Retirees still hold wealth of experience
Let’s face it, the youth bulge in South Africa is not referring to a propensity to weight gain among the under-35s.
It’s the dramatic growth of employable young people in a society that has a 50% unemployment rate and a growing concern over the fact that the older generation isn’t inclined to wander off and leave their posts vacant.
Why should they?
The over-60s are hardly in their dotage and many feel as fit and hungry for life as they did in their 40s and 30s.
They have a wealth of experience under their belts and no intention of cashing in that pension. Why should they when it gathers up funds that will ensure they have a comfortable retirement when they are ready to leave?
The question is: how do organisations tackle this growing trend to ensure that they are meeting it head on rather than sticking their heads in the sand?
Lynn Kleinsmith, the HR director for Adidas South Africa, says the way in which retirement at her company is handled will depend largely on the role the person had when they were working in the organisation.
“I can give you a real life example,” she says.
“Gavin Cowley was our brand marketing director.
He is well known in the industry and has been working for Adidas for 27 years. It was a great loss for us to see him leave at the age of 60, especially considering that 60 is the new 50.
“We have adopted a very open minded approach to this and have hired him back as a consultant, where he still contributes to the business. At the moment he is at universities scouting for talent because he knows what our culture is like and what we are looking for.”
Bongani Phakathi, head of HR at Growthpoint Properties, admits that the company has been discussing the topic for the past few months and looking into the challenges that it presents.
“At 60 or 65 people are still willing and able to carry on working and the reality is that a lot of people cannot afford to retire, not only because they are healthier and living longer, but also because their investment returns have not been upgraded in the last 10 years. The other issue, from a company perspective, is that you have all this knowledge and experience. So how do you harness it so that it doesn’t leave at 60?”
Experience as currency
It is all about the experience that the silver sloggers have to offer. Years of work stand behind them and there needs to be a way of carrying this rich source of knowledge across to the younger generation. This is a priority for Growthpoint Properties.
Phakathi says: “We need to build a ladder that asks how we get the experience and understanding into our younger guys in such a way as to inspire them to look up to the older generation.
"We want them to respect their mentors and want to learn from them more effectively, so that they can replicate the learning curve and hopefully go further.”
It’s a wise move. The experience gleaned from years of work needs to be downloaded into the upcoming generation so that they can leapfrog off this and achieve even more of their potential.
It is certainly the way human society has functioned since the first tribes began — the elders pass down the knowledge and ensure that the mistakes of the past are not repeated.
Today that structure could potentially break down should the role of the 60-plus worker not be structured with sensitivity and an eye towards sustainability, ensuring that the younger generation is given a place and a goal that will see them achieve the same levels of respect and retention.
A corporate vision
Exxaro faces this topic with a remarkable sensitivity in light of the mining industry’s specific set of challenges.
“The mining industry in South Africa has a large contingent of baby boomers who have either recently retired or are in the process of retiring,” says Hannes Badenhorst, group manager for talent and learning at Exxaro. “This is particularly true in our core businesses and white males make up a sizeable chunk of these baby boomers in the skilled and highly skilled environments.”
The company is finding itself in a difficult position. On the one hand there is the need to retain the knowledge and skills offered by the retiring boomers, but on the other hand there must be space for the new generation to fill.
“We need to create room for a workforce that is more diversified and representative,” says Badenhorst. “Exxaro needs to manage these two conflicting issues in a responsible manner and this is something we are working on today.”
Like Adidas, some organisations have chosen to hire back retirees on a contract basis allowing them to input their valuable skills and remain active participants in the business. This is a viable option, especially if the retirement policies and funds have been set to a particular age.
“We don’t want to be stifled by policies that we have in place and yet we wish to honour them, so we have looked at ways and means that allow retirees to contribute to the business in a different way,” says Kleinsmith.
“At the same time, we are in negotiations with our provident fund to extend our retirement age to 65, because we believe that 60 is way too young to go on retirement.”
Kleinsmith says that one of her previous companies was a global multinational that followed a very similar line of thought.
The company would hire its retirees back on two-year contracts and use their skills to mentor or coach the different departments.
This handing down of knowledge is the centre point of all planning for the silver future and cannot be ignored without great loss to the business.
“I do believe that one shouldn’t pull the plug on a person just because they’ve hit 60,” she says. “There is a lot of value that can be added in terms of enrichment to both them and the business.”
Phakathi has a slightly different view.
“If I hire you back, then I force you to retire and cash the pension and then I hire you back to earn an income to supplement your pension,” he says. “If I extend your retirement age instead, you continue working and save for your pension.
“This means your returns are better. In the realm of compound interest and investment, it is quite scary looking at the graph.
“Not only do you save money, but you’ve got a better nest egg and, because you are only tapping into that nest egg later, you’ve got a better retirement.”
The choice between cashing out or retaining employees will depend entirely on existing policies and which strategy can be achieved realistically by an organisation.
Each solution poses its own risks and rewards so the final choice depends on how the business is already structured and what external issues influence it.
Certainly companies that face similar problems to Exxaro may have to eventually find a third way out of the situation, one that has been fine-tuned to adapt to a very different market.
Let’s look at the workers themselves. Why is this grey power suddenly taking a stance and what’s in it for them?
In the UK, the number of people working at the age of 65 and over hit one million in 2013 and the figures aren’t made up entirely of people who are forced to work due to the economy and finances.
In South Africa, the older workforce is educated, smart and enjoying the work experience.
The issue that they face is whether or not the organisations they work for are happy to extend their retirement age.
Silver surfers who boast specialised skills and abilities will likely find it possible to get rehired by their old companies or to continue working with an extended retirement age. Those without may not be so lucky.
In South Africa the concern is with the youth bulge and the growing issues with unemployment, not with an ageing population.
Perhaps keeping on with the job you love may not be possible after 60 unless you happen to work for a company that sees your experience as a resource.
Today, however, there is a measure of positivity in all the organisations featured here: Growthpoint Properties is developing a solution that will hopefully extend the retirement age and provide better financial futures for its retirees, Adidas South Africa is quick to recognise talent and bring it back into the fold, and Exxaro is wise enough to recognise the issues specific to South Africa and its industry will need a delicate touch.