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What You Need to Know as Baby Boomers Retire and Generation Z enters the Workforce

Workplace Dynamics are Changing: What You Need to Know as Baby Boomers Retire and Generation Z enters the Workforce

The next generation of workers is here; Millennials and Generation Z (those born between 1981-1996 and 1997-2012 respectively) are already making a significant impact on the future of work and bring a unique set of characteristics. Namely, these up and coming workers are:

  • Digital-first: Millennials and Gen Zers don’t know a world, let alone a workplace, without technology. They are often ahead of the curve when it comes to implementing and adopting new technologies and are in tune with how systems and processes can be improved through technology.
  • Mobile: Unlike their predecessors, Millennials and Generation Z are more likely to change jobs, roles, or locations than to stay with one company for the long term. They value flexibility and the ability to make changes that work for their changing lifestyles, rather than feeling tied to or “loyal” to one organization for the entirety of their careers.
  • Adaptable and Agile: The younger generations aren’t impressed by promises of stability. They know they can work wherever, whenever, and in whatever kind of situation. In fact, they expect it. They expect to be able to work remotely (when possible) and will quickly adapt and adopt changes.

While it is important to begin to anticipate the changes these younger workers bring, what may be even more important is preparing for the Baby Boomers to leave. Nearly 10,000 Baby Boomers turn 65 years old each day, and by 2030, all boomers will be at least retirement age. The future of work is about to change drastically - what can we be doing now to prepare?

Key Takeaways

  • Baby Boomers are retiring at a faster rate than ever before. Leaders need to be prepared now for what their exit will look like.
  • As we enter into this new phase of work, leaders will need to embrace the following principles:
    • Maximize a Multi-Generational Workplace:
    • Equip the Forgotten Gen Xers
    • Honor Legacy Employees
  • We are not yet in a crisis, but there is a sense of urgency here - the most successful organizations in the future of work will be those who were proactive and prepared.

What to Expect As Boomers Retire

Baby Boomers are retiring at rates faster than ever. In the third quarter of 2021, 66.9% of 65- to 74-year-olds were retired, compared with 64.0% in the same quarter of 2019 (Pew Research). By 2030, all Baby Boomers will be at least 65 years old. It is still unclear what the implications of this will look like (inflation, cost of living, and retirement savings, for example, play a role in when an individual may choose to exit the workforce); regardless, we need to be thinking now about who will be leading when your current leaders are retired. We are not at a crisis point yet - but now is the time to prepare before it’s too late.

Change isn’t bad, but it will bring major differences to the workplace. Mainly, how we work will change. As we enter into this new phase of work, we will need to embrace the following principles:

  1. Maximize a Multi-Generational Workplace:
  2. Equip the Forgotten Gen Xers
  3. Honor Legacy Employees

Let’s unpack this further.

Maximize A Multi-Generational Workplace

The current workforce includes five generations of workers - The Silent Generation (2%), Baby Boomers (25%), Generation X (33%), Millennials (35%), and Generation Z (5%). Though the current workforce is fairly diverse, many organizations do not lean into the many benefits each generation brings to the table. For example, younger employees may be champions for leveraging new technology and training others on adoption, while more experienced employees bring long time knowledge that can influence and guide decision-making. As a result, “the collaboration of fresh innovation with wisdom from the experience brings increased productivity” (AIHR). It’s time to maximize a multi-generational workforce - one that embraces the gifts and talents of all employees, no matter their age.

Equip the Forgotten Gen Xers

Often when we think about “the next generation of leaders,” our imagination might turn to the up-and-coming 20 & 30 somethings in our organization. “Emerging leader” programs have their place and are certainly valuable, but have you considered the Gen Xers (ages 41-56)? Bookended between two fairly large generations - Baby Boomers ahead and Millennials behind - Gen Xers make up about 16% of the population, but at least 50% of leadership positions. What is your organization doing to support and equip this “forgotten” generation?

Proactive succession planning is key to success when preparing for the inevitable exit of the Baby Boomer generation. Take stock of your current workforce and ask yourself the following questions:

Who do you anticipate will retire in the next 5-10 years?

Who will take their place?

Are those individuals prepared?

What kind of training can you provide?

What will you need to invest to prepare your workforce for the exit of key leaders?

Pay careful attention to those in your workforce in Gen X and Older Millennial demographics - these individuals are great candidates for leadership opportunities who may have been overlooked due to their predecessors being such a large group. For many years, they’ve felt neglected and may have missed out on valuable training as a result. Be prepared to provide additional training to these individuals so they can catch up.

Retain and Transfer Knowledge

Older employees bring valuable knowledge and skills that many in your organization won’t possess. As you prepare for the exit of these individuals, you will need to find ways to retain access to their knowledge and skillsets before they leave, namely by facilitating the successful transfer of their knowledge to other members of the workforce and keeping older workers in the workforce longer.

Perhaps the easiest way to facilitate the transfer of knowledge is through mentorship. In addition to the practical benefits of mentoring the rewards of mentoring are substantial as well. Mentorship allows legacy employees to bring younger, less experienced people along and bring them up. Mentorship benefits both the mentor and the mentee; in fact,  a recent survey reports that 91% of workers with a mentor were satisfied with their jobs and another study found retention rates were 50% higher for workers with mentors than without. In the same way, mentors experienced a 69% retention rate and reported increased job satisfaction and overall career success.

Increased retention is a key point to highlight here. We often hear from older employees that “their voice doesn’t matter” because their company wants them to retire anyway - this simply isn’t true! Your older employees bring so much value to the table and should be honored and appreciated just the same as your younger employees. In addition to mentorship opportunities,  your near-retirement employees may benefit from additional accommodations, for example, flexible work options, bridge employment, and caregiver support (SHRM).

Likewise, getting older doesn’t mean aging out of development; be inclusive, invite people in, and be open to creative options that adapt to the changing needs of your workforce. There are probably more people than you may be aware of who are willing to make changes if they are equipped or taught how to adapt. Don’t just assume your older workers want to leave - show them you want them to stay by investing in them.

Be Prepared and Be Proactive

In light of what we can expect, there are some practical steps you can take now. We are not yet in a crisis, but there is a sense of urgency here - the most successful organizations in the future of work will be those who were proactive and prepared.

1. Review your job structure and promotional schedule

You may need to make some changes to the way your jobs are structured. Most jobs are structured to accumulate knowledge generally over time and roadmaps for promotion are typically three-plus years in the future, based on experience. In preparation for a skill gap, design jobs in a modular way where employees can acquire specific skills over a shorter period of time. This opens up opportunities at the bottom and attracts lower-level employees, who will then be prepared to replace upper-level employees at a faster rate. In a sense, this looks like creating “mini-jobs” within the scope of a larger job, which advances the promotional path. This is also a great retention plan, as younger employees will see growth at faster rates.

2. Develop clear succession plans

Once you have identified your key potential gaps, succession planning will allow you to begin preparing successors well in advance. Typically, a good rule of thumb is to prepare three years in advance, but for higher-level legacy roles, succession planning may need to begin as far as 10 years in advance. A successful succession plan places an emphasis on development and prepares multiple people. This safeguards the organization should an individual leave prematurely - then, multiple individuals are prepared with the right skills to fill the gap. The goal here is to ensure organizational outcomes can be accomplished without having to hire externally, which might not mean an exact replacement. You may find multiple people can fill the skill gap.

3. Honor your legacy employees

For many long-standing employees, the biggest barrier to retirement is fear that no one will be able to successfully take the baton from them. Honor your legacy employees by being prepared. This will give them peace of mind about their exit. Formalized or unformalized, your legacy employees will appreciate the care and attention you take to make their transition smooth and meaningful.

Next Steps

As Bob Dylan famously crooned, “The times they are a-changin.” Whether the Baby Boomers in your workforce choose to retire now or in the near future, now is the time to prepare for their inevitable exit. We are not at a crisis point yet, but the mass departure of such a large generation will certainly have a ripple effect for years to come. Preparing for one loss means also preparing for the entrance of their replacements, and what you choose to do now will have an unprecedented impact on the future success of your organization. Don’t wait until it’s too late.

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