Surviving the Retirement Tsunami
What is the retirement Tsunami?
Did you know that 25% of New York State’s current workforce will be eligible for retirement by 2015?
In 2011 the oldest baby boomer turned 65, the typical age of retirement. You may be asking, “Why does this matter to me and my organization?”. The answer to that question is simple; Retirement leads to a loss of valuable knowledge and long-standing business relationships. Your organization will most likely lose a large number of employees in key positions due to the large amount of baby boomers in today’s workforce. The knowledge and relationships these employees have obtained throughout their careers can be irreplaceable.
The harder question is, “How do I survive this massive change in the workforce?” Many organizations are unprepared for the retirement tsunami but the next three sections will outline steps to help you decrease the impact.
Succession Planning is an organizational process for identifying and developing talent internally to fill key business roles. It allows organizations to:
- Understand the career plans of employees to allow organizations to plan more accurately.
- Identify suitable successors for key roles and assess their readiness.
- Mitigate risks to long-term business continuity and growth.
- Avoid external replacement costs including headhunting and recruitment, HR administration, and productivity loss.
- Retain internal tacit knowledge.
- Increase engagement and retention; keeping talented people reinforces career path opportunities and builds team culture.
The first step is to identify Key Roles in your organization
Key roles are can be identified as:
- The most senior roles that carry the bulk of leadership and decision making responsibilities (e.g. CEO, VP of Sales)
- Highly technical or specialized roles that are difficult to replace (e.g. data architect, nuclear engineer)
- Roles that are tied closely to unique or proprietary internal processes (e.g. product manager who has been with the organization for over a decade)
- Roles that are critical to the continuation of business and can’t be left vacant (e.g. website administrator in a small online retailer)
Now it’s time to identify potential successors for all key roles
Succession planning is about identifying the employees who currently possess (or soon will possess) the skills and knowledge required to take over a key role. During this process you will want to collect information from many different sources to ensure that the decision isn’t biased and that good candidates aren’t overlooked. These sources could include but are not limited to recent performance evaluations (predictor of future performance), HR-led interviews (objectivity and confirmation), competency-based aptitude tests (objective data), and talent review meeting (leadership input). Keep in mind that not every employee wants a career change. Find out who is interested before narrowing down your candidates. Make sure you have a pool of successors in case your best potential candidate doesn’t work out.
Avoid “Surprise” Retirements
A good way to reduce “surprise” retirements is to have a career discussion with all employees at least once a year to determine career goals, including retirement plans. Don’t ask employees directly about their retirement plans because it could be misconstrued as age discrimination, instead lead the conversation in this direction and let them bring it up.
Effective knowledge transfer allows organizations to maintain or improve speed and productivity by ensuring the right people have the right skills to do their jobs well. It can also increase agility because knowledge is more evenly distributed amongst employees and if multiple people can perform a given task then no single person becomes a bottleneck.
Knowledge transfer is not stopping, learning, and returning to work
Knowledge transfer is a wide range of methods that must be carefully selected and integrated into daily work. Focus on identifying the knowledge, skills, and relationships essential to a specific key role and find out what it is that the current employee does to perform that key role well.
Explicit vs. tacit knowledge
Knowledge is often split into two basic types; explicit knowledge which is easily explained and codified (facts and procedures) and tacit knowledge which is accumulated over years of experience and is hard to verbalize. Explicit knowledge transfer methods tend to be more formal and one way: Formal documentation of processes and best practices, self-publishing knowledge bases, formal training sessions, and formal interviews. Tacit knowledge transfer methods are often informal and interactive: mentoring, multi-generational work teams, networks and communities, and job shadowing. Your method of knowledge transfer should be selected based on the type of knowledge, the people involved, and the cost. Knowledge transfer tends to be more successful and has a lower time cost if it is integrated in day-to-day activities because real learning is happening at the same time real work is being accomplished.
Group learning methods together to optimize results
When deciding which methods to use in knowledge transfer make sure you group together methods that touch on each of these four learning stages:
- Introduction of concept (lecture, formal education, e-learning)
- Practice (on-the-job assignments, case studies, role-playing)
- Reinforcement (coaching, mentoring, group discussion)
- Reflection (assignments, reflective journaling, peer-mentoring)
Next to each learning stage are a few examples of learning methods that fit into that stage. It is important to keep in mind that there are many other methods not listed here and some of the ones that are listed here span over several different stages.
Alternative work Arrangements
Retain employees post-retirement
Alternative work arrangements are critical tools that employers can use to achieve a mutually beneficial solution that mitigates the risk of loss associated with key roles. These arrangements not only support employees who want to keep working, but more importantly, they allow the business to retain employees who are departure risks due to retirement. Alternative work arrangements include flexible work options, contract-based work, part-time roles, graduated retirement programs, part-year jobs or job sharing, and increased paid time off for employees over a certain age. These methods are becoming more and more popular with flexible work options currently being the most used form. Another option to keep retirees on board is to make changes to their compensation, pension, or health plan.
Using alternative work arrangements can ensure sufficient time to prepare a successor however alternate work arrangements can’t be implemented on a whim. Before making any decisions review the process, assess organizational policies, and speak to affected employees. Remember that this will not only affect the employee but it will also affect everyone who is working with that particular employee.
By now you should have an idea on how to survive the retirement tsunami through succession planning, knowledge transfer and alternative work arrangements. The key is to get started early and have a solution before it ever becomes a problem.