This is a subject that I have been talking about for several years that is now starting to gain momentum in the media. The shifting generations in the workforce not only create the new management issues and challenges that we have been discussing here: team building, communication differences, working styles, etc. It also presents a very real challenge that most businesses haven’t had time to face while trying to survive the recent economic slump.

The interesting challenge of the shifting multi-generational workforce is this: the Baby Boomers are by far the largest of the current generations. As they begin their mass exodus from the workforce, they take with them years and years of knowledge and experience. Many companies will be sorely hit by this loss as the Boomers were more likely to stay with a certain companies for many years (sometimes for the majority of their careers). Companies that have not invested in mentoring or knowledge transfer programs will be facing quite a challenge as this knowledge exits their company, creating a knowledge gap. This knowledge gap not only includes internal strategies and operational knowledge, but in many cases also includes long-term client relationships, sales strategies and knowledge the directly impacts the bottom line.

As companies begin to replace the Boomers with the younger Gen Ys and Gen Xers, they will need to address these issues. Those with the capital to invest should keep long term employees on hand for talent development and mentoring, either in consultancy or part time roles. But for those who still have not recovered from the economic downturn enough to invest capital into this kind of training, the solution is not that simple. The economic slump has recently added another interesting piece to this puzzle, in that many who were approaching retirement were no longer able to afford retirement (via lost stocks, retirement funds, increased cost of living, etc) which has delayed the entry of many younger workers into the workforce and by extension delayed knowledge transfer and training. Recent articles from US News and World Report and TrueSlant.com describe this situation:

There’s been a lot of attention in this recession paid to seniors who are delaying retirement, and for good reason. Reporter Emily Brandon, writing in U.S. News & World Report in September, said the impact of keeping older adults in the workforce is that younger ones are kept out. Her story was based on research done by the Pew Research Center, which released a survey this past fall that showed most adults between the ages of 50 and 61 were considering working during the traditional retirement years. At the same time, more than four in 10 non-workers between the ages of 16-24 told Pew they had tried without success to find a job. Brandon wrote that for older workers, the decision to stay on the job isn’t always economic, although seventeen percent said they need the paycheck and another 27 percent said they were motivated to continue working by a mix of desire and need. That’s 44 percent working because of (or at least partly because of) financial reasons; 87 percent of employers said employees are working longer in order to rebuild their retirement nest eggs. When the economy begins to recover and the recession fades, will those seniors start retiring in droves?

Corporate America appears concerned that’s how things will shake out. According to MetLife’s Emerging Retirement Model Study, released Tuesday, employers today are deeply anxious and concerned about the impact of the knowledge drain on their organizations. When asked which of two retirement-related issues – delayed retirement or the knowledge drain – are of greatest concern today, 74 percent said it was the knowledge drain, as older workers retire. In fact 70 percent of employers surveyed anticipate that will be their biggest concern in the next 3-5 years. MetLife commissioned the survey of 240 employers to examine their attitudes and behaviors towards the aging workforce in the midst of a deep economic crisis.

Ironically, despite all their fears, 97 percent of companies surveyed have done little, if anything, to figure out how to transfer knowledge from older workers to younger workers, including calculating the cost. Last August The Conference Board in New York released a report, “Bridging the Gaps: How to Transfer Knowledge in Today’s Multigenerational Workplace”—that showed most companies had no plan to manage and transfer knowledge held by senior people. The result, concluded the report, “can be a significant drain of business wisdom that decreases innovation, lowers growth capacity, and reduces efficiency in the organization.” About 75 million boomers are poised to retire and as the economic recovery takes shape, those who delayed will likely begin moving on.

The article goes on to point out that many companies have not begun to address this issue because they are uncertain about cost or about where to start. However, companies that delay this process will fall behind companies who have integrated this process into their core operations, especially as the economy begins to rebound. We will be continuing to comment on this subject as the economy changes and media coverage increases.