Strategies for Managing the Wave of Retiring Workers

Senior leaders across a broad array of industries continue to highlight retirements, turnover and succession planning as key issues confronting their organizations. Much has been written and reported on the impending retirement wave of baby boomer workers as one of those areas of concern.

As new generations enter the workforce and older generations remain at work longer, employers must evolve to meet new employee needs. Most solutions involve recruiting tactics for attracting new, younger talent to industry ranks through collaboration with local colleges and technical schools, but what about proactively managing the actual turnover in the workplace? What’s the broader plan for transferring the “tribal knowledge” of departing workers to their replacements?

There are two challenges a turnover strategy must address. The first involves the sheer magnitude of baby boomer retirements underway and on the horizon. Approximately 10,000 baby boomers are retiring every day.

At many companies, more than 50 percent of the workforce will be retiring in the next three to five years. Most of these personnel are in key management and supervisory positions with extensive tenure, tribal knowledge and the secrets or tricks to keeping the workplace on pace. How will their knowledge make it to their replacements?

Source: The Learning Café and American Demographics Enterprising Museum

The second challenge involves the next generation of workers and their perspectives on employment and tenure. Demographic and trend studies show that the future will bring fewer loyal workers who dedicate their entire careers to a single workplace. Portable 401(k)s, the extinction of pensions and other “golden handcuff” benefits are among the many factors influencing career mobility. Skilled young production and manufacturing industry workers are also in high demand, so the likelihood of more frequent job-swapping is real.

Generations X and Y made up more than 60 percent of the workforce in 2012, and that number will continue to rise. Job tenure fell from 9.2 years in 1983 to less than one-half that (4.1 years) in 2008, and the recent recession likely cut that number further.

A higher cycle of turnover is the new reality. More than 90 percent of millennials (persons born between 1977 and 1998) expect to stay in a job for less than three years. How will your company manage the turnover of key positions every few years as opposed to every decade?

Organizations must understand the dynamics of near and long-term turnover, including how younger generations of workers will impact how you recruit, train and operate, along with the tactics for capturing knowledge from workers approaching retirement before they leave.

Dynamics of Near and Long-term Turnover

To prepare for these changes, companies must first consider their aging workforce and focus on how to capture the tribal knowledge that these workers possess. They must also look at millennials. How do they fit into the workplace? How can you engage them and what are they seeking to attain job satisfaction?

Organizations need to assess their company culture. Culture is sustained by structures, systems and style of leadership. It is “the way we do things around here,” and is taught to the newcomers.

In order to better engage the next generation of workers, you must eliminate some of the rigid constraints that past organizational structures may have created. The chart on the previous page offers a contrasting perspective on the differences between the generation X and millennial workforce.

Capturing Knowledge from Workers Before They Leave

Within any organization, the most effective method for establishing a repeatable and more easily adopted operating culture is to develop standard best-practice business operations, and maintenance processes and procedures. It is critical to ensure that high expectations and associated accountability standards are set for procedural compliance and to continuously improve these processes.

An example at a power generation facility might be the synchronization of electrical turbine generators. Is this accomplished by each shift and supervisor with a standardized set of procedures and checklists or is it done a little differently each time based on the personalized styles of those in charge? How would it be accomplished next month if those supervisors or technicians were no longer with the organization?

Evolving from a culture of tribal knowledge and informal operating practices to one of standardized process adherence, practices and procedures involves commitment and accountability from the leadership team. Sharing knowledge, documenting inherent best practices and eliminating the “knowledge is job security” mentality will require time and significant behavioral change.

The following initiatives can be useful in creating more standardized work practices and reducing the damaging effects of high turnover:

• Identify critical work and procedures that are currently being accomplished with tribal knowledge or without the benefit of documented standard operating procedures.

• Capture knowledge and data for this critical work from existing employees and transform that knowledge into institutionalized training programs and documented procedures.

• Establish training programs that drive accountability and ensure all employees have the skills, competency and knowledge to perform the assigned tasks as well as the ability to record data from those tasks.

• Develop continuously evolving standard operating procedures that are followed via checklists and supervisory oversight.

• Utilize an enterprise asset management system that allows managers to make decisions and plans based on factual information, captured data and trends rather than gut feel or the experience of employees who may no longer be around.

It takes time to shift from a culture of “That’s the way we’ve always done it,” to “Here’s precisely how and why we do it this way.” This will require a commitment from leadership to be engaged and visible with workers.

A survey of corporate boards once defined the No. 1 reason senior executives are terminated as “the inability to affect change within their organizations.” Likewise, changing the operating culture within your organization to ensure the transitions that take place when personnel leave will be a critical factor in meeting goals and objectives through this coming wave of retirements and into the next generation of more frequent employee turnover..