I am now of legal age to take advantage of those wonderful senior citizen discounts at Denny’s. So this subject is one I am intimately familiar with, as a student of the workplace and as one of the many individuals who represent the biggest demographic segment of the American population. And just how many are we talking about?
Most official estimates say that there are about 77 million people alive today in the U.S. belonging to the “Baby Boomer” generation, i.e., those born between the years 1946 and 1964. This represents 26% of the country’s population, but over 50% of the working public. Think of it: more than half of the human resources of American companies have just begun reaching retirement age. The bad news is that our businesses could be dramatically hurt if this mass of talent leaves the workforce too quickly. The good news (for business) is that many of the Boomers will be working far past the current average retirement age of about 57. Why?
One reason is that we can. We live in an era when most people will have more than one career in a lifetime, and some will have three or four. Education and opportunity have never been more available than they are today, which gives us the possibility of doing many different things in life. Another reason is that we must. With Social Security benefits at risk of reduction due to our massive federal budget deficits, and other retirement funds (both defined benefit and defined contribution) experiencing difficulty meeting the actuarially-required growth to finance payouts, many of us Boomers will need to augment savings with some type of income. Here’s what businesses can do to weather the big changes upon us.
It will be necessary to redesign jobs, to create functions and accountabilities that are readily adapted to part-time employment and job-sharing. More Boomer employees will want less than full-time work, if they have fixed incomes from other sources, but still need to earn additional income. The redesigned jobs will need to include professional and executive positions as well, since many of these jobs will be vacated by retiring Boomers and there won’t be enough talent to replace them all. For example, an accounting manager who wants to work half-time might be allowed to do so, if an assistant is hired and the combined cost to the company is no greater than that of the manager when she worked full time. Another idea is to separate the part of a job that requires onsite presence from that which is location-independent and allow part-timers to pick which one they want to fulfill.
Most career progression structures and compensation plans are built around the assumption of full-time employees and the inducement of advancement. A larger part of the labor force is not going to want full-time work or pursue the next rung on the ladder. Career paths and compensation programs will need to differentiate between those who want to move up and those who either want to stay put or even move down the hierarchy. Also, health insurance and other quality-of-life benefits will be more important than pay to a larger percentage of the workforce as the Boomer Effect continues. Some companies have used “total compensation menus” to achieve this flexibility. Each employee has choices of what proportion they receive in wages or salary, how much in health insurance premium subsidies, how much in vacation, etc.
Education of younger leaders will be important. It’s a different skill to lead someone who’s significantly older than you are. As people age, their perspectives change, as do their motivations. An older employee can be very productive if you approach the relationship appropriately. And contrary to the oft-cited adage, old dogs can and do learn new tricks. The teaching method chosen makes all the difference. It’s also necessary to explain to the company’s staff how the demographic shifts will likely affect the company’s structural design, job design and compensation programs. Getting everyone thinking about the coming changes, even though they may not be tangible yet or near-term, will increase the odds that solutions are found before the problems arise.
Since the available labor pool will likely be shrinking over the coming two decades, a business needs to start early in hiring the successors for those who will be reducing their contribution, or leaving the workforce altogether. Depending upon how long it takes to acquire the necessary skills and abilities, it might be necessary to hire apprentices many years in advance of the expected need. These days, 10-20% is a common turnover rate for many industries. Manual labor and entry level service jobs can experience 150% to 300% turnover. Reactive staffing is always more expensive and less effective than pro-active recruitment. The money spent in adding staff above the absolutely-required level is more than recouped in lower costs associated with the impact of turnover in the future.
Personally, I intend to earn an income well into my seventies, if Providence blesses me with good health. My fantasy (and proper karma) is to end my working career as an executive secretary to some hard-headed, ambitious, irritable CEO. I wonder if they’ll let me work three days a week?