Mandatory Retirement Age – Is it right for your firm?
It may come as a surprise that many firms do not mandate retirement ages for their firm partners. Why? First, there are internal struggles with some partners not wanting to leave combined with the need for some partners to stay no matter what their age is. If a partner has a unique skillset, they may be challenging to replace. Second, there is a big concern from the Equal Employment Opportunity Commission that mandatory retirement ages violate the Age Discrimination policy.
Firms become stagnant when older partners want to continue working past an age associated with retirement. Growth cannot occur if younger generations do not visualize an end place or goal within the firm. If emerging leadership must wait too long for their role to develop, they tire of trying to succeed and move on to a more forward-thinking firm, resulting in recruiting trouble and retaining current staff. Every industry needs to consider how they “build their bench” and have a succession plan for when partners do retire or the unexpected happens. Even if the plan is to sell the firm, a buyer needs a bench, or they will walk away or heavily discount the firms value. Most importantly, communicate that plan to younger staff and include them in strategic decision-making.
Begin with the End Vision in Sight
Ultimately, it is the partners decision to create such a policy. Some say no, others say yes, and some have a loose policy. Partner groups should start with defining the vision of the firm and determine what is the best course of action. Both steps protect the firm at the same time. A retiring partner does not necessarily stop working for the firm if they wish to continue, but it should be at the direction of the remaining partnership and not by the partner retiring. Retiring partners often stay on as a part-time consultant, or director for the firm.
Generally, age becomes an issue because older partners have other priorities, bill less hours, experience mental fatigue, etc. Instituting a mandatory retirement age attracts younger members with new ideas, clients, and technical skills.
The Next Step
Lifecycle transitions are an emotional event. Consider exploring options with not only your partner group, but also legal professionals to ensure it will not violate the age discrimination laws. Create a roadmap to begin the conversation. Carefully detail the client transition process and manage clients to protect retention. Most importantly, clearly communicate to everyone in the firm to preserve employee morale and assist in a smooth transition.