They say age is just a number, but when it comes to workforce trends, it’s a number we’ve got to start paying attention to. The current labour force is ageing, with 34% of today’s workers quickly approaching retirement age. As they leave the workforce, they’ll take decades of experience and expertise with them. It’s how business owners and managers respond to this shift that will determine their business’ future success.
Born 1945-1964 Baby Boomers are our biggest demographic. They makeup over a third of our current workforce and hold the majority of senior roles throughout the country. While as individuals, their retirement might be celebrated, it’s the effects of mass retirement that stand to impact businesses. As these people leave the workforce en masse, they create gaps in expertise and intellectual property that can hobble business productivity.
Prepare For Productivity Loss
Traditionally, a retiring Baby Boomer would leave a 90 day productivity loss in their wake. This is the average time it takes an equally experienced replacement to get up to speed in their new role. However, as more Boomers leave the workforce and fewer remain in the job market, businesses are forced to look towards capable, yet less experienced, workers from Generation X. This results in further productivity losses, of around 120 days, as these new hires extend themselves into more senior roles.
Businesses who promote from within can reduce the top level productivity loss, by replacing a retiree with someone who already knows the business. Unfortunately, they’re then faced with losses down the chain, as more people step up to fill vacant roles.
Incoming Hires Won’t Have Boomer IP
The rapid loss of Baby Boomers also means a rapid loss of intellectual property. Most Boomers have been in their business, or the very least their industry, for a number of years, meaning they’ve had time to build unwritten understandings of the best ways to get things done. They know how to get around red tape, can better anticipate and overcome potential challenges and know the right people to go to to get things done. This knowledge takes time to build, and contributes to an ability to be productive. If this knowledge is not passed on, productivity won’t fully recover, until the replacement has had the several years required to accrue the same knowledge themselves.
Another challenge is the ageing of the managers that would normally address workforce trends such as this. While senior management might draft and roll out a plan to address, say, a spike in absenteeism, it is these same managers that are vacating roles for retirement. The most successful businesses will be those that can train younger managers to oversee and coordinate a response to widespread retirement.
How Can Businesses Brace Themselves For Boomer Retirement?
The ability to recognise such trends, and others that affect the workforce, allows businesses to plan the appropriate response, and often, leverage opportunities that such trends present. Instead of watching Boomers retire and take their knowledge and expertise with them, businesses have the opportunity to build a more effective and experienced Generations X and Y.
By setting up mentorships, businesses allow boomers to handover the knowledge younger generations need while preparing for them for a smoother transition into retirement. More progressive businesses can even experiment with flexible working arrangements to stem the flow of exiting Boomers. Such arrangements allow Boomers to ease off their full-time roles while still remaining active in the business, while the business continues to benefit from their experience without the burden of a full-time wage.
The ageing and retirement of Baby Boomers is not a trend that can be stopped. Most businesses will feel impacts to their productivity as their senior staff retire. It’s how businesses respond to this trend and the others that affect their workforce that will determine their continued success.