Industrial Aging Workforce: Retain or Recruit?

industrial aging workforceThe Baby Boomer generation began turning 65 this year. Over the next 19 years, roughly 10,000 will reach retirement age every single day. As they consider whether to retire, work part-time, or continue to work beyond retirement age, their employers are trying to decide the best way to retain the tacit knowledge they’ve amassed over the years. Do you invest in retention programs, designed to keep existing talent happy?

Do you heavily recruit from a seemingly dwindling talent pool to replace those who do leave? You might be surprised to know that roughly one-third of companies are doing absolutely nothing.  Perhaps the reason is that both sides have their caveats.

Retention

Studies show that Baby Boomers want and need competitive healthcare and benefits packages. That’s not difficult for a company to provide. However, in a panic, some companies go above and beyond that, offering other, extremely expensive incentives. These companies often do not consider the employees that retire, but are willing to continue to work on a part-time or contract basis. That’s a great way to keep the knowledge, but save a little money on salary and benefits. The problem is that a huge investment in retention programs has the potential to become unsustainable. It’s estimated that industrial companies can expect up to forty percent of their workforce to retire in the next ten years. Can you really afford to offer over forty percent of your workforce a retention package?

The good news is that the Baby Boomer generation is not just interested in money and healthcare benefits. While those things are important, they are also more likely to stay with a company that offers intangible benefits, such as schedule and work location flexibility, an environment that utilizes their experience and opinions, and the confidence to know they are welcome to work as long as they are able. Those things won’t cost you anything, and they make for happier employees. Many potential retirees may also be interested in receiving additional industrial training to learn new skills or technologies. The cost to offer these employees a variety of industrial training solutions is minimal, your employee feels more accomplished and has the opportunity to learn new things, and you benefit from the additional knowledge. It’s a step worth taking. Ultimately, the question becomes: how valuable is that tacit knowledge that is going to walk out the door, and can you afford to keep these people?

Recruitment

On the other hand, some companies choose to recruit new talent to replace those who retire. There is a perception that older workers are “set in their ways” and do not want to learn new processes, procedures, and equipment as technology changes and advances. They are often seen as more expensive to retain and less productive than younger workers. This has been found to be largely untrue. In fact, studies have shown that motivation increases with age, and experience offsets the natural cognitive decline that can come with age. However, there will be those that leave the company.

When it comes to recruiting new talent, it seems the pickings are slim. Or are they? One mistake many companies make is being too selective in education or experience requirements, which results in an apparent labor shortage.  The solution for this is really company-specific, as you need to look for talent who meets your own needs. Just remember that the younger generations may or may not have comparable education and experience levels. Consider setting up a mentoring program, in which retirees serve as mentors to incoming employees. This can ensure effective knowledge transfer and help with training. You also have eLearning and other online industrial training courses available to help new employees learn your equipment, processes, and procedures. These have been proven to increase productivity and reduce certain risks. They’re also a convenient and affordable way to bridge the knowledge gap. Also keep in mind that, as technology advances, some positions become automated or even eliminated. This can create one of two scenarios: the vacated position is now easier to learn, making training easier, or the position is no longer needed.

The solution

The reality is, there really is no right or wrong answer when it comes to retaining tacit knowledge. You can develop sustainable retention incentive packages. You can recruit competent new talent. The best solution probably lies somewhere in between. It can be done, but you need to start working on your solution now.

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