Strategies for Managing the Wave of Retiring Workers

Senior leaders across a broad array of industries continue to highlight retirements, turnover and succession planning as key issues confronting their organizations. Much has been written and reported on the impending retirement wave of baby boomer workers as one of those areas of concern.

As new generations enter the workforce and older generations remain at work longer, employers must evolve to meet new employee needs. Most solutions involve recruiting tactics for attracting new, younger talent to industry ranks through collaboration with local colleges and technical schools, but what about proactively managing the actual turnover in the workplace? What's the broader plan for transferring the “tribal knowledge” of departing workers to their replacements?

There are two challenges a turnover strategy must address. The first involves the sheer magnitude of baby boomer retirements underway and on the horizon. Approximately 10,000 baby boomers are retiring every day. At many companies, more than 50 percent of the workforce will be retiring in the next three to five years. Most of these personnel are in key management and supervisory positions with extensive tenure, tribal knowledge and the secrets or tricks to keeping the workplace on pace. How will their knowledge make it to their replacements?

The second challenge involves the next generation of workers and their perspectives on employment and tenure. Demographic and trend studies show that the future will bring fewer loyal workers who dedicate their entire careers to a single workplace. Portable 401(k)s, the extinction of pensions and other “golden handcuff” benefits are among the many factors influencing career mobility. Younger workers are significantly more connected with national and international business, job opportunities and trends. Whereas 10 years ago a baby boomer may have been aware of two or three alternative job opportunities within a 100-mile radius, today's generation X or Y worker is likely aware of hundreds of national or global opportunities for which he or she may be qualified. Skilled young production and manufacturing industry workers are in high demand, so the likelihood of more frequent job-swapping is real.  

Generations X and Y made up more than 60 percent of the workforce in 2012, and that number will continue to rise. Job tenure fell from 9.2 years in 1983 to less than one-half that (4.1 years) in 2008, and the recent recession likely cut that number further.

A higher cycle of turnover is the new reality. More than 90 percent of millennials (persons born between 1977 and 1998) expect to stay in a job for less than three years. How will your company manage the turnover of key positions every few years as opposed to every decade?

Organizations must understand the dynamics of near and long-term turnover, including how younger generations of workers will impact how you recruit, train and operate; the tactics for capturing knowledge from workers approaching retirement before they leave; and how to utilize enterprise asset management (EAM) and a computerized maintenance management system (CMMS) to sustain best practices despite higher turnover rates.

Dynamics of Near and Long-term Turnover

To prepare for these changes in the workforce, companies must first consider their aging workforce and focus on how to capture the tribal knowledge that these workers possess. They must also look at millennials. How do they fit into the workplace? How can you engage them and what are they seeking to attain job satisfaction?

Organizations need to assess their company culture. Culture is sustained by structures, systems and style of leadership. It is “the way we do things around here,” and is taught to the newcomers. Edgar Schein, author of Organizational Culture and Leadership, defines culture as “a pattern of shared assumptions and behaviors that an organization learned as it solved its problems and that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems.”

Culture is a product of how you have learned to manage problems. Structures refer to how you divide the work, such as through organizational charts and job descriptions. Systems refer to how you coordinate the work, including processes, measures, rewards and contracts. Style of leadership addresses how you engage and motivate the workforce.

In order to better engage the next generation of workers, you must eliminate some of the rigid constraints that past organizational structures may have created. The following chart offers a contrasting perspective on the differences between the generation X and millennial workforce.

Source: The Learning Café and American Demographics Enterprising Museum

Impact of Younger Generations of Workers

An AARP publication, Leading a Multigenerational Workforce, offers suggestions to recruit and retain workers in the millennial generation. In terms of recruitment, it helps to have an outstanding employee from the millennial generation talk to the candidate. Millennials look for organizations that provide flexibility to allow them to pursue their many outside interests. They like to get involved in meaningful volunteer efforts and are community-oriented.

Millennials are financially savvy and have the capability to access and share information quickly. This is the most technologically and globally aware generation. Pair them with older mentors. On surveys, millennials say they relate best to the baby boomer and World War II generations.

How can you operate your organization with a workforce of millennials where high turnover rates are inevitable? For example, imagine an enterprise that has more than 250 employees with an average age of less than 22 who operate and maintain sophisticated mechanical, electrical and cutting-edge technology systems in unusually harsh climates and around-the-clock shifts. The operating requirements demand no less than 100-percent reliability for periods often exceeding six months. Now consider that this unusually complex operational facility actually turns over its entire workforce, including the president and senior management team, every three years.

The operation described above does exist and is typical of a U.S. Navy warship or submarine. How does a Navy ship's commanding officer manage constant turnover while successfully operating and maintaining such a complex organization? The answer is in the ship's operating culture, which allows the crew to not only survive but continuously improve in an environment of ongoing personnel turnover. An operating culture can be defined as the collective behavioral norms and expectations that govern the way people approach their work and interact with one another.

Capturing Knowledge from Workers Before They Leave

Keeping with the previous example, you likely would see work being conducted on a Navy ship with checklists or standard operating procedure manuals, formal safety procedures and a buddy system that ensures quality control and safety. Training, both formal and on the job, is continuous. Senior supervisors and officers are visible and supportive. Very little seat-of-the-pants work is performed despite the nature of the unique maintenance, operations and training challenges the crew confronts daily.

Within any organization, the most effective method for establishing a repeatable and more easily adopted operating culture is to develop standard best-practice business, operations, and maintenance processes and procedures. It is critical to ensure that high expectations and associated accountability standards are set for procedural compliance and to continuously improve these processes.

An example at a power generation facility might be the synchronization of electrical turbine generators. Is this accomplished by each shift and supervisor with a standardized set of procedures and checklists or is it done a little differently each time based on the personalized styles of those in charge? How would it be accomplished next month if those supervisors or technicians were no longer with the organization?

Evolving from a culture of tribal knowledge and informal operating practices to one of standardized process adherence, practices and procedures involves commitment and accountability from the leadership team. Sharing knowledge, documenting inherent best practices and eliminating the “knowledge is job security” mentality will require time and significant behavioral change.

Do your root cause failure analysis efforts often result in “human error” as a common cause? Have you observed personnel completing a task such as swapping out a duplex strainer on a pumping system lately? Are they following a standardized process or procedure that is written down? Are they completing a checklist and confirming or quality-checking their work? If not, how might you go about introducing those concepts?

The following initiatives can be useful in creating more standardized work practices and reducing the damaging effects of high turnover:

• Identify critical work and procedures that are currently being accomplished with tribal knowledge or without the benefit of documented standard operating procedures.
• Capture knowledge and data for this critical work from existing employees and transform that knowledge into institutionalized training programs and documented procedures.
• Establish training programs that drive accountability and ensure all employees have the skills, competency and knowledge to perform the assigned tasks as well as the ability to record data from those tasks.
• Develop continuously evolving standard operating procedures that are followed via checklists and supervisory oversight.
• Utilize an enterprise asset management system that allows managers to make decisions and plans based on factual information, captured data and trends rather than gut feel or the experience of employees who may no longer be around.

It takes time to shift from a culture of “That's the way we've always done it,” to “Here's precisely how and why we do it this way.” This will require a commitment from leadership to be engaged and visible with workers.

It's likely your organization has accomplished this within other elements of your business. Safety and human resource departments tend to have evolved their standardization of procedures and processes. Now is the time to initiate the change and activities necessary to bring this consistency and standardization to your everyday operating practices on the plant floor.

The operating culture of a U.S. Navy warship is an impressive vision for leaders to model because it serves as a realistic example of how an organization can be efficient and effective in managing workforce turnover.

A survey of corporate boards once defined the No. 1 reason senior executives are terminated as “the inability to affect change within their organizations.” Likewise, changing the operating culture within your organization to ensure the transitions that take place when personnel leave will be a critical factor in meeting goals and objectives through this coming wave of retirements and into the next generation of more frequent employee turnover.  

Utilizing an EAM/CMMS

In many organizations, information is compartmentalized by functional group (finance, procurement, etc.) and fragmented into pre-programmed reports or analysis formats. As a result, it is difficult, if not impossible, to quickly and accurately measure performance or make data-driven decisions.

Information is a highly complex, multi-dimensional and multi-disciplined issue. It is an ongoing challenge to convert data into knowledge that is reproducible and sustainable. No single employee or vendor can provide a comprehensive solution.

Handling the massive amounts of data generated by a plant is not a small endeavor. A number of elements must be considered, including information quality, legacy systems, data visibility, security concerns, etc. It is impossible to take everything into account upfront.

Many plants are data rich but knowledge poor. They record gigabytes of raw data ranging from trivial transactions to critical business indicators. The rapidly changing global market has put more pressure on the ability to quickly make data-driven decisions. As a result, the volume of data needed to manage a company has grown by a factor of 10. Unfortunately, the ability to convert raw data into an actionable database has not kept pace.

An enterprise information management system should be able to seamlessly integrate in near real time all of the data required to manage the entire plant operation, including each of its functions. It can provide effective coordination of activities and the same real-time information to workers at the appropriate level.

In conclusion, adapting to a changing workforce climate with higher turnover demands a multi-dimensional approach. Leaders must understand the dynamics of near and long-term turnover in their organization as well as how younger generations of workers will impact how they recruit, train and operate their business. They must also employ tactics for capturing knowledge from workers approaching retirement before they leave. Utilizing an EAM or CMMS can also help you institute and sustain best practices despite these higher turnover rates.