Early retirement plans have a number of advantages.
Companies as diverse as Anheuser-Busch, Best Buy, Harley Davidson and Verizon all have one thing in common. These companies have all used buyout packages and early retirement plans to cut costs, reduce painful layoffs and adapt to an ever changing business environment. Early retirement programs and company buyouts offer a number of important benefits, both for workers and for their employers.
One of the biggest reasons companies use early retirement programs is to cut costs. Workers with decades on the job are likely to be making a higher salary than the younger workers who will replace them. Writing in the “Syracuse Post Standard,” Charley Hannagan detailed plans by beer giant Anheuser-Busch to offer buyouts to union workers. The company hopes to use these buyout packages to replace expensive long-time union workers with less costly non-union workers in the future. For the near term, the cutbacks and buyout packages are designed to address overstaffing issues at the affected plant.
Voluntary retirement packages are an excellent alternative to mass firings and involuntary layoffs. Mass layoffs are always hard, and no manager likes to fire competent workers. By offering long-time workers a generous early retirement package, companies can avoid those painful cutbacks and give workers who were contemplating retirement anyway the opportunity to move on to the next chapter in their lives.
Companies that lay off a lot of workers involuntarily, often find that they have morale problems with the workers who are left. The employees who survive one round of layoffs often fear that another round might be on the way. By offering voluntary retirement packages instead of simply firing workers or laying them off, companies can avoid some of these morale problems. When the remaining workers see that departing workers are treated fairly, they might be more willing to stick around, rather than looking for jobs elsewhere. When Best Buy decided to offer buyout packages to its corporate workforce, worker morale was one of the reasons cited for the decision. According to Best Buy, giving those workers a choice in their future was a better solution than simply laying off loyal employees.