Over the next few years, the aging population will lead to a 'retirement tsunami', with millions of baby boomers leaving the workforce within two decades. In Australia, the ratio of employed persons to retirees will be cut almost in half, falling from 5 to 2.5 workers for every retired individual, according to Treasury data. In the US, "baby boomers in a big lump are leaving the labor force," according to Andrew Chamberlain, chief economist at Glassdoor. In short, there won't be enough new talent entering the workforce to keep up with those leaving it.
According to the data from the Australian Bureau of Statistics, almost half (49 percent) of people who were at least 45 years old in 2013 planned to retire between the ages of 65 and 69 - about 20 years from now. However, the retirement wave may come even sooner than expected. While the government wants people to keep working longer, recent retirees generally left the workforce around age 61. In the United States, the Government Accountability Office (GAO) estimates that by 2016, more than a third of the federal workforce will be eligible to retire, putting the pending loss of so many experienced workers on the GAO’s “high-risk” list of management challenges for government.
What does this mean for organizations like yours? If you have employees who will retire with the baby boomer generation, you'll not only need to replace these workers but may also face an increasingly fierce competition for new talent. With the candidate pool smaller than the outgrowing crop of employees, organizations have more difficulty filling the shoes of outgoing team members.
What's to be done?
The retirement tsunami is a challenge that most enterprises will have to face. However, it doesn't have to be disruptive to operations. By starting to plan and prepare now, organizations can better tackle recruitment needs more strategically.
And that means the more you know about your upcoming openings and existing talent, the better. Understanding your workforce allows you to approach talent management more holistically and proactively, as long as you have the right information to guide you.
In general, this comes down to three basic steps:
● Anticipating your personnel needs over the next few years
● Identifying the talent assets you already have within your organization
● Recognizing which skills you should develop through training or other avenues.
With these insights, you'll can plan more proactively for recruitment and performance management, starting by making the most of your current staff.
3 steps to understanding your workforce
Let's take a closer look at the three steps that provide a strong sense of your true talent assets and needs.
1. Analyze what your organization will need in terms of people
Recruitment and talent management efforts always address needs, usually in the form of a job opening. When these processes are reactive - such as in response to an employee leaving an organization - the delay between identifying the deficiency and attaining the talent can be a significant disadvantage.
You can't always predict the future, but the more you anticipate your upcoming openings and workforce changes, the better you can fill those spaces proactively, keeping a step ahead of any shortage.
This forecasting can draw on data about your organization’s performance, its goals, market trends and workforce demographics. For instance, knowing which employees will be eligible to retire during a particular period can uncover future needs, all the more so if you've been in communication with these workers about their intentions.
2. Understand what you already have in your workforce
Once you know your needs, it's time to see whether you already have the people power to fill them. Often, organizations have existing staff members who can step into a new role, whether that includes a promotion or a little extra training to transfer to a different position.
Having a strong sense of your talent base - including their professional goals, performance potential and interest in developing new skill sets - makes it easier to recruit from within. Performance management software streamlines this process, automating processes for assessing talent and recognizing opportunities for professional development.
3. Identify existing skill sets and training opportunities
In addition to knowing who might be strong candidates to fill particular openings within your enterprise, you can take a look at exactly which skill sets your staff already has and which they'll need to develop before they can take on a new workload.
High-potential junior employees, for instance, might benefit from leadership training to prepare them for managerial roles. Other staff could take classes to develop a specific, hard-to-recruit skill set.
The benefits: More than just a search strategy
Developing a clear, 360-degree view of your workforce isn't only about making it easier and faster to fill openings (though it should assist with that process). Internal hires present a number of benefits for organizations and their workers.
For starters, it may be less expensive to promote from within. A recent study found that the salaries of outside hires are 18 to 20 percent higher than those promoted to the role internally, even though they're more likely to jump ship and often don't perform as well. These factors, which were reported by The Wall Street Journal, are compounded when you consider recruitment and training costs.
Creating opportunities for advancement is also great for morale, job satisfaction and motivation. A 2012 study published in the Harvard Business Review found lack of professional development support drives young managers to leave their companies, with these employees identifying training among the most important aspects of their jobs. On the other hand, developing the talent you have can aid in retention and performance, ultimately impacting the bottom line.
Additionally, even if you need to train employees to take on a different role, it's often faster to bring a current worker up to speed than to start from scratch onboarding a new hire. Current staff members are already familiar with the organization's processes and offerings, may have relationships with partners and clients, know their co-workers and are ideally a good fit for the organization’s culture.
Finally - and this is particularly pertinent to the retirement tsunami - looking internally first can facilitate smoother transitions. When you know an employee is going to retire and have already identified a successor, the departing employee can train the replacement, passing along key information.
Laying the groundwork now
As a whole, getting to know your current talent assets and potential, as well as upcoming needs, will empower you to make the most of your workforce. Although recruitment will always be a part of the picture, this more proactive, comprehensive performance management approach can help you ease the burden of departing workers.
The sooner you start, the better. Once you have an understanding of your workforce, you can begin putting the right strategies in place to fill those gaps. For instance, HR professionals and managers could have conversations with staff about their career goals and interests.
That way, your employees know you're interested in investing in their careers. You may also be able to circumvent some of the fierce recruitment battles when the retirement tsunami washes over.
Originally posted on Acendre blog.