The Payroll Blog
News, tips, and advice for small business owners
When a valued employee within your organization retires, replacing them is not a simple one-for-one swap. It’s more complicated than that.
In a tight-knit company, losing a senior employee is like detaching a member of the family. It affects the camaraderie and sense of order. It creates tensions because a new internal order must be established.
How can management lessen the disruption? Planning well in advance is a key strategy.
Good internal communication is crucial, says management expert Hunkar Ozyasar:
"Small companies are less formal and people tend to be more forthcoming about their plans. Therefore, you should know, or at least have a very good idea about, what each of your employees plans to do with her career. Create a plan to find a suitable replacement for older workers well ahead of time. Keep in mind that several factors can alter the employee's timeline. An earlier-than-expected retirement of a spouse or increasing pressure at the office may provide all that's needed to inspire an earlier retirement date."
Sometimes, long-range planning is not the answer. Occasionally, despite your company's best efforts to stay in touch with workers, an employee abruptly leaves. That's when an emergency plan should be available.
A well managed company will always have a "wild-card" contingency plan to replace a suddenly departing employee.
When a retirement does take place and is foreseen in advance, another important component of effective management is to smoothly transition to the new employee. If the replacement is internal, it is easier to make sure the replacement spends plenty of time with the retiring employee so he or she can hit the ground running once the retirement takes place.
Of course, naming the replacement assumes your internal choice is obvious and expected and doesn't cause turmoil among passed over employees.
If the replacement is an external hire, it is a little trickier to coordinate the transition. It still should be a goal to have the incoming employee spend time with the retiring employee, so management should strongly consider hiring the new person in advance of the retirement.
If that is not possible, have the retiring person leave detailed notes or better yet a video to help speedily train the new employee.
Replacing a retiring employee is trickier than it sounds, but with a little planning it should be a relatively seamless transition.