Has the long-anticipated retirement tsunami finally started?

Thursday - 4/19/2012, 5:10pm EDT

Michael O'Connell, reporter, Federal News Radio

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Figures released earlier this month by the Office of Personnel Management seem to suggest that the giant wave of baby boomers leaving federal service may be starting to build.

For the first three months of 2012, OPM saw a steady increase in the number of new claims for the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS) over what it had predicted for those months. In March, the most recent month reported, OPM received 7,090 requests, over 2,000 more than what it expected to receive.

These figures followed a year of steadily increasing retirement requests. In 2011, 104,810 retirement applications were filed by federal employees, according to OPM — a 24 percent increase over 2010 levels. Although December is typically the slowest month of the year for retirements, 7,041 requests were filed in December 2011 compared to 4,726 in 2010.

John Palguta, vice president for policy, Partnership for Public Service

"I don't think it quite reaches tsunami stage, but I think that was partly an oversold prediction," said John Palguta, vice president of the Partnership for Public Service. "We're not being swamped with retirements in particular. But, we are seeing that wave of departures increasing and, indeed, in fiscal year 2011, we were at a 10-year high for voluntary retirements in the executive branch."

Palguta said it was unclear which agencies were feeling the brunt of the growing retirements, but some could be more vulnerable than others.

"Some agencies, I think, metaphorically they've been standing on their toes with the water up to their chin and this wave can be tsunami-like for that particular organization and they're stretched thin," he said. "All of a sudden, they're losing some key personnel. For other agencies that have been doing succession planning or happen to be in a better position in terms of their appropriations and so on it's not as big an issue."

Not just baby boomers are leaving

Governmentwide, though, the data seems to suggest a steady stream of departures — and it's not just baby boomers retiring.

"In fiscal year 2011, if you look at just full-time permanent employees, there were close to 35,000 people who quit government," Palguta said. "There were another 9,000 people who were terminated or removed, fired if you will, and over 645 individuals were removed involuntarily due to a reduction of force situation."

According to Jon Desenberg, the senior policy director at the Performance Institute, "the average federal employee retires at about seven years after they're eligible. That's what our research showed. I think we're getting to that point now."

A federal employee's retirement rate is currently based on the average of his three highest salaried years of employment. However, some in Congress have proposed changing that to the highest five years.

One of the indicators of whether the tsunami has arrived, according to Desenberg, is seeing feds figuring out their "high-3" and "high-5" years and coming to the conclusion that it makes the most financial sense to retire now while the current system is still in place.

"That's a major factor and you hear federal employees talk about that constantly," Desenberg said.

Another contributing factor to the increase in retirement requests may be the amount of stress feds are facing these days.

"Mentally the engagement level is taking a hit," Desenberg said. "Everything from the constant beating on Capitol Hill to the lack of salary increases to the increased workload, and some of the intangibles which just lead government to get beat up right and left. That is certainly getting worse and people just don't have the appetite for it anymore, especially people who have the years in that they can leave at any time."

Desenberg has also heard from many federal employees that the expense of living in the Washingon, D.C., region is playing a factor in their decision to leave public service and move elsewhere.

"[Agencies are] having a hard time attracting talent from elsewhere in the country to come to Washington," Desenberg said. "If you live here currently and you're at retirement age, what we're hearing is people saying it's a good time to sell your house and leave the area."

In addition, Desenberg said, the civil service is experiencing a generational shift as more and more baby boomers enter their 60s and 70s.

"I think that the word is 10,000 people are turning 55 every hour now," Desenberg said. "The baby boom is certainly hitting retirement age and that is, by far until recently, the majority of people in government."

Generation gap in government service

When Desenberg, a self-described Generation X'er, was working as a federal employee, he encountered few feds in his age bracket. Most of his colleagues were from the generation born before 1964 — the baby boomers.

"It's not just the retirement tsunami, it's the big gap that exists between the people who are eligible to retire and emerging leaders," he said. For most of the 1990s, the government stopped hiring new people, which has led to a huge generational chasm between retiring leaders and young, up-and-coming federal employees.

Carol Bonosaro, president, Senior Executives Association

"I think that the dam has broken," said Carol Bonosaro, president of the Senior Executives Association. While she doesn't have any specific data regarding members of her organization, she has heard from many senior executives who are retiring. They are choosing to leave because of the negative environment they are encountering now, thanks to things like the ongoing federal pay freeze and threatened cuts to retirement contributions.

The latest slight, according to Bonosaro, is the Stop Trading on Congressional Knowledge Act (STOCK Act), which President Obama signed into law earlier this month.

Among other things, the STOCK Act would make available online the financial dealings of members of Congress, political appointees and senior executives whose base pay is 20 percent more than the base pay of a GS-15 step 1. Although this information was already available via Freedom of Information Act requests, the law makes it accessible on an Office of Government Ethics website. Bonosaro sees this as a possible "final straw" for those senior executives contemplating retirement.

"As one of them put it to me, the STOCK Act put the final nail in the coffin, because they don't want their personal information out there," she said.

How to survive the tsunami

Between the exodus of federal employees and the generational chasm in senior management, the government faces considerable challenges in maintaining its ability to do its job. Desenberg described the chief challenge as "knowledge management," i.e., transferring knowledge from one generation to the next in order to maintain a continuity of service.

He said agencies should figure out who their top people are and determine what the blueprint is for passing on knowledge and expertise. "We can't recreate great people," Desenberg said. "But we can give people the competency and we can try to recruit people and retain people who share the competencies of our best folks."

In talking to the Food and Drug Administration about this issue, Desenberg said he asked the agency to identify its most critical positions and what makes the leaders in those positions so successful.

"Who are your best performers right now, regardless of their age? Who are they? Why are they so good at their job? What makes them so good at their job? Can we interview them? Can we talk to them about what competency or skills they have that enable them to be so good?"

One of the solutions to preserving institutional knowledge that agencies are looking seriously at is phased-retirement. The House Oversight and Government Reform Committee recently passed a bill that would allow federal employees to retire part-time. This would allow seasoned feds to continue working in an effort to pass on information to those employees coming up through the ranks.

"You're going to become a mentor, become a coach," Palguta said, explaining the idea behind the legislation. "Your job in a reduced, phased out retirement mode is to nurture and bring along folks behind you so that when you're fully gone we have people fully capable of filling in behind you."

Another thing Desenberg said agencies should consider is whether replacing someone who leaves is even necessary. He said the retirement tsunami presents agencies with the chance to evaluate the way they do business and whether a vacant position even needs to be filled. Just because something was done a certain way in the past doesn't mean it's the most efficient way to do it in the future.

"This is a chance for us to take the lemons of the tsunami and start to think about the lemonade, which is the re-adaptive, re-shifted workforce, which reflects not what we did over the last 30 years, but maybe what we want to do in the next 30 years," Desenberg said.

Congress is also encouraging agencies to take a long view as they reassess how they get their jobs done.

"If you're continuing to face declining budgets and increasing expectations, either from the public or from Congress, or even the administration, the first thing you can do is say, 'Is there a way for us to achieve these same goals but go about it in a very different fashion?'" said Rep. Chris Van Hollen (D-Md.), in a Federal News Radio interview in February.

"You can call it innovation, you can call it process improvement, you can call it any number of different things," Van Hollen said. "But, the bottom line is, can you, as a leader, find a way to marshal the very best ideas to find new ways of achieving on those very high expectations? After that then ... comes the time to figure out, do we need to prioritize differently?"

Transferring skills and leadership

"It's not just about losing talent, it's about skills and leadership and particularly those skills that involve integration, public policy and the management of institutional behavior," said Michael Kane, chief human capital officer for the Department of Energy.

Energy Department CHCO Mike Kane

"Looking here at Energy, for example, one of the things that we're faced with is we hire a lot of technical talent and we have to take those technical managers and develop acquisition skills, develop program management skills and develop long-term leadership skills," Kane said. "That is going to be one of the areas where we're struggling."

According to Kane, some of the solutions should be obvious to agencies, starting with hiring more people at mid-level.

"You can see the trend where across almost every agency acknowledging that mid-level is important and we need to diversify it," he said. "We need to get it knowledgeable about the better ways of doing business across the government."

One of the things Energy is doing is pushing mid-level people out to take rotations in other agencies, while pulling in people from other agencies to learn from them.

Another solution, according to Kane, is focusing early on to make sure senior executives don't just lead, but lead by teaching what they know. This will help them build a stronger relationship with employees.

"We value the fact that executives have that knowledge and we make it part of their appraisal that they have to pass it on," Kane said. "It's a skill we want them to have. A skill to teach and impart knowledge to those who work for them and with them."

Leaders as Teachers is Energy's program for preserving institutional knowledge. Whether it's technical, acquisition, human relations or program management, leaders have something to teach and the program is Energy's way of preserving institutional knowledge. The approach promotes mentoring as well as communication and engagement. Additionally, it improves teamwork by having employees at different levels working and interacting with each other, Kane said.

Tighter budgets vs. recruitment cuts

As more federal employees retire, it would seem logical that more emphasis would need to be placed on recruiting. But have tighter agency budgets put a damper on recruiting and hiring initiatives? Federal experts say no.

"Ever since we downsized in personnel back in the '90s, a lot of those resources that went toward recruiting went away and they've never come back in many cases," said John Crum, director of the Office of Policy and Evaluation at the Merit Systems Protection Board. He made the comment during a recent panel discussion on Federal News Radio.

"Agencies will always fund the programs that are important to them," said Angie Bailey, OPM's associate director of employee services. "If recruiting is at the top of a particular agency's list, then that agency will choose to maintain funding for recruitment. Effective recruitment does not have to be costly."

"The cost of employee turnover and training is often forgotten in the race to the bottom," said OPM Director John Berry. "We have taken actions — a two year pay freeze, and reductions in benefits, including retirement contributions. It's important to now pause and make sure we aren't hurting recruitment and retention. We need to recognize we don't know where the break points are — we don't know where the edge of the cliff is, so we need to proceed slowly, with great caution."

Desenberg added, tighter budgets are more likely to mean development and training dollars will be cut, not money for recruiting.

"They are easy to cut and don't impact filling positions," he said. "The federal government doesn't actually put that much money into proactively recruiting anyway, most of it is just driven through OPM and the federal jobs website."

In tight budget times, managers may choose the online route as a more economical alternative to traditional recruiting methods such as campus visits, job fairs and professional conferences. That choice, however, has a trade off, according to Palguta.

"Unfortunately, the Partnership has found that while 'high tech' can certainly help on the recruitment front, it doesn't substitute for the 'high touch' aspect of recruitment — face-to-face discussions or in-person group presentations — that can make all the difference in reaching well-qualified individuals, especially those with skills in shortage category areas," Palguta said.

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