Sixty is the new fifty...
And today, "retiree" often means "recruit" as increasing numbers of mature workers retire from one job to start a new career. The aging of the Baby Boom generation (the hundreds of millions of people born between 1946 and 1964) is the single greatest trend that will shape our society during the first quarter of this century.
Companies are starting to feel the pinch. Retaining valuable 50 plus workers has emerged as a top issue as large numbers of baby boomers are just starting to retire. Organizations will lose these people's skills, institutional knowledge, and the intrinsic capital that comes from long-term relationships with customers, partners and vendors.
Even more dire is the loss of leadership since this group, known for its corporate loyalty, is strongly represented in the management ranks of companies—more so than the general population. They are the executives who have led companies through market upheavals, cultural turnarounds, mergers and acquisitions, scandals and successes. The visionaries who could see around the corner to the "next big thing." Who will take their place?
Further complicating the issue is the fact that for many companies, the exact same group of baby boomers represent their largest, most valuable customer set, and they will need qualified employees who reflect and can create a bond with this clientele.
Why is this a crisis now?
Three demographic trends are converging with major ramifications for almost every industry. In addition to the impending retirement of baby boomers, people are living longer due to improved medicine and public healthcare. For example, Canadian women born in 2001 have an average life expectancy of 82, and Canadian men, of 77.
The third trend is that the birthrate is at an historic low; for example, in Canada, it's 1.1 children per family; almost all of the European Union is also below the 2.0 replacement rate. These trends paint a picture of a ballooning population of aging citizens, followed by successive, smaller generations.
How will these demographics impact the workplace?
Companies will start to see their "bench strength" seep away as large numbers of key employees retire. At the same time, they are faced with a shrinking pool of talent to fill these jobs. Fifty-eight percent of HR managers responding to an AARP survey found it harder to find qualified job applicants today than five years ago.1
This is creating a talent crisis for industries and the public sector worldwide. In the U.S. trucking industry, because of a 20,000 driver shortage, turnover in 2005 was 131 percent.2 A Canadian utility cannot fill the more than 450 jobs that it has had open for months. The skills gap is acute in the government, where 60 percent of the current workforce and 90 percent of the executives will be eligible to retire in the next decade.3 Mature industries such as oil and gas, aerospace, manufacturing, healthcare and education are also struggling, with banking, insurance and IT organizations not far behind.
Countdown to 2008
While most companies acknowledge this talent crunch—90 percent of executives responding to a recent survey said they planned some type of retention for senior talent, but only 14 percent said their company had taken any formal steps.4 Businesses are distracted by more immediate issues, such as the new call centre or product launch. The Y2K problem had the advantage of focusing everyone on a single day, while this talent drain seems years away. However, when you consider that any initiatives put into place will require several years to produce results, and the first boomers will reach retirement age in 2008, less than a year and a half away, the time to start is now.
1 "The Business Case for Workers Age 50+", 2005, Towers Perrin for AARP
2 usatoday.com, 5/1/06
3 washingtonpost.com, 5/2/06
4 "Making the Most of your Human Capital", Ernst & Young, 2006
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