Strategic Human Resource Management

Section Four

Early Retirement

In dealing with an excess of employees, companies frequently
offer early retirement incentives in which employees currently
ineligible for retirement receive additional years’ credit and a
bonus payment that enhances pension benefits. Major concerns
with this practice are the effects on the company’s pool of
talent and the impact on early retirees. Ann Howard conducted
a longitudinal study of AT&T and Bell System managerial
employees that addressed these concerns. One of the study’s
major conclusions was that there were no significant
differences at the 20-year mark in the performance ratings of
managers who took early retirement versus those who did
not.^46 The study concluded the following:

Thus, the companies suffered no loss in quality of

management talent as a result of the early

retirements... there are no indications that the

most capable managers leave the company if a

golden handshake for those nearing retirement

age is offered. Nor, of course, are the least

capable most likely to leave.^47

The same study also investigated other characteristics
between managers taking early retirement and those
remaining. Although performance ratings at their 20th year