Corporate Continuity in a Graying World
Preoccupied by the threats of terrorism and a serious business downturn, some companies may find it hard to focus on a long-term issue like the aging of the workforce. Yet, over the long run, this demographic issue threatens corporate continuity, quietly eroding the talent base on which so many organizations utterly depend. "There's a knowledge problem in organizations," sums up William C. Byham, CEO of Development Dimensions International. "All the history is going out the door."
And there's a real danger that companies won't find enough workers to replace those talented people, given demographic trends. In European Union countries, for example, an average of 16.4% of their population is already age 65 or over, and the same is true for 17% of Japan's population. These percentages are expected to increase dramatically in the coming decades, while total population and working-age population are expected to decline. Because of its growing population, the graying phenomenon will be less noticeable in the U.S. Nonetheless, as a percentage of total population, there will be much faster growth in the 65-and-older range than in the traditional working-age range.
So, how are organizations preparing for this future? Some are conducting talent inventories in their organizations. In this way, they hope to foresee not only worker shortages but knowledge and talent shortages. To prevent shortages, some companies also use various other strategies: succession plans, knowledge-sharing programs that include mentoring and best-practice communities, knowledge-maintenance programs that include phased retirement and flexible scheduling, and knowledge-transfer programs such as job rotation and job-sharing.
Chevron Corporation, for example, took steps in 1999 to prevent a repeat of what occurred when an offer of buyout packages led to the exodus of many of its experienced managers. To retain needed expertise, all operating units now conduct annual demographic analyses to determine where talent shortages will occur. There is also a renewed emphasis on succession planning so that qualified managers are prepared to step up when retirements take place. Younger employees are being tapped for executive development programs, and experienced executives are transferring knowledge and skills to younger executives.
Deloitte Consulting recognized its vulnerability to talent losses when it determined that the number of partners over the age of 50 would double within a five-year span. The global consulting firm developed a Senior Leaders Program, targeting its most valued senior partners. The program gives these partners greater freedom to determine how, when, and where they would like to work. From location choices to part-time scheduling options to opportunities for anything from consulting to mentoring, senior partners can restructure their jobs to meet their needs. Deloitte is hoping that the flexibility will reduce the likelihood of losing senior talent.
The combination of talent inventories, knowledge-sharing programs and retention policies may help reduce talent shortages. Ultimately, however, the severity of shortages will also depend on various factors over which businesses have less control: economic growth rates, legislation affecting retirement and pensions, medical advances, savings rates, immigration policies, etc. The most proactive employers will develop contingency plans that ensure corporate continuity under a variety of scenarios.
For more on global aging, see various age-related documents at the Population Reference Bureau's Web site at
http://www.prb.org/
For U.S. population statistics by age group, see
http://www.census.gov/population/www/socdemo/age.html
For more global data on these trends, see the "Ageing Society" documents at
http://www.oecd.org/
And there's a real danger that companies won't find enough workers to replace those talented people, given demographic trends. In European Union countries, for example, an average of 16.4% of their population is already age 65 or over, and the same is true for 17% of Japan's population. These percentages are expected to increase dramatically in the coming decades, while total population and working-age population are expected to decline. Because of its growing population, the graying phenomenon will be less noticeable in the U.S. Nonetheless, as a percentage of total population, there will be much faster growth in the 65-and-older range than in the traditional working-age range.
So, how are organizations preparing for this future? Some are conducting talent inventories in their organizations. In this way, they hope to foresee not only worker shortages but knowledge and talent shortages. To prevent shortages, some companies also use various other strategies: succession plans, knowledge-sharing programs that include mentoring and best-practice communities, knowledge-maintenance programs that include phased retirement and flexible scheduling, and knowledge-transfer programs such as job rotation and job-sharing.
Chevron Corporation, for example, took steps in 1999 to prevent a repeat of what occurred when an offer of buyout packages led to the exodus of many of its experienced managers. To retain needed expertise, all operating units now conduct annual demographic analyses to determine where talent shortages will occur. There is also a renewed emphasis on succession planning so that qualified managers are prepared to step up when retirements take place. Younger employees are being tapped for executive development programs, and experienced executives are transferring knowledge and skills to younger executives.
Deloitte Consulting recognized its vulnerability to talent losses when it determined that the number of partners over the age of 50 would double within a five-year span. The global consulting firm developed a Senior Leaders Program, targeting its most valued senior partners. The program gives these partners greater freedom to determine how, when, and where they would like to work. From location choices to part-time scheduling options to opportunities for anything from consulting to mentoring, senior partners can restructure their jobs to meet their needs. Deloitte is hoping that the flexibility will reduce the likelihood of losing senior talent.
The combination of talent inventories, knowledge-sharing programs and retention policies may help reduce talent shortages. Ultimately, however, the severity of shortages will also depend on various factors over which businesses have less control: economic growth rates, legislation affecting retirement and pensions, medical advances, savings rates, immigration policies, etc. The most proactive employers will develop contingency plans that ensure corporate continuity under a variety of scenarios.
For more on global aging, see various age-related documents at the Population Reference Bureau's Web site at
http://www.prb.org/
For U.S. population statistics by age group, see
http://www.census.gov/population/www/socdemo/age.html
For more global data on these trends, see the "Ageing Society" documents at
http://www.oecd.org/