Perhaps it’s my age? Maybe it’s my role? But, I seem to be seeing more retirement conversations in the last six months than in the previous 20+ years of my career. As someone who retired from a particular line of work once already, I have a mental (and financial) model of how such a decision ought to be made: Have you completed the task?
However, when it comes to employees considering retirement, this can be a delicate situation for both the employee and the employer. Completing the big picture task can sometimes become an idealized version for an entrepreneur or a very motivated employee. Just yesterday, I had a tenured employee tell me that he would wait to retire until he was sure the company was an inevitable success. I love that sort of language. It truly pulled on my heartstrings. Yet, (after thanking him) I immediately countered with, “let’s keep the lines of communication going both ways.”
In a small business, the retirement of a seasoned veteran is difficult for the company to navigate well. Not only is the financial ambiguity about when and how (and “I changed my mind”) a common problem, but you also contend with all the relationships they’ve accumulated over the years. What usually amounts to a pleasant well-wishing farewell, usually has an iceberg of back story that requires a firm but precise hand –and foul moves damage major arteries of the company.
I know from experience.
As someone who has directly led the acquisition and subsequent retirement of a dozen companies, I can say with confidence that no two are exactly alike. Yet, the emotional ups and downs of the sellers are extreme. Some resolve the downs with bitterness. Others engage in competitive behavior, while others are joyous and helpful counselors to new managers and long held staff.
This usually gets worked out in the first six months post-acquisition, and as the buyer, you’ve probably got a strong pulse on how it will go after the first 60 days. That’s the good news.
The more challenging news is what will develop a few years later when the team that came together around the founder starts itching to retire but doesn’t know how to have the conversation with you, the new owner. They probably always pictured sitting down with the seller to help them map it out. Now, you’re there. And what good are you at reading their minds? Indeed not as good as the original patriarch.
Alas, you may also have hired in several veterans during your first few years of ownership. They, too, have expectations about how retirement ought to look for them. But, like the others, they don’t come out and say it straight away. If they do, you’ve got a blessed situation. Be thankful.
I do not have a set retirement requirement. I know some businesses do. Maybe that’s better because everyone can plan, and exceptions can be made for the best situations? This approach probably de-risks the situation just a little bit but sets up a culture that says, “we’re not very good at navigating people.” As attractive as that appears to me (the known introvert with an absence of social norms weirdo,) I don’t think it honors people well enough.
In my version of the world of employee retirement, we establish a unique plan for each individual that includes some buffer for maneuverability of both parties. In this way, the company can probably have them engaged and productive for longer, but they can obtain the freedom to walk away from stress when they want. I like this in concept and with high integrity employees. It’s been a treat with business sellers, and I’m using a similar method with their tenured teammates as they begin to express serious interest in exploring what “slowing down” might look like.
The real trouble arises with the see-saw of “I’m retiring.” Followed hours later with, “Oh, I was just upset.” It’s happened to us several times in the last 60 days. For me, this is a tell-tale sign that they want to slow down but don’t know-how. The employee wants the employer to help them map it out. They don’t want to leave but don’t feel like they’re doing their job as well as they could or should, or have done in the past. It’s often made even more delicate because of the spouse and health insurance, which they don’t want to blame or frankly discuss with the new leaders until after they’ve boiled over at least twice.
What to do now?
Oh, I’m not giving up my secrets.
Nay, seriously though, the big theme one ought to hold in your mind is “how can I speak honestly with love?” Put this in the front of your mind and ask questions while holding firm. Do this while placing the legalese toward the back of your mind. As an owner, you’ve got to take risks. And, I say loving people is worth the risk over the long haul. Might you get hurt from time to time? Yes. Will you develop better relationships over the long term? Likely.