The early retirement incentive program: a downsizing strategy

The literature on downsizing and downsizing through early retirement programs lead to a clear conclusion: managers must take a very thoughtful approach to downsizing. Poor planning, knee‐jerk reactions, miscommunication with employees and the mishandling of remaining employees can lead to failure. Despite all the benefits, early retirement incentive programs have received harsh criticism on a number of fronts. The legal, societal, and individual implications of early retirement incentive programs are numerous. The key to reducing this uncertainty and potential negative outcomes is the ability to predict beforehand which employees will accept the early retirement packages. Many factors influence the decision to retire and are examined. Predicting who or why someone will retire is extremely difficult. One of the missing ingredients for the success of these programs can be found in the Human Resources Department and its activities. This is the linking pin for all training, development and education efforts intended to socialize the existing management team responsible for this activity and its success as well as failures to deal with the new changes and culture of a downsized organization. Attention is given to the role and major issues of this intervention.