How to ask employees to take voluntary retirement

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Asking employees to take voluntary retirement is a proactive way to reduce headcount while saving costs, staving off possible legal dealings and maintaining positive public relations and corporate morale. Firing staff tends to greatly affect productivity, and there is no telling how much information will become public, what the public's reaction will be or how the company will be affected. Requesting anything from staff begins not when you realize you must cut personnel, but as soon as you hire them.

Voluntary Retirement

  • Treat employees with honesty and respect throughout their tenure. This will build trust and tends to aid in productivity and morale. If, when staff comes to you with requests, you try your best to say, "Yes," they are more inclined to do what you want.

  • Try to avoid terminating employees, particularly those who have been at the company the longest and will be difficult to replace. See if you can cut costs elsewhere, take loans to get through bad times, sell assets or increase income.

  • Speak with Human Resource and/or legal professionals or conduct research to be sure you are conducting voluntary retirement procedures according to all city, state and federal guidelines. Be sure all announcements and information given are completely legal.

  • Inform candidates as soon as possible, after determining that voluntary retirement is the only option. Be clear how many people would need to retire, and what would happen if they don't. Don't sound threatening, but state matter-of-factly what is going on. A "carrot and stick" can be employed in a gentle way, especially if you honestly describe the situation. If the candidates don't retire and the company will go bankrupt--unable to pay unemployment, health care or anything else--then this can be explained, compared to the benefits available if a certain number of employees retire.

  • Research what benefits and compensation structures other companies have used to induce people to retire early. Consider maintaining a certain percentage of their annual income for a year. Offer continuing health benefits for a certain time. You should have an idea of what aspects of the job the staff enjoy and what they may fear by leaving. If they value membership in a union, try to continue those benefits. If they fear trying to find another job, see if you can offer benefits to return to school, retraining or career counseling.

  • Negotiate with a "win-win" attitude. They are performing a benefit for you, and you ought to provide a benefit for them. Weigh the cost of what you are able to offer and voluntary retirement versus your other options. If you are not an expert in negotiations and staff may think you are biased, consider hiring a consultant who specializes in conflict resolution. Staff may feel more free in expressing their feelings to a neutral party.

  • If there are a few optimal candidates and you feel that working privately with them is better than making public announcements or hiring a consultant, speak to them individually. See if you can negotiate terms without the entire company being affected.

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