This is due to a lack of allocated resources going to the replacement of knowledge at companies across the country. Even though companies devote significant time and money to find replacements for outgoing CEOs and other top officers, they are expending far less resources to groom successors for highly skilled professionals and making sure that invaluable knowledge is passed on to younger workers, according to a Conference Board report.
Supporting this is 66% of the 150 companies polled that do not keep ageprofiles of their workers, 63% that do not maintain inventory banks listingthe firm’s available skills and 49% that do not assess their companies’training and development needs.
“The leading edge of boomers, now in their mid-50s, are beginning to retire,” says Howard Muson, author of the report, “and not enough people are coming along in the much smaller Generation X, now 25 to 38 years old, to replace them. The unprecedented turnover rates in recent years among younger, mid-career employees will further shrink that pool of qualified replacements at many companies. There is a real question as to how many companies are prepared for the retirement tsunami already underway.”
To head off the retirement avalanche, the Conference Board suggests three major strategies companies can implement:
- HR departments must do a better job of planning future HR and skill needs.
- Incentives should be devised to entice the best performers with badly needed skills to delay their retirements until younger people gain the experience to fill their shoes.
- Companies need to improve strategies for capturing valuable technicalexpertise and history before it walks out the door.
For companies looking for a good example, the Conference Board highlights Deere & Company and General Motors as major exceptions to the nationwide trend. Tractor manufacturer Deere & Co. did some rudimentary workforce modeling in the late 1990s and discovered that over the next 10 years it could lose almost two-thirds of its salaried workforce from retirements. In response, the company that had one little hiring for several years, had to step up its recruiting of mid-career employees.
Comparatively, General Motors effectively coordinates its hiring practices with the mix of skills required to fulfill its strategic plan. GM’s Human Resources Planning Group works with the division and business units to analyze the numbers of people and types of expertise each will need. The plan looks out two years and matches each model in the GM product portfolio with the manpower required to make and market it.
Even with the suggestions and example though,Muson suggests ultimately the best strategy is to try and retain the current talent while implementing a replacement strategy. “Persuading seasoned, still-productive workers to extendtheir careers seems to be the best alternative to replacing the large numberswho will be eligible (and financially able) to retire. Since workers insurveys say they’d like to keep working and earning, companies may well beable to get through the crisis with people they already have.”