An article published in today’s Pioneer Press reports that, despite beliefs that the current economy has prolonged retirements, Baby Boomers are indeed retiring. Based on Social Security data and projected population growth, the state demographer’s office projects 59,000 retirements this year, 62,000 next year, and then increases each year throughout the decade.
“The 2010s will…be a decade of great transition,” according to “The Long Run Has Become the Short Run,” a report from the Minnesota State Demographic Center. “Retirements will increase sharply through 2013,” the report adds. In the current decade, nearly as many people in Minnesota and the U.S. will turn 65 as in the previous four decades combined.
I’ve had the opportunity to chat at length with our state demographer, Tom Gillespy, and we both agreed that most employers remain in denial about the approaching shift in human capital. As both of us go about our work researching and presenting on the topic, we find that business leaders cling to the hope that the Boomers will prolong their retirements, younger generations will somehow morph into Boomers, and generational differences and talent gaps will just disappear.
Herein lies the problem: most business executives are Baby Boomers themselves. Always dubbed the ‘me-generation’, some of those self-centered tendencies are popping up now, as they worry endlessly about whether or not Boomers will retire and when and if they can continue on as consultants and board members and linger in power a little longer.
The fact is, the business world needs to worry a whole lot less about the Boomers leaving (because they will) and worry a whole lot more about whether they can keep Generation X and if they’re prepared for the arrival of Generation Y.
While the economy has kept some people in the job market longer than they anticipated, factoring that dynamic into retirement assumptions doesn’t have much of an effect on the anticipated waves of older workers who are expected to retire. In other words, we can’t stop people from aging. All the data still points to the largest shift in human capital in history.
Increasingly, a larger share of employment nationally will be made up of those “replacement” jobs, ones created by people retiring or leaving the workforce, rather than new job growth. (In the 2009-2019 projections by the Minnesota Department of Employment and Economic Development, 70 percent of the jobs will be from replacements as the Boomers retire.)
Here’s why employers should be more concerned about who’s moving in, rather than who’s moving out.
With almost every company expecting to lose a portion of their employee base through retirements, competition among employers is likely to heat up, making talented, and therefore desirable, workers more difficult to recruit and retain and more expensive due to the increased need for their skills.
Also, a key side effect to the Boomer reason is the loss of the knowledge, skills and abilities — collectively known as KSAs. After having been entrenched in the workforce for decades, Boomers often occupy positions that require a high level of technical expertise, business acumen or, at the very least, industry experience.
As Generations X and Y — the ‘replacement workers’ — move into the positions vacated by the Boomers, the odds that these new workers will be able to function at the same level as their experienced and knowledgeable predecessors are very low, and succession planning therefore becomes a critical concern.
This KSA vacuum plays into another business concern: lost experience. Even if a recent college graduate can demonstrate the technical or business skills necessary for a position, how can businesses replace the savvy, historical perspective of their former employees?
The answer is that they cannot. Some experience can be passed on with mentoring programs and other succession planning efforts, but most companies fail to see that as an option or make meager attempts to implement such programs. That’s because most companies remain immobilized by fear–the fear of what they will lose or have to change.
Dear business executive, there is only one certainty in this world and that is change. Rather than fear the future and focus on loss, think about the new opportunities that lie ahead and what you have to gain. Prepare for the infusion of new knowledge and new skills that the next generations have to offer.
Time is running out. The Boomers are retiring and without Generations X and Y, your company doesn’t have a future.
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