The Boomer Bust -- Big Problems Ahead for Organizations: As One Generation Leaves, a Very Different One Enters
Part I: Capturing Boomer Wisdom
By: Frederick A. Miller and Judith H. Katz
Originally published in the May 2004 Issue of Link & Learn. 
No single generation in the history of the United States has had quite the impact of the Baby Boomers. The population explosion that followed World War II was so great that every decade since has been shaped by where the Boomers are in their life path. In the 1950s, they began flooding schools. In the 1960s, they changed the structure and politics of college campuses. In the 70s and 80s, they began filling and transforming the workplace. Their health care needs, child-rearing habits, personal tastes, cultural proclivities, and political preferences have always caused major ripples in American culture and commerce, if only for the sheer size of their demographic.
The next wave of Baby Boomer influence is looming on the horizon, but the United States institutions most affected by it - institutions, corporations, and organizations of all kinds - are only slowly acknowledging it. In the next five years or so, Baby Boomers will begin retiring in waves never before seen in history. Few organizations are prepared for the repercussions of this exodus, both in terms of the experience and knowledge that will be leaving and the new population that will be entering.
In this two-part series, we'll examine the challenges for organizations that departing Boomers represent and identify critical strategies for maintaining high performance in their absence. In part 1, we'll explore how organizations can capture and leverage Boomer expertise as this group prepares to retire. Part II will look at the next generations who will take these retirees' places - a very different cohort that has very different expectations and needs.
The Numbers
It is not hard to do the math. The Boomer generation is generally defined as those individuals born between 1946 and 1964. (Some 76 million Americans were born in this period. i ) That means the oldest boomers will turn 58 in 2004. By 2015, half of the boomer population will be 60.
The current US workforce is comprised of about 145 million workers. Of these, the boomers comprise the largest contingent. By 2010, half of the baby boom cohort will be aged 54-64, and just that partial boomer influx will increase that demographic 46% over its 2000 population ii. The percentage of workers over 45 will rise from 33% in 1998 to 40% in 2008 iii. Between 2002 and 2012, the over-55 component of the labor force will increase at a rate more than four times that of the overall workforce iv. As a result, in 2012 the median age of the labor forced will reach 41.4 - the highest ever recorded v.
The exodus of baby boomers from the U.S. workforce represents the single biggest brain drain in the history of American business. This is especially significant in a time when organizations are needing individuals' intellectual knowledge and capital more than ever before. In client after client, we are seeing projections that as many as 40% of the workforce will be eligible for retirement over the next three to five years.
The Challenges for Organizations
All of this means that not only is one large, knowledgeable, and experienced segment of the workforce about to disappear from many organizations, but also that another altogether different one is poised to take its place. The departure of Baby Boomers from the workforce creates two great challenges:
- To capture their wisdom before they leave, so the organization can maintain the knowledge base and expertise it needs to function; and
- To be prepared for the "diversity influx" that follows the Boomers' departure. Younger workers often have very different life and career needs and expectations.
In both areas, United States organizations are not yet doing what is required to meet these challenges.
Failure will certainly bring harsh consequences. In the worst cases, organizations will literally lose a significant amount of access to the wisdom and institutional memory it needs to operate successfully, and may suffer - perhaps fatally - in their marketplaces as a result. Even organizations that weather the initial storm may need to hire retirees as independent contractors, a practice that is often very expensive and creates difficulties in motivating and working with people who do not need to work for their primary livelihood - that is, many people who will be impervious to threats of termination or poor evaluations.
Furthermore, relying on certain indispensable retirees is a very person-dependent way for an organization to exist. There need to be processes in place to transfer institutional wisdom, in order to guarantee the organization is always ready and smart.
Capturing Wisdom On Its Way Out The Door
In order to survive the loss of so much institutional knowledge and experience, organizations need to be very conscientious and strategic about capturing the wisdom of departing Baby Boomers. This requires more than succession planning. It requires a full-scale strategic effort aimed at transferring information - both formally and informally - from one generation to the next.
This must start with a comprehensive assessment of what talent is expected to leave in the next three to five years. The organization needs to be clear about the skill sets and expertise that it anticipates will be walking out the door, in order to plan an effective strategy for managing the resulting change. Given the fact that many organizations find it challenging to manage and plan human resources for the next six months, this is a considerable hurdle.
The organization also needs to create institutional structures and norms that allow younger people to work directly with older people. Professional interactions between incoming and outgoing people is essential for preserving and conveying organizational wisdom
5 Things to Do Right Now to Prepare for Tomorrow
1. Accelerate development opportunities for younger people
2. Create highly involved sponsorships of younger people by tenured people
3. Pay for expectations
4. Populate key functions and future opportunities with younger people
5. Create forums for senior leaders to interact with younger people in which they can share their knowledge and expertise
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Knowledge and Experience Can't Be Summarized in a Document
Too many companies rely on mere documentation to fill the void created by the absence of a tenured associate, in the belief that a person's contributions and years of experience can be captured in a document or formal procedure. Few organizations have truly comprehensive and up-to-date documentation of its many positions and activities. And given the knowledge and "tricks" gained over the years by in-the-know workers, even a well-documented methodology might run up against an unexpected problem: doing things "by the book" that have never been done that way before. (That extra turn of the widget, or slap on the side of the machine that keeps things running smoothly will be lost.)
All employees - and certainly the best employees - bring those personal touches and hard-learned lessons to their work. They know the right person to call for different problems that arise. They know the solutions that have worked - and failed. They know how to navigate a particular vendor's internal politics, or the kind of approach that works when dealing with a specific client or customer. These can be critical pieces of information, but they are rarely included in written procedures and job descriptions. Tenured associates have developed unique and irreplaceable relationships with key customer and suppliers
Conclusion
Capturing the wisdom and expertise of Baby Boomers before they depart the organization will be one of the single greatest success factors for organizations in the next ten years. No organization can afford to lose so much institutional knowledge in a 10 or 20 year period.
However, leveraging the outgoing generation is only part of the solution. In the second part of this series, we'll discuss the generations that will be taking the place of the Baby Boomers, and the unique ways they will be transforming the U.S. workplace.
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i Dohm, A. "Gauging the Labor Force Effects of Retiring Baby-Boomers." Monthly Labor Review (Jul 2003): 17-25.
ii Horrigan, M.W. "Employment Projections to 2012: Concepts and Contexts." Monthly Labor Review (Feb 2004): 3-22.
iii Dohm.
iv Toossi, M. "Labor Force Projections to 2012: The Graying of the U.S. Work Force." Monthly Labor Review (Feb 2004): 37-57.
v Toossi.
Judith H. Katz and Frederick A. Miller are the co-authors of The Inclusion Breakthrough: Unleashing the Real Power of Diversity (Berrett-Koehler, 2002) and co-owners of The Kaleel Jamison Consulting Group, one of the oldest and most respected consulting firms in the United States focusing on diversity and inclusion. For more information or to contact the authors, visit www.kjcg.com.
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