They've Got the Gold Watch Blues

Companies are cutting back or eliminating formal recognition for retiring employees, and risking goodwill in the process.

Experts say that retirement recognition doesn't have to be costly. But it should be handled with care, thought and civility.

"Retirement recognition is also a time to honor the organizational culture and history", Chuck Davis, President of recognition company, C.A. SHORT.

By Joe Millich

Gary Brennecke attended plenty of retirement functions during his 36 years as a salesman for one of the world’s largest pharmaceutical companies. From the start, he was impressed that a retiree’s spouse and children were always present for the festivities. Even spouses of other sales reps were included, and the sales reps were encouraged to say a few words about their departing colleague.

By the time Brennecke retired in 2000, though, the hoopla was gone. Instead of being given a swank party, he was merely asked to step to the front during a routine business meeting. A supervisor made a few perfunctory comments about his many years of service as a top salesman. And that was it. There was no gift. Brennecke's wife, whom he calls "a very big part of those 36 years," was not invited.

"My retirement was not only a disappointment to me, but it was also a very big disappointment to many of the younger sales reps who had always looked up to me for leadership and support," says Brennecke. "Big business has certainly changed over the years."

And so has retirement recognition. Experts say that given the sluggish economy and frequent job-hopping by workers, many companies have curtailed, and some even eliminated, formal recognition of retiring employees. What these companies don't realize, those experts say, is that this has a demoralizing effect on their workforces, which translates into lower productivity and higher turnover.

"If you are five years from retirement and see that the company has treated retiring employees like horses going to the glue factory, why would you pour your heart and soul into the company for the next five years?" asks Jeff Kaye, president of Kaye/Bassman International Corp., an executive search firm in Dallas.

Experts say that retirement recognition doesn't have to be costly. But it should be handled with care, thought and civility.

Short-term focus
Part of the reason that recognition in general has been de-emphasized is the focus that many companies now have on quarter-to-quarter earnings. Fifteen years ago a huge number of firms were run by people with a sales-and-marketing background who knew the benefit of motivating employees, says Chuck Davis, president of the C.A. Short Co., a performance recognition and award firm in Charlotte, North Carolina. Now, Fortune 1000 companies are steered primarily by accountants who view employees as an expense. As soon as quarterly earnings dip, the quick solution is to whack off a third of the workforce. In that kind of environment, experts say, service and retirement recognition is diminished.

"The lack of retirement recognition also reflects the decline of civility in the workplace," says Kimberly Smithson, vice president of business solutions and co-founder of Prosperiti, a performance-management consulting company in Chicago. "However, it's important to take time in this fast-paced world to recognize that workers are important and what they do is important."

Retirement recognition, experts say, should be the culmination of honoring employees for service throughout their tenure. The Container Store, the Dallas-based retailer that has made Fortune magazine's 100 Best Companies to Work For list for four years in a row, certainly believes this. Every year, Container Store employees celebrate their 5-, 10-, 15- and 20-year anniversaries. At 10 and 20 years, they are are flown to Dallas with their spouses to be lauded by the company's founders at the quarterly staff meeting. Afterward, they are feted at the Mansion, one of the city's foremost restaurants.

The 25-year-old company hasn't had many retirements, says Kelly Vrtis, public relations supervisor. "No one wants to retire from here," she says. But when a longtime employee recently retired, the company had a roast, where the staff member was decked out like a queen, and friends and coworkers gathered to tell stories about her. The firm's two founders were present.

This attention to recognition pays off. "In the retail industry, turnover often comes close to 100 percent," Vrtis says. "Our turnover is incredibly low, 15 to 25 percent."

Turning positive into negative
It's not a coincidence that most high-turnover firms do a terrible job of recognizing service and retirement, says Prosperiti's Smithson. She talks about one of the world's largest retailers, which recently abandoned its service and retirement recognition program when profits fell. "They know it's a huge lapse of theirs, but they aren't going to look at it again until the economy turns around," she says.

Ironically, bad times are when workers need recognition most. "Character, ethics and morality are not situationally based on a P/E statement," says Kaye of Kaye/Bassman. "Employees pick up on what you think of them by your actions--and in the end, you pay more for worse talent, with more turnover."

Another company, a large airline, gives retiring employees nothing more than a form letter on a cheap plastic plaque. Smithson recalls hearing a burly operations technician talking about the pride he took in keeping every airplane safe and then his shock at finding that his 15-year pin was left in his in-box. He didn't even get a handshake from a supervisor. "It would have taken no more money to make a big deal out of it at a team meeting," she says. "Instead, the company turned a positive into a negative."

Many companies have made retirement recognition into ad hoc events done on the local level. However, Smithson says, that causes inequities that can demoralize an organization. If one manager uses budget money to honor a retiring employee and a manager at another store doesn't, word of the disparity gets out on the corporate grapevine.

One New York firm addressed this kind of situation by instituting a company policy not to fund any retirement or going-away parties. If local areas want to sponsor such events, the attendees and participants must pay for it. The company said that "it wants to ensure that all their employees are treated consistently and fairly as it relates to this issue."

The lawyers might like that. However, experts say that companies that take this tack miss a huge opportunity. Retirement recognition is also a time to honor the organizational culture and history, Davis says.

At the C.A. Short Co., each retiree is given a barbecue, ice cream social or other party. "We show photos of them as kids," Davis says. "We talk about their entire careers and the impact they made. It gets mushy. This has a tremendous impact on people, which is what it's all about. If people retiring are not treated fabulously, what does that say to other employees?"

Reflecting the culture
The best retirement events reflect the culture of the company. A high-tech firm, for instance, might take a photo of all retirees with the chairman, add a sound bite and e-mail it to everyone in the company. "It doesn't cost any more money to take a picture of the retiree shaking hands with the president or chairman," Davis says. "People generally value these photos much more than the company thinks they do." He finds that employees tend to be even more impressed when lower-level employees receive a big send-off, so he doesn't believe that retirement recognition should be any different for a janitor than for the chairman. "Companies try to elicit loyalty, yet when people retire after years of being loyal, they are given a watch and sloughed off," Davis says. "You should make individuals who are leaving feel like a million bucks."

Some companies now try to pick retirement gifts that are more meaningful, says Greg Boswell, manager of performance recognition for O.C. Tanner Co. in Salt Lake City and past president of the National Association for Employee Recognition. Instead of a cliched gold watch, for instance, they might provide gifts that will be used after retirement, such as cameras and electronics. Nationwide Insurance in Columbus, Ohio, for example, has each retiree select a gift from among 70 items.

However, Boswell stresses that the way in which a gift is presented is crucial. "In fact, a gift that costs a little less money but is presented with fanfare will make a bigger impact than a more expensive item that is presented poorly," he says. "The human element is what makes or breaks a successful retirement recognition."

They're not leaving
A practical reason for improving retirement recognition is to make retiring employees into useful resources and ambassadors for the firm. Experts say that as the job market tightens over the next few years, companies will need the wisdom, experience and expertise of older and retiring employees. The pending shortage of skilled workers by 2010 will encourage companies to take more care in recognizing employees throughout and at the end of their tenures because their official "retirements" will likely not be a cessation of work, they add.

"We are fast approaching an age when many people will never fully retire," says Valerie Paganelli, senior retirement consultant with Watson Wyatt Worldwide. "Companies will need the skills these older workers bring and will forge all kinds of new relationships with them." In the years ahead, experts say, these types of relationships will become more common in corporations, similar to emeritus professors at colleges or retired attorneys who are "of counsel" at law firms.

Ken Higginbotham is a case in point, a kind of "company ambassador." A little over a year ago, he retired as managing director of the construction division of Kaye/Bassman. Even so, he continues to read the company newsletter, answer questions from recruiters about handling tricky problems and stop by the office to make motivational speeches.

Higginbotham isn't paid, or obligated, to come into the office or field calls. He simply wants to. "It's the greatest company I ever worked for," he says. "I feel privileged that I can go back and people want to listen to me."

Not coincidentally, Higginbotham was honored quite well at his retirement party. He and his wife, Joyce, received lifetime invitations to every future company trip, usually two a year to such destinations as Cancun, Hawaii and New York. "That made a big impact on the whole workforce," says Kaye, his former boss. "People see he put everything into it and how well we treated him."

Kaye is still figuring out the precedent he has set with Higginbotham, the firm's first retiree. "Now any managing partners, who represent about 20 of our 80 employees, are entitled to the trips if they retire because of age or health-related reasons," he says. Employees who retire after shorter tenures or from lower positions might receive lesser gifts.

Kaye says he is certain that honoring retiring employees benefits the company. "We want every employee to think they are going to retire here," he says. "Statistically, we know that's not going to happen. But we want that mind-set."

Workforce Management , November 2003, pp. 73-78 Subscribe Now!

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