The looming labor shortage: why aren't you worried?
By Elaine Varelas, 3/5/2007
Industry experts are painting a grim picture for American businesses in the years after the baby boomers start to retire. Some say companies will experience a labor shortage unlike anything in history, while others speculate commerce and industry will crash, because there won't be enough workers to sustain our nation's growing businesses. These dire warnings remind me of the uproar over global warming. Supposedly, it is imminent and we're all going to suffer, but if it's not hurting us now, should we worry?
Statistics show there is reason to worry. Currently, baby boomers make up approximately one-third of our workforce. Each year, they are edging ever closer to the traditional retirement age of 65. The first boomers will reach this milestone birthday in 2010, just four short years away. In the next decade, tens of millions of baby boomers are poised to retire.
How can human resources managers plan for this mass exodus? It isn't too late for organizations to prepare for the boomers' departure, but HR mangers need to develop a strategy now to ensure that their companies aren't blindsided by the pending labor shortage.
There are two main issues associated with baby boomers retiring that HR managers need to address: 1) capturing the intellectual capital the baby boomers possess, and 2) recruiting and retaining qualified employees.
When the boomers retire, will all of their know-how, relationships, wisdom, and expertise walk out the door with them? With planning, companies can make sure that the boomers' experience and knowledge can be passed down to future generations.
The first step HR managers should take is to assess the organization's demographics. How many employees will reach retirement age in the next five to ten years? Which of these employees can be identified as "key?" Which employees, if lost, put the organization at risk? Is there a group of employees in this population which will prove most difficult to replace?
HR managers need to connect with these employees to become aware of their plans. These conversations may be tricky because there can be legal implications associated with requesting that people divulge their plans. It also can be intimidating for employees to speak about retirement with managers. They may fear they will be "phased out" sooner than they had hoped if company leadership knows they want to "retire," or cut back on hours or assignments. Employees may be more willing to share if management lets them know that the information won't be used to oust them, but rather to continue to capture the value they bring on a daily basis. It is important to create a trusting environment for employees to discuss this information in the planning stages, and not as a fait accompli. Initiating these conversations 12 to 18 months in advance allows both sides to plan for a successful transition.
If employees do plan to leave the company, or even cut back on their work hours, HR managers need strategies in place to facilitate the transfer of knowledge to other employees. Formal mentoring and shadowing programs are effective approaches for this transfer. By pairing long-term workers with more junior staff, organizations can encourage boomers to share their experience and skills, and protect the intellectual capital that makes organizations successful.
According to AARP, approximately 70% of baby boomers plan to work for pay after retirement. But these workers will look much different than the pre-retirement workaholic employee. After years of devoting a majority of their time to their work, boomers want a life! Many are looking for part-time schedules so they can pursue other interests: traveling, taking classes, volunteering, spending time with family, gardening, or golfing. Regardless of the reason, boomers want to spend less time at work, yet work has great need for their talent.
Companies that are willing to redefine what a workday, and what work life looks like, will be poised to retain the boomer generation of employees. It only makes sense for organizations to learn how to comply with boomers' requests, hopes, or demands. The next generation of workers doesn't want to work like the boomers did. They are less fanatical about work and aren't willing to sacrifice as much of their personal lives to climb the corporate ladder. This new group of employees is looking for organizations that support a work/life balance. This is a different way of thinking for companies that have always had a traditional 40-hour work week. Will companies change to accommodate their workers and their prospective employees? What will happen if they don't?
Some companies have already begun to respond to employee requests for more flexible schedules, with a focus on outcomes, not face time. They provide "mother's hours" or telecommuting or "virtual" office options for employees. For most organizations, these opportunities are only provided on a case-by-case basis. However, the sheer volume of workers requiring some kind of flexibility warrants that the programs become more formal.
Fortunately, there is still time to develop recruitment and retention methods, and time to test them to see which will be most effective. Organizations that are creative and flexible-and those that allow their managers the autonomy to think and act creatively-will be the most successful. American companies must respond to the needs of the baby boomers, to reap the benefits of them staying in the workforce and set the groundwork to attract and retain the next generation of employees.