About seven years ago, Ontario eliminated mandatory retirement, following the lead of many other jurisdictions.   This meant an employer could not lawfully discriminate against an employee or job applicant because he or she was 65 or older.  Significantly, if a current employee was still able to do his or her job at age 65 or older, the employer cannot compel the employee to retire, or terminate them because of their age.

All good stuff.  People who needed to put away a retirement nest egg, or replenish nest eggs shrunken since the 2008 meltdown might have a second chance.   It also gave more flexibility to employers facing a demographic squeeze with the retirement of Baby Boomers.  They could plan for staffing transitions and keep people on the job longer, given that there were fewer in the younger demographics.   And, most important, if you like your work, and do it well, you shouldn’t be turfed out simply because of what your birth certificate says.

But the end of mandatory retirement has also meant that there is less certainty for staff planning purposes.   Before, one could plan for replacements based on the knowledge that an employee would be leaving not later than his or her 65^th birthday.   Now, there could be a problem transitioning the replacement into a position, if the incumbent resolves to continue working indefinitely.

There’s also the unhappy task of sitting down with a long-service, loyal employee who may no longer be up to a job, or simply can’t be accommodated in a way that the employer can afford.   For reasons of liability, all of this should be carefully documented.

Given the elimination of mandatory retirement, it’s no surprise that notice periods for terminating employees under common law have been growing longer.  It used to be that an employer could give shorter notice periods to an employee approaching retirement age because it was known by all that the employee was approaching 65 and termination would occur.    Since the change, court cases in Ontario have awarded up to 24 months of pay to former employees who were not provided sufficient notice, and had not indicated their desire to retire.  

My suggestion is that employers need to start the conversation about retirement of older employees sooner, and more collaboratively.  It’s a cinch that the vast majority of employees have given retirement a lot of thought by the time they are into their 60s.  Engaging them in that narrative makes it possible to plan a transition to retirement, and the development of a replacement, who can be developed and mentored. 

More than a conversation about setting a retirement date, it may involve a retirement “bonus” that is less than a court might impose.   It might also involve retirement planning services for older employees.  Not just financial planning, but true retirement planning, as in “what am I going to do with the rest of my life?” planning.

My friend and colleague Rick Atkinson has written and lectured extensively on the benefits and absolute necessity of having a good retirement plan in hand before you actually retire.   The author of Don’t Just Retire – Live It, Love It!,  Rick works closely with financial planners and employers to help employees apply proven retirement planning methods at a non-financial level.

Finally, a little perspective on the issue of non-retirement among older workers.   There is actually only a small minority in the work force who’ve chosen to work past the age of 65, approximately 12% in 2012, far below any of the other demographic groups.   That’s not likely to change dramatically, even as Baby Boomers enter their golden years.  What’s good about it from a staff planning point of view, is that there’ll be a golden pool of talent and experience when employers need it most.  

 “Thou shalt complete a succession plan for the organization,” is a typical command from a Board of Directors to its CEO and management team.   No surprise, it’s very much part of the Board’s job to ensure that the organization continues to have able leadership, particularly in the event of unplanned losses of key staff.  

Despite a good rationale for succession planning, leaders and managers often wonder if the plan is really just the first step in his or her imminent departure.  Attitude like that can slow succession planning to a crawl. 

But a succession plan isn’t about getting rid of people.  It’s about being prepared when both foreseen and unforeseen change visits management or the workforce in general. It’s about management due diligence to ensure the organization can continue functioning at a high level, despite changes in key staff.

A  good succession plan gives the organization a road map around potential pot holes, or even sink holes, that could emerge if a key leader, technical expert, or knowledgeable professional leaves.   For example, if your CEO departs, winging it in choosing his or her replacement could cost shareholders billions of dollars in lost value.  That’s some sink hole.

In fact, I would argue that the legacy of a CEO is determined almost as much by the organization he or she leaves behind, as what was accomplished during the CEO’s watch.  An organization that continues to excel after the departure of a CEO or other key players, means that thoughtful planning and development has gone into ensuring that capable successors have been developed and promoted.

The loss of a visionary leader can have significant repercussions if there isn’t a cogent plan to replace him or her in both the short and longer term.  It may have been unavoidable given his visionary image, but the value of Apple computer stock shrank more than $100 in the year or so after the death of Steve Jobs.   This, despite the assurances that the company had more new products in the pipeline at the time of Job’s death.

All of this notwithstanding, there is good news about putting a succession plan together.   It doesn’t need to be complex or costly to work.  Here are some suggestions to get it underway:

Keep it simple

You can pay a lot for a succession planning model that only a large consulting firm has the horses to figure out.   And you can keep paying a lot each time you want to update your succession plan.  Or you can develop your own model (with external help as needed) and embed it in the management process so that the plan is regularly reviewed and updated.

Integrate succession planning with annual reviews and personal development plans

Performance reviews are natural inputs to both succession and personal development plans, so why not make them part of the same process?  That way, personal development plans get aligned with what’s called for in the succession plan, while performance reviews act as a reality check for succession plans on an annual basis.

Automate

I’ve seen too many succession and performance management plans that are little more than a paper chase.  Not only is it cumbersome, but updating it can be a headache, so it’s frequently incomplete.  Why not a simple spreadsheet, pre-populated with candidate profiles, evaluation factors (competencies, performance indicators)?  It can capture both quantitative and qualitative assessments of each candidate – all without taking too much of a manager’s time.  Best of all, evaluations can be compiled and analyzed, when it’s an online process.   It allows for standardized evaluations based on organizational competencies and performance factors.   And it’s an easy way to demonstrate that proper due diligence is being applied to succession planning, should the Board want to know. 

Use both quantitative and qualitative evaluations

I don’t believe you can devise a scoring system that will reliably identify the right succession choices by itself.  There are too many intangibles that go into the decision, ones that a good leader has embedded in his or her judgment.  However, a scoring system based on competencies, or other standard metrics allows a numeric value to be assigned to some evaluative factors, including competencies.   This, in turn, can provide a helpful initial indication of who the top candidates are to consider qualitatively and in more depth.  In fact, each competency or evaluative factor can also be weighted, so that attributes which are more important to a position figure more prominently in the evaluation.  Leaders then use qualitative evaluations, the “intangibles”, about a candidate to consider succession positions. 

Quantitative evaluations can also support the case to undertake an external search, when internal candidates have low scores in relation to a succession position requirements. 

Don’t waste executive time

I’ve encountered succession planning that is a time-wasting up-close-and-personal bull session for both middle managers and senior executives, facilitated by expensive consulting firms.  Rather than tying up all of that salary in real-time meetings, consider using an online system that allows evaluations of candidates to be completed off-line in virtual time, then reviewed and approved by supervisors one and two levels up.   Based on the evaluations put forward, there can still be a real time discussion between the evaluator and his or her superior(s) when it’s needed.   

Where appropriate however, the CEO may want to convene a ‘succession panel’ from his or her management team (include HR) to verify succession planning evaluations and choices, and to ensure the process moves along.

Review at least two levels removed

One of the human biases that can creep into succession evaluations come from managers who may inadvertently deflate their evaluations of possible successors, in order to create a safety zone around his or her job.  This doesn’t happen when managers are confident in their roles and looking upward in their own careers.  To counter this issue, evaluations and selections of successors should be reviewed at least one level removed from the candidate, and preferably, also at two levels removed.   A more senior review also allows a wider perspective on the organization’s talent needs in the longer term.    

Cast a wide net

 Don’t assume that a successor to any given position must also work in that unit or department.  As organizations succession plan at higher levels, there is a greater need to ensure cross-functional experience for those moving into general management roles, perhaps heading two or three distinct functions in a division.  It’s important to remember that high-performing managers have experience and judgment that can travel well from, say, finance, to production management, or possibly to a sales and marketing role that helps season a future leader.   

Know when to look outside

A good succession planning process, applied annually, and linked to such factors as performance management and personal development plans, can go a long way to help an organization retain, develop and promote its future leadership from within.   But you simply can’t plan enough for every contingency that could remove an incumbent from a key position, without a successor identified and fully developed. There is too much competition from other employers for top talent, and the best people aren’t afraid to change employers, or even careers, when least expected. 

It’s important to clearly identify positions where the developmental curve is too long or steep for a viable successor candidate to be identified internally.  For those scenarios, have a game plan to address the gap in the near term (secondments, temps, consultants), to allow functionality while a formal search is underway.    

You should also consider conducting an external search as an added dimension for senior level positions, regardless if you have a good internal candidate.  That way, you benchmark your succession choice with the market place to verify that they have the right stuff.   Moreover, you may come up with an external candidate that will be able take the organization further, or perhaps be ideal in another role.

Finally, keep it current

Revisit your succession plan regularly, not only to make sure current succession candidates progress is captured, but also to add new rising stars into the mix.   A lot can happen, even in the course of one year, so I recommend a review and update of the succession plan annually, if possible.   It won’t be hard if you’ve streamlined the process, put it online, and embedded it with the performance management and developmental planning process.

Studies and experts have long heralded the coming of a severe labour shortage as the Baby Boomers begin to retire, and subsequent generations don’t have the numbers to fill the resource gap.  I too have echoed this demographic cliff:  there won’t be enough people in the workforce to do the work that must be done; organizations will have to retain older workers or there will be many jobs that simply go unfilled for lack of applicants.

My thinking on this looming crisis is now beginning to evolve.  Yes, you can still demographically project a decline in the number of people in the work force, but it is more gradual than originally envisioned. More important, projections of workforce gaps appear to ignore dynamics that will help address worker shortages – productivity gains and the virtual workforce.

You see, our economy has never stopped gaining productivity and efficiency since the dawn of the industrial age.  Peter Cappelli of the Learning Forum points out that just since the end of World War 2, the U.S. economy has grown eight-fold but its workforce has only doubled.  If you do the math, it means each employee is four times more productive today than 65 years ago.  

From my own experience, I can look back on how many people it took to produce a corporate publication in the 1980s.   One or two public relations people to draft and edit copy, a photographer, clerical person to type a clean version of final copy for the typesetter, who then retyped it into a compositor to product print galleys, before an artist laid out camera-ready artwork.   Most were regular employees of the company, though you could outsource much of this work too.   Once the artwork was done, it went to a printer who produced film and plates for the four-color printing process, involving another 3 or four people.  Finally there was the distribution of publications via mail and courier.

Today, the same work can be done digitally, sometimes by one individual with a design program and access to an astounding bank of photos and graphics.  Distribution is just one click, with printing left to the option of the reader, though more people prefer to read publications on-line.  The result:  headcount, production and distribution times are a small fraction of what they were just 30 years ago.

Productivity gains aside, there’s another trend that will also have a profound impact for employers.  The ability to access skills very differently than companies have in the past. 

Using my corporate publishing example, virtually all of the skills in that scenario can be had through online or freelance basis.  In fact, there are business networks and dedicated websites that enable people to establish profiles of well-defined services that companies can access.  That way, skills such as accounting, planning, presentations and communications of all types can be contracted and produced remotely for a client organization.  No overhead, salary or benefit burdens.

From short-term contracts and freelancers, to online services and offshore resourcing, employers can build a virtual workforce to augment their regular workers, some of may also work remotely, either for lifestyle reasons, or because they are on a shared office schedule to save overhead costs.

What all of this change adds up to is that companies faced with a demographic cliff actually start doing things differently than they have in the past.   They don’t necessarily back fill every vacant position just because a worker has retired or left.  Rather, employers, more than ever, consider redistributing a departed employee’s work to other staff, and jettisoning work that does not need to be done.  Outsourcing of tasks to specialty firms, or to virtual online employees as described earlier, are also options.   The key consideration is whether the work can be done effectively at a lower cost.  Once again, work forces get smaller, but produce as much or more.

Notably, though sales are recovering in US companies after a rather stark recession that began in 2008, employers are holding back on hiring.  Employment numbers do not appear to be marching forward as robustly as sales, implying that employers want to push productivity over bigger payrolls at this time. 

What does all of this mean to the experienced worker who wants to stay in the work force, or is trying to find another job?  It doesn’t necessarily mean there won’t be available work, but your working relationship with an employer may change dramatically.   Where long term employment with one organization was once the standard, employment is becoming more term-oriented, by contract, and on a project, assignment or as-needed basis.   Moreover, an increasing amount of available work may come to workers online, rather than in-office.

For some, this shift in the relationship between worker and employer is an exciting prospect for a diversity of new experiences.   For others used to steady employment with one employer, it could be culture shock, at least initially, followed by survival of the adaptable.   For all of the Boomers, the employment scenario will never be quite the same. 

It’s an election year in the U.S. and the rhetoric about healthcare, Obamacare, and Medicare is in full flight.  Both parties say it’s time to reform U.S. healthcare, but can’t agree on how it should be done.  During this debate in the past, the Canadian healthcare model has been invoked,  either as a failed system, or a progressive healthcare system – depending on one’s political viewpoint.

One thing that the Americans don’t seem to have down about the Canadian healthcare system, is that it isn’t a national healthcare program at all.  The federal government sets out national standards for healthcare delivery as a condition of receiving just 20% of the funding transferred to provinces for their health care programs.  Yes, it is the provinces that provide most of the funding and administer their own healthcare programs, tailored to the demographics and needs of their citizens.   Trying to administer healthcare on a national scale would be a boondoggle for Canada with just 10% of the population of the U.S., so just imagine the disaster of doing it on a national scale south of the border.

In Ontario, the most populous Canadian province, the Ontario Health Insurance Plan (OHIP) is deemed to be the sole payer for medical services provided to its citizens.  Doctors, who are mostly private businesses (practices and clinics) bill OHIP and are reimbursed based on a fee scale negotiated (sometimes peacefully) with the Ontario Medical Association who represent practitioners. 

Sounds straight forward, but it isn’t the whole story.   About one-third of medical services in Ontario aren’t covered by the OHIP plan.  To access those, you need either a private health insurance plan (typically provided by employers), or a credit card.  From cosmetic surgery and various tests, to semi-private hospital rooms, the Ontario healthcare system also exists in the private sector.

Which brings me to my main point.  If the objective is to ensure citizens have access to the full range of affordable healthcare services, as well as protecting them from catastrophic loss in the event of serious illness, then we need both the public and private sectors working together and on the same page.   It’s sort of working in Canada, and it can work in the U.S.  In a way, it might even be a hybrid that blends the best of the Canadian model with its U.S. counterpart.

Here’s how it might work.   Leave to the private sector, the things they do best:  build and operate facilities (hospitals, clinics, other access points for healthcare), and innovate new treatments.   There is no need for governments to own or run hospitals as it simply drains public funding for healthcare services.  This would help end government administration practices of not providing services after hours and on weekends, or allowing private operators to keep those services after hours.

Leave to government health insurance plans what they have proven themselves able to administer:  basic protection for citizens from catastrophic economic loss due to the costs of treating illness and coverage for a reasonable menu of medical services.  People over a threshold income should pay an annual premium of less than $1,000; those under the threshold in any given year would retain their health insurance without premiums.   All other services would be accessible through private plans or pay as you go.

And here’s one more obligation for government.  Monitor service constantly (waiting times, quality of services, etc) and promote the development of new doctors, specialists, nurses, and other practitioners who comprise our healthcare force.  Offer tax incentives, not only to meet improved healthcare service standards, but also to bring more healthcare facilities and services to the market. 

It’s what I call a participative healthcare system, one that leverages the best that each sector can bring to the table. Healthcare simply can’t be the domain solely of government anymore.