Those who start up their new business do so with a plan: to be successful in their business in the long run. And for you to reach success, you will need to be able to depend on your staff in the long run.
This is why it can be very inconvenient when you see that one employee has retired after another. What do you do when the people that have helped you build your business have decided to retire and go to the Bahamas?
We all age – so this cannot be avoided. However, if you know the retirement rate, it will be easier for you to figure out a battle plan.
What is the Retirement Rate?
Implementing a strategy is very important for any business – particularly if you want to be successful in the long run. The more people retire, the more people you will have to hire – and preferably before the entire main staff has already retired.
So why would you have to know this ratio? Well, for one, if you know how many people retire on a yearly basis, you will also know when you should be looking for “fresh meat.” The employment is not necessarily the difficult part; it’s their training that is generally the most troublesome part.
This is why you ought to check every time whether your retirement rate is increasing or decreasing. In this aspect, you may want to consider aspects such as age, health issues, retirement age rates – everything that might forecast an early retirement. It’s a particularly convenient metric for a company that is creating a strategic workforce plan.
The percentage is calculated by calculating the people who retired from the people who were employed. Therefore, Retirement Rate = People Hired In the Last Year / People Who Retired in the Past Year. As an example, if you hired 1,000 last year and 100 of them retired, then you have a 10% retirement rate.
Complimentary Metrics
A retirement rate is a key metric that can offer you, in itself, a good idea of what the future of your company holds. It can allow you to build on your strategies, to tell you how fast you need to “replenish the pipeline,” and how many resources you will have to make available in order to train the new staff.
However, this metric will be much more efficient if you use it together with other metrics as well. Here are some which, when used with this metric, can provide a more complete picture.
- Average age
- Average retirement age
- External time to fill
- Vacancy rate
- Succession planning rate
On a final note, you should bear in mind that if an employee decides to leave the company, this might not mean that they want to retire the workforce altogether. Some of them decide to remain part-time or project-based – which is why you may want to keep an eye on their retirement plan.
If an employee that is an important part of a strategic plan wishes to retire, it might be helpful to know if they want to continue working with you – obviously, in a casual manner.