Retirement seems like more of a distant goal for a significant number of CFOs.
Thirty-eight per cent of CFOs are more uncertain about when they’re going to retire than they were five years ago, according to a Robert Half Management Resources survey of more than 1,400 US CFOs.
CFOs were asked: “How, if at all, have your retirement plans changed in the last five years?”
Many respondents (49%) said their retirement plans are unchanged, and 6% plan to spend fewer years working than they had intended five years ago.
But 38% said they are more uncertain and cannot predict when they’ll retire. And another 7% said they plan to spend more time working than they did five years ago.
“Economic trends and personal demands are causing many executives to re-examine their retirement plans,” Paul McDonald, Robert Half senior executive director, said in a news release. “A growing number of professionals nearing the traditional retirement age are exploring project and part-time work so they can continue their careers, while gaining the flexibility to gradually transition into retirement.”
Employers can accommodate seasoned employees who want to ease into retirement by enhancing succession planning efforts and offering consulting opportunities, McDonald said. “This allows firms to retain legacy expertise and transfer knowledge from departing executives to future company leaders,” he said.
Similar findings, global implications
Many older workers are staying in jobs for reasons such as poor investment results in their retirement savings. Some are continuing to work because they are supporting unemployed adult children.
According to a PwC report, the scenario is making it harder for younger workers to find work, and, particularly in Europe, companies’ productivity measures are at a five-year low.
“The difficult job market means many experienced workers are staying longer in jobs, leaving companies struggling with top-heavy structures, little staff turnover and rising wage bills,” Richard Phelps, human resource services partner at PwC, said in a news release on the report. The scenario has hampered innovation at some organisations, the report said.
The scenario is expanding a leadership gap. With more experienced employees staying in jobs longer, younger workers are waiting longer to move up in organisations. PwC’s report, citing European metrics, showed that the number of executives with more than three years in the role has been increasing, while the number of employees with less than two years’ service was falling.
Younger employees looking to advance are left with a choice: Leave the organisation for a bigger role, or wait for senior employees to retire. Meanwhile, when long-held senior positions are finally vacated, companies are faced with having to fill the role with whoever has stayed with the organisation – or brave a tough market for experienced talent.
One segment of the PwC report, a survey of more than 1,200 chief executives, shows that 55% in Western Europe and the US rate the recruitment and retention of “high potential middle management” as a key challenge, compared with 32% saying the same for “young workers.”
Closing the leadership gap
Establishing succession plans for top-level executive positions is one consideration for organisations, but it’s not the solution, said Dow Scott, a professor of human resources at Loyola University Chicago’s Quinlan School of Business.
“It takes more than a succession plan,” Scott told CGMA Magazine in September. “You have to provide development opportunities, not just training programmes, but meaningful assignments. You have to create an internal culture that values development, and you have to have people willing to take on assignments, further their capabilities, so you get the best person from within.”
Some companies have been devoting extra resources to grooming current employees for positions of greater responsibility and authority. Employee development budgets, which often were cut in cost-saving measures during the recent recession, are making a comeback.
Spending on learning and development (L&D) rose an average of 12% among more than 300 training organisations surveyed by research-based human resources programme provider Bersin by Deloitte. This follows a 10% gain in 2011.
In the United States, when members of the highly populated “baby boom” generation retire, there often aren’t many mature, skilled younger workers to move in and take their place. Sometimes, highly skilled technical workers are getting promoted to management positions, and their technical skills are sorely missed in their previous jobs, said Josh Bersin, principal and founder of Bersin by Deloitte.
Related CGMA Magazine content:
“Older Workers, More Cost for Companies in Developed Regions”: Older workers are staying in jobs longer, and employers are emphasising experience over youth. The result: Younger workers are having a tougher time finding work, and, particularly in Europe, companies’ productivity measures are at a five-year low, according to a PwC report.
“Poor Talent Management Hinders Companies’ Growth, Innovation”: Inadequate talent management is hindering the competitiveness and financial performance of businesses, a CGMA report suggests.
“Companies Invest in Employee Training to Reduce Global Skills Gap’s Effects”: Spending on employee learning and development is rising as companies attempt to hire and train new workers and leaders alike to combat a global skills gap, according to research by Bersin by Deloitte. Read about some of the best practices in L&D, as well as mistakes to avoid.
“Top Companies’ CEOs Generally Rise Through the Ranks”: Companies generally regarded as the world’s best have at least one thing in common: CEOs who are no stranger to their organisation. Hay Group research says the top 20 companies’ CEOs have averaged 25 years of service at their organisation.
—Jack Hagel (firstname.lastname@example.org) is the editorial director of CGMA Magazine.