The utility industry is partnering with community colleges to ignite the workforce of tomorrow. Aerospace firms have launched a new type of mission: knowledge transfer. Human resources professionals worldwide are consulting best-practice models for how to recruit, retain and train a multigenerational workforce.
All of these efforts are driven by a single looming reality: The global population is aging at an unprecedented rate.
According to the McKinsey Global Institute, the portion of the global workforce age 55 and older will rise from 14% in 2012 to 22% by 2030. In the US alone, according to the accounting firm Ernst & Young, more of the 76 million Baby Boomers born between 1946 and 1964 are reaching retirement age every year, while in Europe, 2010 marked the first year more people retired than joined the workforce. By the end of the decade, retirements will outstrip workforce entries in Russia, Canada, South Korea and China.
The first year that more people retired in Europe than joined the workforce.
The World Economic Forum (WEF) calls global aging “one of the most significant risks to global prosperity in the decades ahead.” Dangers include loss of institutional knowledge and skills as workers retire, plus the limited numbers of candidates available to replace them, especially in fields that have fallen out of favor with young people.
A STATE OF DENIAL
To transform the perils of global aging into prosperity, experts say, companies must act now to prepare future workers while leveraging the social capital of their older, more experienced employees.
“It’s essential to develop flexible hiring, worker retention and education strategies for a multigenerational workforce,” said Fernán Cepero, vice president of human resources for the YMCA of Greater Rochester, New York (USA), and former New York state director of the Society for Human Resource Management (SHRM), the world’s largest organization devoted to HR issues.
GLOBAL AGING IS “ONE OF THE MOST SIGNIFICANT RISKS TO GLOBAL PROSPERITY IN THE DECADES AHEAD.”WORLD ECONOMIC FORUM
Yet many organizations have been slow to respond, perhaps lulled by the drop in early retirements that followed steep losses in investment portfolios during the recent global recession. In 2012, for example, SHRM and the American Association of Retired Persons (AARP) released the results of a joint poll of US organizations. While 72% of human resource professionals described the loss of talented older workers as a “problem” or “potential problem,” approximately 71% of organizations said they had taken no action-related workforce assessment.
UTILITY INDUSTRY ALLIES WITH ACADEMIA
One exception is the utility industry. With an estimated 40% to 50% of its workforce eligible to retire by 2020, according to a recent report in Harvard Business Review, energy companies have stepped up to the challenge. Some traditional utility jobs, such as meter reading, are being replaced by automation. But the need for line workers and plant managers is ongoing. Consider Hurricane Sandy, which struck the northeast US in late October 2012. Crews from across the US converged on the eastern seaboard to restore power to devastated communities. But will they be able to work as quickly in the future, when retirements might cut their numbers in half?
“The country depends on reliable electricity, and we need a highly skilled workforce on the ground,” said Mary Miller, chief administrative officer of Edison Electric Institute (EEI), an association of shareholder- owned electric companies. “It takes five years to attain the status of journeyman line worker.”
EEI and its nonprofit arm, the Center for Energy Workforce Development (CEWD), pursue a number of highly successful collaborative training strategies. EEI partners with community colleges and the public workforce system—a network of federal, state, and local offices—to assess future job needs and align college curricula to match. Meanwhile, the Bill & Melinda Gates Foundation funded a project identifying pathways for low-income people to achieve high-paying utility jobs.
In addition, EEI launched an initiative called “Troops to Energy” to accelerate the training and employability of military veterans. With their military training and experience, many veterans already possess valuable skills that transfer readily to lucrative energy careers. “Line-worker salaries, with overtime, often reach six figures. Plant managers also earn good money,” Miller said. “These are well-paying jobs that are not going to be outsourced.”
BIGGER TYPE FOR BETTER PRODUCTIVITY
In Germany, where the population is actually projected to shrink 20% by 2060, keeping older workers productive and happy is an increasingly important focus.
Daimler AG, for example, most famous for its Mercedes Benz automobiles, implemented an “Aging Workforce” initiative in 2008 that tackles the issue on two fronts: keeping older workers productive longer and transferring their knowledge to a new generation of employees. Innovations have included expanding the training available to existing workers, offering permanent employment contracts to all skilled production workers, and offering permanent positions to qualified production trainees.
At BMW, meanwhile, where one- quarter of the workforce is older than 50 – a statistic that is projected to rise to 45% by 2020 – the company experimented with ways to help its older workers maintain their productivity. BMW spent US$50,000 to make 70 small changes in an assembly line, such as increasing the size of the typeface on its computer screens and allowing workers to sit while performing certain tasks, then staffed it with older workers. Within a year, productivity matched those of assembly lines staffed by younger workers, and absenteeism dropped from 7% to 2%. The experiment was so successful that in 2011, BMW built a new factory outfitted specifically for older workers and staffed it entirely with employees 50 or older.
AEROSPACE AIMS FOR KNOWLEDGE TRANSFER
Another rapidly graying global industry is aerospace where, according to Harvard Business Review, up to 60% of workers will reach retirement eligibility by 2020. Concern about this trend led Lockheed Martin to conduct a series of studies identifying best practices for capturing the knowledge of departing employees. The effort yielded benefits beyond the retirement issue alone; it also illuminated ways to continually revitalize the corporation.
Up to 60% of aerospace industry workers will reach retirement age by 2020. HARVARD BUSINESS REVIEW
“We wanted to transfer knowledge and make sure it’s pervasive, so it grows and plays a dynamic role in the company,” said Patricia Scaramuzzo, Lockheed Martin’s knowledge continuity program manager.
Lockheed Martin’s knowledge- transfer studies debunked common myths. In a recent presentation to the National Defense Industry Association, Scaramuzzo identified some beliefs revealed as false. For example, one myth is that capturing knowledge is enough. Lockheed Martin found that, in reality, capture is essential, but the knowledge must be applied before the expert leaves, to flesh out and assimilate vital details. Another myth: It’s easier to transfer knowledge one-on-one. The reality? Groups work better, because people benefit from one another’s questions. Third myth: Inexperienced people will slow the group down. Reality: Inexperienced people contribute to team diversity and ensure important basic questions are addressed.
“We’ve been sharing our findings because we believe successful knowledge transfer is key not just to the company’s success, but to the country’s,” Scaramuzzo said.
KNOWLEDGEWARE CAPTURES EXPERTISE
Parker Aerospace, a unit of Parker Hannifin Corp. that makes aircraft components, employs a variety of knowledge-transfer strategies, including expert-guided curriculum development, direct access to senior staff and a formal mentoring program. Knowledgeware software, meanwhile, gives the company a tool to gather, share and reapply knowledge. Even sophisticated knowledge can be captured in templates easily reused by junior employees.
“We have experts who might be the only ones who know how to do X,” said Bob Deragisch, Parker Aerospace manager of enterprise systems. “But if they’re 50 or 55 years old, they’re beginning to realize they need to teach it; their job is to leave something behind that adds value. In some cases they think, ‘I’ve been doing this for 25 years, there’s no way a computer can replicate it,’ but we prove that it can be done. Often a repeated process can be automated to free up humans to be more creative.”
John A. Challenger, CEO of the executive outplacement firm Challenger, Gray & Christmas, Inc., agrees that the technology can make an important contribution to capturing knowledge before an employee walks out the door. “Knowledgeware preserves corporate history and can be a valuable support tool for mentoring,” Challenger said. “You can get it down in writing, how people work on different tasks. You can organize and display the information to be accessible. That doesn’t replace personal communication, but can enhance it.”
CHANGING WORKPLACE PROVIDES FLEXIBLE OPTIONS
Challenger noted that the changing nature of work brings creative flexibility. Gone is lifetime, nine-to- five office employment with mandatory retirement at age 65. Today jobs can be project-based, part-time or mobile—all of which help attract and retain older workers.
“AGE IS IRRELEVANT. PEOPLE SHOULD BE JUDGED BY THEIR PRODUCTIVITY AND CONTRIBUTION.”JOHN A. CHALLENGER
CEO, CHALLENGER, GRAY & CHRISTMAS
“Companies used to hire young workers and expect them to stay their whole careers,” Challenger said. “That era is over. Age is irrelevant. People should be judged by their productivity and contribution. Older workers are valuable because they bring years of experience in multiple areas, and they know how to work in teams. Forward- thinking executives and human resource professionals are always thinking about how to create a culture where age and experience are honored.”