Expected Implications of Baby Boomer’s Retirement Wave



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Management 3360: Organization Theory [Document Subtitle] The Baby Boomers are a globally recognized cohort of individuals who were born post World War II, between 1943 and 1960 (Salahuddin, 2011). This shockwave of births resulted in the second highest births per year with 1. 5 million more births than had been expected (Salahuddin, 2011). 60 years later, the boomers are in the midst of their transition towards retirement from their careers and this trend will result in nearly the largest wave of retirement that our continent has experienced.

The implications of this wave have been expected and planned for, but until the consequences are realized in the 21st century economy, there is little that can be done to prepare for this economical shift. Though the effects will be experienced globally, this paper will focus on the Canadian and American economies. The ideas behind this topic are worthy of discussion as is evident by looking at research on the topic to date.

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The North American implications are numerous so it seems necessary to reduce the exploration of the topic to what are perceived to be the most drastic impacts in terms of organization theory. The position of this paper will be that though the wave of retirement will occur and will result in an economic and societal shift, it will not be detrimental to the staffing levels of large corporations. It will, however, have significant impacts on the day-to-day operations of organizations as they adapt to the differing work styles and preferences of the new and upcoming demographics.

Additionally, the major impact that this wave will have will be on the human resource functions of the organizations, as they fight the combat of high turnover, restructuring, and the effective implementation of these changes. One of the main perceived issues is that the retirement of the baby boomers will result in a staffing shortage for the American and Canadian economies. There is quantitative evidence that supports this issue, and which states the issue in terms of the current population of older employees relative to other demographics in the workforce.

However, there are a number of factors that offset this issue. Primarily, the potential issue of a labor shortage can be addressed in terms of the amount of work to be completed as opposed to the number of positions to be filled. Since 1940, productivity growth has increased 400% in the American economy (Cappelli, 2005). Productivity growth is a number to consider and one which can be increased simply by giving employees access to technologies and equipments that increase their output while simultaneously utilizing effective methods of performance management (Cappelli, 2005).

This is a measure that organizations in the 21st century are likely taking already. Though the implementation and attainment of new technologies is expensive, time consuming, and will likely come with some resistance, the requirement of organizations to make these changes is just that: a requirement. Without technological innovation and improvement, the success of organizations would be highly unlikely. A major argument from Cappelli that is worth mentioning is that organizations in the past have approached their human resources needs in a manner that has accommodated their past situations, which seems natural.

However, in a labor market that has supplied an abundance of highly qualified workers desperately seeking employment, as has been the situation stemming from the baby boomers presence in the labor market, it seems that the human resource departments of organizations have not been presented with an accurate reality. To address this issue, researchers and theorists seem to agree with the fact that human resources departments of organizations need to focus on retention of employees and on performance management.

There are numerous ways in which organizations can direct their efforts towards retaining and managing employees as opposed to recruitment and hiring efforts, again which are efforts that organizations should be pursuing regardless of potential threats. This is a proactive approach that will play a large factor in the general success of an organization, and one that will assist organizations in effectively managing their internal staffing levels.

Given the evident reduction in the number of available workers, as demonstrated by the Canadian population statistics and growth patterns, it is appropriate to assess the situation in terms of the Canadian labor market and the fulfillment of the organizational positions that the baby boomers will and already are leaving. A major perceived threat by scholars has been the fact that the generation following the baby boomers, the baby busters, AKA the Xers, is 16% smaller in size (Cappelli, 2005).

Regardless of any increase in productivity, this number is significant and cannot be ignored. It can, however, be offset by the encouraging statistic that describes the generation following the baby bust generation: the baby echo, AKA the Nexters. This generation consists of the offspring of the baby boomers and though when this research was conducted in 2003 they had yet to enter the workforce, their entrance is one that seems to have often been ignored by researchers considering the implications of the retirement of the baby boomers.

This brings up the second issue to address is that of the evolving employment relationship. It is undeniable that there are “significant generational and demographic changes that are about to occur” (Cappelli, 2005) and that have already started to occur within today’s labor market. With variations in work ethic, style, and preferences between these demographics, the shifts in organizational operations are being realized during and after this shift.

To grasp the differences between the relevant generations for the purposes of this paper, Salahuddin’s analysis was considered. Through an assessment of the generational differences in terms of work styles, it is pertinent to the discussion to address the implications that these different generations’ work styles will have on the functionality and success of organizations today. To summarize the substantial differences between the demographics as described by Salahuddin a chart is presented: Boomers| Xers| Nexters|

Service-Oriented| Creative| Use goal setting| “Willing to go the extra mile”| Impatient| Hardworking| Good at relationships| Have poor people skills| Inexperienced at handling issues with people| Good team players| Independent| Belief in collective action| Uncomfortable with conflict| Lack of intimidation by authority| Trust centralized authority| Judgmental to those who do things differently| Adaptable| Technologically literate| | Cynical| Optimistic about the future| | Technological| | | Poor leadership skills| |

Baby Boom generation refers to “boomers”; Baby Bust generation refers to Generation “Xers”; Baby Echo generation refers to “Nexters” The previous chart is simply a summarized and organized depiction of the characteristics that Salahuddin attributes to the different generations in terms of their work styles. Consideration of this chart combined with personal experience regarding the different generations confirms the point that organizations will need to take a different approach when accommodating these demographics within the same organizational contexts.

This is especially apparent when considering their perceptions of teams, interpersonal skills, and the fluctuations of work ethics between generations. This confirms the idea that the upcoming challenges will be caused by changes in the employment relationship that are created by these generational differences, as opposed to the shortfall of workers expected to rise from this baby boomer debate (Cappelli, 2005). From this argument it can be reasoned that organizations cannot neglect to focus on the productivity, employee satisfaction and retention of any of the generations individually.

This demonstrates a requirement of the organizations to focus on all of the generations simultaneously (Salahuddin, 2011), as they are all still active members of the workforce that contribute to overall organizational success within our society. An example of this being carried into organizational context would be the act of an organization enabling the boomers to use their strong leadership abilities to mentor the Nexters through through informal, vertical communication within the organization, which would benefit the Nexters because they are a demographic that respects authority and requires supervision.

A subsequent argument that stems from the evolving demographics is that of the tendency for individuals in our society today to obtain post secondary education. This argument can be utilized to offset the expected issue that the senior-level, more experienced workers will be retiring. To refute this argument, it is important to consider that the workforce entering the market is prepared, productive and knowledgeable. According to Statistics Canada, the number of young post-secondary graduates in 1999 was 7%.

This number is significantly lower compared to the 44% of young post-secondary graduates counted just 4 years later in 2003 (Government of Canada, 2004). This evidence only seems relevant when one considers an assessment of the group of young people with high school or less education, which Cappelli classifies as one that is “not particularly in demand”. This information extends a solution to the issue of the lack of education and qualifications of entry-level workers, though it may pose a threat to the industry of the trades.

However, this is another topic in its own and will not be considered within this paper. To begin concluding this research topic, certain remedies for potential issues can be addressed. First, as previously mentioned, the retention of senior level employees is an area of human resources that has been neglected in the past. In fact, studies have shown that only 37% of employers claim to have adopted strategies aimed at encouraging workers to stay with the organization past their traditional retirement age (Kennedy Information LLC).

Researchers believe that the expected retirement age of the baby boomers has been increasing throughout time, as has the expected retirement age of the generations following. Organizations can make the most of this trend through offering flexible work options (Kennedy Information LLC). This solution will also appeal to the ‘Nexters’, as they are a demographic that values family life, autonomy and independence. Flexible work options can include job sharing, the option of semi-retiring or holding a regular part time position, working from home, or flexible work hours.

Through these flexible work options, it is believed that older workers will be significantly more likely to stay in the workforce longer, which is another factor that could offset the potential of a labor shortage. This will also create opportunities for senior employees to mentor the employees that are new to the workforce or new to the company. Though Cappelli did an exceptional job of refuting the ideas behind the potential labor shortage, there are still many researchers who believe that the labor shortage is inevitable. These researchers are focusing their efforts on how organizations can cope with this shortage.

Some ideas include outsourcing to other countries or moving operations to other countries, or emphasizing such human resource activities as recruitment and selection. These suggestions will not negatively impact organizations, but there must be a balance of effort placed on the different human resource functions. The underlying theme here is that organizations should embrace the proactive retention and performance management strategies that are available in order to make the most of the labor pool that is available to them as opposed to exerting financial and human resources towards the other, defensive approaches.

Both types of strategies should be embraced, but if a tradeoff must be made in today’s labor market, it should be one of the defensive strategies in exchange for the proactive ones. Conclusively, though the large demographic that is the baby boomers is already beginning to retire as a collective, progress in other fields can offset these negative implications. External factors such as globalization combined with generational tendencies, the availability of flexible work options and the already increased productivity due to technology, will increase the overall productivity of the workforce.

In terms of population differences, an assessment of research on the topic concludes that “the future pool of skilled employees…promises to be more than adequate for businesses’ needs” (Santosus, 2003). Additionally, the recognition of human resource departments of the need to focus on the relevant functional areas will make more effective use of the resources that organizations have. Finally, and possibly most importantly, the generational populations following the baby boomers will allow the labor market to satisfy its own demand in terms of productivity and the fulfillment of organizational positions and performance criteria.

Works Cited Cappelli, P. (2005). Will There Really Be a Labor Shortage? Human Resource Management , 44 (2), 143-149. Government of Canada. (2004, July 5). Youth in Transition Survey: Update of the Education and Labour Market Pathways of Young Adults. Retrieved November 9, 2011, from Statistics Canada: http://www. statcan. gc. ca/daily-quotidien/060705/dq060705a-eng. htm Kennedy Information LLC. (n. d. ). Meet Needs of Older Workers to Avoid Brain Drains. Retrieved from Inc. com: http://www. inc. com/articles/2000/04/18660. html Morissette, R. ; Rosa, J. M. (2003). Innovative Work Practices and Labour Turnover in Canada. Human Resources Development Canada, Statistics Canada. Ottawa, ON: Minister of Industry. Salahuddin, M. M. (2011). Generational Differences Impact on Leadership Style and Organizational Success. Journal of Diversity Management , 5 (2), 1-6. Santosus, M. (2003, November 15). The (Real) Effects of the Baby Boomers Retirement Boom. Retrieved November 12, 2011, from CIO: http://www. cio. com/article/31980/The_Real_Effects_of_the_Baby_Boomers_Retirement_Boom_

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