Over the next 20 years, 81 million Baby Boomers will be exiting the workforce.
Their retirement will leave a void in many organizations. Their skills and experience cannot be replaced easily by the 46 million Gen Xers that will succeed them. Can this looming skills gap be filled by the 85 million hungry Millennials anxious to make their mark in the world?
The Millennial generation (also known as Generation Y) is poised to take on the challenge of a new job, and, with their affinity for technology and networking, they are more adept at developing their career path to getting noticed by employers. However, this energetic, tech savvy age group arguably still lacks valuable work experience necessary to fill the big shoes of the more experienced workers who are fast approaching retirement.
A talent gap is looming
For decades, we interpreted the workforce as a pyramid shape. Retiring workers finished their careers, moved to Florida, and then a bountiful selection of new talent was available to come take their place. It was the cycle of life. It has been proposed by some that because there are so many Baby Boomers that the new workforce model is really more like an inverted pyramid.
The full retirement age for workers born after 1937 is 67 years old now. Due to the state of the economy older workers are working longer and retiring later. The most significant factor causing many to continue working later in life is because they lost their retirement investment and savings in the financial institution meltdown that crippled our economy during the Great Recession.
Even if the Boomers stay in the workforce a little longer, they will not delay the inevitable losses that organizations will suffer due to the talent gap. Employers will need to increase headcount dramatically to cover the gap in talent, maintain productivity, and grow.
This workforce dynamic is made more challenging by the fact that since 2008, organizations have reduced headcount and distributed the workload over fewer employees. The result is that companies have created complex, multi-function job descriptions that are nearly impossible to fill by the average person with less than ‘x’ years of experience.
So, with large numbers of Baby Boomers leaving the workforce and lesser experienced workers entering, companies will have to revise job descriptions again to bring back positions and increase headcount in order to replace retiring workers.
The key: engaging and retaining employees
This is why I envision the hourglass-shape becoming an accurate model to describe workforce management for the next 10-15 years. There are plenty of warm bodies to enter the workforce, but because they lack the experience necessary to replace the outgoing talent, just hiring warm bodies will not be enough to sustain organizations.
This is HR’s talent management dilemma. How will their organizations manage the impending skills gap? How will organizations find the right talent and fill the more than 20.5 million new jobs projected through 2020? And, how will HR manage the rapidly approaching exits of retiring or semi-retiring workers? HR must find a way to balance both sides of the “hourglass” workforce.
Employers and recruiting practice opinion leaders call it the “War for Talent.” The job seekers feel like it is more like a War on Talent. Whatever you want to call it, it is going to be war. Surveys of employers consistently report sourcing candidates to be their number one talent management objective year after year. Hiring costs are going to explode. Training expenses will increase astronomically.
The key to mitigating risks to the talent management plan is engaging and retaining employees, and networking through the organizations top talent to build a strong bench for future expansion. Employers must ramp up their recruiting efforts to find, attract, and engage top talent now, even before they need them.
Employers must also build talent communities to retain connections with top candidates for future open positions. They will want to follow them in their careers to ping them again and again about new opportunities. This will reduce time-to-hire, advertising costs, reduce the dependency on agencies to source talent.
Keeping Boomers in the game a little longer
Additionally, employers must take advantage of the retiring workforce staying in the game a little longer. These experienced workers know best what is required to make the company successful. Strengthen employee and alumni retention programs. Retain alumni to implement mentorship programs for training new employees in critical positions.
New employees will be happier for the personal introduction to the company by an experienced worker, and they will be better prepared to take on the challenges of the position. Perhaps appoint semi-retired workers to HR and talent acquisition roles to assist with recruiting, training, and onboarding the entry-level workforce. This initiative could possibly increase new employee satisfaction and effectively reduce turnover.
Social networking and talent communities have been buzzing in HR for quite some time. Effective implementation will improve efficiency of the recruiting process, reduce costs-of-hire, and decrease time-to-hire. Talent communities establish connections and build relationships with both active and passive candidates, enabling employers to identify top talent and attract them to open positions. Matching candidates to positions before retiring workers leave, and investing in their training by exiting workers will ensure that the candidate excels in their new position.
Balancing the needs of the experience spectrum won’t be an easy task, but implementing a talent management system that benefits both exiting and entry-level workers will prevent the widening skills gap. Business leaders must make talent management/development one of its top three (3) objectives to ensure the future viability and health of their organizations.
What do you think? Do you agree with this perception of the hourglass-shaped workforce model? What changes must HR implement to address the talent management challenges related to the changing workforce?