Monday, April 2, 2007

Retaining and Attracting Skilled Baby Boomers

The Dallas Morning News has reported The US is ill prepared with countermeasures to deal with a wave of retirement as baby boomers exit the workforce in droves over the next 5 years.

The oldest boomers will qualify for Social Security's early retirement benefits in less than a year, but a large part of corporate America isn't prepared for the tens of millions of employees who will quit their jobs or scale back their hours over the next decade.

"Most companies haven't seen their boomer employees retire yet, and if it's something not happening in this quarter, CEOs believe they have time to think about it," said Marcie Pitt-Catsouphes, co-director of Boston College's Center on Aging and Work.

The research center surveyed 578 businesses and found that only 12 percent have planned in-depth for the wave of boomer retirements that are projected to create a worker shortage. Twenty-six percent of the companies haven't planned at all.

Labor analysts predict the U.S. economy will face shortages of 6 million workers by 2012 and 35 million workers by 2030. Some industries will be hit harder than others, but the boomer brain drain is expected to ripple through the entire economy.

A Federal Reserve official recently told Congress that the nation's economic growth may slow to 2.2 percent annually by 2015 because of the surge in boomer retirements. That's a full percentage point below the average growth rate for the last 40 years.

Generation X is only three-fourths as large as the boomer generation it follows. Analysts predict that some businesses will be hard-pressed to find replacements for the senior managers, technicians and other employees approaching retirement

So if only 12% of Business has planned for expected retirements that leaves 88% vulnerable. One of the first areas impacted unfortunately will be an employers Short and Long Term Disability plan. In the absence of a flexible work schedule which permits the boomers desire to cut-back their schedule to spend time with grandchildren in another state or with a spouse who has retired, some boomers will notice peers going out on disability and ask; Why ot me? Since some Americans over 55 work everyday with physical problems which are disabling for many will choose disability especially where there is pain involved. Dr Scott Haig wrote on this in Time recently in an article focused on pain;

As an orthopedist who has seen a lot of tough older men with painless, yet arthritic joints, I'm suspicious of there being a peripheral pain blockade that sometimes occurs around joints that are simply not given a chance to rest when they hurt. These are the ones who when asked "Don't you have any pain? say something like "not really but what does it matter, I still have to work to put the food on the table."

The population between 55-64 will grow by 48% over the next 5 years. Incidence rates for disability explode exponentially over 55. When employees realize they can go on disability for many the concern about putting food on the table is suddenly removed. These are some of cultural factors cited by employers in my march 28, 2007 post The Black Hole In Your Benefits Plan.

To see how just a small percentage of the disabled population can drive costs up exponentially in a disability plan see my 3/30/2007 post Surveillance exposes Disability Fraud-Black Hole II

Most people in business would readily acknowledge its considerable less expensive to keep the customers you have than to acquire new ones. This is also true of employees. So while employers should look to be senior friendly in hiring they should also consider return-to-work plans and job accommodation as critical retention tools for talent with a very high ROI. Employers should consider engaging a consultant with significant expertise at evaluating plan loss experience data and formulating recommendations for return-to-work plans as well as plan design for short and long term disability to achieve the optimal ROI outcome.

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