retirees pass along their expertise to younger generations

Issue: Retiring Employees, Lost Knowledge

A pilot program at American Express gives soon-to-be retirees less work and more time to pass along their expertise to younger generations

With baby boomers poised to leave the workforce, will the next generation of workers be equipped to run the show?

That question was on the minds of executives at American Express (AXP) in 2006, when the company assembled an internal team to anticipate problems and pose solutions stemming from demographic shifts in its workforce.

Before long, the group made an important discovery: Not only would a huge number of employees become eligible for retirement in the next five to 10 years, the company had done little to retain the wealth of institutional knowledge they would be taking with them. From the intricacies of key client relationships to mainframe computer languages no longer being taught in school, many experienced workers possessed critical know-how that, if lost, would be costly—if not impossible—for the company to replace.

This was a problem with no simple solution, according to Jim Rottman, head of American Express' workforce transformation group. Retiring employees would need incentives for infusing the company with their knowledge, and they would need time to do it. Their expertise would have to be translated and presented in a form that would appeal to the younger workers receiving it. And since it would be nearly impossible to elicit knowledge from all exiting employees, the company would have to target those with the most crucial skills.

Pilot Program Launched in 2008

These parameters helped shape the American Express phased-retirement program, an initiative launched in pilot mode during the first quarter of 2008. Rather than retiring and leaving the company at once, participants gradually give up their day-to-day responsibilities, while replacing some of their free time with activities like mentoring and teaching master classes to their successors. In addition, they get more time out of the office doing whatever they want—be it planning for life in retirement or doing charity work. The phased retiree continues to receive a portion of his previous salary, benefits as usual, and the company in turn gets to hold on to some of its most valuable employees a year or more past traditional retirement age.

For now, the program is only being rolled out to employees in two of its business units: technology, because it was easiest to assess what skills needed to be passed on there, and finance, because that's where the company has some its most important client relationships. Soon-to-be-retirees in these units can apply to be part of the program.

It's an easy sell to senior employees, says Rottman. "It allows them to pursue their personal passion while working at American Express," he says. "And it allows them to leave their legacy behind and get the next generation of leaders and experts ready." It also helps them avoid some of the emotional and financial hurdles of sudden retirement.

Tech Teaching Tools a Must

Tailoring the lessons of an older generation to Gen Xers and Gen Yers, on the other hand, has required creativity. "One of the things that we've really focused on is paying as much attention to the person who's transferring the knowledge as to the person who's receiving [it]," says Rottman. That means getting phased retirees to learn new teaching tools like "learning maps," or visual representations of systems and processes, and interactive media like wikis, instant messaging, and audio posted on a company intranet.

So far, Rottman says the response from employees has been enthusiastic. And since it has involved little or no extra cost to the company, and no apparent risk, the initiative is gaining support in the upper levels of the organization.

Douglas MacMillan is a staff writer for BusinessWeek.com in New York.