June 2024 – Adieu, Baby Boomers – Managing the Generation Change

An opinion by Rico Hägele – Partner and Executive Search Consultant at AGILIUM WORLDWIDE member firm Liebich & Partner in Baden-Baden, Germany.

The baby boomers could be gone – tomorrow!

The generation change has long begun and mastering the current plight of “retiring baby boomers” is the key to tomorrow’s corporate success. In the executive search business we are clearly seeing the need to plan and act with foresight so as to create a resilient and competent workforce for the future.

According to legislation in Germany baby boomers can retire at 65 or 67 years old. My prediction is that most of them will retire much earlier. Companies need to be prepared for multiple early retirement decisions.

The first issue is, how can we replace the knowledge that baby boomers possess and will take with them? The shortage of skilled workers is raging anyhow, and it is increasingly difficult to find employees with the right skills and knowledge. On top of all this, those who were the reliable pillars of the company are leaving. Those who have been with the company for decades, have boundless expertise and excellent work ethics, may soon be gone.

Secondly, why will the baby boomers be gone sooner than we think? Ask around. More and more employees at all levels of the hierarchy are already reducing their working hours. As an executive search consultant, I don’t come across too many people who, these days, still want to work 40 hours a week. And more and more of them clearly no longer have to. The desire, and even the need to work fewer hours, is becoming increasingly apparent throughout the population. This might or might not be related to health complaints. It’s important to keep in mind that too much of any kind of negative stress can cause someone to quit.

The higher up in the hierarchy someone is, the more probable it is that they can reduce their working hours, or even give up their job completely, because their financial situation allows it. Furthermore, solid savings and substantial inheritances facilitate the decision to retire earlier.

Thirdly, the trend is clear. Many people want to retire before the official retirement date. And this forces both companies and entire economies to ask themselves, can we, and how can we, replace these baby boomers? It is, therefore, extremely important for organizations to be prepared in advance for this major change. Despite this being clear to almost everyone, I have observed that most companies are not yet acting according to any kind of plan.

Therefore, my first advice to companies is to create a master plan for the generation change. Ask yourself if you have an overview of the upcoming retirees and a plan to manage it. Here I don’t just mean those who will be leaving in the next two years or those who are already on semi-retirement schemes. What is your plan for the long term? It would be vigilant to keep a close eye on all employees aged 55 and over by considering:

1. The employees who will go into statutory retirement and when.
2. The departments/divisions/hierarchical levels that will be affected.
3. The fact that some employees will accept pension reductions to retire early.
4. The fact that employees could quit their job earlier due to physical or mental illness.
5. The signs, such as repeated sick notes and absence.

Secondly, I would recommend that companies start having conversations. In my executive search work I observe time and time again that employees can be retained and are more productive when their work is tailored to their individual needs. Working hours that make it possible to look after children or relatives in need of care should now be a pivotal factor in the design of workplaces. Working models, such as part-time and working from home options, play a major role. Much has happened recently in this context but, compared to Scandinavian countries, there’s still a lot of room for improvement here in Germany when it comes to work-life balance. Personal conversations are the key to understanding the individual needs of employees and being able to react in good time, helping to retain employees who might otherwise be considering early retirement, for longer.

The transfer of knowledge and retaining employees are pivotal in securing the profitable future of companies. Here are ten crucial factors that I believe to be essential for a successful generational change:

1. Promote your talent internally. Identify and develop the potential of your current employees so that they can fill future management positions.
2. Bring diversity into your recruitment strategy. People from other cultures have different perspectives and fresh approaches.
3. 55 is not old! Recruit more “mature” employees.
4. Analyze the skills gaps. Be proactive in identifying which skills and knowledge will be lost when the baby boomers retire.
5. Introduce a culture of lifelong learning. Create a corporate culture that encourages employees to be inquisitive and to pursue learning at all levels.
6. Introduce mentoring programs. Pair the baby boomers with younger employees to ensure a seamless transfer of knowledge.
7. Create specialist groups. Use the expertise of your most experienced employees to create internal think tanks.
8. Build alumni networks. Stay in touch with former employees so as to benefit from their knowledge even after retirement.
9. Initiate reverse mentoring. Encourage inter-generational exchange where, for example, younger employees introduce baby boomers to new technologies and methods of working.
10. Create knowledge databases. Document the specialist knowledge of your baby boomers in accessible, systematic databases.

Up to now I have observed that only a small number of my clients are preparing properly for the generation change. The interest in such, however, has grown rapidly in the past year. Early planning, flexible working models and continuous professional training can mitigate the effects of losing all that knowledge. Proactive action will help to secure the viability of companies and create long-term competitive advantages.

Companies should ask themselves: Are we strategically prepared enough to fill the gap that the baby boomers will leave behind? And consider that by partnering with an executive search firm, they can tap into bigger pools of talent and better identify candidates who possess the necessary skills and the right mind-set to fill the future gaps in their workforce. With executive search consultants the approach to recruitment is more targeted, resulting in better fitting hires and, ultimately, helping companies to manage the generation change more efficiently and successfully.

Rico Hägele is partner and HR consultant at AGILIUM WORLDWIDE member firm Liebich & Partner in Baden-Baden, Germany.

Read more: https://agiliumworldwide.com/index.php/news/adieu-baby-boomers-managing-the-generation-change

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