A few months ago, I toured a client’s auto parts plant. While on the production floor, the Senior Vice President of Operations and the Plant Manger proudly introduced me to Bob, who runs one of the press machines. “Bob,” the SVP yells over the machinery, “is one of our star employees. He has worked here for…how many years is it now, Bob? 38?” Bob looks up from his machine work and assents with a polite nod, then returns to his task. The Plant Manager chimes in, “We don’t know what we’d do without Bob – he knows more that machine than the machine does!” He offers an appreciative clap on Bob’s back as we walk away. When we take our hardhats and goggles off in the office, I ask about Bob. The Plant manager crows about Bob’s expertise, efficiency, and knowledge. I query, “Bob has been here a long time; how many more years will it be until he retires?” The Plant Manager admits he has no idea, and he would never ask him. I inquire, “Who else knows that much about that machine as Bob?” No one, the Plant manager admits. “So…Bob could retire tomorrow, and no one else knows how to run that machinery even close to as well as he does. What would you do?” The SVP and Plant Manager quickly dispel any concern, stating that there are plenty of talented employees who surely could do the job. Still, I can tell I’ve hit a nerve…what will they do if Bob retires suddenly? Who is trained to do his job? What impact would it have on the effectiveness of the company if there was suddenly no one to run this machine the way Bob has?
While the tale is fictional, it could be told in countless factories, offices, and agencies all over the country. While Congress is embroiled in resolving our national “fiscal cliff,” businesses, nonprofits, and public sector organizations are facing a “cliff” of another sort: the impending retirement of a huge segment of our working population in the next ten years (Baby Boomers), combined with a lack of ready talent in existing and emerging talent pools.
Demographics elucidate the issue: currently, there are 79 million Baby Boomers in the US (aged 48-67). Many have built their careers at one company over many years and they hold significant “brain power” in their organizations. This is particularly true in a few industries (utilities, manufacturing, real estate, healthcare). The pint-sized Generation X (aged 32-47), of which there are only 49 million, is already fully deployed in the workplace. So, who will fill the shoes of the Boomers when they retire? Will the 75 million Millennials (aged 20-31) be ready in the next ten years?
Early statistics say no. Predilections hold that we will have a major talent shortage as we loom toward this cliff, for several reasons, among them:
- Mismatch of capabilities with needed skills. In general, companies report that young professionals lack the type of training and experience required to be successful in many of the jobs that will be vacant by Boomers. This is particularly true in industries like utilities, where it is expected that 50% of employees will retire by 2020, and manufacturing, where 600,000 jobs are expected to be vacant in that same timeframe.
- Lack of interest. Many young people have a desire to work in industries that are “sexy,” such as marketing, real estate development, social media, consulting, etc. When facing the opportunity to either to work as a Shift Manager at a manufacturing plant with lots of career longevity or work for a plucky new internet startup that turns people over every two years, 20- somethings are more likely to pick the latter. After all, nothing is guaranteed so why not do something fun that will make a splash on a resume?
- Growing adoption of “personal CEO” mentality. Many young people are approaching the workforce with an expectation that they will not stay in a job long-term. In fact, 70% of college graduates stay in their first job less than two years. As such, they are more likely to see work as a “job” rather than a “career” than their predecessors, and work to build and diversify their skill sets as quickly as possible before looking for something else.
- Knowledge hoarding. In many companies, veteran employees tend to keep their knowledge to themselves, for fear that if they transmit it to younger workers they will become dispensable. The belief is this knowledge is power as job security and leverage.
- Lack of corporate urgency. During the economic downturn, many companies slashed budgets for training and development in service of keeping costs low. That means for the past four years, many employees have not had the luxury of formal learning to grow their capabilities. In addition, about 33% of companies say they know the talent gap exists but are doing a poor job of addressing it.
The good news here: many Boomers are staying in the workplace well past the age of retirement, so there’s still some time to prevent the “brain drain cliff.” But don’t delay – they will be leaving before you know it. Some critical steps to retain knowledge in the company:
- Conduct critical workforce planning and analysis. Engage in rigorous workforce planning, identifying critical roles for now as well as the future. Dusting off ten-year-old job descriptions won’t cut it – define and quantify roles and responsibilities. This should not be reserved just for executive positions; identify the “linchpin” positions – those roles that have direct and significant impact on achieving financial or operational success – and ensure those roles are well-defined.
- Evaluate/build robust succession planning. The next step is to engage in careful evaluation of your talent pool, to understand readiness for next-level roles. Succession planning and talent review should be a regular part of your organizations’ plan for retaining knowledge and talent. Use the “three-legged stool” of talent identification: Potential x Performance x Preparation.
- Review recruiting strategies. Engage in critical review and revision to your strategies for attracting and selecting great talent. What strategies are you leveraging to meet a changing demographic? What is your company/industry brand image in the marketplace? Are you seeking seasoned talent that may have been displaced during the economic downturn? Robust and regular evaluation is key.
- Maintain continuous focus on knowledge management/knowledge transfer. Steve Trautman, an expert on knowledge transfer, talks about the “secret sauce” of knowledge transfer: going well beyond on-the-job training, it requires accelerating the acquisition of wisdom. OTJ training is one tool, but also consider apprenticeships, internships, “returnships” (internships for experienced individuals have been out of the workplace for some period of time), mentorships, Dynamic Computer-Based Training (DCBT), critical skill review (manager and seasoned employee), instant messaging, wikis, podcasts, and old-fashioned storytelling.
- Keep older workers engaged. By keeping your oldest workers safe, job secure, and in control of their destinies, they are more likely to willingly develop their successors. Deploy flexible approaches to work/family and retirement options. Transfer workers to less physically demanding tasks where necessary. Provide ongoing learning – and teaching –opportunities; they want to continue to learn! Involve your seasoned employees in the selection of a successor. And, create development and “twilight” career plans so they can transition gracefully into their next life chapter.
- Keep younger workers engaged. If you want to buck the “70% turnover in two years” statistic, you must work to grow and develop younger workers from day one. Continually develop their skill sets (deep and broad). Create flexible learning strategies, where they can have input into what and how they learn. Let them select a mentor early on. Leverage a variety of communication styles that will meet their needs, not just yours. Provide regular review and feedback, and ensure seasoned employees treat them with respect.
The brain drain “cliff” is looming. You can equip your organization with a bridge to success by taking action now. Start with a few action steps, keep it simple, involve affected employees, evaluate, and make adjustments along the way. When you find you are successful…Congress may come calling.