New Pew report suggests that older workers stay on the job for non-financial reasons; implications for macro-succession crisis?

I’ve written several pieces on the “macro-succession” crisis I see facing American businesses. One challenge to my central thesis (which I’ve heard a few times, in fact) comes from people who think that the massive loss of institutional knowledge and expertise I predict as a result of Boomer retirements (which have already begun) won’t occur because many of these people are choosing to work past the age of 65 (and will continue to do so). The logic is economic – more and more people can’t afford to retire, goes the thinking.

My response has been that while I think this dynamic is a real one, I don’t believe it indicts my theory. Workers driven by economic factors are primarily line workers and lower-to-middle management. My concerns primarily address what’s happening at the senior management and executive levels, and these people don’t have significant money problems, by and large.

A new report from the Pew Research Center looks at the phenomenon of older workers choosing to stay on the job in some detail. The study doesn’t directly address my contention that leadership and upper management types are more likely to retire, instead focusing on exclusively demographic factors like age and gender. However, it does make clear that many are continuing to work for reasons other than financial. It’s possible that these results, if they accounted for the worker’s place in the organizational hierarchy, might dispute my thesis. It’s also possible that financial reasons and non-financial motivators are spread evenly across the population. Hard to know without more data.

In any case, we owe it to ourselves to evaluate a new scenario in light of the Pew report. So let’s imagine that retirement-eligible workers do stay on the job in significant numbers. Further, since the data indicates significant numbers of them driven by non-financial concerns, let’s imagine that senior management and executive leadership are implicated and that a meaningful number of them do not exit, as postulated in previous scenarios. Under these conditions, how does the macro-succession dynamic play out?

  • This scenario requires us to assume that the economy doesn’t expand significantly. If it were to rebound and grow (think late ’90s Dot Com boom here), then all those older workers with economic concerns would be able to retire after all. (At a future date we need to wargame that scenario, I suppose.)
  • The previously theorized loss of leader-level expertise is mitigated to some degree. Certainly many business executives with substantial institutional knowledge still retire, but it’s possible that enough stay on to prevent the “sudden vacuum” effect. In this case, there may be something like an orderly transition from Boomer leadership to Gen Xer leadership in the near term. The longer-term numbers problems remain, though – the Boomers still leave eventually and Gen X is still only 2/3 the size of the Baby Boom. (If the economy contracts significantly, we may not experience a crisis at the leadership level, although we certainly will lower in the organization. See below.)
  • We still have an issue with Xers being relatively unprepared for senior leadership, although it’s not as bad as it would be if the Boomers left en masse. In this scenario, you can begin to conduct more of the mentoring that hasn’t happened to date.
  • The Gen X “stretch” problem described in previous posts is mitigated. Since many Boomers stay in their middle and lower management jobs, the smaller pool of Xer managers aren’t needed to cover as much territory.
  • Where Millennials are concerned, there’s good news and bad news. The good news is that all those Boomer managers hanging around mean that Mills aren’t thrown headlong into positions that they’re not ready for. The bad news is that if the Boomers don’t retire, Mill employment and advancement prospects are severely impeded. If the economy remains tight, or if the recovery isn’t accompanied by lots of new jobs, then we could be looking at a Millennial freeze-out. Consider the Pew finding that, thanks in part to the economy, younger workers are delaying entry into the workforce and now constitute a much lower percentage of the force than they did a decade ago. They can hardly compete with older, more experienced workers on any criterion save one – cost. And while undercompensated beats not compensated at all, we’re still a long way from an ideal situation.

The Pew report raises interesting questions and gives us the chance to examine alternate scenarios (that clearly need to be examined). The thing that remains constant, though, is what I’ve contended all along – that very few businesses are paying the slightest attention to any of this. As such, they’re courting disaster.

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