The Succession Planning CrisisJanuary 8, 2016 . .
Preparing your organization for the massive retirement of the baby-boomer generation
An Urgent Challenge:
North American organizations do not have 5-8 years to make plans for replacing their baby-boomers. They have 5-8 years to replace them—approximately half of them.
There are 9.6 million Canadian baby-boomers (born 1946-1965), comprising 46% of the Canadian workforce. In 2020, just five years from now, the median age of these boomers will be 65 years old, and the massive wave of retirements will be hitting its peak—not getting underway but hitting its peak!
Not all boomers will retire on schedule, of course. Nevertheless, roughly half of all boomers will have already retired or be eligible for retirement within 5 years.
Since it will take at least five years to develop a new generation of leaders who are fully operational—for those organizations that do it really well—organizations already need to be implementing their plans for dealing with the boomer crisis now.
How about your organization?
- How many boomers will be eligible for retirement in your organization in the next 5-7 years?
- How many of those retiring boomers are in senior management positions?
- How many of them are in middle management positions?
- Do you already have a plan to deal with the boomer crisis; are you already executing your plan?
Impact on organizations – why this is such a big deal:
Loss of skilled talent, particularly leadership talent, will be devastating for many organizations.
Retiring leaders are typically the most experienced employees in the business, and they will take with them crucial knowledge, expertise…and relationships.
Turnover will be heavy at the top and throughout organizations, since retiring boomers are working at all levels of organizations.
Labour shortages in many skilled professions, including management, will most likely intensity the boomer crisis.
Many companies will be caught unprepared and will be forced to headhunt talent at exorbitant rates, potentially ruining the possibility of normal course recruiting and distorting wages in general. This will likely impact the distribution of resources within organizations.
Finally, passing the baton so quickly will intensify all of the inter-generational challenges: communication, collaboration, mentoring, and culture management in a multi-generational workforce. It is not merely that we have to train a bunch of kids to do things our way. We have to set them up to do it their way—to figure out how to do it better than we did. And we have to absorb all of those changes organizationally.
The stakes: risks & costs of the retirement crisis
Here are some of the risks and costs of doing a poor job of handling this crisis. The challenge is to identify which of these risks are the greatest for your organization, and then assess how much you might be affected by each of these risks (your risks) given the number of boomers who are retiring from your organization, the roles they play (function, experience, seniority), and taking into consideration what you predict the labor climate will be like over the next 5-7 years—as waves of boomers retire.
Risks and costs include:
- Not having the staff you need to deliver your products & services or to execute strategy
- Poor communication, teamwork, morale, and productivity as your employees struggle with new bosses, colleagues, roles and leadership culture, and with multi-generational issues
- Interruptions to normal course leadership development, organizational learning, and continuous improvement
- General impact on your reputation & brand
- Opportunity costs resulting from time spent putting out fires
- Loss of knowledge, skill, and expertise due to retiring boomers and general turnover
- Loss of experienced leadership talent, and their tacit knowledge and relationships
- Difficulty replacing experienced employees
- Cost of recruiting, hiring, orienting, and training new and promoted employees
- Time to full productivity of new employees and employees in new roles
- Errors, poor service, poor quality work while new employees are getting up to speed
- Time it takes for new employees to embrace and live your core values
- Turnover due to all of the changes and disruptions
- Turnover of new employees—who don’t have 30 years of loyalty to your company
- Cost of learning how to manage a new (younger) generation of employees
Research and experience show that workshops are only a small part of leadership development. A middle manager can never fully prepare for a senior leadership role by attending a bunch or workshops.
At Incrementa, we help our clients build their workshops into a broader organizational development approach that ensures new competencies are successfully implemented and that leaders are successful in their new roles as per organizational needs. A sustainable solution must include both training and the behind the scenes OD work to support new goals and objectives.
Here are a few key pieces to consider when building your solution:
Clearly, your work has to start with some discovery work and a solid strategy for addressing the boomer crisis. Your strategy has to be aligned with your HR and talent management strategies, which in turn must, of course, be aligned with organizational vision, strategy, and core values.
Second, you need to redesign your succession planning systems and practices to support your new succession planning strategy.
Third, you need to build a leadership development program to drive, reinforce, and sustain your succession planning objectives. This work happens at multiple levels. You will need:
- a suite of programs to prepare front-line managers for middle management roles;
- a suite of programs to prepare middle managers for senior leadership roles;
- a program to teach your current senior leaders how to build talent and fully support your succession planning objectives.
Experience and research remind us that training must be complemented by other learning methodologies, e.g., coaching, mentoring, action learning, apprenticeships, and assignments—stretch assignments and new roles. The most important learning happens on the job, and people need to get hands-on experience to fully digest and leverage what they are learning in the classroom. Workshops are very useful for setting people up for success in new roles and helping people take their game up to the next level. And coaching and mentoring ensure people are learning the right things while they are getting hands-on experience. My favorite tagline: “learn to work and work to learn.”
Finally, it is crucial to align leadership development, succession planning, and other organizational systems to (i) support new talent management goals and (ii) anchor new skills, practices, and expectations in culture. In plain language: the best workshops in the world are not going to help you if you don’t help your participants follow up on what they are learning, and if your organization does not proactively support the use of new skills and tools. People not only need lots of opportunities to put those new skills to work—which is the most important part of the learning—but they also need organizational support to sustain their efforts.
Multiple layers of value & results:
Leadership development and succession planning, done well, generate multiple layers of results. Design your systems and interventions proactively to generate all of the desired outcomes (this is how we do it at Incrementa):
- In addition to preparing participants for future leadership roles, each leadership development program should generate concrete business results for the organization—each program should pay for itself by generating a solid return on investment.
- Leadership development, done properly, enhances the engagement & retention of the participants (the leaders attending the program), and this in turn enhances employee engagement & retention.
- Employee engagement and retention are drivers of quality work (fewer errors), efficiency (productivity), and customer service.
- Done well, leadership development should also build communication, teamwork, and relationships across the organization—as leaders learn, work, and innovate together.
HR needs to step up:
One of biggest challenges you will face is a kind of general anxiety of your current senior leaders. Many of them will be very nervous about sharing leadership responsibility and passing the baton. And even those who are gung ho about it may not have the skills to do it.
People worry that the next generation won’t be ready—won’t be able to learn quickly enough. I worry more about the current generation’s readiness and ability to pass the reigns. We need to address both.
This is where HR really needs to step up to the plate. You have to make the case for change, for investing in the next generation of leaders, and you need to help your current leaders share leadership to build the next generation of leaders—to build leaders of teams and teams of leaders.
Copyright © 2015 Joel Shapiro, Ph.D., all rights reserved.
Joel Shapiro a leadership educator with Incrementa Consulting. Joel is passionate about developing leadership capacity, making employees part of the solution, and finding the perfect blend of humanity and business performance. You can read more of Joel’s thoughts on the Incrementa website, at his former blog, and on twitter.