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Boomers Staying in the Workforce -
Do We Really Need Succession Planning?Dr. Diane Hinds, Director, Organizational Effectiveness
Several years ago, headlines declared dire warnings about what would happen to employers when the baby boomers hit retirement age. We were warned that boomers would leave in droves, taking all their knowledge with them. Employers were told to be prepared for unprecedented rates of retirement or suffer the consequences. Succession planning was all the rage, for a brief moment. But guess what - the boomers are aging and the wheels haven't fallen off. Many baby boomers are at retirement age, but the majority of them are still working. A perfect storm of factors significantly reduced the boomers' predicted mass exodus. The decline of the economy certainly contributed. Many older workers want to retire but don't feel that they are financially prepared to do so. Over 60% of workers age 50 or older say that they believe they will have to stay working longer than they expected due to the recent economic downturn (Pew Research, 2009). Many saw their retirement accounts plummet and even though those accounts are generally starting to creep back up, financially cautious boomers are looking to amass a little bigger nest egg before relying on the fixed income of retirement to meet their needs.
In addition, the boomer generation includes many "achievers" – people who like to get things done and thus many feel that they want to "stay in the game" a while longer. A survey released in September 2009 by the Pew Research Center found a majority (54%) of workers 65 and older said the main reason they are still working is because they want to. Twenty-seven percent said they're working because of a mix of desire to work and financial need, and only 17% say they are working because they need the money.
Many employers now provide greater flexibility in work hours and locations, making staying employed more attractive. For a combination of reasons, the boomers just haven't left the workforce as predicted. However, wise employers recognize that having a succession plan will contribute to their long term success. The departure of the largest single generational group in our history, the boomers, is inevitable. It may be spread over a few more years than expected, but the reality is that fewer people will be entering the workforce than leaving it for the next 25 – 30 years.
Employers who aren't preparing successors to replace retiring boomers will struggle, particularly at the leadership level. Researchers predict that up to 60% of current managers and executives could be out of the workforce within the next 5 - 7 years. Many organizations are aware that a significant portion of their leadership group will likely retire within the next few years, but they are still not actively creating succession plans. Good intentions to create succession plans often fall by the wayside because immediate needs grab our attention.
However, it is prudent for organizations to proactively prepare for the challenge of ensuring a smooth transition from current leaders to the next generation of leaders. Succession planning is a planned effort to ensure an organization's on-going, effective performance by developing individuals to replace key employees when these key employees leave. It is a systematic approach to identifying, evaluating, and developing current employees so that they are prepared to assume higher level positions. Effective succession planning provides a bridge from the current leadership to those who will lead the organization in the future.
Organizations that devote the necessary resources to develop and maintain an effective succession planning program realize significant benefits. They report lower turnover among their high potential employees. They also indicate that individuals who have been developed through the succession planning process are more capable and learn their new positions more quickly than others hired into similar positions. However, an organization must understand that such a succession planning program requires investment of time and effort to achieve these results.
If you have questions about succession planning, please contact Dr. Diane Hinds, Director of Organizational Effectiveness at 763-253-9184, or dianeh@employersinc.com.
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