Employers experienced high turnover rates in 2021 during the “turnover tsunami” or great resignation, and now there’s talk of another wave about to hit, the silver tsunami. We saw many members of the baby boomer generation decide to head towards retirement during the post-pandemic era, and that number is trending upwards, posing a handful of challenges.
This was bound to happen as generations naturally age out of the workforce, however, company leaders can take notice now and adopt proactive strategies to mitigate the impact of an aging workforce.
Could This Be the End of the Baby Boomer Workforce?
Legal Jobs suggests that roughly 10,000 baby boomers, the generation born between 1946 and 1964, retire every single day. In fact, the number of workers in this generation who returned to the workforce after the economy reopened post-pandemic was nearly 2% (1.7) less than the pre-pandemic level.
One key factor behind this accelerated retirement was that many older workers were scared of contracting COVID-19 at work. As a result, they cashed in on their 401(k) plans, took a buyout package, or were part of a reduction in force and decided not to re-enter the workforce. Another group decided simply not to return since they had reached their planned retirement age.
Currently, in today’s economy, there’s a possibility that inflation and economic disruption might force some boomers to come out of retirement, however, it wouldn’t make much difference as a much larger number transition into retirement.
This demographic shift, which experts coin the “silver tsunami,” has been long anticipated, but its effect is now being keenly felt. The labor surplus felt by the boom of this generation is leaving the workforce could mean that labor shortages may be felt for longer than anticipated, compounding the labor shortages faced in the aftermath of the pandemic.
The Impact of the Silver Tsunami on the Industry
Besides potential labor shortages, the new wave of boomer retirements can leave significant knowledge gaps in multiple industries, from healthcare to leisure and hospitality. This older generation, for better or worse, has been the backbone of the US labor force, having been in active service for at least 39 years, with many only quitting their jobs three times on average. Unsurprisingly, this older generation boasts a vast experience that future generations might miss out on unless enough groundwork is laid to maximize it.
Back in March of this year, 2023, 2.2 million older workers retired earlier than expected, taking with them a multitude of valuable institutional knowledge and leadership. That number will practically double over the next few months when 46 million US adults approach their upcoming retirement years, reaching ages 65 and above.
This is significant because 4 million boomers are leaving the workforce every year. With boomers making up nearly a third of the entire workforce and 56% of retiring boomers being in leadership positions, this means a lot of knowledge, as well as a third of the workforce, is walking out the door.
A recent survey shows that only 57% of the aging workforce has transferred less than half of their knowledge to the incoming one, with 21% yet to do so. It’s an outlook that doesn’t bode well for the future. Large-scale businesses lose $3000 per employee every year due to loss of knowledge. This can also lead to employers losing their ability to train and retain the younger generations. Younger workers are typically known for high turnover rates, as the average tenure of a Millennial is 3.2 years—a long shot from the average tenure rates that the boomers set. Needless to say, employers don’t have the time to waste recouping lost knowledge if they don’t start taking action now.
How Companies Can Mitigate Crisis When The Silver Tsunami Hits
As the silver tsunami edges closer, companies must take concrete steps to prepare for the challenges it poses. Reducing the impact of this demographic shift demands a proactive approach that not only addresses the unprecedented loss of experienced professionals but also prepares the organization for a more age-diverse workforce.
- Offer upskilling and knowledge transfer programs: Skill-intensive industries, such as healthcare, need highly skilled workers. However, since talent is scarce, it’s wise to develop it from within. You can achieve this by establishing succession plans and mentoring programs within the organization. Encourage more experienced employees to mentor their younger colleagues before they retire. By job-shadowing older folks, younger workers can learn the ropes of the industry, develop their skills, and achieve higher job satisfaction, bridging the knowledge gap and reducing turnover.
- Create a flexible work environment: As the pandemic gradually phased out, it brought about a behavioral change in the workforce, regardless of generation, that may reshape the American work arrangement. Flexible workweeks, remote options, or phased retirement plans will not only increase employee engagement across the board, but may help company retain employees in the boomer generation full time or part time, preventing early retirement and allowing time for knowledge transfer. Not only do these flexible work policies help take valuable talent off the sidelines, but they also foster a more inclusive and age-friendly work environment.
- Encourage employee participation by creating purpose: Besides increasing wages, offering extra benefits, or creating a flexible environment, companies can improve employee retention by readjusting their operational model—their vision, mission, and culture—to encourage collaboration among the staff, provide growth opportunities, and create a sense of belonging. This is essential because it will garner employee buy-in with your company’s long-term goals, enhancing company transparency and, in-turn, gaining you employee loyalty. To help with this, as a leader, engage with your team for transparent feedback, promote any health and wellness programs among seniors to encourage a healthy lifestyle, provide conflict resolution training, and adapt your recruitment strategies to attract employees who bring valuable experience and a strong work ethic to the organization.
- Incentivize and right size the wages of the average American worker: To help retain employees within the oldest generation, a surefire way to retain them is to look at their paycheck. After all, most have worked for half a century, giving loyalty to organizations without so much as a cost of living increase each year. It’s not uncommon to find two workers in similar roles with wildly different compensation plans, simply because one has been there longer and didn’t get a chance to negotiate a new offer. Taking the time to right size the compensation of your longest tenured employees with fair market value is one of the easiest ways to retain them, their knowledge, and to avoid the cost of recruitment and training should they suddenly retire early.
While these strategies are effective in the short term, the Silver Tsunami is rapidly approaching one way or another as the oldest generation in the workforce continues to age. One thing is for sure, the last thing companies want is to let valuable and vital knowledge to retire with them without passing it on to younger generations, finding teams short-handed with large gaps in processes and workflows. While this reality can’t be stopped, it’s effects can be curbbed by implementing and promoting succession programs, creating a flexible work environment, and encouraging intergenerational collaboration.
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