Preparing for the Coming Skills Shortage

In just two years, U.S. companies expect to lose 11% or more of their current workforce due to the retirement of baby boomers, says Deloitte Consulting. This impending loss is largely unrecognized: 51% of medium-sized companies report they are just becoming aware of the future labor shortage, and only 35% are beginning to examine internal policies and management practices to prepare for it, says the Society for Human Resource Management 2006 Workplace Forecast.

The retirement of personnel with specialized skills will lead to a talent gap. Companies should strategize now for how they will invest in training new employees and restructure the remaining workers facing the increased workload.

All of that pressure could stymie employee productivity.

Closing the gap

Bracing for the post-boomer skills gap is fundamentally an issue of supply and demand. The supply curve can be bent up by more aggressive recruitment techniques, improved retention through internal mobility, alternative work programs and other tactics. Similarly, the demand curve can be bent down by enhancing productivity, improving automated technology and making products/services more focused on customer self-service. By bending the worker supply curve up and bending the pressure on remaining employees down, companies hope to shrink the skills gap.

Another technique for coping as baby boomers leave is to recognize "who is most critical to adding value to your business."

The retirement of "critical talent" could be crippling to businesses because this group drives a disproportionate share of the company's business. These employees understand the work itself as well as how to make things run smoothly internally.

If a company does not recognize their critical work segments they are missing an entire section of their business perspective. Employers should identify these critical work segments, prioritize them, decide where the segment will need to work harder and find out what motivates them. Organizations should have a talent-management process in place to address the workforce shifts without snubbing the non-critical talent segments, because they, too, are valuable to the company.

Power of flexibility and personal contact

The approaching talent crunch will be bigger than any we've seen since World War II. There will be fewer workers doing more work to compensate for the vacancies left by retirees - a trend seemingly incompatible with more and more employees desiring a greater work-life balance. The looming question is, which will win: employers' push for work intensification or employees' request for work-life balance?

Employers will need to alleviate the pressure on employees in order to grease the wheels for knowledge transfer. Reducing stress for hardworking employees can be done by reducing workplace noise, like the constant drip of e-mails, audio noise, interruptions, misunderstandings and the noise of the unknown.

Greater workplace flexibility can also prevent employee burnout. Employers are experimenting with letting employees manage their time more autonomously. Especially when workers are divided into teams, an employer can let an entire group decide how and when they will work. People will work harder if you give them flexibility.

As individuals take on more tasks at work, they can lose sight of the company's objectives. Having one-on-one performance conversations regularly with employees in order to identify what working environment employees want, determine what drives employees, develop strategies to meet goals and recognize their accomplishments.

Stay, just a little bit longer

Making the workplace appealing enough for boomers to stay is another way to manage the exodus of retirees. More older workers are resisting the trend toward boomer retirement than one might expect. Some may be delaying retirement because of Social Security reforms, changes in employer-sponsored benefits, improved health and less physically demanding jobs, says the Urban Institute.

Herman says keeping older workers is crucial to successfully training new employees and ensuring a successful knowledge transfer. Older employees may seek part-time work, contracting, arrangements similar to job sharing and teleworking, but overall, Herman says most older workers won't require difficult accommodations because technology will help "quite a bit."

A smooth transition

As boomers train other employees and prepare for their retirement, another set of management issues will surface concerning cross-generational communication and promotion to management roles.

Communication between the complex mix of generations in the workplace during training is not always easy. HR professionals should talk to managers or those conducting training about what motivates individuals in these employee segments and suggest communication techniques.

Employees preparing to fill the shoes of boomers lack experience with the position and sometimes the company. Networking, corporate culture and customer communications - both internal and external - are often difficult for generation X and Y employees because they cannot be accomplished through e-mail or memos. Trainees may not understand building business relationships personally.

It is also suggested that companies prepare to support new managers as they take on their positions because managing a group they once were a part of can often be a struggle.

Extensis Can Help

Extensis is the leading New Jersey based Professional Employer Organization. We have years of experience in providing the guidance required to make our clients make the most of their people, "Boomers", Gen-X, Gen-Y or in between. Let us help you sort out your administrative overhead and let you get back to growing your business.

For more information, go to www.extensisgroup.com, or call 888-473-6398.