DALLAS — Their retirement funds slashed by massive market losses, workers in every field who previously were on the brink of retirement are rethinking those plans, sparking a variety of human resources and investment challenges.
In addition to would-be retirees deciding to keep working for various reasons, Chris Thomas, regional staffing manager for Credit Union Employment Resources, said he is also seeing an increase in the number of retirees returning to the workforce due to the downturn in the economy.
"Unfortunately, many organizations have implemented hiring freezes, so jobs are a lot tougher to come by," Thomas noted.
Thomas said CUER is seeing more job seekers than job opportunities.
"Furthermore, there are currently even fewer opportunities for executives," he said. The positions that do come available are more for entry-level positions, and many credit unions are going the temp-to-hire route, he said.
Susan Looney, vice president of human resources for the Texas Credit Union League, said CEOs holding off on retirement due to the economy is not a trend they are currently seeing. However, she noted that during a downturn economy, turnover is typically low.
"People want to hold onto their jobs because they know that few opportunities are available," she said.
Looney cautioned that employee morale can sometimes be adversely affected during difficult economic times, which in turn could affect productivity.
"Some employees may be struggling financially and that can affect their ability to focus at work," she said. "With constant reports of the rising unemployment rate and widespread layoffs, employees might become overly worried about their own job stability and that too could affect their productivity."
People are going to have to work longer, agreed John Vardallas, CEO/founder of TheAmericanBoomeR, in Madison, Wis.
Retiring at 65 Is a Myth
"The whole idea of retiring at 65 is a myth right now," he said. "We're going to be redefining 'The Golden Years.' I know a lot of examples where CEOs have gone to their boards and said 'I want to stay.'"
On the other hand, Vardallas noted that "this unprecedented challenging economy will be a great 'out' for those in leadership positions who have already checked out-and were just biding their time."
"The stress of change, innovation and competencies needed will soon be too much to overcome," Vardallas explained. "Presenteeism in the workplace is a thing of the past. Credit unions talking about going in new directions and innovation-people may say it's time to go now."
Vardallas said that for this reason, people who delay their retirement are going to have to stay sharp longer. "Keep your health up," Vardallas advised. "Keep up your competencies. Sixty is the new 40. You have to think of yourself as a 40-year-old to keep it going. It's just the new reality."
For that reason, some CU boards may have a tough decision to make when CEOs expected to retire request to delay their retirement. "Have the CEOs been competent people? Some boards were ready for new blood," Vardallas noted.
A Lot Of Anxiety In The Workplace
In cases where these CEOs stay instead of retiring, boards may have to bring on a "second in command to bring the credit union to new levels," he said. "They may have to initiate a performance plan-even for CEOs who have been there for many years, may have to challenge their competency. The thing that got us here isn't going to get us where we need to go. Everything has changed. Credit unions need to be thinking out of the box. This is causing a lot of anxiety in the workplace."
Alec Berkman, chairman of Executive Compensation Solutions, said that because this financial crisis came on so rapidly, there has not been time to collect statistically sound data.
"But as we talk to our clients and contacts, it certainly seems there are CEOs-and other executives-delaying their retirements," Berkman said.
Berkman said there are really two reasons CEOs are staying on instead of retiring.
"First, there are many credit unions that have asked their CEOs to stay at the helm through the crisis," he said. "Whether these credit unions are facing large investment losses, or depressed ROAA, or larger loan delinquencies, or are just trying to have the most experienced leader they can guide them until the markets stabilize, is hard to determine. The bottom line is that CEOs are being asked to stay or feel a duty to stay a while longer.
"Second, there are CEOs who can't retire because their retirement plans were based on the earnings on a specific block of assets. No earnings equals no retirement. Where the executive retirement benefit is defined as a percent of compensation, or a specific dollar amount, the funding of the plan may not be sufficient to pay the benefit. If the CEO retires as scheduled, the credit union has to make up the gap. This troubles me a lot, because we've taken a different direction in funding our clients' plans. Stable fixed returns with baseline guarantees always earn something. It's like the tortoise winning again."
Berkman said he has not heard of CEOs going the other route and retiring early.
"We have not seen CEOs retiring early to avoid the hard decisions that have to be made, and made quickly in a time like this. Most CEOs thrive on those kinds of challenges," he said. "On the other hand, we've seen some executives resign based on already extant financial negatives."
Berkman agreed that it is advantageous, to remain mentally and physically fit regardless of whether one has to stay in the workplace.
"I seem to be working as hard as I have in any period since I started Executive Compensation Solutions 40 years ago," he said. "I've put my retirement off for a while because we made a decision not to participate in the recession. All of us are working a little harder and a little smarter to make sure we implement that decision."
