Preparing for the Wave of Retiring Baby Boomers

Businesses are just now beginning to contend with the loss of an entire generation from the workforce. Baby boomers today range in age from mid 50s into their 70s; an average of 10,000 baby boomers turn 65 every day, according to the AARP.

Some industries, such as manufacturing, are already being hit hard by the loss of this portion of the workforce. For example, after Hurricane Katrina, basically every retirement age employee at Virginia-based shipbuilder Huntington Ingalls Industries retired.

According to Industry Week, that left the organization with a workforce where 72% of workers had less than 15 years of experience. Only 4% had more than 25 years of experience. “So now the already-bad demographic issue we were facing got accelerated on us. We thought we were going to have more time to deal with it, but Katrina accelerated it,” says Bill Ermatinger, Corporate Vice President and Chief Human Resources Officer at Huntington Ingalls.

As Industry Week reports, “Suddenly, knowledge management became crucial to the company’s continued success.”

Indeed, preparing for baby boomers retiring is effectively a form of succession planning. The foundational step is to open communications between employer and employees. Often, employers don’t necessarily know what employees are planning to do, and that creates unpredictability. “There’s some pretty significant disconnects, gaps in knowledge between what the employers think and what the employees think” when it comes to retirement planning, says Alan Glickstein, a managing director at Willis Towers Watson, a risk-management and insurance brokerage company.

Next, organizations need to deploy new strategies to deal with the situation. For example, employers can implement flexible-retirement plans that allow workers to ease into retirement by reducing hours over time. According to the AARP, nearly half (42%) of baby boomers would prefer to phase into retirement rather than treat it as an all-or-nothing proposition. Such an approach would also facilitate the ability of employers to better handle succession planning and knowledge transfer.

Regardless of specific strategy or approach, the key is to ensure company-specific knowledge that may be difficult or impossible to replace is retained. Promoting internally and focusing on employee retention can help; it does no good to prepare for succession by sharing knowledge from an older worker to a younger worker, if the younger worker just leaves after the older worker retires.

“At the end of the day,” says Ermatinger, “it’s about enhancing the skills that will prepare you for the future. We have a particular focus on accelerating leadership skills to make sure we’ve got that next generation of leaders prepared as we begin to lose our more seasoned people.”

CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.