COLUMN ONE : A Golden Parachute Tarnishes : Many companies have found that incentives for early retirement carry a huge initial cost. Firms often lose employees they can least afford to.

Many middle-aged corporate workers who are bored with their jobs have an enduring fantasy.

It goes like this: Your employer, burdened by excess manpower, decides to cut costs by offering a company-wide early retirement “incentive” program. The company temporarily liberalizes its pension eligibility rules, raises monthly benefits and throws in months of severance pay. You can quit with a full pension at, say, age 52 instead of 62.

Alas, the odds of this prayer being answered are shrinking.

Early retirement incentives, which boomed in the mid-1980s as corporations rushed to slash their staffs, are far less likely to be offered these days. Experience has taught many companies that incentives carry a huge initial cost and often backfire by ridding the company of the people it can least afford to lose--talented, risk-taking workers or managers in their 50s who are willing to pocket their pension, head out the door and find a new job or start their own business.

The proportion of companies willing to use incentives to cut manpower has fallen by about 40% during the last four years, according to annual surveys by the American Management Assn.

Only 20% of more than 1,000 companies surveyed this year said they would consider retirement incentives to cut non-management jobs. About 25% said they would offer incentives to pare more expensive management jobs. The respective percentages in 1987 were 31% and 44%.

Retirement incentives are still popular at some firms, especially those in industries where technological innovation is eliminating jobs. For these companies, incentive programs offer a humane way of “restructuring”--permanently cutting the size of the work force and in the process ridding themselves of older workers, whose salaries and fringe benefits are often considered disproportionately high.

Increasingly, however, American corporations--which permanently eliminated 110,000 positions in the first quarter of 1990 alone--are reverting to old-fashioned layoffs, which carry a harsher public image but a lower price tag.

Reluctance to offer incentives is expected to grow even stronger as the nation edges closer to a recession. In such a climate, businesses become more conservative, shying away from plans that, like retirement incentives, require an immediate investment in order to achieve a long-term savings.

Older workers throughout St. Louis-based McDonnell Douglas Corp. may have been expecting early retirement incentives earlier this year when the ailing aerospace giant began announcing plans to cut thousands of jobs, including many positions at Douglas Aircraft in Long Beach.

After all, several divisions of the corporation had offered incentives three years ago in another work force reduction program.

The trouble was, more people than anticipated signed up for the 1987 offer. And in some cases, from the company’s standpoint, they were the wrong ones.

“We didn’t have any control over the critical skill mix,” spokeswoman Barbara Anderson said.

That’s why the 17,000 jobs McDonnell Douglas is eliminating this year are being cut through layoffs.

Such thinking may be for the best, some analysts say, because in many ways the notion of early retirement incentives has simply not worked.

The proportion of workers willing to accept early retirement has never been high. Nearly two-thirds of all employees who are offered incentives reject them, unable to get by on less than their full-time paycheck.

While some managers and workers are satisfied with the offers they receive, a growing number are finding they amount to little more than a year’s severance pay--a gilded shove instead of a golden handshake.

Few workers are able to truly “retire” on what they receive, said Dan Lacey, a consultant who specializes in layoff trends.

“Most of what we’re seeing is euphemisms,” Lacey said. “What the company really is saying usually is: ‘Would you like to jump or be pushed?’ You’re in a bind. You’re 52. The company says, ‘Look, we’ll give you this little extra plum.’ You know you’re not retiring. You’re taking the lesser of two traumatic possibilities. The company is giving you a year’s severance pay. I personally would not like to see people believing that early retirement programs constitute a lot of people on the golf course.”

For employees, confronting such offers can be a stressful experience.

“It’s like a truck rushing right at you,” said Jack Walton, an American Telephone & Telegraph Co. communications technician who retired at age 50 earlier this year after AT&T; created a relatively generous early-retirement plan aimed at cutting 12,000 jobs.

Like many people who came of age in the 1940s and ‘50s, Walton had signed on young with a corporation and wound up staying there all his adult life. There was an implied contract in those days, a sense of loyalty. You expected to quit on your own terms.

“I wasn’t ready to quit economically,” Walton said, “and I also wasn’t ready because I grew up during a time when, if you didn’t have a job, you were a bum.”

Workers faced with such a choice are forced to pick up pencils and pads and calculate what to do with the rest of their lives. Should they quit and flat-out retire? Quit and find another job, often a perilous thought to people in their 50s? Bypass the offer and risk being laid off later?

Corporate planners, meanwhile, throw the dice every time they make such an offer.

To avoid charges of age discrimination against older workers, early-retirement incentives cannot be offered selectively. The same offer must be made to the entire company or corporate division. It is here, many personnel consultants say, that a painful reality enters: You tend to lose the people you want to keep and keep the people you want to lose.

“If you have a very talented person and you’re going to give him a rich incentive, he’s the person who’ll accept it. He’ll go somewhere else, work another 10 years and keep the full pension he received from you,” said Chuck Longiotti, who designs early-retirement plans for Hewitt Associates, a personnel consulting firm.

Consider Carl Gromacki.

At 52, Gromacki had worked 30 years at the USS-Posco Industries steel plant in Pittsburg, Calif. He had worked his way up to division manager and knew every crevice of the plant. He still loved his job too. He wanted to work at least four or five more years.

Last November, his company, desperate to cut costs, made an early-retirement offer. Gromacki, whose wife still works, added things up. He had the option of taking all pension and bonuses as a lump sum of $300,000. By investing it, he’d be set.

By June he was gone. This month he’ll be in Indonesia. A division of his old company has offered him a six-month consulting job at a steel plant there, paying 30% more than he made in Pittsburg.

Stories abound of corporations in which employees “oversubscribed” to early-retirement offers, forcing the companies to hire them back as consultants--paying pension benefits all the while.

Atlantic Richfield Co. was forced several years ago to hire 1,500 new employees “to replace skills we would rather not have lost,” one executive said.

Digital Equipment Corp. announced last month that it was narrowing the terms of a new early-retirement incentive designed to cut 6,000 employees from its worldwide payroll because a previous program that offered up to two years pay for employees with 20 years was “oversubscribed.”

While encouraging older workers to quit allows talented younger employees a chance to rise faster, some analysts believe early-retirement incentive programs cause harm by weakening employee loyalty among workers of all ages.

“It’s a way of signaling to people that nothing is forever and that they just may not always want to think of themselves as identified with this one firm,” says Paul Hirsch, a management professor at Northwestern University. “The new culture is to keep your nose clean and your bags packed.”

Some senior citizen groups have criticized the programs as an unethical way of getting around federal age-discrimination laws. They say the programs epitomize a general business bias against workers over 50.

Increasingly, analysts say retirement incentives can be more costly than anticipated.

Heavy pension and retiree health-care tabs make it 34% costlier to retire workers 55 or older than to lay off ones from 40 to 54, according to a recent study by the National Foundation for Occupational and Environmental Health Research. Buy-out bonuses are often simply too big to be offset by lowered wage costs.

A wave of early retirement in the 1980s is partially responsible for pushing the average age of retirement in the United States to 61, compared to 65 during most of the post-war era. By the year 2000, only one in four men 60 and older will be working, according to government estimates.

AT&T;’s program, undertaken last spring, was an effort to cut 12,000 jobs from its 135,000 nonmangement work force. The program instantly doubled the number of employees eligible for immediate retirement to 34,000.

In making his decision to accept the retirement offer, Walton, the AT&T; technician, recognized the odds. He, like many people who are confronted by the offers, knew that his company was being shaken up and that he could not necessarily stay where he was. His job in AT&T;’s long distance-circuit monitoring facility in San Bernardino was being moved to Denver or Atlanta as part of a major corporate reorganization. He had enough seniority to “bump” someone else to stay in Southern California, but the job might be in Blythe.

“Most of the people who are going to be taking it, even if they don’t like it, are taking it because they feel they don’t have much of an option,” Walton said in an interview before the June deadline arrived.

He spent weeks trying to make up his mind. He did some calculating. He figured that if he worked for the next two years he’d make only about $6,000 more than if he quit now and took the pension and severance pay.

“It’s hard to accept it, to decide it, and to do it,” he said. “I’m divorced, my children are on their own.” How hard would it be to find another job? What would he do with all that freedom? Suppose he fell on hard times? “I don’t want to be a burden on my children.”

It was not supposed to happen this way.

“When I hired on with this company,” Walton said, “they said we don’t pay the most but we never lay anyone off, our benefits are good and our retirement is good, and as long as you want a job you’ll have it. This was not a contract, it was a way of selling the job. A 40-year man with the company then was not an exaggeration.”

However, ever since a federal court ordered the divestiture of AT&T; in 1984, the corporation has been slashing its work force to adjust to technological advances and compete with new long-distance carriers.

Lessons have been learned.

“Now, if you talk to mid-level managers, they’ll tell you to plan on a career in this industry but not a job or a career with this company for life,” Walton said. “Plan on changing jobs three or four times.”