often look for overall, industrywide trends that they think may have an impact on their workforce. Others look at statistics for these aging workforces (externally) and try to draw inferences that are relevant to their organizations in particular. While the findings from these external analyses might seem “interesting” at first, they may not even apply to your organization. In any case, recommendations based on external demographics will never be specific enough to help your organization to identify the most critical gaps that you will be facing, nor to define the staffing actions that should be taken to address those particular gaps.
An inappropriate focus on large groups of employees. Some organizations focus their retirement analyses on their own (internal) workforce, but look at data for large groups of employees (perhaps even the company as a whole). Such broad analyses always yield broad findings that are, at best, difficult to act upon. Studies that identify retirement issues among a company’s entire workforce, for example, usually contain data summaries, combinations of jobs, and data compilations that make it virtually impossible to identify any specific, job-related issues or to define effective staffing strategies and plans for addressing those issues. If a study looks at all engineers across a unit, for example, any staffing plans based on these findings are, by definition, for that combined group—engineers as a whole, not by discipline. Thus, specific plans for each discipline (which are needed to guide real action) just cannot be prepared.
Looking only at the executive succession and development pools. A third group of companies includes risk assessments arising from retirements as part of the succession planning processes. While often helpful, this approach is rarely sufficient. What about all the retirements in positions that are not included in the succession planning process? How will they be identified and addressed? In addition, the focus of succession planning is usually on developing candidates. How often do those development plans provide for the transfer of knowledge, experience, and personal relationships from incumbents to candidates?
Taking a focus that is too narrow. Another common mistake that companies make is to attempt to define retirement numbers precisely (trying to forecast who will retire, and when). Often, companies try to predict with certainty what their retirements will be, attempting to improve their accuracy with each iteration. At best, these organizations are simply guessing. An effort like this could be a beneficial part of an overall workforce planning process, but often these analyses are done on a stand-alone basis, where these “accurate” estimates do nothing to address what should be done to mitigate the effects of these predicted retirements. Even where these efforts focus on critical job categories (normally a good thing), they fail to define what needs to be done to address the critical staffing issues.