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.
In many ways, it’s symbolic that Generation Z is named after the last letter in the alphabet because their arrival marks the end of clearly defined roles, traditions, and experiences. After all, Gen Z is coming of age on the heels of what has been referred to as the most disruptive decade of the last century. America has become an increasingly changing and complex place.
Members of this generation have undoubtedly been shaped by crisis and disruption. This generation will largely be responsible for confronting the aftermath of the Great Recession, high youth unemployment, the effects of climate change, terrorism, energy sustainability, and more. These dark events have undoubtedly made this generation more cautious and pragmatic, but they have also provided this generation with the inspiration to change the world – and their grit will likely allow them to do it.
Coming of age during disruption means that most Zs will be comfortable being the disruptors. While Millennials tend to be collaborative and innovative, this generation tends to be sincere, reflective, thick-skinned, and self-directed, and will likely approach work in much the same way.
In the era following World War II, Boomers (1946-1964) were born and eventually became the wealthiest, most prosperous generation in history. Raised to aspire for the American Dream, this very large generation moved into positions of power and influence, and served as the workforce majority for 34 years.
With the American Dream alive and well, Boomers had no reason to teach their children, mostly Millennials, about competition. Instead, they taught them to focus on academic achievement and to be team players because if everyone works hard, everyone can win.
Enter Generation X (1965-1981). In contrast Boomers, Xers came of age during a time when change and economic and political uncertainty began to take root. They have lived through four recessions, struggled with debt and economic decline most of their lives, and watched the best educated and accomplished generation of all time (Millennials) graduate during the Great Recession and become the most debt-ridden generation in history.
Gen Xers can be defined by their independence and anti-status quo approach to life, and they have taught their Gen Z children to be competitive, believing only the best can win. They have encouraged their children to be realists, finding something they are good at and aggressively pursuing it.
Xers have raised their Zs with an intense focus on competitiveness -- in academics, sports, and other activities. This approach to parenting has many implications, but one stands out in terms of business: Gen Z is likely to lead.
Millennials in the workplace created and aggressively advocated for collaborative work environments. In fact, their aversion to leadership has been so strong, some Millennials sought out companies that boasted boss-free or team-managed workplaces.
In contrast, Zs have been raised with an individualistic, realistic, and competitive nature. They have been taught the skills to successfully defy the norm. This means we’re going to see the pendulum shift away from collaborative workplaces towards a widespread demand for, and pursuit of, leadership development.
While Millennials have been criticized for their “delayed adulthood”, Gen Z is showing signs of “early adulthood”. Educators and parents often describe this generation as being more serious and contemplative about the world. Zs are thinking about their career paths and exposing themselves to career training at an earlier age than Millennials. It’s probable that some of this early onset of adulthood is caused by parents, who are pressuring their children to be competitive and successful and to avoid the debt that plagued both the Gen Xers and Millennials.
The numbers from our global research found 46% of Gen Z said they know what career to pursue and 51% have taken a class at school focused on their career interests. Forty percent joined an extracurricular program (team, club) based on their career interests.
Zs have been shaped by the aftermath of the Great Recession. They watched Millennials become debt-ridden and are concerned about falling into the same trap. XYZ University’s survey results show 66% of Zs said financial stability is more important than doing work they enjoy, which is the exact opposite of Millennial survey results. Also, 71% of survey-takers have a paying job.
When presented a list of leadership traits, Zs ranked positive and trustworthy the highest. While Millennials and Gen Zs both value trust in a leader, Millennials usually cite collaboration and vision as most important. In other words, Millennials focus on the outcomes leaders inspire, whereas Zs are more likely to consider leaders’ attitudes and personalities. To Z, what leaders encourage others to do isn’t as valuable as how they make them feel.
Both Millennials and Gen Zs place a very high value on feeling challenged and appreciated in the workplace. However, according to our survey results Millennials rank appreciation slightly higher than challenge, whereas Zs rank feeling challenged slightly higher than appreciation.
Time will tell how Zs go down in history, but we know this generation’s influence on history will be unlike any other.
Does your organization have what it takes to engage the next generation? Take this quiz to find out.
Sarah Sladek is CEO of XYZ University. Our generational intelligence can assist you with engaging and retaining young talent and members.
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