The changing landscape of talent within a company leads to inevitable, and many times drastic, change. Since 2011, there have been 10,000 Baby Boomers retiring daily, according to studies from the Pew Research Center. Only 40% of this generation are left in the workforce, while Millennials (born between 1981 and 1996) are on target to become the largest generation the U.S. has ever seen. Generation X professionals (born between 1961 and 1981) have been widely overlooked due to Baby Boomers staying in the workforce longer and Millennials being tapped for succession at earlier ages. How can companies embrace the unavoidable change and capitalize on the transition in leadership?
Human resources executives should be playing an integral role in responding to the growing number of retiring Baby Boomer executives and the influx of Millennials on track to fill their shoes.
Effective succession planning depends upon a strategic partnership between HR, the CEO, and Board. HR should provide objective support in profiling current executive roles and evaluating what skills, experiences, strengths, and competencies make a successful leader. The next step is for HR to identify and evaluate potential candidates within a structured framework and process.
Whether the successor is an internal promotion or an external hire, HR must play a role in establishing an effective onboarding process. Throwing a new executive in at the deep end isn’t an option. Many of the skills and abilities that were instrumental while climbing the corporate ladder can become significant “de-railers” once promoted to the C-Suite. Onboarding and coaching ensure that a cultural alignment is established, resulting in a successful transition.
It’s a well-known stereotype-one based in truth-that Baby Boomers have been loyal to the organizations that employ them.
Thus, most have risen through the ranks of just one or two companies over the course of many years, which is not the case for Generation X professionals. This tenure is what has made many Baby Boomers so good at what they do. It only becomes a problem when they set their sights on retirement.
Generation X and Millennials are more than capable of building the same skill sets as Baby Boomers. However, the challenge is in the institutional and tacit knowledge that an individual gains throughout the years working at an organization. Much of that knowledge is so inherent that the gap is not revealed until a key departure. HR leaders must prepare for the process of knowledge transfer between retiring Baby Boomer executives and future leaders.
A study from Deloitte revealed that 64% of Millennials don’t believe their employers are providing an opportunity for leadership development. That’s a big deal for a generation that values life-long learning.
Equipping Millennials for executive leadership is a vital strategy in preparing for the continued exodus of Baby Boomers. Mentorship and coaching programs enable them to learn and experience the lessons of their elder colleagues, protecting against a future knowledge gap while also strengthening employee loyalty.
Historically, a key component of leadership development was “on-the-job training.” Unfortunately, many mid-management roles have been permanently eliminated, with organizational structures now resembling an hourglass as opposed to the traditional pyramid. As a result, organizations must foster non-traditional developmental outlets for high-potential Millennials.
As one corporate HR executive recently stated, “the war for talent is over…and talent has won.” Companies that get ahead of this multi-generational succession dilemma can still win this war by retaining their home grown high-potentials and recruiting externally when appropriate.