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Have You Thought About Your Retirement Strategy? (Part 1 of 3)

Preparing a Successful Succession Plan within Your Company

“I Hope I Die Before I Get Old”. Do you remember this line? It’s from The Who’s “My Generation” released in December of 1965. Roger Daltrey and Pete Townsend were 20 and 21 years old. How times have changed! Now that I have reached an age that “My Generation” is probably considered old, I find myself looking forward to, what I hope are, some of the best years of my life.

In the last two years I have spent a lot of time preparing for my impending retirement on June 30th of this year. I’ve been reading books on the subject, and have discovered blogs by folks who are already there and willing to share their experiences. I can say that I feel pretty well prepared for the journey ahead. In the course of that preparation, it became clear that my retirement had to be coordinated with the needs of the business and that coordination requires a similar amount of planning.

When Should I Start to Plan?

Getting ready for retirement takes longer than you might think. Starting to plan in your 50s is not too early. This type of forward thinking applies to businesses, as well. Here at Perkins, we’ve been monitoring shareholders’ expected retirement dates for a number of years. As a result, we have a pretty good understanding of what the impacts on the firm would be in terms of lost capacity and knowledge. Despite that planning, when the first of our long-time shareholders retired, we discovered that we didn’t have as much experience on how to execute it as we would have liked.

When an experienced leader in any organization retires there are a number of important components that require attention. At Perkins, our top priority is to ensure the retiring employee’s clients know who their new primary contact will be and giving them plenty of time to get acquainted with their new accountant. Making sure the succeeding service providers are prepared to continue to provide the level of client service previously experienced is paramount. The firm’s long-term growth strategy is dependent on executing this process well. We also want to allow each retiring shareholder to transition to the next phase of their life knowing the firm is there to encourage and support all of the activities and emotions related to that process.

Phase into Retirement

In August of last year, USA Today ran a story titled “Don’t Jump Into Retirement, ‘Phase’ Into it With Part-Time Strategy”. Depending on your role within an organization, you may well be able to make the case that phasing into retirement is good for your company by enabling the organization to ease in the next generation of leaders. We’ve all read the statistics about how the Boomer generation is starting to leave the work force: Organizations need to start identifying their future leaders well in advance of the time the current leaders depart.

In many organizations, the most experienced leaders are not customer facing, however, they touch all aspects of a business’s processes and procedures. A February 2017 Business.com article entitled “Baby Boomer Retirement: Avoid a “Senior Moment” In Your Business” described the “Baby Boomer Brain Drain,” which associates business risk with the loss of experience and knowledge of departing retirees. These risks can be mitigated by slowing the rate of Boomer departures by reducing hours over a longer period of time. Use part-time, job sharing, telecommuting, and compressed work weeks to facilitate phased retirements by senior leaders. Assessing key succession risks is critical to ensuring that organizations progress smoothly to a new generation of leadership.

Another factor to consider in making phase down arrangements is that some Boomers may be unable to retire at the time they want to; those that fall into this category are known as the “grudge workforce,” a term coined by a research group in Australia. Phase down arrangements may help ease the distress these older workers are feeling.

Finding the Right Balance (for you and your company)

As part of my transition planning, we felt that it would be a good idea to test drive “part-time” for my last year. Accountants have a bit of an exaggerated view of what full-time is so a reduction to 85% might equate to a normal 40 hour work week all year ‘round for most. In my case, we settled on 75% of “accountant” full-time with built in increases for the busier times of the year. In my second month on this new schedule I had my first epiphany: I hadn’t started to prepare myself to let go of the responsibilities I had; they were tied to my sense of value over the course of my career. It became immediately clear how important this letting go process was, and it reinforced the value of moving away from the normal CPA work schedule.  Creating a balance between being engaged and letting go is critical to ensuring that both the organization and retiree feel like there is value in the retiree’s presence and that the reduced work schedule is beneficial to all. Do not leave this all up to the retiree; they are just like any other person in your organization, and they continue to need reinforcement that execution of their transitional responsibilities is appreciated.As a result of keeping track of when our Boomer generation owners would be retiring, we were able to establish a plan for making sure a new generation of leaders had the opportunity to develop the skills to take over. I’m delighted with the progress they are making and am excited for the future of Perkins & Co with them at the helm.

Having effective plans for facilitating a smooth transition to retirement for Boomer generation employees allows your organization to minimize the risk associated with the brain-drain from their departure. Being able to provide assistance and resources to those soon-to-retire can be very beneficial for everyone involved. In the next blog post of this series I’ll share some perspective on how to make sure a transition to retirement is successful.

The shareholders at Perkins are well versed in the issues related to Boomer generation retirements; we work regularly with our clients as they navigate the end of their business careers and we are actually living it ourselves. Have you stopped to think about how well prepared your business is for the pending retirement of experienced organizational leaders? Give us a call. We’d be glad to share our perspective.

About the author:

Grant Jones began his career in public accounting in 1977 and has been a shareholder at Perkins & Co since 1989. In fact, he’s the only remaining non-owner employee of the original Perkins & Co, which formed in 1986. He’s a leader in the firm’s Employee Benefit Plan Audits and Nonprofit practice groups and actively assists clients in managing operational, strategic, and ownership issues. He specializes in working with closely-held businesses in a variety of industries, and his areas of expertise include accounting and auditing, financial management, and general business consulting.