Boomer Bust

By the year 2011, a large portion of the largest generation in U.S. history will be reaching retirement age. Are you prepared to recruit and retain your way through the
biggest demographic shift ever to hit the U.S. workforce?
By Holly Dolezalek

For years, experts have been warning American businesses that the coming retirement of the baby boomers would create havoc—shrinking the pool of qualified workers and creating a sudden loss of a large group of experienced employees.
Now, Companies are Finally Starting to Get Scared

In the 2006 Job Retention Poll issued by the Society for Human Resource Management in December, nearly three-quarters of the human resources executives surveyed said they were concerned about retaining employees, and half said their firms have created special retention programs to address this problem.

Estimates vary, but the Bureau of Labor Statistics counts 78 million people in the post–World War II baby boom generation. They were born between 1946 and 1964, which means that a lot of baby boomers won't reach retirement age until 2029. The demographic shift won't occur overnight, and not every baby boomer is going to retire at age 65 and head for Arizona. "Consistently since 1998, when AARP began surveying its membership, between two-thirds and 80 percent of respondents have been saying that they plan to work full- or part-time into their retirement years," says AARP spokesman Joe Nathan.

Still, eventually everyone stops working, and a plan for slowing the impact when large numbers of employees do so is important for the health of any company. The first step in helping your company make a graceful transition is to find out what demographic patterns characterize your workforce.

Know Who Your Boomers Are

Some companies have more problems in this area than others. "Consider the hiring patterns of the last 20 years," says David DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce. "At many companies, downsizing and other hiring choices means that they have plenty of older employees in their late 50s or early 60s, and plenty of younger employees who are just entering the workforce. But they don't have anyone in between, so there's a huge gap in their bench strength."

DeLong points out that three groups are aging out of the workforce. The first is older workers
who are low-skilled and are relatively easy to replace, such as retail salespeople or middle managers in government agencies. The second group is higher-skilled employees like engineers, research scientists or upper middle managers. These employees are adding value to the organization, but may feel trapped in jobs where they aren't getting the training and development opportunities they need to move on. Finally, the third group is highly skilled workers or managers whose unique expertise and training makes them extremely difficult to replace.

"The second and third groups are the ones you have to be concerned about," DeLong says. "The second group is likely to just give up and serve out their time, or leave, because organizations fail to motivate and develop them to ensure their late-career success. And leaders consistently underestimate the cost of departure for the third group, because they don't realize their value to the business or the difficulty of replacing them."

That means that the more you know about your workforce, such as which employees might leave before retirement and which ones are frustrated or feeling stalled in their career progression, the better positioned you'll be to keep them.

"Your training department should be working with HR to determine which divisions and units are at the most risk, given the changing workforce demographics," DeLong says.

Keep in mind that just because a boomer decides to keep working, it doesn't mean she'll want to keep working for you. She could just as easily decide to change jobs or careers for variety, or to start her own business. That's why part of your strategy should be to hang on to your boomers for as long as you can. But that means you're going to have to give them reasons to stick around.

Make Sure Your Boomers Feel Valued

Letting older employees know that the knowledge they have gathered in their decades of work is necessary to the company is an excellent way to encourage them to stick around, especially if you find ways to help them share it with younger employees through mentoring and coaching relationships.

But you may have to be cautious in your approach. Especially at organizations with a history of downsizing, trying to capture older employees' knowledge can backfire. "You can ask people to mentor and share their knowledge, but you have to make sure that you send clear signals that they are valued and not at risk of being asked to retire early or being downsized," DeLong says. "If you don't communicate that clearly…these employees may guard their knowledge instead of sharing it, because they know that their knowledge is their job security."

One way to communicate the sense that their experience has value is by offering training opportunities to this population. DeLong notes that this is a great way to both invest in those employees and to make it clear that their development and skills are necessary to the company, and that the company cares about them.

"Have the conversation directly," DeLong says. "Talk to those employees, and ask them what their plans are. Do they want to keep working for you? Are they thinking about retirement? What do they want to do in the time remaining, and how can the company help them do that? By confronting the question head-on, you establish trust and you establish their value. You also gather the information you need to appeal to that employee to stick around."

By encouraging managers to talk to employees, especially those who are approaching their retirement years, you can ensure that you have information about what boomers want to do with their remaining work years, and what kinds of incentives would tip the stay-or-leave decision in your company's favor, says Rodger Stotz, vice president and managing consultant at Maritz, in Fenton, Mo.

Keep in mind, though, that many boomers are actually being managed by employees who are younger than they are. Generation Xers might be managing workers who are 20 years older. If that's the case, those managers might need encouragement to change their perspective on those older employees. They need to be sensitive to and appreciative of the much longer years of experience that the boomer has. "Older workers want to be seen as an asset, not somebody who's over the hill," says Stotz.

These kinds of conversations will yield information that might allow you to retain employees in the oddest of ways. For an example, see the sidebar below.

Ease Up on the Corporate Reins

Corporations aren't known for their flexibility. They have a tendency to set rules that everyone has to follow and they have an allergy to exceptions.

In order to deal with a shortage of talented employees, corporations might just have to get over that, and relax rules about benefit plans or work schedules or incentives and rewards.

If it's an option for your company, many boomers who are near retirement will love the idea of transitioning to part-time hours, or taking some time off (maybe a few months) and returning on a consulting basis, where they work two days a week or do a lot of their work from home. In fact, this kind of schedule might keep some boomers from retiring for years on end, if it meets their needs.

Not all organizations can offer these kinds of schedules. A manufacturing plant can't have a particular machine sitting idle for half the day because the operator is working part-time. But for those that can, it's a way to encourage employees to stay around—and it's also an opportunity to capture their knowledge before they go. "If you're offering flexible work hours to employees, particularly if they're knowledgeable and experienced, when they take you up on it, it's important to build in a training or mentoring commitment on their part," says DeLong. "Organizations often offer flexibility without thinking about the knowledge they're failing to retain."

Of course, no one has more flexibility than someone who is his own boss. "Many people are becoming contractors so that they can make more per hour, get paid overtime, choose their own projects and avoid the bureaucracy that's so frustrating at some companies," says Tom Darrow, founder and president of Atlanta-based recruiting and search consulting firm Talent Connections. "Some older workers are starting their own businesses, and they're even using part of their retirement nest egg to do it. That shows you that a lot of people really want to get out of Corporate America and its inflexibilities, and you're going to have to offer them some good, flexible benefits to get them to work for you."

Tailor Benefits to Boomers

Workers who are approaching retirement age have unique needs. Smart companies offer them benefits and incentives that fit specifically with the challenges they face at their time of life. Retention is the intended result.

"If you want to get rid of someone, don't train them," says Bill Byham, CEO of Minneapolis-based performance management company DDI. Since many companies fail to keep training employees as they get older, and focus on younger workers whose training needs are obvious, it's easy to suddenly find that your boomers are moving on because they aren't learning anything.

Look for problems in all areas of training and development. For example, are you eliminating older workers from your training plan because you don't think they'll respond to e-learning and other types of more innovative learning? Are you encouraging them to take advantage of the company's tuition reimbursement program? (An advanced degree might be just the incentive to keep them around for a few more years.)

Many companies require employees to work 40 hours a week to be eligible for health benefits, but especially for those boomers you hope to retain, it might be worth it to relax those rules and allow them to get those benefits even if they're working only 30 hours a week, or part- time, or even six months on and six months off each year.

Some employers are starting to offer on-site medical clinics to all of their employees. Rather than having to take an afternoon off and drive across town, employees can see a doctor on their break or lunch hour, or stop by after work. Many of these clinics offer shortened waiting (or even a call from the clinic when there isn't any waiting), letting employees remain productive.

The management of chronic conditions is much easier with an arrangement like this. At Grand Sierra Resort and Casino in Reno, Nev., Vice President of Human Resources Sterling Lundgren says that the clinic is a big incentive that makes the company an employer of choice. "The convenience is unmatchable—the clinic is right next to the employee entrance, and they've treated heart attacks, appendicitis, you name it," he says.

Another benefit that specifically targets those valuable older employees is help with elder care. Many boomers are caring for elderly parents or other relatives, and the strain of giving that care often shows up in absenteeism and lower productivity. Any employee who is close to retirement might choose to retire early so as to reduce that stress.

"It's not an expensive investment for us to make, and the cost is reasonable, based on the productivity we get back," says Pete Stoddart, director of PR for Minneapolis-based human resources company Ceridian. "We're helping a valuable long-term employee to get back to their career, and you can't put a dollar value on that."

Recruit Older Workers

Your company might not have to replace its most experienced workers if retention measures work. But the other side of the coin is finding people to replace those boomers who do retire, and your first line of possible candidates might be other boomers. After all, many boomers won't even be at retirement age for another 15 to 20 years, and employees who want to keep working but try a new environment or even a whole new career will be ripe for the picking if you can offer them better incentives than other employers do.

In fact, by being older-worker-friendly, you might find an untapped source of labor. "I go to networking sessions, and a lot of times nearly everyone there is over fifty," says Talent Connections' Darrow. "They're usually good people with great skills to offer an employer, but they're all a little discouraged because they can't even get a return phone call from a recruiter. Age discrimination is hard to prove, but I think companies routinely discriminate against older workers. That's an opporunity for a company who needs workers and understands that people over fifty are just as good em-ployees as people under fifty."

Darrow argues that in many ways, older employees will make a better stopgap than younger ones when companies need to recruit fresh talent. Older workers are more likely to have already sent their kids to school and even to have paid the mortgage off, he says, which means that they don't need the big-buck salaries that might be expected based on their levels of experience.

"Plenty of older workers take jobs where they're making half of what they used to, and it's because they want and need different things from their work than they used to," Darrow says. "They don't want the top salaries because they don't want the long hours, required travel and pressure that come with them. They're off the fast track and they just want a decent job that's meaningful and pays them a fair salary with the benefits they need, but Corporate America has a hard time getting its arms around that concept."

Sidebar: Incentives Stay Put

Who are the boomers and what rewards will motivate them to remain in your company's employ?

Although the baby boomers are often discussed as though they were a homogeneous group, it's actually not easy to generalize about them because they are both a broad and deep segment of the population. "There are boomers who are empty nesters and boomers who have young children; some have children in college, and some have both; some are single and some are remarried with essentially two families," says Rodger Stotz, vice president and managing consultant at Maritz, in Fenton, Mo.

Because different boomers will have different needs, it's impossible to say that reward cards or incentive travel or any specific incentive will keep them around or encourage them to consider your company an employer of choice. That's why managers are the front line of your company's ability to find out what will motivate folks to stay around.

What if a boomer you want to retain has always wanted to go to cooking school or start getting back into golf? That may not sound like the company's problem, but if you'd like that worker to stay with you for five more years (or join your company, rather than start her own business), you might think about how an imaginative incentive reward like a chance to pursue this dream might translate to the retention you need for the hard labor times ahead. Flexibility and imagination are the keys to retention.
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