Boomers derive a great deal of personal value from their work. But when it comes to retirement, that intense personal investment can stall the perpetuation of your brokerage and hurt your business. What can you do about it?
We have a large number of Baby Boomers in the workforce nearing or at retirement age. However, unlike generations of the past, three fourths of the workers in this generation are estimated to continue on in the work force past age 70.
This could have a significant impact on individual businesses and the overall economy. The costs could be devastating to allow our workforce to increase in average age. Some employees are saying they want to leave, but they continue to push the date back. Others are simply saying they want to work well past age 70.
Psychologists and economists are saying Boomers are staying because they can’t and will not be able to afford to retire. I have found a bigger reason they are staying, and this reason will have a huge cost to businesses and our economy if we don’t address and manage it.
Who Are the Baby Boomers?
The Baby Boomers (born 1945 – 1963) are a cultural phenomenon. They were the result of couples deciding it was financially affordable to have larger families after the depressed 1930s.
The bubble of increased births allowed them to influence the economy, politics, culture and religion, just to name a few. They have many distinct differences to other generations and they are very aware of those differences.
Statistics Canada,says this country has one of the largest Boomer populations of the G8 nations. Canada is one of the youngest countries as a whole, but it has one of the largest percentages of retirement age employees in the current workforce. This number is only going to get bigger in the next 12 years.
The Baby Boomer generation has impacted the world’s economies for the past 60 years. It has inspired more new business startups (entrepreneurial in nature), stock markets movements, increased spending habits over prior generations, healthcare, product development, and travel. The cultural differences with this generation have made an impact and will continue. However, the impact Boomers are going to make in the workforce over the next 25 years may be the most defining moment of their lives.
Baby Boomers were the leaders who created the Internet and the foundation of much of our technology. They taught us how easy it was to start up an entrepreneurial business. This generation moved us away from the industrial revolution and into middle class business ownership.
North America has enjoyed wealth from what Baby Boomers have created. I believe they will continue to inspire and create more wealth. I also believe we owe a lot to Baby Boomers and should treat them with respect and dignity as they move to the next season of their lives.
Aging is a reality and it has a cost.
If an increasing percentage of our workforce decides to stop the cycle of job and business perpetuation, we will have an increase in average age. This increase has a cost to businesses and to our economy.
Quantifying the cost of this time bomb is eye opening. The areas we will see cost increases are: healthcare, absenteeism, productivity, lack of innovation, inability to attract young talent, lost clients, employee turnover of young talent, and lack of internal perpetuation. This list of costs cannot be ignored. These items have the power to take a huge chunk of the profit from businesses and potentially close the doors.
As people age, they have more frequent health issues, may have less competitive energy, and could be less willing to change. This doesn’t mean every Baby Boomer will cause problems and cost us money. But, being an industry that understands predictive modeling from the law of large numbers, we should understand the truth in these numbers.
An example of these costs occurred in a recent perpetuation flop at an insurance agency.
A 62-year-old producer decided he was going to retire. He and management set a date two years out. They hired a young experienced producer, began training and working on the transition of the client relationships, and even started working on the retirement party. The older producer said he really wanted to retire. However, he threw more wrenches in the cogs of the retirement machine than the machine could sustain. He would call clients and tell them they could always call him if the new producer wasn’t working out. He would introduce the new producer as “a really talented young person that was learning a lot” (thus not capable yet). Over the two-year period, clients began to leave and go to other brokers. They were uncomfortable with the awkward transition and thought that the new person was not going to be as good. They saw the conflict with the older producer not wanting to leave. They needed new ideas and innovation and they could see he wasn’t going anywhere.
The agency lost business. The young producer left after 18 months. The Boomer producer had to extend his retirement two more years, or more. This example represents over $500,000 of cost to the business. The costs included lost clients, cost of training and paying a Producer in training, opportunity costs of not selling new business with a good Producer in place, and management time.
Similar examples can be told about service staff, sales staff, and owners of insurance brokers all over Canada and the US.
The Big Issue
The Baby Boomer generation has defined themselves by what they do for a living and what they own.
If you talk with a typical North American Baby Boomer, one of the first things they will bring up is “what they do for a living.” In the past few months, I have begun hundreds of conversations with “tell me about yourself.” The answers have always begun with their job title, company name, and/or an explanation of how they make a living.
The significance of this revelation is that Boomers identify their personal value with their job and career. How can someone leave something that defines his or her personal value? Baby Boomers are not leaving the workforce because they are afraid of losing those things that, in their minds, define them as people. This will be a major cost to businesses.
Psychologists are giving many reasons for this generation staying in the workforce. Most are saying it is because of a lack of savings, primarily due to the economic damage from the collapse of the US housing market and US banks. I don’t disagree with this argument, as it is going to be part of the decision for many North Americans. However, Boomers are not going to leave their jobs if they connect personal value to what they do for a living, regardless of their economic circumstances.
In the past five years, my company has consulted with dozens of insurance agencies that have had terrible experiences of sales people and service personnel damaging potential job perpetuation. In every case, the departing employee has suggested they want to retire or transition a book of business to a younger person.
However, these Boomers begin to destroy the transition by devaluing the young person to clients or to management. One 64-year-old salesperson told me directly he couldn’t transition his book because he would “become less valuable as a person if I have a smaller book of business.”
This problem will not be solved easily. We have to begin with awareness. When we realize the need to help Boomers identify what is keeping them from retiring, we will have a chance to help them retire with dignity and grace.
We have been working with employees at all levels in a brokerage to address this issue. We are seeing success with some very focused strategies.
Strategy #1 – Boomers can’t “leave.” They have to “go to” something.
We are helping Boomers find their next life and passion. We are helping the Boomers find something they can get energy around: charity work, grandkids, volunteer work, or starting up a new business. Allow them the opportunity and time to start finding this next passion in their life. They have to transfer their personal value to something else. When they see their value transfer, they will be able to leave.
Strategy #2 – Help them with proactive financial management over the next few years.
Many of the Boomers will not be able to retire because of financial needs. However, if you give them support and guidance, they may be able to get there quicker than expected.
Strategy #3 – Have written agreements with the potential retiring employee.
These agreements should include what can be said to clients and employees, how the message will be communicated, what can’t be said, time frames for retirement, performance expectations in transition, how complaints about perpetuating employees will be handled, and feedback frequency.
Strategy #4 – Help them with counseling and support.
This generation has accomplished great things for all of us. We need to give them dignity and respect in their retirement. Spend money on counseling and support to help them be successful in this time of their lives. Great counsel will cost you less than poor transition or no perpetuation.
We already have five years of Baby Boomers in the workforce past initial retirement age. The average age will be growing fast over the next 10 years. If we implement these strategies now, we will have a great chance of avoiding or lessening the costs on our businesses in the very near future.
Larry Linne is the CEO of Sitkins International and Intellectual Innovations. His latest books include Make the Noise Go Away: The Power of an Effective Second in Command, and Brand Damage: It’s Personal!, to be published this fall. Mr. Linne will be a featured speaker at this year’s Top Broker Summit, taking place December 2 at the Ritz-Carlton Hotel in Toronto. Mr. Linne’s presentation, “The BEST Sales System,” will reveal the seven attributes of the most successful sales system for Insurance brokers. For more information about the Top Broker Summit, including the full agenda and registration, click here. Or click here to go straight to registration!
Copyright 2013 Rogers Publishing Ltd. This article first appeared in the July 2013 edition of Canadian Insurance Top Broker magazine.