WORK FORCE GETTING OLD? PRODUCTIVITY DOWN? TRY THE EARLY RETIREMENT SOLUTION.
High turnover can be troubling. So can no turnover, as Amos Press Inc., a $25-million publishing company in Sidney, Ohio, discovered a few years ago. Top management at the fifth-generation, family-owned business realized that several of its longtime workers were slowing down. A few were even falling asleep on the job -- but they weren't about to quit.
"We had covered for them for a while, but we couldn't keep it up," says Earl Bowlin, Amos Press's vice-president of administration in charge of human resources. Revenues from the company's daily newspaper and special-interest magazines were growing at 12% a year, but absences and physical disabilities were interfering with productivity. "We could have used performance appraisals to document terminations, "Bowlin says, "but we didn't want to force anyone out. We wanted them to leave with their heads held high." His solution: Induce retirement with cash incentives and a series of educational seminars.
Early retirement programs, of course, have been a management staple for more than 20 years. Their popularity was growing during the last recession, when hundreds of companies, viewing the move as a better alternative than layoffs, opened so-called early retirement windows. Still, it is rare when a growing company offers premature retirement benefits to spur turnover.
Amos's plan was also unusual because it applied to few people. Unlike large companies, whose program goals number in the high hundreds, Amos made only 17 of its 350 employees (those 60 and older) eligible. Eight of the eligible employees accepted, including some who the company had expressly hoped would retire. The buyouts cost Amos $250,000 over five years, but it realized a net savings of $175,000 by consolidating jobs and -- in most cases -- promoting from within, thus paying most replacement personnel lower sharies than their predecessors had received.
According to surveys tracked by Retirement Advisors (RAI), a consulting and publishing group based in New York City, mass retirement efforts have caused a spate of age discrimination suits in recent years. The courts have ruled in favor of employees who could prove that they had been coerced into leaving or that they had been replaced by younger people. At Amos, Earl Bowlin was careful to stress that the program was voluntary. "We told people that retirement wasn't expected until age 70, and even then they'd have a job with us if they wanted one. We tried to present the option as a benefit," he says. In offering the plan, adds Amos president J. Daniel Francis, the company was "recognizing and fulfilling its social responsibility."
Edwin Neuce was among those who accepted the offer without hesitation when it was made in the summer of 1983. Then editor of Linn's Stamp News, Neuce suffered from arthritis. He had joined the company 23 years earlier and had always hoped to retire early. "I loved my work," says Neuce, now 62 and a weekend antiques dealer, but "surprisingly, I don't miss the job at all -- only the people."
The decision didn't come easily, however, for people who had intended to continue working. Betty McClain, then a 64-year-old clerk typist, was furious at what she perceived as an attempt to force her out. McClain insisted she wasn't ready "to sit in a rocking chair," but felt that at her age, she couldn't afford to bypass "such a good deal." The program, McClain adds, "was fantastic. They gave you facts, not promises." She now has a part-time job tending houseplants in fast-food restaurants.
Amos's retirement offer, which is typical of early retirement plans, was set up to give workers an economic bridge between getting a full salary and drawing their Social Security benefits. They received one week's pay for every year they had been with the company; their full pension plus what they would have gotten had they stayed until age 65 (with 6% interest added annually for anticipated inflation); and a monthly check equivalent to the Social Security benefits of a 65-year-old. Their medical coverage and life insurance were also continued until age 65.
In addition, the company sponsored a series of four seminars dealing with financial and estate planning, investing, and starting another career. To avoid the appearance of internal pressure, Amos retained Betty Fisher -- a retirement consultant with Drake Beam Morin Inc. and an early retiree herself -- to run the seminars.
The plan did have one predictable negative effect. Wanting to be fair, the company offered it to everyone older than 60 -- and naturally, says president Francis, "One or two we hoped wouldn't accept it, did."
Among them was Courtney Coffing, formerly the international editor of Amos's Coin World. Says Coffing: "If I'd stayed on the job, knowing what I'd passed up, I'd feel like I was working for peanuts and hate myself for being there." So at age 63, on his eighteenth anniversary with the company, he left, and a year later took a job in Wisconsin with a competing publisher. Looking back, Coffing questions Amos's tactics. "The company could have done something individually," he points out, "for the unproductive people they really wanted to get rid of."
Still, human resources director Bowlin feels good about staging a smooth exit and buffing the company's image in the process. And as the country's labor force ages, more plans like Amos's are likely to appear. With a flood of baby-boomers already competing for a finite number of promotions, and with longer life expectancies keeping people on the job beyond standard retirement age, early retirement incentives could become as common as two-week vacations.