Dispelling the Retirement Wave Myth: It’s an Undercurrent, Not a Wave
For years now Federal human capital and human resources practitioners have been told human resources horror stories about the retirement wave: “Nobody go into the barn, the boomers are all in there retiring!” In most Federal organizations, however, it’s just not happening. We know it’s coming, but more like a herd of “walkers” way off in the distance in “The Walking Dead” that is out there but never seems to approach us. (It’s Halloween, thus the scary movie references.)
Of course, organizations with mandatory retirements face challenges as the boomers retire. The majority of the Federal civilian agencies, however, do not have mandatory retirement and despite feverish workforce and succession planning, it seems that far fewer govvies are retiring. Simply put, the retirement wave isn’t. There is, however, an undercurrent of change in the Federal workspace and HC/HR needs to set course with this in mind rather than focusing on the distant tsunami they fear is on the horizon. This brings key questions as to why boomers aren’t retiring, what the implications are for human capital, and what a human capital leader can do about the implications.
Let’s start with the why. The economy has burdened the boomers with a trifecta of bad:
• Dwindling nest eggs: First, investments have plummeted both in the stock market and in real estate. Boomers’ nest eggs aren’t as large as many expected them to be. Moreover, boomers have watched many of their parents outlive their retirement savings. Living to be 100 is great. Running out of money at 80 isn’t.
• Uncertain economics: Second, boomers have a heightened awareness of the uncertainty of one’s financial future. Boomers weathered the 1970s stagflation (some even believe their entrance into the workforce caused it), Black Monday, the Friday-the-13th minicrash, dotcom bust, 9-11, and the housing bubble, just to name a few. The real cause of their uncertainty now, however, is not the commercial sector, but rather the Government. Fears around cuts to Social Security and Medicare are doubled with the reality that most of the boomers will live longer than they expected.
• Sandwiched Generation: Third, and finally, many boomers’ expenses haven’t decreased the way they had hoped. Boomers’ parents are living longer than expected and many boomers are caring for their elderly parents. Boomers’ children are facing hard economic times and many have moved home. Eight percent of grandparents share a household with a grandchild and many are the primary breadwinner in supporting their grandchildren. Boomers are sandwiched between their elderly parents and their boomerang children and grandchildren. Their expenses didn’t drop off at 55 or even 65. For many, their only option is to keep working.
So, what are the implications? The upside for boomers who work in Government is that most Government jobs are not manual labor intensive (with many exceptions, of course) and boomers have unprecedented health even in their “golden years.” Many boomers are continuing to work just because they enjoy working! Government is also one of the few remaining industries that respects long-term service and experience as much as youth and exuberance. The downside, however, is that this complicates workforce planning and “sandwiches” gen X in the workplace the way boomers are at home. The result will be the loss of gen X talent in the Federal government, not the predicted mass exodus of boomers.* The departure of gen X employees affects the Federal workforce several ways:
• No Way Up: As boomers are retiring much later than expected, gen X has fewer opportunities for promotion. Lack of opportunities for advancement combined with the “new normal” of sequestrations and possible shutdowns are enough to convince top talent in gen X to head for the commercial sector where they make more money and, for the first time in history, perceive more stability. (Saying the commercial sector is more stable than Government may sound like crazy-talk, but that perception is growing.) As gen X exits the Government sector like it’s the end of the movie with no hope for a post-credits teaser trailer (Avengers, anyone?), adverse selection will become a larger succession planning problem than retirements.
• Why is everyone here 20 or 50?: As gen Xers leave and Gen Y/ millenials stay, the bifurcated workforce can become less effective at working together. Gen X is the glue that binds the boomers and millenials together. Their Grunge-listening, Reality Bites watching, we-didn’t-grow-up-to-be –the-slackers-Time-Magazine-predicted ways bridge the gap between the idealistic millenials and the somewhat jaded boomers. More specifically, as tacit and organizational knowledge is built over time and generally transferred through direct reporting relationships, the missing link will be that of not only knowledge transfer but also innovation. Gen X both knows why something is done the way it is and is open to new ideas about doing it differently. They are simultaneously a conduit and an emergency brake. They are essential to your organization and you can’t meet your mission objectives without them.
• SES = Seldom Easily Staffed: In general, boomers who haven’t made SES by now aren’t a fit for that position (be it by skill or by choice.) Millenials are too inexperienced for senior executive service. If gen X leaves the Federal workforce, we will be about as able to find our next SES internally as we are to find a heliophysicist at a Kardashian party. This is, by far, the riskiest result. Technical skills can be developed through training, whether formal or on the job. Leadership skills, however, require longer term development. Training is helpful, of course, but mentoring, coaching, stretch assignments, and job rotations are where the rubber hits the road. And those activities take place over many years of a career. As brilliant as that Cornell ’09 may be (as all Cornellians are, given that’s my alma mater), she isn’t ready for an SES position and there’s no way to get her ready in the next 24 months. We need seasoned professionals and gen X has them.
Given this, what do you? Force more mandatory retirements? Get one of the gen Xers to take you with them to the Commercial sector?
Rather than fight the undercurrent, embrace it:
• Develop Part-Time Opportunities for Boomers: Actually, part-time programs for all employees. The Federal Government could benefit from more part-time roles and job-sharing like programs. This allows your organization to continue to have the benefit of boomers expertise and enables boomers to continue to earn wages while having more time to enjoy themselves outside the office. These programs will also appeal to millenials later, as they start their families, and more couples will share child-rearing equally. millenials will have more stay-at-home dads, but also more families with two part-time, white-collar workers.
• Rotate the Gen X Top Talent: Although top talent does expect to be promoted, a new challenge can be just as rewarding for many. Develop job rotations programs for top talent to ensure their engagement and you will have the added benefit of a stronger leader when the individual is finally promoted.
• Stretch Assignments: Work with high potential gen X ‘s managers to identify stretch assignments at the next level. This will help to transfer knowledge and in other sectors has allowed high potential individuals to be “performing at the next level” for two years or more before promotion. This can give their managers the freedom to pursue other tasks, such as innovation and staff development (How many managers do you know who really spend 20% of their time developing their staff? Or any time on the high performers given their time constraints and the needs of low performers?)
• Emeritus Programs: Consider developing Emeritus programs for boomers who want to work simply because they enjoy service to our country and prefer flexibility to income. NASA does this exceptionally well. Their program at Goddard Space Flight Center provides an innovative opportunity for highly talented and recognized retired employees to continue as valued contributors to NASA enterprises and to NASA activities, while reducing the level of activity and responsibility required of civil servants. This does, of course, require lots of legal wrangling, so start that now!
• Ask them!: Communication is key in understanding the motivations and values of a workforce. Identify your high-potential employees – regardless of generation – and ask what you can do to engage them. For some it may be telecommuting. For others it may be more educational opportunities. There are many non-monetary motivators at your disposal. Use them!
The retirement undercurrent isn’t scary. HR/HC has the tools and acumen to handle it. Don’t be fooled by the mask it wears (there’s no wave!) or by the millenials who just yesterday were knocking on the door to trick-or-treat and now are knocking on the door of the corner office. Of course, none of this addresses the STEM crisis or all those students graduating with English lit degrees instead of in-demand math and science skills. (I’m a gen Xer with an English undergrad – does this make me a trendsetter?) Regardless, Happy Halloween, everyone!
* = As many writers use different definitions of generations, for the sake of this article let’s define boomers as having been born between 1946 and 1964 (age 49-67); gen X as having been born between 1965 and 1979 (age 34-48); and Gen Y (aka millenials) as 1980-2000 (age 13-33).