For the last 10 years we have heard that a war for talent was
coming. In fact it was supposed to arrive right about now:
4,000,000 baby boomers would retire annually and there would not be
enough people to replace them.
Perhaps this would have occurred if defined retirement plans had
not disappeared. For the moment and until the economy fully
recovers, the overall supply of workers will greatly exceed the
demand. This does not mean that competition (sometimes global) for
specialized skills has diminished. This does mean, however, that
the boomers who planned to retire cannot afford to now.
According to Time magazine, "Investment firm T. Rowe Price
calculates that the oldest boomers will have to delay retirement by
nearly nine years in order to recover what they lost in the
market." Many boomers probably could not have afforded to retire
even before the market crashed, suggests Alice Munnell, director
for the Center for Retirement Research at Boston College. In 2007,
the median 401k holdings for people 55 to 64 were around $60,000.
So the boomers are remaining in their jobs and probably will for
several years. Additionally, competition for jobs will increase as
the millennial generation enters the workforce. Will there be a war
for talent? No. And a review of Bureau of Labor Statistics reports
going back to 2006, and probably earlier, suggests that the talent
gap everyone feared probably was not going to happen anyway. As
Mitra Toossi wrote in Monthly Labor Review, "An increase in the
labor force participation rate of the older workforce, multiplied
by the large number of workers in this age group, has the potential
to increase the size of the labor force significantly. The 55-years
and-older age group accounted for 16.2 percent of the labor force
in 2005 and is projected to constitute 19 percent of the labor
force in 2010 and nearly 24 percent in 2020.
"The decision to continue to work into the later years of life has
been the result of several intertwined factors, such as the
increasing life expectancy of the population, wherein a growing
number of people are healthier for a longer portion of their life
span. In addition, the elimination of mandatory retirement and the
enactment of age discrimination laws have contributed to the
increase in workforce participation rates of older persons. Other
factors, such as significant increases in healthcare costs and a
decrease in the availability of health benefits, also have
increased the participation of the older age groups in the
workforce. Finally, recent changes in the Social Security laws,
along with an increase in the normal retirement age for certain
birth cohorts and a decrease in benefits with early retirement,
have encouraged the 55-years and-older group to increase its labor
force participation."
In the final analysis, the number of persons 55 and older who are
planning to remain in the workforce is increasing faster than any
other portion of the population. The bottom line is that there is
not going to be a talent gap, there never was going to be much of a
talent gap, and there won't be much of one when the economy
recovers.
Some implications
While there won't be a war for talent, there is likely to be a war
among talent. Gen X and Gen Y had expectations that their turn had
arrived or was coming soon. This presents some challenges and
opportunities for HR:
- The boomers will still have to perform. It is
likely they will be under greater scrutiny. Having a fully
functioning performance management system could be very helpful -
especially for avoiding lawsuits.
- Some boomers probably will ask for flexible work
arrangements. Those in Gen X and Gen Y undoubtedly will be
watching for favoritism. Companies that already have policies and
practices that address this could have fewer problems.
- Gen X and Gen Y are at the beginning or middle of their
careers. They will need development assignments (jobs as
well as taskforce/committee work) to build knowledge and skill. The
challenge is to do this while the boomers remain. There is a fine
line between favoritism, special assignments, and age
discrimination. A fully functioning succession system with a fully
functioning talent review committee could be very helpful here.
- The boomers will retire or leave eventually. The
need to address knowledge transfer still is important; it's just
not urgent. Will companies take advantage of this or wait for the
crisis?
- The same could be said about succession. There
have been a variety of studies over the past few years telling us
that a significant majority of executives believe succession is
very important yet only about 50 percent of companies have formal
processes for workforce planning and succession, according to CLO
magazine.
- Succession is a long-term process. When the
succession crisis comes and your executives realize there is an
urgent need, it is too late for a planned approach. However, it is
not too late to pay a headhunter a lot of money for someone who, if
current research is to be believed, probably will not work out.
- The generalized angst about understanding and accommodating
Gen Y mostly seems to have vanished. Interesting what
happens when employment is a buyer's market. But some of what Gen Y
was "demanding" always has been good practice. For example, all the
research says that Gen Y wants regular feedback. That's applicable
to and necessary for all generations. What happens now? And what
happens to extensive onboarding programs that really can get
someone functioning effectively in less time? Will organizations
abandon such efforts and become more overtly "Darwinian" as safety
and survival (Maslow's Hierarchy) dominate?
Finally, it can be argued that talent management was developed in
response to the anticipated talent war and that it represents a
strategic re-conceptualization of HR. It can get HR a "seat at the
table" because an integrated talent management system provides a
means for executives (including HR) to manage the talent flow
within the context of the organization's strategy and business
goals. Traditional HR, which typically operates at a tactical
function level (compensation, recruitment, etc.) was not designed
to do this and often does not.
The current recession has focused management at all levels and
functions on essential short-term solutions such as reducing
headcount and managing costs. This is defensive behavior.
Eventually, organizations will shift focus to the future and to
growth. Just as the anticipated talent gap and war for talent
provided HR with an opportunity for that "seat at the table," the
situation described above provides another.