Could ‘pre-tirement’ help family businesses with the talent crisis?

One of the hallmarks of the family business sector is undoubtedly its sheer variety and breadth. From centuries-old private banks to high street retail chains, from construction firms to family farms, family enterprises come in all shapes and sizes.

But while the profile of family businesses may vary, there is one common and pressing challenge almost all of them are wrestling with at the moment: the talent crisis. Everyone is fishing from the same pool and having to compete for the talent they so desperately need to fulfil their growth and performance aspirations.

Covid accelerated and magnified problems: skills shortages for in-demand roles, technologically-driven change, flexible working and new employee experience expectations. The pandemic has led to discoveries which cannot be unmade.

One of those is the phenomenon of the Great Resignation – as increasing numbers of more experienced workers contemplate stepping out early and going off to do other things instead.

This talent drain can pose acute challenges. But perhaps we should turn this challenge into an opportunity – and think about new models and approaches instead?

Your experienced workers and managers have a lifetime of know-how. They’ve bought into your organisation’s culture and values and have enormous amounts of knowledge to pass on – qualities that you’ll struggle to replicate in new hires.

I suggest family businesses could consider the concept of ‘pre-tirement’, where key individuals who may be considering leaving the workforce early are offered the opportunity to work fewer hours, have more free time and perform what we could call ‘resilience on demand’ roles. Trading some reward for a different work/life mix could be incredibly attractive to many.

Perhaps you pay them 30 percent of their wages for 20 percent of a week’s work but they agree to be on call during the remaining normal working hours. They can pursue other interests, write their book, play golf or help looking after the grandkids. Given the possibility to work from home this is possible in a way we wouldn’t have imagined in 2019. 

Now, if one of your junior staff encounters a new situation in which they need a sounding board or some advice, they can call the experienced, retained, resilience resource – ‘resilience on demand’.  And that means that career entrants can afford to take on a little more risk, knowing that they can call on senior input when they encounter unforeseen challenges.

The model could also be applied to that other big question facing family businesses – succession. Maybe your ‘NowGen’ family leaders could phase their exit from the business through a pre-tirement period when they’re available to their ‘NextGen’ successors as they begin to take up the reins.  Or perhaps senior non-family members take “pre-tirement” but remain on hand as advisors to the NextGen team. 

As a sailor, I know that to pass my yachtmaster offshore exam I needed to acquire enormous amounts of knowledge. Such as how flares work, what to do if the mast falls down, or how to rescue a man overboard. But I still need to sleep, and, on overnight passages, I hand over the helm to a watch leader who doesn’t necessarily have all of that. But they have instructions to wake me if they need help. So we still make progress through the night.

Of course, the trick is to be really clear about those waking instructions. “Who’s in charge?” should not be ambiguous. The first time my crew woke me up, it was for a matter they could have handled easily and I admit to being slightly… ill-humoured.  Mistake. Inevitably, the second time, the crew delayed waking me and I joined a situation which had begun to get out of hand.  Lesson learnt! Clear contracting is vital, particularly in times of crisis which we’ve all experienced over the past two years.  And it’s important to adapt those contracts to match the growing confidence of NextGen as they become NowGen.

What’s in it for the experienced generation?  They now get consulted on only the knottiest problems where their experience, relationships or judgement can make a difference, while avoiding many of the less intellectually satisfying aspects of life at the helm.

This is a model which has wider benefits too.  In our recent KPMG report, we celebrated the ‘regenerative power’ of family businesses as they constantly find ways to renew themselves.  The “historic calm” of the senior generation who’ve seen crises before can help steer the ship while the Next Gen brings a willingness and capability to embrace technology and an articulation of purpose which can attract similar like-minded employees.

I think adding “pre-tirement” to the family business leadership model could help lead our recovery out of tough times.