New Gallup research finds that older baby boomers are retiring in large numbers and predicts a possible shortage of U.S. workers. This makes sense. Ten thousand baby boomers turn 65 every day, and, according to the Stanford Center on Longevity, the crucial pool of workers age 45-54 is shrinking as a percentage of the workforce. With fewer highly experienced employees to replace those who retire, businesses need to get serious about succession planning.
Unfortunately, few have done the planning they’ll need. Most organizations already report having too few candidates for their needs, and about one-third of organizations surveyed have no succession plan at all, according to Human Capital Media Advisory Group. Industries at highest risk include those that depend heavily on specialized knowledge, such as the pharmaceutical industry, as well as industries with a relatively older labor force. Also especially vulnerable are family businesses: only 27 percent surveyed by PwC have a robust and documented succession plan.
Companies that meet the challenge will closely involve senior leaders in succession management and will move away from by-the numbers approaches to a continuous planning process. They also will consider all critical positions as well as top performers and high potentials: researchfrom Bersin by Deloitte finds that high-performing organizations are pushing succession planning further into the business to include a range of important roles and are seeing the benefits in employee engagement and retention. Among other keys to preparedness, organizations also can survey the competition to identify what others are doing to develop future leaders.
The loss of executive knowledge has serious potential consequences as America’s senior corporate leadership gets older. Experience does matter, and USA Today points out that the companies with the oldest 10 CEOs are financially outperforming the market. Until succession planning becomes a higher priority, expect bumps ahead as experienced CEOs and other senior executives leave and unprepared leaders take charge. By focusing now on succession planning, organizations can position themselves for significant gains in the increasingly competitive talent landscape ahead.