Baby boomers have come of age and are leaving the workforce in droves. The first wave of the generation hit age 65 in 2011; by 2029, all boomers will be retirement age. For the next 20 years, an estimated 10,000 boomers will retire every day. In high-level spots, the news is particularly dire: 56% of leadership positions in the U.S. workforce are held by boomers.
For small businesses, the impact will be even more serious. Four million companies (66% of all U.S. businesses with employees) are owned by baby boomers. An estimated $10 trillion worth of businesses will change ownership in the next two decades.
Because they represent 31% of the U.S. workforce today, a company may be hit hard if boomers take their knowledge and expertise with them. While you do have some time, preparing for that brain drain is critical to continued success, and it's never to early to start.
Preparation starts with knowledge and ends with flexibility. Many companies don’t create succession plans, but as boomers exit the workforce, they'll become critical. Start with data on your gray factor. Collect demographics to see where you might be at risk for loss of knowledge, connections and expertise. From there, look for areas to bolster your knowledge base and prepare successors to work on their own.
And all of this needs to happen within a culture where it's okay to talk about it. Erik Fromm, financial advisor at Janney Montgomery Scott, suggests “creating a culture that promotes an open dialogue with employees entering the 5-10 year period ahead of a ‘normal’ retirement age.” Offer the company (or a trusted vendor) as a resource for navigating the financial, social and emotional transition of retirement.
"An open dialogue reduces the likelihood of an early or delayed retirement being a surprise and increases the chance for the company to plan for the transition," Fromm added.
It's also important to ensure that you're looking at all levels of your organization. A common misconception, according to Raymond Lee, founder & CEO of Careerminds, is that the higher up you are, the more impact there is when you leave. But succession plans for innovators — those who have a direct impact on products, customer retention, inventions, patents and creativity — are the ones you’ll want to create five to 10 years in advance because the learning curve is so extensive, he says.
Create paper trails
Your seasoned employees may be able to do their jobs in their sleep, but now you need them to share their knowledge with others. Long-term employees know the quirks of their job, shortcuts that make it easier and areas to avoid. To reduce the learning curve of replacements, help them document these processes for future reference.
But don’t wait for a retirement announcement to do it. Andrea Denison, SPHR, SHRM-CP, client advocate with G&A Partners recommends that you have workers continually update documentation on critical processes. “Formally reviewing, documenting and updating processes on a regular basis helps ensure that the organization will be able to continue performing its critical functions at the same rate and standard regardless of who is in a given position," she said.
With key client or vendor relationships, it's vital to include a successor in meetings long before retirement. Transitioning suddenly to a new representative can be difficult: a wealth of knowledge about that relationship is lost, not to mention the intangible features, like trust between the original parties.
Introducing an additional rep over a long transition period not only introduces them to the client or vendor, it allows time to gain knowledge about the relationship and to begin creating their own relationship.
Bridge the gap
Long before you’re planning retirement parties, start bridging the gap with intergenerational teams and mentor programs.
According to research, 75% of millennials want a mentor, and they want them to be from the boomer generation. Creating and fostering intergenerational work teams allows knowledge and expertise to transfer gradually and cooperatively.
Foster a culture of sharing
When employees feel threatened by coworkers, information is hoarded. Creating a culture where knowledge is shared (and documented) by all workers, not just those nearing retirement, reduces the threat of being replaced, and protects the company when seasoned (and not-so-seasoned) employees leave.
Lee notes that we’re at an unprecedented point in history with five generations in the workforce simultaneously. People are living longer and no longer retiring at 62, with some working into their 70s. This creates a problem for employers as younger workers seeking growth perceive less opportunity, causing engagement and retention issues.
“Good organizations,” he says, “create a talent strategy that is a knowledge transfer, not a brain drain. Some companies use their seasoned staff as ambassadors for programs like onboarding, to create intergenerational communication. The object is to create a culture that incentivize knowledge sharing among all employees, not just retirees.”
Incentivize the transition
Some employers are creating programs and incentives that allow boomers to transition gradually. Allowing them to work part-time or on a consulting basis can help. The fact that they're driving the gig economy means that your retirees may be open to the possibility of contracting with you after they’ve left the 9-to-5.
“Offering 'phased' or flexible retirement options to seasoned employees can allow employers to continue tapping into those employees’ institutional knowledge for extended periods of time," Denison says.
For some, retirement is a sensitive topic. Not only can questions about such a transition lead to concerns about employment security; they could lead to an age discrimination charge. The challenge is creating a culture that allows for an open dialogue about such issues, and ensures that such dialogues aren't perceived as punitive.
The aforementioned programs that help employees plan the next chapter in their lives can help, so workers can see how they can leverage the discussion to their advantage. Once employees have a plan in mind, employers can incentivize knowledge-sharing and explain show how workers can add value even after they leave the full-time workforce.