New York., -- A new survey conducted by Ernst & Young LLP, ExecuNet Inc., and the Human Capital Institute reveals that, although corporate America foresees a significant workforce shortage as boomers retire, it is not dealing with the issue at present and may be underestimating the strategic challenges ahead.
The survey, ‘The Aging of the U.S. Workforce: Employer Challenges and Responses’, indicates that a little more than half of respondents agreed that the aging workforce is an issue that must be addressed. While almost two-thirds said that retirements will lead to a "brain drain" in their organization, less than one-quarter said that it is an issue that is strategically very important.
"Approximately every seven seconds in America this year, a boomer turns 60," said William Arnone, an Employee Financial Services practice leader in the Human Capital Practice of Ernst & Young LLP. "Seventy percent of the survey respondents have not yet attempted to identify where business wisdom resides in their organization. This means one thing: corporate America is facing a significant wisdom withdrawal."
While the survey illustrated that employers are putting off tackling the issue of an aging workforce, an overwhelming 90 percent said they are committed to putting formal retention programs in place in the future. Of the 30 percent who have identified where business wisdom resides, only 67 percent have formal processes in place to transmit that business wisdom to the next generation.
"Right now, HR professionals are focusing on other things they consider to be more pressing, such as governance and compliance issues," said Arnone. "As the looming 'wisdom withdrawal' becomes a more immediate concern, they will focus their resources on the issue at that time."
Aging Workforce by the Numbers
Of survey respondents who believe that the aging workforce is an issue that must be dealt with, 53 percent said it will lead to a workforce shortage. Sixty-three percent said that retirements will lead to a "brain drain." While almost 15 percent of respondents' employees are eligible to retire in the next 5 years, they estimate that just over 10 percent of their current workers are likely to do so.
Approximately 40 percent noted that their top human capital concern is the availability of talent over the next five years. Other highly ranked areas of concern include retention of key employees and talent management (i.e., ensuring that the right employees are in the right positions).
Over 85 percent had no formal retention programs in place. Of those who did, hiring retirees as consultants or contractors, retention bonuses, promoting a culture of generational diversity and pre-retirement planning programs proved to be the most popular.
Survey findings are based on responses from a sampling of senior human resources executives from a cross section of some of the largest employers in the U.S. in a variety of industry sectors. The survey was conducted electronically from November 11, 2005, to December 21, 2005.