Who Reaches for the Golden Handshake? Author(s): Ann Howard Source: The Academy of Management Executive (1987-1989), Vol. 2, No. 2 (May, 1988), pp. 133- 144 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/4164815 . Accessed: 10/06/2014 06:23 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academy of Management Executive (1987-1989). http://www.jstor.org This content downloaded from 188.72.96.138 on Tue, 10 Jun 2014 06:23:43 AM All use subject to JSTOR Terms and Conditions
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Who Reaches for the Golden Handshake?Author(s): Ann HowardSource: The Academy of Management Executive (1987-1989), Vol. 2, No. 2 (May, 1988), pp. 133-144Published by: Academy of ManagementStable URL: http://www.jstor.org/stable/4164815 .
Accessed: 10/06/2014 06:23
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].
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Academy of Management is collaborating with JSTOR to digitize, preserve and extend access to The Academyof Management Executive (1987-1989).
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?The Academy of Management EXCUTlIVE, 1988. Vol. 11, No. 2, pp. 133-144
Who Reaches for the Golden Handshake? Ann Howard
Leadership Research Institute
Downsizing. The word has a fearful ring, both to those whose jobs are in jeopardy and to those who must
make the decision to push others out of the corporation. To soften the blow of workforce reductions, especially when they involve management employees, companies frequently offer a financial incentive or "golden handshake" to volun- teers willing to terminate their employment ahead of sched- ule. This has been particularly effective for those nearing retirement, who can claim their pension and an additional payout. The golden handshake offer often takes the form of a bonus payment, which may be supplemented by a change in pension requirements, resulting in a larger pension. (For example, a company may give the employee credit for more years than he or she actually worked.)
Observing the departure of managers reaching for such golden handshake offers, an executive may wonder, "What have I done? Have I lost my best managers?" At the same time, colleagues may wonder, "What will become of them? Will they regret it? Should I do the same thing?"
Some answers to these questions come from a longi- tudinal study begun in the 1950s of Bell System managers. Participants in the study were followed intensively until the mid-1980s, by which time a significant number had taken an early retirement. Those who left with golden handshake offers were compared to other early retirees, and all who retired early were compared to an equivalent group who remained active on the company payroll.
Also explored was whether it was possible to predict which managers were most likely to retire early. Data col- lected periodically over their managerial careers reveal that the retirees differed from the actives in terms of their work motivations and attitudes, their financial concerns, and their values and interests.
A final consideration is the reactions of the early retirees to the circumstances of their departures and to their lives in retirement. These various analyses have led to recommendations for companies' using golden handshake offers.
Background of the Study
The Management Progress Study is a long-term, lon- gitudinal study of the lives and careers of managers from Bell System telephone companies.1 One subset of participants in the study, known as the noncollege sample, is the focus of the research described here. This sample consisted of 148 men hired for craft positions and promoted into manage- ment at a young age in three of the telephone companies. At the time they were brought into the longitudinal research, from 1958 to 1960, their average age wds almost 30 and they had nearly 9 years of experience with the company.
Information on the men in the study was collected at regular intervals for more than 25 years. Abilities, motiva- tions, attitudes, and personality characteristics were meas- ured, based on multiple exercises including simulations of managerial work, at three different assessment centers.2 One dozen interviews with each man in the study, as well as with someone else in the company who could evaluate his per- formance (most often a boss), were also a prime source of data; so were many periodic questionnaires. When a partici- pant retired, he was asked to fill in several more question- naires and was given a final interview. Most of the retirees and actives had spent their careers with the same telephone company, although a minority had changed telephone companies or joined AT&T.
The divestiture of the telephone companies by AT&T came in January 1984, which was the 23rd to 25th year in the study for the men in the sample. It was primarily after this event that AT&T and the regional Bell operating companies were faced with the need for downsizing. As of September 1986,85 men in the sample had taken early retirement. The average early retiree left in the 26th year of the study at the age of 55. The early retirees were compared with 52 men who remained on the payroll.
Fortunately, the 20th year in the study had been an important time for data collection. The third assessment center and the tenth interview vith a boss or other company representative were conducted during this year for each man in the study. Thus, several years before the divestiture and the subsequent downsizing became influential factors in retirement decisions, the characteristics of the participants who would later retire had been evaluated.
Do the Most Capable Leave?
Both psychologists and middle managers interviewed the bosses of the participants and wrote reports of their two-hour discussions; based on those discussions, the inter- viewers rated various job and performance characteristics of the participants. These ratings indicated that there was no meaningful difference in overall job performance in the 20th year of the study between those who retired early and those who stayed. Average ratings on a five-point scale were 3.7 for the overall job performance of those who stayed, compared with 3.6 for those who retired early.
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Other ratings showed that the two groups did not differ in "leadership ability," "self-confidence," "harmony with others," or nearly 20 other management characteristics rated. "Creativity" and "organizing and planning ability" showed a disparity between the groups, but in light of the other findings, it is likely that this disparity occurred by chance. Moreover, even if it did not occur by chance, the study indicated that the active group was stronger than the retirees in these characteristics. Thus, the companies suf- fered no loss in quality of management talent as a result of the early retirements.
Other data confirm the boss ratings. After observing the participants' performance on a variety of exercises, tests, simulations, and interviews, assessors during the 20th year of the study (MPS:20) rated the participants on 47 different dimensions related to managerial abilities, motivations, per- sonality, interests, and satisfactions. None of the dimensions involving ability showed any differences between those men who would later take an early retirement and those who would continue their employment with the company.
A related question is whether those who accepted golden handshake offers differed substantially from those who retired early without such financial incentives. Of the 85 men who retired early, information was available from 62 as to the reasons for their decision to retire. Of these, 37 (60'S.) indicated that they had accepted a financial incentive to retire; 25 (40%) did not mention this as a precipitating cause.
A comparison of these two groups showed no differ- ences in (1) performance ratings from the boss interviews, (2) assessment center dimension ratings at MPS:20; and (3) results of a variety of psychological tests administered at MPS:20. The men retiring without a bonus tended to be younger, which suggests that they left before the golden
handshake offers were proffered. However, the data over- whelmingly indicate that those who accept golden hand- shake offers are likely to be indistinguishable from those who retire early without such an incentive. In our study, those who left with golden handshakes seem merely to have been more fortunate in their timing.
We thus come to the reassuring conclusion that, at least for a group like the one studied here, there are no indications that the most capable managers leave the com- pany if a golden handshake for those nearing retirement age is offered. Nor, of course, are the least capable most likely to leave. Early retirees are likely to include both above average and below average performers.
Is Early Retirement Predictable?
If early retirees don't differ in abilities or job perform- ance from those who stay, do they have other characteristics in common that might forecast their decision to leave the company prematurely? Do certain qualities distinguish them from their more enduring colleagues?
The 20th year assessment center uncovered sure signs of the inclination to retire early. "Retirement proneness" was one dimension rated by the assessors after they had heard and interpreted all the data that had been gathered. On this dimension, those who would subsequently retire early were rated 3.6 on a 5-point scale, compared with 2.3 for the group that would remain active. More specific predictions about who would retire early and their employment status as of September 1986 are shown in Exhibit 1. Nearly three- quarters of the men likely to retire early had done so by this date; only about half of those with questionable results or those considered unlikely to retire early had done so.
Primacy Inner Work Realism of Bell Value Job Satis- of Work Standards Expectations Orientation faction
** * * * *
*P~ < .05. **P < .005. Dimension
Three major types of characteristics distinguished the early retirees from the stayers several years before the possi- bility of divestiture and downsizing was even contemplated. Work motivations and attitudes, the feasibility of an early retirement, and personal values and interests all played a role.
Work Motivations and Attitudes
Interviews with the participants' bosses in the 20th year of the study indicated that those who retired early and those who stayed did not have significantly different jobs. Such characteristics as the amount of challenge, structure, supervisory responsibility, stress, and supervision by bosses showed little variation between the two groups. Moreover, the bosses of those in the two groups were seen by the participants as equally credible achievement models, and the participants had received comparable amounts of recog- nition and criticism. But in spite of these similarities in job situations, the early retirees showed lower work motivations and attitudes in the 20th year.
Average ratings on dimensions from the MPS:20 assessment that illustrate work motivations and satisfactions are shown in Exhibit 2. One key difference is that the actives gave work greater priority in their lives ("primacy of work"). Several of the early retirees talked about their lessening of interest in work when interviewed in the 19th and 20th years of the study.
"My career has become less important to me over the years. But even though I'm not particu- larly invested in my work, I still feel I do a good job."
"My job with the phone company now ranks fifth or sixth to family, home, and living in general. Ma Bell is not the end of the world. My goals now are for the short run and are geared to enjoying life now. It makes no sense whatsoever to eat your guts out anymore."
"I'm losing interest in my job. My recent 3-week vacation really pointed this out to me. I did not at all want to go back to work and I could have gone on forever without going back. I've been around this company too damned long! I proba- bly will never quit working, but I want to get out of the rat race."
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The active employees were also more conscientious than the early retirees about turning in quality work ("inner work standards"). They more strongly identified with the Bell System and its goals of providing service, a fair rate of return, and the like.
On the other hand, the early retirees were more likely to have given up on further promotions, an attitude indicated by their higher ratings on "realism of expecta- tions." Two of them commented as follows:
"I see nothing, zero, in my future as far as promo- tions go. I'll just keep riding the tiger the best I can, although I still bring the same energy and the same creativity to the job I always did. I can't change that."
"I don't think I have a bad attitude; it's just that reality has set in. I had to turn down better jobs because I didn't want to move, so I have faced up to the reality that I am where I'll be for the rest of my life with respect to salary level."
The early retirees also showed greater discontent with their current jobs, even though they showed no less satisfaction with their careers as a whole.
"My work is interesting, but it's very hectic and demanding. I have just learned to tolerate it. There are many pressures, including my imme- diate supervisor, who likes to beat on people as a management style. I'm also subject to sudden calls for information or actual papers to help executive officers prepare for presentations."
"Myjob has too much paperwork. I sign over 100 letters and vouchers every day I'm in the office. Since I'm now traveling once a week for one to three days at a time, my paperwork can easily back up."
An attitude questionnaire administered with the MPS:20 assessment exercises gives further evidence of the job dissatisfaction brewing among those who would retire early. As shown in Exhibit 3, the retirees scored lower than the others on 6 of the 10 scales in the questionnaire. The largest gap between the two groups was on "identification"; the active group was much more likely to feel a part of the management team than the early retirees were.
The early retirees also showed greater dissatisfaction with their bosses (the supervision scale). They were more likely to feel that their bosses did not treat them fairly, did not appreciate them, and lacked interest in them. Some com- ments to interviewers reflected this.
"I haven't quite been able to figure my boss out. He has everybody on edge and is known as a 'hatchet man.' His greatest weakness is the way he deals with people; he makes people feel unsure of themselves and uncertain of their own futures."
"My boss is a clean desk administrator. He keeps nothing in his desk that pertains to anything about my job or other subordinates' jobs. It creates confusion. He doesn't remember what he said and each time you have to present some- thing as if it is being presented for the first time."
The early retirees were also more likely to have nega- tive comments about higher management. This was revealed in the "general management attitude" scale, a composite measure of overall satisfaction, including confidence in higher management. One early retiree said:
"I think the officers are all striving to get ahead. They are so competitive that they are looking out for what can help them compete against their peers and come out on top. What's good for themselves comes first and what's good for the company is secondary."
A global measure of satisfaction with working for the telephone company ("job satisfaction") also found the early retirees more critical of the company than the actives. They were also more apt to be dissatisfied with communications - including information about company policies and the workings of the business ("impersonal communications") or freedom of expression between participant and boss ("per- sonal communications"). Satisfaction with salary treatment was the only scale on which the early retiree group did not score lower than the actives. Thus, although the jobs of the early retirees did not appear to be any less challenging than those of the actives, their dissatisfaction was apparent several years before they were given the opportunity to retire with a bonus.
Were the early retirees more disgruntled throughout their careers, or did their dissatisfaction grow with time? A comparison of scores on the Exhibit 3 scales for the first, seventh, and twentieth years of the study showed no con- sistent pattern of dissatisfaction over time among those who retired early. However, there was clear evidence that the early retirees' attitudes about supervision and both types of communications declined between Years 7 and 20. Exhibit 4 illustrates this effect for the supervision scale. Here, as in the other two scales, the early retirees actually scored higher than the actives at Year 7; but by Year 20 the attitudes of the actives had improved, while those of the retirees had declined.
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Absence of Financial Need for Job Financial Worries Motivation Security
** * *
Dimension
*p < .05. **p < .005.
Feasibility of Early Retirement
Analyses of the feasibility of an early retirement were based on financial considerations. Ratings of three dimen- sions from the MPS:20 assessment that illustrate this are shown in Exhibit 5. Those who retired early had fewer finan- cial worries several years earlier and less of a need for a secure job. Said one:
"I'm not worried about finances. I realized some time ago that once I took out all the taxes and expenses of working and compared it to my pension, I was working for a dollar an hour. I feel quite content to give that dollar in return for having fewer expenses, taxes, and hassles."
Moreover, the early retirees, particularly those who had a golden handshake offer added to their retirement benefits, were less motivated than those who continued to work to add to their financial resources.
As further evidence, questionnaires completed by 42 of the early retirees were compared with those of 39 actives at the 25th year of the study. The retirees had fewer children living with them, and the market value of their homes was $74,000 more than that of the actives. Their average net worth was $250,000- not bad for a group that had primarily occupied lower-level management positions. There were no indications that the early retirees and actives differed in such factors as family worries, marital stability, marital satisfaction, or concerns with health or aging, which might also have had financial implications.
Data coded from interviews over time indicated that actives became less satisfied with their financial situations between Years 7 and 19, while the retirees became more satisfied over this same period. Apparently the early retirees had either been more skillful with their financial assets or more fortunate than those who stayed with the company. Said one retiree:
"I think as long as inflation doesn't get fired up, I'll be in good shape. I've never been a high roller. We've always lived well within our means.
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The many interviews with the participants over the course of the study were rated according to nine life themes to show both participants' involvement in and satisfaction with various aspects of life.3 A comparison of the ratings on involvement, based on interviews in the 19th year of the study, shows that the early retirees had greater interest in recreational activities than did those who remained with the company (see Exhibit 6).
One of the themes receiving more emphasis from the early retirees was "recreational-social," which indicates that they were more involved than the actives in such leisure- time pursuits as hobbies, sports, partying, and socializing. Analyses of interviews over time showed that the retirees had consistently been more interested than the actives in recreational and social activities, but that their satisfaction with such activities increased between Years 7 and 19 of the study. Related to this was their higher rating at the MPS:20 assessment on the dimension "avocational interest," which indicated their greater depth of interest in a hobby or hob- bies. Having an engrossing avocational interest would, no doubt, act as a siren call to these participants to retire early and spend more time on something already known to be enjoyable. The retirees also showed more involvement in the "locale-residential" life theme, which indicated their attraction to travel as well as to the home. Retirement would also offer opportunities to pursue such interests.
On the other hand, those who stayed with the com- pany were more involved in the religious or spiritual aspects of life; this was true rather consistently over their careers. A hypothesis here is that the actives were more likely to buy into the Protestant work ethic, which views hard work and industriousness as the road to salvation. In contrast, the retirees were rated higher at MPS:20 on the dimension "escapism," which indicates that they were more likely to engage in activities to escape from the responsibilities and routine of life. Those who stayed with the company were more Apollonian, bent on fulfilling their responsibilities in life, while those who left were more Dionysian, freed to pursue their pleasures. For example, some who would retire early commented at the 19th- and 20th-year interviews:
"I handle the tension of the job with mental fallback. I don't live in the work world. I live in many worlds - of hobbies and books. I don't take the job too seriously, frankly."
"I spend all my free time at my resort. I use it as an escape valve. We have several lakeside cabins, and I do all the maintenance work myself. I spend nearly every weekend there, even during the winter. I like doing all kinds of things fishing, boating, photography, woodworking, cross-country skiing, snowmobiling, and ice fishing. "
Exhibit 6
Involvement in Life Themes in Year 19
5.6
5.2
4.8
4.4
3.6
3.2
2.8
2.4
2.0I Marital Parental Locale Financial Self Rec. Religious Service Occupa-
Develop. Social tional
*P < Q05 **p < Q05,
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Such preplanned pleasures might suggest that force reductions can be trouble free if golden handshake offers are made to potential early retirees. Unfortunately, the mes- sage is not that clear. In the first place, discontent with work may come to a head prior to the time of early retirement. The organizational circumstances that lead to the need for downsizing are in themselves often traumatic.
The precipitating factor here was the divestiture of the telephone companies by AT&T and subsequent reorgan- ization and reorientation of the telecommunications busi- ness. Comparisons between retirees' postretirement ques- tionnaires and the 25th-year questionnaires of the actives indicated that the retirees were experiencing less personal satisfaction with their jobs just prior to the time they left the company than the actives were at that time.
'Many tinmes during work in the last two years, by the en(d of the day I would have a hea(ache, be dea(l tire(, tense, an(d stressed. It kind of crept up on me over the last few years, an(l then I began to really notice it. Now that I'm retire(, I (on't have any of those symptoms anymore.
Although some early retirees were obviously stressed and overworked, on the average they indicated they were not as busy on the job as the actives said they were.
"Before I retired, I was a manager of customer services. It was a goo(d job a few years ago, but after (livestiture, it lost a lot of its zing. My five subor(tinates were re(uced to three, and I di(n 't really have enough work to do. Basically I felt bore( an(i without a challenge."
The early retirees did not consider their jobs as impor- tant to the continuity of the telephone business as the actives did, and they did not feel as much pride in their ac- complishments on the job. They also rated their bosses significantly lower in assertiveness and fairness than the actives did. Thus, their earlier dissatisfaction with the job seems to have been exacerbated at the time of downsizing, so that the retirees felt increasingly irritated but less useful and productive. In addition, they could not rely on a boss to protect and defend them.
The golden handshake offer led to rancor when it was perceived as a way to coerce managers to leave. Some managers objected to a "stick" as well as a "carrot" in the retirement benefits - that is, when there was a penalty for continuing to work as well as a benefit for discontinuing employment:
"When the plan was intro(luce(l inito the conm- pany, they gave us some terrifying numbers about what the new cost of ouir health insulrance woul(i be if we di(in't retire. I felt very pushe(d out by the company and very (denigrate(J by the manner in which it was done. It shook my con?fi- dence in my abilities an(d in my sense of ac- complishment an( worth to the companry."
Sudden changes in appraisals also aroused suspicion that the plan was not as "voluntary" as the company implie(d. (Unfortunately, data were not available to indicate whether there were any performance changes just prior to retire- ment.)
"About the time they intro(duce( the new benefit plan, they also intro(duced/ a new appraisal plan. I ha( always been rated above average, buJt the new appraisals were done by managers upstate. I became the bottom of the list. My boss and( I both broke into tears. Rather than face another unsatisfactory rating, I decide(d to leave the com- pany. I felt the whole thing was because the company was juist trying to get ri(d of me."
"My old boss had given me a rating of outstand- ing. Then six months later, when I was tind(er my new boss, the (lirectives regar(ding force re(uc- tions were sent out and I was told I was not performing satisfactorily. I believe that I was tar- gete(i for removal and they were trying to force me to retire."
Such appraisal changes, as well as the institution of penalties - like increased health insurance costs - for continued employment, were perceived as not-too-subtle methods of forcing employees out of the organization.
A key factor in whether or not a retiree would depart with rancor was whether he was treated with dignity and respect at the time of his departure. Even though the men may have felt fortunate to be able to retire early, they still wanted to be appreciated for the contributions they had made to the company.
"I gave them a good time, a pro(luctive time from my life. I was a cable man working out there when it was twenty below. A few years ago I came up with an idlea that saved them millions, literally millions of dollars. The day I left my jot), I received no word of praise or encouragemernt or in any way was given the satisfaction of beirng appreciated at the company."
"One important aspect of my job was to attend rate case hearings. I used to keep a recor( of mny wins and losses, kind of like an athlete. When I retired my record was 32 to 2. I was pretty prod(l of myself for that contribution to the company, but it was completely ignore(d when I left."
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But although the retirees may have harbored resent- ments about the way their exodus was handled or the condi- tions leading up to the downsizing effort, they were often able to separate the latter experiences from the total career. Most had positive things to say about their careers as a whole.
"Overall, I had a lot of good years with the com- pany. They provided sustenance for my family for many years, and I'll always be grateful for that. At the end of my career it was pretty bad, but mostly I attribute that to my boss."
"My dissatisfaction with the job scene during my last few years of work is a real contrast to the high level of satisfaction and pride I had in prior years. I think overall it was a great career. The Bell System as it was structured was one of the few places where you had an opportunity to grow and advance in the ranks. They didn't go out and hire managers from the outside as many other corporations did."
Yet the retirees' positive view of their careers and the old Bell System culture made the downsizing experience seem all the more harsh and cruel in contrast.
The Life of Riley?
How, then, did the early retirees fare? Did they later regret their actions? According to both interviews and ques- tionnaires, for most retirees the answer is clearly "No." As many reports indicate, as long as finances and health cause no major problems, the retirement experience can be a very positive one. The fact that these retirements were precipi- tated by golden handshake offers seemed to have little effect on their outcome.
Problems of Retirement
The retirees seldom referred to problems of retire- ment as significant. On the average, they rated none of the problems on a proposed list as even moderately significant. Only 7% commented unfavorably about retirement bene- fits.
"I haven't found any problems associated with retirement yet. They may come later, but I just haven't found them yet."
Perhaps most prominent on the retirees' minds was the spectre of a reduced income and the lack of companion- ship from co-workers (both were rated between "some- what" and "moderately" significant).
"We haven't had to change our standard of living as a result of retirement, since the pension takes care of all of our needs. The difference is that we are no longer saving. If things seem tight, I'll havye to take a part-time job."
Many of the early retirees did take part-time jobs, and 38% indicated they would have continued to work part-time for the company if they had been given the opportunity. However, their motivation seemed as much to keep active as to augment their incomes. Some, drawing on their craft or managerial experiences, became handymen or consultants to the telecommunications industry. Others drew upon prior hobbies or interests to embark on business ventures, such as running a resort, having an antiques business, or starting a bookstore.
On the average, the retirees did not indicate on their questionnaires that a lack of structured activities, a lack of challenge, being without work, a restriction of activities, or boredom were significant problems for them in retirement. Some 69% responded that they were rarely or very rarely bored. They also did not have to any meaningful degree such ego-deflating experiences as feeling less important in society or less competent as a person.
Many did feel a drop in the amount of challenge in their lives, but this seems to have been countered by a concomitant lack of desire to make a new mark on the achievement scoreboard. A personality and motivation questionnaire, the Edwards Personal Preference Schedule, used in the three assessment centers, was readministered to the men after they had retired. One of the 15 scales showed a noticeable change after retirement, as illustrated in Exhibit 7.
On the achievement scale, which measures pleasure in doing a difficult job well, accomplishing tasks, and solving tough problems, the participants had generally shown rising scores beginning during the early days of their careers. Apparently involvement in work had presented them with problems and challenges, which they enjoyed. After retire- ment, however, the motivation to achieve dropped to its original level: They had lost interest in wrestling with tough problems.
"I'm starting to detest sitting at a desk all the time and doing paperwork. It was an ordinary part of my life before, but now I can't stand to do it. Normally I would have had my taxes done by this time, but I haven't even started on them."
On balance, then, the problems of retirement seemed to be few; boredom was relatively rare, and retirees adjusted readily in motivation to accommodate new opportunities.
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When asked to rate the pleasures of retirement, the retirees rated a number of items as being of at least moderate significance. They indicated that they enjoyed having more time for interests and hobbies, and they also liked a more relaxed pace of life.
"I have a large number of interests, things I was doing before I retired but not to the same extent. I ski, play golf, hunt, ride a motorcycle, have a camper, and do projects around the house."
"I got involve(i in some woodiworking projects as gifts for my gran(lchildren, starting with doll cra- (lIes and cribs and dollhouse furniture. They were so well received that now I occasionally make and sell these items as gifts - mostly for frien(s of my children. I've also gotten into wall- papering, fixing cars, gardlening, fishing, and hunting with a bow and arrow."
Freedom from routine and daily accountability were also pluses of retirement.
"The major a(ivantage of retirement is the free- (Ioni to come arnd go and to do what you please whernever you choose."
"The one biggest thing I like is that I have control over my own time. That means so much to me that it's hard to explain to others. I guess I feel strongly about that because I was so locked into not having control over my own time before."
Having more time for their family and experiencing their family's positive reaction to their retirement added to their pleasures.
"My wife was tickled to (leath that I (Jecided to retire because she could see the job was getting to me. I spent too many hours at it and never ha(i any free time that I could call my own. We woul(d go on a vacation and I would get called back. She felt if I could get out while I was still healthy, that was worth a lot."
Thus, major pleasures for a retiree included having time not only to enjoy hobbies, interests, and family life but to call his own - to do what he wanted when he wanted.
Less meaningful (rated "somewhat" to "moderately" significant) to the retirees were being free from the concern of pleasing others and having more time for friends. In fact, compared with those still active at Year 25, the retirees indi- cated that they had more control over their relationships with friends and stronger preferences for doing things by themselves. Rated "not at all significant" among retirement pleasures was the opportunity to offer advice and guidance to young people.
Exhibit 7
Average Achievement Score for Early Retirees
Percentile*
99
90
80 69
70 63 v e q ~~~~~~~~~~~~~~~~~~~~.; .. .. .. .. . u o ~~~~~.. . . .. .. .. ..
Taking all things into consideration, 62% of the group indicated they were "very positive" about retirement and another 18% were "somewhat positive"; only 13%, indicated they were "negative" or "very negative" about retirement. A few (7%) of the retirees said they were "very dissatisfied" with their lives, and 5% were equivocal. About one-quarter (24%) were "somewhat satisfied," but the majority (64%) were very satisfied."
"Retirement has been super. I couldn't recom- mend it more highly to anyone. The only surprise was how good it is!"
"I love retirement. The part I like the most is when I get up in the morning and see the drive- way full of snow, and I can just have another cup of coffee and sit here watching it."
"Retirement? Fantastic! I thought I'd miss the people and the work, but I really don't at all."
"I have yet to wake up in the morning and say that I wish I were at work."
"I've had not one second thought. Not one!"
Are Golden Handshakes Effective?
On the whole, these data suggest that the golden handshake may be beneficial for the company that must downsize and for managers near retirement age. In this case, company executives need not have had concerns that a voluntary plan would denude their workforce of its most capable managers, since the abilities and performance of those who stayed and those who left were not notably different. Moreover, those who left had less motivation and poorer attitudes toward their work and company; the net result was that the golden handshake offers left the company with the more motivated and dedicated managers.
A question that should be raised, however, is why the managers who left developed such negative attitudes toward their work lives. The data showing the decline in satisfaction with supervisors and with communications point to a failure of management in this regard. Since the group of early retirees contained as many good performers as the group that stayed with the company, the organization had a defi- nite loss of talent that could possibly have been avoided. Problems were brewing early that should have been resolved by communication and negotiation, rather than by termi- nation.
Downsizing is inevitably traumatic, even among those of retirement age, and it should be handled as sensi- tively as possible. Voluntary offers are more humane than involuntary force reductions, since they give managers the chance to leave the company with dignity and a sense of having had a choice. However, the manner in which the offers are made and executed can seriously affect how they are perceived. The revelations of this study lead to several recommendations for those considering golden handshake offers to implement downsizing.
1. Make voluntary retirement offers truly voluntary. Offers that combine both the "carrot" and the "stick" can have the effect of a steamroller and lead to great antagonism among potential retirees. If the organization is truly inter- ested in voluntary departures, it should emphasize a gener- ous "carrot" and avoid any kind of coercion. The real volun- teers will probably have their finances in good order, while the coerced could easily find themselves in financial diffi- culty. If, on the other hand, the company's focus is on ridding the organization of poor performers, it should announce its intent and devise a plan accordingly. Attempt- ing to deceive employees can only lead to resentments.
2. Don't make dramatic changes in performance appraisals at the time of downsizing. If an employee is seen as a poor performer, he or she should have been informed of this well in advance of the offer, and his or her supervisor should have been taking steps to work with the employee. All too often poor performers are merely tolerated, and performance appraisals worded positively so the individual still gets an annual raise. This practice gives no information for poor performers to use as a basis for improvement. Moreover, if the appraisal is suddenly changed from "satis- factory" to "unsatisfactory" at the time of downsizing, the employee understandably feels betrayed.
Nor should the basis on which appraisals are made be changed suddenly at the time of downsizing. Some of the men in the study described here indicated that the appraisal process had been taken away from their boss and adminis- tered by an impersonal third party just before the downsiz- ing. The criteria for good performance may be changed at the time of downsizing as part of the effort to modify the culture of the organization, but all such acts lead to a feeling of betrayal on the part of the employee - a suspicion that the original employment contract has been violated without warning.
It is quite possible that a particular employee's style will not fit in with the new culture of a downsized organiza- tion. If this is the case, this should be demonstrated to the employee with relevant behavioral evidence. At the same time, his or her performance under the old culture can be properly discussed as a job well done under the conditions originally encountered.
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3. Make sure early retirees feel appreciated at the time of their departure. It is easy for an early retiree to feel "over the hill" and unwanted if the company is focusing on this age group to help its downsizing efforts. But supervisors should never forget that the retirees have made many con- tributions to the company in the past, and these contribu- tions should be gratefully acknowledged as the retiree makes the transition out of the world of work. The gold watch may be replaced by the golden handshake, but the purpose of the gold watch to acknowledge the departure of a trusted, productive member of the team - should still be strongly communicated. It is important that the retiree leave the company with his or her self-esteem intact. Aside from the humanitarian reasons for assuring this, the retiree will represent the company in the community, and his or her goodwill can be a better public relations effort than the company can buy.
4. Consider using retirees as part-time help or con- sultants. Many companies have an aversion toward employ- ing retirees because they are against people "double dip- ping" with a paycheck as well as a pension. Nationally, however, more than one in six pensioners supplement their income, and nearly two out of five of the retirees in this study indicated they would have liked to work part-time for the company if given the opportunity. Part-time retirees can offer considerable savings to companies over full-time employees; their benefits are already being covered, and they will need little additional training. They can, in effect, serve as an elastic labor force during the unstable times that lead to downsizing. In addition, part-time work can offer the retirees a graceful transition out of company life and reduce some of the trauma of a sudden departure.
5. Don't use golden handshake offers to rid the company of problems that should have been resolved pre- viously. If attitudes of employees begin to decline, managers should get to the root of the problem and try to resolve it. Golden handshake offers, for both early retirees and other employees, give options to employees who feel they are not being treated well by the company. Good employees can be lost at such times if dissatisfaction has been allowed to linger.
There are no indications here that retirement is a devastating experience. In fact, the respondents were far more likely to cite pleasures than problems. However, this was a group that earlier was more dissatisfied with work and more pleasure-oriented than other workers; the intensely dedicated could have a more difficult transition. U
Dr. Ann Howar(d is president of the Leadcership Research Institute, a nonprofit organization (le(licate(d to research on the selection and development of leaders atn( managers. Employed by AT&T between 1975 and(i 1987, she was associate director and then director of the Managemernt Progress Study and the Management Continuity Sttudy, two longitudinal research studies of managers. Before joinin)g AT&T, she was director of research for a behavioral science consulting group for nine years. She holds a Ph.D. in indus- trial psychology from the University of Marylaned.
Dr. Howard is the president-elect of the Society for Industrial and Organizational Psychology, a (division of the American Psychological Association, where she is a Fellow. She is on the Board of Governors at the Center for Creative Leadership and a past editor of The I ndustrial-Organizational Psychologist. In addition to numerous journal articles anid book chapters, she is the author (with Dr. Douglas W. Bray) of Managerial Lives in Transition: Advancing Age and Changing Times, a book summarizing 20 years of research with the AT&T studies.
Endnotes 1. For more information on the design of the Management Progress
Study, see Ann Howard and Douglas W. Bray's Managerial Lives ini Transi- tion: A(lvancing Age arn(d Changing Times, New York: Guilford Press, 1988.
2. Detailed information on the construction and use of assessment centers for management can be found in George C. Thornton, IiI and William C. Byham's Assessment Centers an(d Maniagerial Performance, New York: Academic Press, 1982.
3. For a discussion of the life theme coding method, see Joseph F. Rychlak's Personality an(I Life-Style of Young Male Mana-igers, New York: Academic Press, 1982.
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