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Are Baby Boomers Going to Work Forever? Time to Assess Your Risk…

By Sara Zeff Geber, Ph.D., Retirement Transition and Life Planning Expert, Life Encore

Pencil erasing risk from page.

Ask your employees age 55+ “where do you want to be in five years?”  I’m betting their answer won’t be “right here, boss!”  Are you prepared for the exodus of your older leaders and key, long-term employees?  If not, you could be in for a truly rough ride when it comes to preserving internal knowledge, key skills, and critical customer relationships in the next decade.

The warning bells about the impending retirement wave were first sounded in the early 2000s.  Most companies did nothing and left themselves open to tremendous risk.  But they got lucky!  They were saved by the great recession.  Baby boomers (those born between 1946 and 1964) were trapped by their diminished investment holdings and too scared to take the early retirement they had banked on. 

Boom times again

Fast-forward to 2015, and once again the warning signs are there.
• One baby boomer reaches the age of 65 every seven seconds – that’s 10,000 per day.
• It will be the largest drop in available talent in the history of the U.S. 
The economy has recovered in most industry sectors, and if you think anyone over 55 is NOT thinking about leaving – for retirement or for a new and different lifestyle – you better guess again! 

How big is this problem?

Baby Boomer retirement statistics graph.

Unfortunately, many organizations still have their head in the sand about this impending sea change.  In 2012, the Society for Human Resource Management (SHRM) and AARP conducted a joint study on workforce planning.  Here are a few of their key findings:

• Less then 30% of organizations have analyzed the impact of losing their age 50+ workers
• Only 25% of organizations indicated a modicum of awareness of the “brain drain” issue
• Around 40% indicated a belief that their organizations and their industries are at risk and are beginning to look at changes they could make to stem the tide of the knowledge exodus

The last statistic is encouraging because awareness is starting to rise.  More companies today are waking up to the threat.  Many of the more progressive organizations are taking steps to better understand how the threat might affect them and are beginning to launch initiatives to avert it.  

Meeting the challenge of turning over your company’s operation to the next generation is going to require a two-pronged effort:  1) Educating and training the Gen X and millennial generations so they are ready to lead and function in key capacities, and 2) enticing the Boomers to stay around long enough to mentor and coach those in the wings. 

What’s at risk?  Invisible institutional knowledge

Is your organization a ‘great place to work?’  If so, you surely have long-time, dedicated and loyal employees who have been there for many years – maybe decades.  In their heads is a tremendous storehouse of tacit institutional knowledge that is critical to the smooth running of your operation.  Can you see it?  No.  It’s invisible, but it is active every day those employees come to work. 

According to Leonard, Swap and Barton, the Harvard-based authors of the 2014 book, Critical Knowledge Transfer, the most profound losses to institutional knowledge occur in four key areas:

  • Relationships – not just the list of key contacts, the knowledge of who to call when and for what
  • Reputation – the reputation of any company is built on people – key relationships (with customers and suppliers) that are supportive and where the trust goes both ways
  • Re-work – as valuable as “fresh” thinking can be, but the learning curve for a junior employee to understand product lines, critical processes, informal norms, and ways to get things done can be years
  • Regeneration – As revolutionary as your next product may be, the wisdom behind what it took to launch the previous generation of that product is invaluable

To get a picture of how these Four Rs work in the real world, consider the following two situations:

Selena is 58.  She started working at Carlton, a large container manufacturer in the Midwest, when she was 35.  She started as a data entry clerk and worked her way up to the role of an IT manager.  She understands the interests and capabilities of the 26 people in her organization, either directly or through the lower level supervisors that report to her.

About 15 years ago, she got very interested in the new technologies that were making the work of her department much easier.  Now she has witnessed the evolution of technology in her area and knows why each new application was introduced, what it replaced, and why it was necessary to keep Carlton competitive.  In fact, Selena did most of the research to find the best technology application for their systems.  Over the years she has built high-trust relationships with the suppliers of these technologies and is on a first-name basis with the key reps. 

Outside of her Carlton job, Selena has been supporting a local animal welfare non-profit for the last 12 years.  She is passionate about their mission and has been looking forward to a time when she can dedicate her energy and the skills she has built to this worthy organization. 

Abe at 62 is a director at Pro-Vest, a mid-size investment firm in the Boston area.  Abe has been with Pro-Vest since it was launched – just before the financial meltdown in 1989.  Many investment firms didn’t survive that downturn, but Abe’s company did.  Abe worked hard as a junior analyst in those days and has great admiration for the fortitude and know-how of the partners who started the business.   The founders have been retired now for about 15 years, but before they left, they made sure Abe and his generation of managers had the knowledge and tools to carry on after their departure.   During his 25 years with the firm, Abe has thoroughly assimilated the culture the founders built.   Abe and his colleagues at Pro-Vest have hired some bright young people in a variety of positions, many of them during the last five years.  He hopes they too will adopt the work ethic and cultural norms he so deeply believes in. 

Abe now has grandkids but they don’t live nearby.  His son’s family has settled in the southeast and those warmer climes are looking more and more attractive to Abe and his wife.  

If Abe and Selena were your long-term employees, what would you lose when they retire? If we refer back to the four “Rs,” it is fairly evident that there would be big losses in all four areas.   Would you be ready for them to retire?  Do you think you could persuade them to stay longer when they announce their retirement plans?  What would you need to do to get ready for those departures? 

Forward-looking companies are figuring out that the way to achieve a win-win – for the organization and for employees like Abe and Selena – is to develop both knowledge transfer programs and flexible work arrangements for older employees that could best be described as “Phased Retirement.”  This term could describe any program or policy that gives retirement-ready employees to opportunity to make some changes in the way they work – for some period of time – before actually leaving for good.  In order to do this effectively, you have to understand what these older employees want.

What do older employees want?

The short answer is “more flexibility in their work.”  Almost without exception, when I ask older workers what would keep them on the job longer, they tell me they would like the opportunity to work fewer hours and do creative work.  That might translate to any of the following opportunities:

  • Shorter workweek (3-4 days)
  • Shorter workdays (5-6 hours)
  • Yearly sabbatical (month off each year)
  • Shorter work-year (9-10 months instead of 12)
  • Work from alternative locations.   Telecommute from home or seasonal transfer to another facility (working in another area of the country for part of the year)
  • A job with modified responsibilities
  • Working on a project-by-project basis
  • Leave the workforce and return as a consultant or contractor, independently or through an employee leasing service of some kind

For pending retirees, these options will differ, based on the individual’s needs.  In Abe’s case, it may be an opportunity to spend time with his grandkids.  Depending on the needs of Abe’s company, they might offer him the opportunity to work from an alternative location for one week per month or take a one-month sabbatical once or twice a year.

Selena may want a shorter workweek, giving her more time to get involved with the non-profit in a meaningful way.  Most older workers don’t want to abruptly and totally stop working; they just want the ability to slow down the pace and/or the time commitment, make a worthwhile contribution and not be bored. 

In the AARP study mentioned above, 78% of older workers reported that the availability of some kind of phased retirement plan would encourage them to work past their expected retirement age.

Read Part 2 for an explanation of Phased Retirement, how it can work, and some examples of how companies have successfully used it in combination with knowledge transfer strategies.

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