In recent reports from the U.S. Census Bureau, it is amazing to note that the number of persons 65+ years of age will actually double from 2000 (35 million) to 2030 (72.1 million). Although we often talk about the large retirement figures, workforce planning and succession planning – seldom do we hear companies discuss other issues associated with the mass exodus of two large generations from our workforce. The Baby Boomers (1946-1964) and the Traditionalists/Veterans (born before 1946) are ready to march out the door and little is being done to stop them.
A SHRM/AARP joint study reported that the potential impact on companies is very significant because 10,000 people turn 65 years of age daily. HR professionals reported this impending brain drain is a significant issue (72%) yet only 5% of these companies have addressed these issues with strategies and programs. The greatest basic skills gap between the older and younger worker as reported (51%) in this study was the lack of writing in English (grammar, spelling, etc.) The greatest applied skills gap in favor of the older worker over the younger worker was the professionalism and work ethic.
As the older workers and baby boomers retire, meeting the needs of the organization has become a costly requirement. Since it is difficult to find many hard-to-fill position candidates, companies end up hiring the retiree back on a contract basis for additional dollars. Thus, the retirees are becoming a prime candidate pool for contract workers in some industries like IT and engineering.
In one survey conducted by Baby Boomer Knowledge Center, some interesting figures were noted about the concern of the “knowledge drain” when the economy completely rebounds and the retirements hit. Seventy-four percent of the companies surveyed voiced strong concern about this brain drain and 62% felt there would be a negative impact on productivity of their organization when these retirements occurred. Workforce culture was also noted by 43% of the respondents as facing a decline when the baby boomers retire.
While 42 is the median age of the U.S. workforce, a recent study by Harris Interactive for CareerBuilder of workers over 60 reported 57% of them planned to look for another job once they retire and 11% felt they would never be able to fully retire. In addition, 49% of those surveyed planned to retire from their current position within four years. A recent MetLife study reported that boomers that are still working now do plan to retire by age 68.5 and 63% are already receiving Social Security, earlier than they had originally planned.
The top reason that people retire earlier than expected (37%) is due to health reasons followed by loss of job/opportunities (16%). Those that retire later than expected do so because they still need the salary (27%) or they enjoy working and want to stay active (13%) or need additional dollars in their savings (11%).
A study by Hewitt Associates indicated that many companies (61%) either have phased retirement programs in place or are considering them. Almost half (47%) already have some type of program available with an additional 40% expressing interest in such strategies. Plans to be able to transfer knowledge from the very experienced to the lesser experienced will be key in continued success of companies in the future.
Some practices currently in place or being developed in U.S. companies include:
- Allowing retirees with a certain number of years with the company to work part-time and be eligible for health benefits
- Allowing retirees that have pensions with a company to work some hours each month and still receive their pension
- Using the retiree through a third party for contract work
- Flexible work arrangements
- Enhancing the process needed for re-staffing with needed retirees
- Hiring retirees as consultants or temps
- Retirement planning programs
- Detailed succession plans
- Wellness programs attractive to older workers
10. Training to upgrade skills of older workers
11. Financial training programs
12. Processes to capture institutional memory and organizational knowledge from the employees getting ready to retire
13. Surveys of older workers to gain information on what might keep them in the workplace
14. Opportunities for older workers to transfer within the company to jobs with less pay and responsibility yet remain employed
Facing these retirement dilemmas seems to have gone to the bottom of the “to-do” list for HR professionals because it is something that is going to occur in the future. But, we must all take note that the future is actually here and holding on to the potential retirees that matter to your company will take some planning. It is definitely time to get started!