The Retirement Epidemic: Leaving the Corporate Fold

by Barbara Wood Gray

    • “It’s like being shot. A whole part of my life has been killed.”
    • “I was unhappy anyway. I had reached a plateau and wasn’t going anywhere: I look forward to being able to do what I want to do without all the corporate bull—-.”
    • “I’m thrilled. This gives me the chance to exercise an option I have been planning on for years. It’s a fabulous opportunity to get out on my own and start my own business.”
    • “I have glimpsed for the first time my own business morality.”
There are as many reactions as there are people—and there are a lot of people. One outplacement firm put 1,000 people through its programs this year. That’s one firm, in Denver alone. The local office of “40 Plus,” a non-profit, self-help organization for professionals seeking re-employment, has increased its active membership 36 percent over the last year.
Top executives, professionals, men and women with over 25 years of service to their company—out of work. They’re told it’s not their fault: “Company restructuring, closing an office, tight economic times… The most humane way to handle this is to give those who want to leave an opportunity to get out gracefully, with benefits intact. We’ll do everything we can to assist you with the transition. Outplacement counseling, secretarial help, retirement incentives—but the bottom line is, your corporate place is gone; your job is done; find something else to do with the rest of your life.”
It’s the retirement epidemic, a handy euphemism for layoffs in the upper echelons of business. These matters aren’t handled with pink slips, and are, on the surface at least, voluntary. But even generous green or golden handshakes—severance payments designed to ease the financial burden of corporate separation—do little to ameliorate the shock. The fact is that career executives, people accustomed to high salaries, generous benefits, and the expectation that the gravy train will run well into retirement, find themselves in the uncharted territory of unemployment.
And the odds are imposing. One local executive, caught in the retirement squeeze after 30 years with a national firm, estimates that in the past few years 5,000 companies nationwide have “retired” an average of five executives, all of whom, presumably, are out looking for executive work. Many companies exceed the average by hundreds. Compounding these executives’ future problems is the corporate ideal of the 1990s: The “lean and mean” business approach keeps executive ranks smaller and in any case favors the younger executive.
“Typically, I meet them the day they’ve been terminated,” says CareerLab’s Bill Frank, a consultant to senior executives who are seeking re-employment. “They are in total shock. They say ‘I can’t believe this is happening to me.’ Many are full of rage, and in some cases they want to get even.
“The thing that I see that most people probably don’t see is how these sort of random terminations affect peoples’ lives. It is a violent assault on someone’s world with some fairly shattering consequences. The executives usually recover, but the effect is not unlike a death. Also, this major life event rarely happens in a vacuum. Frequently, the termination is not the only issue being dealt with. Add just one other factor, like a terminally ill family member or a recent relocation to a new city with no support structure, and you are asking for serious trouble.”
The stages of adjustment can sometimes be likened to the stages of grief when there is a death in the family. Chuck Welch, training director with IMPART, INC., feels that “in almost all human events, we are more like each other than we are different. It can be of immense comfort to know that what you are going through is the normal progression and response to loss. It is important not to chide yourself or have others use this theory to urge you into or out of a particular stage. The central message is that each person needs to progress through their adjustment in their own way and at their own pace. Counseling and training can assist with this process and give someone the support they need to regain their sense of self-worth.”
Early Planning
How does one pass through the dysfunction stage to discovery, direction and re-employment? Again, there as many ways as there are people. For some it is luck. For others it takes gut-wrenching, eight-hour-per-day work for months.
Jim Outland is a chemical engineer who was released from PPG Industries last August after more than 20 years with the company. “My early reaction was that this might be an opportunity to find a job doing something I like more. I was overly optimistic about what might be available. I didn’t believe them in outplacement when they told me it would take six to nine months to find something else. Now I’m convinced. It doesn’t make any difference how good you may be in your field, all the outplacement training in the world won’t help you get a job in a foundering field if there are no jobs. Most of the local opportunities are in the environmental field, and they want someone with five years experience—but not 20 years! And I have still to make peace with the idea of going to work for less than half of what I was making before. I’m just not willing to do that.”
But Outland did some early planning for this day, even though he may not have realized he was doing it at the time. “My wife and I were both raised by people who had been through the Depression. Our attitude toward saving money was very conservative—we can go for four years without my making any income, and we already have money in the kids’ names for their entire education.
“I also have a lot of things around home I enjoy doing that I didn’t have time for before. Other people who are having a harder time with this ‘out-of-work’ process depended totally on their job for their satisfaction in life. The important thing is that I don’t think the outcome of my job would have been any different if PPG had been my whole life. I would still be out of work today.
One manager who has climbed high on the corporate ladder at age 33 has seen the handwriting on the wall. Even though he is a high performer, he says, “Companies are going to have so much pressure on them profitwise, I think their ability to be benevolent will not be there anymore. Sometime between now and when I am 50 there is a high probability that I will be told I don’t have a job. I want to have enough money set aside that I could go without work for two years. That way I can have some choice and not feel pressured to accept other options available to me. I have been thinking this way for four or five years.”
Change in Attitude
Certainly the past history of Manville Corporation is a perfect example of this type of change in corporate attitude. Chuck Hite, senior vice president of human resources and corporate relations, states, “Our world changed forever and will never be the same when we got out of the asbestos business. Redirecting Manville required reduction of expenses. Costs of benefits were getting out of sight–we redesigned the benefits plan and lowered the number of people involved.”
And it’s a painful process. “You are affecting employees lives, families, their social situation. I see the business necessity of it, but that doesn’t make it any easier. The 1982 downsizing was probably the most traumatic thing this company has ever gone through. We had always been a very protective, paternalistic company. We could no longer afford it.”
Corporate paternalism and company loyalty are being redefined by necessity. Jim Outland comments, “When we were young comers with the company, we thought some of the older executives were lucky to get in and out of the rain. We saw examples of people being kept on the payroll who didn’t seem to be carrying their weight. This added to our sense of ‘eternal job security.’ And our wives and families saw our dedication and loyalty–long hours, weeks away from home. When the ax fell, they sometimes felt more enraged than we did. Our sacrifices had not been rewarded.
“This is all different now. When you get your paycheck at the end of the month, the score is even. You don’t owe your employer anything other than a good solid day’s work. I think the days of hiring and retiring with the same company may be over.”
Softening the Blow
Companies are making a valiant attempt to ease the pain of downsizing. Outplacement counseling, for example, is no longer a luxury, but an expected benefit at no small cost to the company. Typically, the fee for these services is anywhere from 12 percent to 17 percent of the person’s compensation. Why do corporations bother? “It shows the company cares about its people,” says Hite. “It assists the person in making the transition to new and different opportunities and it demonstrates to the community and to other employees that we treat our employees well.”
Bill Frank believes that in addition to demonstrating corporate concern for their people, outplacement services can diffuse anger, put the termination in perspective, and assist the person in getting in touch with the ways in which he or she was unhappy anyway. This process can ultimately have the effect of protecting the corporation from retaliation from an individual with unresolved feelings of rage or resentment.
Management also has a fine line to walk in working with people who are being offered these packages. Joe Stearns, vice president of sales for industrial specialties and services for Dow Chemical Company in Denver, points out that, “The company doesn’t want to get overly involved in the individual’s judgment process. There is a fine line between supplying all the necessary information and influencing the decision. Management people can have a powerful impact on a person’s decision making. One of the ways the company walks that line is to hire a professional employee assistance firm. This gives the employee an access to people who are professionals at decision making. The judgment part is the employee’s–that is their right and responsibility.”
There are many variations on the retirement package theme. In addition to outplacement counseling, the departure bait offered could include any or all of the following:
  1. Bonus of a week’s or a month’s pay for each year of service to the firm.
  2. A retirement “kicker” benefit to remove the actuarial penalty of retiring early.
  3. Making up the social security benefit until age 62 when social security kicks in.
  4. Retirement with full benefits as early as age 55, providing the employee meets minimum        years of service requirements.
  5. Ability to work part time up to 1,000 hours per year without losing benefits.
  6. Carrying forward of medical and dental benefits.
  7. Early retirement at 55 or younger at some percentage of pension benefits.
  8. Eligible for retirement after 30 years of service no matter what the age.
  9. “3+3”–a modification of the standard pension plan where, in a limited time frame, three        years of service and three years of age are added to the service records of everyone              covered by the plan.
  10. “Hotline” phone number for information and counseling.
  11. Office equipment and secretarial availability for job-search process.
  12. Pre-retirement assistance open to spouse or “significant other.”
Frequently a person being offered an early retirement window is told that there will definitely not be another one offered in the foreseeable future. In many ways this tightens the screws on the decision making. There’s a “you have a choice, but not really” aspect to the whole process. But according to Hite, it is not possible to offer these packages on a regular basis. For one thing, it is a simple matter of numbers. At Manville, 932 people were eligible for the program when it was offered, and 778 accepted. That left the company with less than 200 people over the age of 55. “In addition, the program is costly to the company,” Hite notes, “and IRS approval is required every time you want to offer such a plan.”
Management’s obvious goal in offering such attractive packages is to downsize without having to go into any massive layoffs. Upper management people who are eligible know the situation. They know the company is facing critical economic challenges. Here again, the element of free choice is not as open-ended as management would like others to believe. Sometimes early retirement plans and incentives are offered prior to facing the issue of removing poor performers. It is only at this point that the situation smacks of age discrimination, as companies offer an out to productive experienced older workers while protecting the jobs of younger people who might otherwise be let go for performance reasons.
 Blindly Climbing the Ladder
The common theme from management, and from those whose lives have been personally touched by the recent wave of outplacements, is that not enough planning is done early in life with or without the corporation. Bill Frank is amazed at how far people come up the ladder of success with limited self-awareness. “Outplacement should not be done as an afterthought at the last hour. Employees should be encouraged, and time and resources should be provided for them to do internal career planning at an earlier age. I believe that we are going to see continuing layoffs, mergers, acquisitions–continual reshuffling of the corporate deck. This is not just a sign of the times. This is a sign of the future. People need to be trained to manage their own careers. It is important not to throw the responsibility for your career to others. It is not good enough any more to just do a good job and hope it will be noticed. It is necessary to make changes in your organization and to make sure it is noticed. The sum of this approach is accomplishments, and accomplishments make you marketable. Whether or not your company notices or not, another company might.
“People have to be really creative in positioning themselves in the marketplace. They must be entrepreneurial in their thinking…not necessarily that they start their own business, but that they try to figure out where they can make a contribution and sell themselves into that position.”
John Wells, former senior vice president with the outplacement firm of Drake, Beam and Morin, Inc., corroborates that view: “The higher an executive is, the harder he is to work with–not from a personality point of view, but because he does not have the experience or comfort with marketing himself, which is central to finding a job or starting your own business. Also, their expectations are frequently unrealistic.
“The business school mentality is that we keep moving up in money, position and responsibility. Those expectations were built during the highest inflationary period in this country. So what is happening now to people goes directly against their training expectations.”
Companies could do a lot in the future to change this state of affairs. Some ideas might include: self-awareness exercises, skills assessment and self-marketing training in conjunction with ongoing career planning workshops throughout corporate life; sabbatical leaves for re-education and development of new skills and redirection of career paths; placing a high value on community involvement and activities, i.e. the well rounded life; in-depth pre-retirement counseling early in a person’s career; phased flex-time scheduling as a worker approaches retirement age in order to phase out the full-time working process.
Financial planning is another important aspect of this issue. Without exception, the people with financial security (either from planning or from a two-career family) have an easier time of adjusting to being outplaced than those without it. But there is a dramatic shift in money management when retirement hits–whether it be early or late. “During their working life, most people are in the accumulation phase,” says Denver-based CFP Jonathan Clearly. “At retirement they move into the phase of living off their accumulated resources. They need to change the entire way they manage their money–their risk exposure in their investments, their liquidity, their debt structure, their insurance and their estate planning. For those leaving on early retirement programs in which they receive significant bonuses in the first year, they have additional questions of how to deal with this ‘windfall’ and not send it all away in taxes. Financial counsel at this point can result in savings of as much as $15,000 to $25,000 in taxes.”

Impact on the Corporation
For younger managers looking to the future, the turmoil in today’s corporate world makes the view up the ladder more unclear. Sometimes the survivors of a downsizing can be as severely impacted as those released. As a company is streamlined, jobs are combined and many people are given increasing responsibilities, leading to increased stress. Some people may lose their best friends at the same time their work load is doubling or tripling.
On the other hand, the changing pattern of loyalty to an organization can have some positive ramifications. As individuals become freer to express their dissatisfaction with particular jobs or with the company, they become more open to other career possibilities. It is conceivable that the days of people settling into a niche, becoming bored and unmotivated, and producing minimal results, are now over.
It is also important to note how much it can hurt an organization to lose a senior employee with valuable experience. “There’s no doubt about it,” says Stearns of Dow. “It is a loss to the organization. And during the transition period a person’s focus tends to be on ‘What does this mean to me?’ and productivity suffers. But when the dust settles and everyone knows what the future holds, we tend to return to work with a new anticipation and energy. The uncertainty and anxiety turn to renewed vigor and the discovery of new talent in people as they accept new challenges.”
According to Bill Frank, a lot depends on how severe the company cuts are. “The first cut is the invigorating one. Get rid of the deadwood or eliminate unessential jobs. That’s the best kind of streamlining. The next cut is the demoralizing level when, due to economic factors, the company must cut deeper and deeper into its critical people. Trimming the fat is always good. Major surgery on the core of the organization is another matter.”
At Manville, Hite says, “We are not looking back. We are looking to the future. There isn’t a person in this organization who doesn’t wish we could have skipped going through the period from 1982 to 1985. But is has succeeded in positioning us favorably for the future, and that is what we are really excited about.”
Life in the Corporate Hereafter
What of those who have gone on–whether by choice or by necessity? For people seeking re-employment, in addition to corporate outplacement firms, Denver has a branch of “40 Plus” which is a non-profit volunteer organization aimed at supporting and assisting professional people in their job search. The population they serve is the over 40 professional or managerial person with a salary range of $20,000 to $75,000 per year. They offer classes, networking, job listings supplied by government agencies and employers, resume writing and interviewing information, reading materials and support groups for redirecting and self-marketing.
Another resource is the Career Development Center on Washington Street. Men and women at any stage of career transition may consult with them on an individual or group basis for redirecting and self-marketing. One of their members summarizes his new outlook: “I am not unemployed. I am a product manager, and the product is me.”
Starting your own business is yet another avenue for someone with a lifetime of strong management experience. Robert Cuje accepted a golden parachute from Manville Corporation over a year ago, and started his own company, Directors Resource, Inc. He saw a specialized need and is providing a unique service as a management consultant for board-of-director strategy and appointments.
“What is a career?” Cuje asks. “Is it 30 to 40 years commitment to one company or is it a series of career windows? How many windows were open to you during your 40 years with one company that you didn’t take? People must now ask themselves, “Will the company, job, pension plan still be there?”
Cuje views his new life with gratitude. In his view, an early retirement program is a deserved opportunity. For those who have paid their dues, it is a blessing to have the chance to ask yourself the question. “Do I want to work for someone else, do I want to reduce my work responsibilities and work in a lesser capacity for health or other reasons, or do I want to open up that bait and tackle shop I’ve always dreamed about?
“Manville took me off the street, trained me, educated me, did everything to make me successful. What they gave me allows me to do something else. In Denver, there are lots of examples of people getting together in groups doing a variety of things–four or five executives set up shop in leased office space doing consulting or marketing products or whatever they can do with their combined expertise.
“The secret is if the person leaves the company with regrets. It may be ahead of their schedule, but it can still be viewed as an opportunity.”