Here is an interesting situation that many of you might be facing:
In 1998, after significantly downsizing for 10 years, the Tennessee Valley Authority (TVA) realized that the median age of its 13 000 remaining employees was 48. Because most of its retired well before the age of 60, this meant that over the next 10 years TVA, the electrical utility in the USA, was bound to lose many of those it depended on to run its nuclear, coal-fired and hydroelectric power plants efficiently and safely.Those employees, and the knowledge they embodied, would be hard to replace.(source: Accenture: Chemical Industry Leaders: Are you ready for the future workforce)
Question: if you were on the executive team of the TVA, how would you react to the above statement?
Do you feel like your team is equipped to deal with a challenging scenario such as the one above? Well, let’s hope so, because in the words of the legendary rock Canadian band Bachman-Turner Overdrive (BTO), “b-b-b-b-baby, you ain’t seen nothing yet”.
The Pending Workforce Challenge
Not to fear monger, but one the most important metrics that CEO’s seem to be missing these days concerns the aging workforce that dominates their corporate landscape: in particular at an executive level.
The evidence is indisputable. The current demographic trends are not reversible, nor are they catastrophic, but they certainly are concerning if left unchecked. According to research in the US, the percentage of workers age 45 and over will increase from 33% of the labour workforce in 1998 to 40% in 2008 adding a full 17 million workers to this group. Further, those aged 25-44 will decline from 51% to 44% (translating to more than 3 million fewer workers in this bracket). (source: Accenture: Chemical Industry Leaders: Are you ready for the future workforce)
The question that all CEOs need to ask is the following: do you know the average age of your workforce? And once you do, do you have strategy to deal with it?
While I would argue there is no magic bullet that would automatically solve the above situation, the concerning point in my very unscientific research conducted over the past 12 months is that too many CEO’s and executive teams don’t even know this number. This is tantamount to flying a plane wearing a blindfold. While the autopilot is pretty good these days, do you really want to do that if you have a choice?
Why is this number so important? 3 reasons spring to mind. An older workforce requires more careful attention to:
When those boomer walk out the door, they walk out with more than just their laptops, a few pens and nice mug. They walk out the door with a tremendous amount of tacit knowledge. Knowledge that lives inside their grey matter and nowhere else. Once they are gone; it is gone. How do you transfer that knowledge to the generation behind them (oh and by the way, they don’t think like that generation so the old models and theories don’t necessarily work)
While an older workforce is a more stable labour pool than the more transient millennial generation, both will put demands on the HR team. Look for new focus on flexible working environments / job design, mentoring programs, etc.
When you lose a whole stratum of your core team, especially in key areas like R&D, Engineering, System Design, etc., you can’t just replace them with “newbies” and expect the same results. Most organizations have not yet begun to consider, yet alone calculate, the cost implications of losing 15-20% of their R&D teams within a 5 year span on their company’s ability to innovate?
This certainly is not an exhaustive list. Many other implications fall out of this, including loss of efficiency/productivity, an inability to grow the business outside of existing areas of practice, etc.
The question therefore is simple? Do you know the average age of your workforce and do you have a strategy to deal with it appropriately?
Over the next few weeks, I will outline some of the approaches that NLC has seen in this area that might provide a window in what some of the more innovate strategies and tactics to this management problem could be.
In the meantime, lets start an informal post/survey.
1.What is the the average age of your workforce?
2.What industry are you in?
3.What will that average age look like in 5 years?