Strategic planning

Strategic Planning

Plugging the

BOOMER DRAIN
Can your organization stay afloat during the talent crisis? Here are challenges and solutions to consider as bahy hoomers jump ship.
By Jean M. Pliillips, Mary Pomerantz aiid Stanley M. Giilly

y 2020, 16 percent of the U.S. population v\nil be age 65 and over, up from 12 percent in 1999. Accordingto the U.S. Bureau of Labor Statistics, 50percent of federal employees and 70 percent of federal senior managers will be eligible to retire by 2010. Yet leaders of many organizations ignore aging workforce issues despite the potential problems they see coming, and some damage seems likely to occui' before the issues receive appropriate attention. We identified three challenges for employers posed by baby boomei-s' imminent retirementeligibihty by drawing from our own research and con54 HR Magazine December 2007

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ducting confidential interviews with 12 vice presidents of human resources and one CEO from a variety of industries last spring. First, organizations can expect to have expert knowledge disappear us highly experienced workers retire. Second, rising heiilth and pension costs—due to aging employees—will increa.se laborcosts, making it difficult to stay competitive in a global marketplace. Third, it will be difficult to maintain head counts in key positions requiring experienced, high-quiUity talent, a challenge to business strategy execution and company performance. >

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A single company may not experience all three challenges in the next decade, but most vAW face at least one—and many experience themnow. Here's a brief look at each problem and some possible solutions.

Fostering Knowledge Transfer

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Wben a key employee leaves, expert knowledge leaves as well. This challenge grows even thornier for companies facing a surge in retirements. It can take years to transfer critical knowledge—developed through years of job performance— from experienced workers to their replacements. StayingCompetitive According to Dorothy Leonard and Walter C. Swap's book When labor costs rise but employee productivity stays the Deep Smarts: Hmv to Cidtwate and Tiurtsfer Evditrin^ Bimn€!i.s same or falls, companies' lower return on investment for workWisdom (Har'ard Btisiness School Press, 2005), it can take up ers reduces their global competitiveness. to 10 years to develop the kind of "deepsmarts" that these Some companies restructure and automate to reduce the highly experienced workers will take with them. need for workers, or relocate work to other countries \vhere In the meantime, losing critical knowledge can hurt the skilled employees receive lower salaries and employers do not pay emploj'ee or retiree health care or legacy pension plans. competitiveness of most businesses. Whileleadership and technical competencies need to Meanwhile, back home, tbe higher financial investment in be transferred, traditional more-experienced, senior workers—namely, their higher pay ways of transferring ex- and benefits eosts, especially for healtb care and defined bene^ Online Resources pertise—including formal fit pensions—may not be offset by higher produclivity levels. As For addKionatinformation ahout the training, on-the-job learn- a result, the return on investment for ex]>eriencecl workers may ifnplication5 of baby boomers' retireing, observation, work pro- be less than that for junior workers. In iuldition, the continuing ment, see the online version of this artigressions and structured health and pension costs of retired oi' otherwise separated cle atwww.5hrrTt.Drg/hrmagazine/ assignments—are not suf- workers decrease the return on investment—profitabil ity'—of 07December for links to: ficient for transferring their replacements. • Hf?M^dz//)earticlesabout the coming labor shortage, millennial workers these t}pes of knowledge. Company leaders must limit their long-term competiH\ e liand retiring workers. Instead, tbis process often abilities and reduce costs,...