The workforce is getting old fast! The baby boomer generation is rapidly approaching retirement and IT leaders must act now to avoid workforce complexities. Start making changes now to avoid being left in a crisis situation.

The stakes are high and the issues complex. IT leaders that realize the full implications of the age wave and develop long-term strategies will not only survive the massive wave of change, but will position themselves to ride on the crest of success into the future.

Enterprises are quickly reaching the point where large percentages of skilled and valuable employees are nearing retirement age. The baby boomer generation throughout Canada and the US will be retiring in droves in 2007.

Rudolph Penner of the Washington Urban Center warns enterprises that the tidal "age wave" in Canada and the US has begun, stating that "there are some baby boomers retiring already and the first group will apply for social security in 2008…. We are going to see a huge loss of very experienced people without many younger people to take their place…"

This means, according to the 2000 US Federal Census statistics, that employed members of the demographic behemoth known as the boomer generation are starting to leave the workforce and will likely constitute approximately 17% of the workforce by the end of the decade.

As the baby boomer generation quickly approaches retirement, IT leaders must be aware of how to retain intellectual capital and tacit knowledge. When these workers, referred to as knowledge workers retire, they take with them years of insights and experience. Consider the following:

• Employees are retiring and taking their knowledge with them.
• Experienced employees have key insights about managing customer relationships.
• Experienced workers know how to handle exceptions to critical processes.
• Due to years of low turnover and almost a decade of downsizing, the current workforce is not equipped to hire and retain new talent.
• It can cost organizations significant time, money and energy to train people or recreate the knowledge retirees already have.
• Organizations risk repeating prior mistakes and exposing themselves to new risks.
• Organizations will likely experience difficulty managing integration concerns. (i.e. younger workers have limited familiarity with legacy systems, and mainframe skills are not commonly taught as part of typical computer science curriculums)
• Knowledge exists within employees that are derived from training and years of experience. Key elements such as judgment, values and insight are not easily replaced.
• The national workforce is shrinking. This leaves enterprises competing for fewer qualified applicants.

According to David DeLong, author of the book, Lost Knowledge: Confronting the Threat of an Aging Workforce, "what isn't well known or recognized is that [the US] is retiring the first generation of professionals and managers who [posses] deep knowledge of complicated technologies [such as] computer systems,…pharmaceutical drug development,…[and] managing global research and development efforts…People leaving organizations today have new types of knowledge that didn't exist a generation ago [and this] knowledge is very hard to transfer and retain."

A recent global survey published by Deloitte acknowledged that 74% of Canadian respondents cited retention of talent as the most critical people issue facing organizations. The survey further demonstrated that 53% of Canadian organizations find the effect the retirement is having on their organization is a critical issue. According to Ian Cullwick from Deloitte, "Canada [and the US are]… vulnerable to the demographic changes that [will] lead to a shortage of skills and a threat to business performance worldwide. [It is] imperative that … organizations develop strategies now, before irreparable harm to economic growth results." For more information, refer to the McLean Report research note, "IT Skills Shortage: A Wake-up Call to Action."

Intellectual capital is one of the most valued assets in organizations. Knowledge is often defined in two categories; explicit and tacit. They are as follows:

• Explicit knowledge. This refers to knowledge and information that is written down and easy to share.
• Tacit knowledge. This refers to knowledge that people carry in their minds.

Preparing for large-scale retirement of employees requires effective tacit knowledge transfer. However, few organizations have implemented "best practices" for tacit knowledge transfer and retention.

1. Quantify (i.e. using a risk scale rating) the magnitude and immediacy of the retirement problem as it pertains to retaining intellectual capital and tacit knowledge. Break the problem down by:
   • Business process.
   • System area.
   • Application.
   • IT function.

Prioritize each area in terms of importance to the organization or to the effective running of IT. Perform a vulnerability assessment to determine if there are potential retirees, typically those aged 55-64. The Human Resources department can most often provide information on staff such as retirement eligibility projections, actual retirement intentions for the short term, and information of whether a talent pool exists to fill retirement positions. Supervisors and leaders are also likely to know people at or near retirement age and if they have discussed retirement plans.

2. Identify critical knowledge found in specific roles, occupations, and/or people that must be transferred within the organization. Developing a method for identifying critical subject matter experts (i.e. people who have historical knowledge, specialized expertise). To identify these people, use the following steps as outlined in a case study for Transport Canada.
   • Who do others go to in a crisis situation?
   • Who has long term corporate memory and history within the company?
   • Who is responsible for a "one of a kind" type of job?
   • Who has a unique set of skills or knowledge that is recognized by others?
   • Who carries the ball on major projects?
   • Who has made unique contributions to the organization and/or served the organization with distinction

Determine if the knowledge that subject-matter experts possess is critical to ongoing running and success of the business process, application, and/or function for which they are responsible. Identifying key people is the first step to creating a plan to transfer knowledge to potential successors.

3. Put a knowledge transfer plan into place. Start recruiting and training people for areas where there is a high risk of losing talented people to retirement. Considering putting a business plan in place which has two people in one role to allow for proper transition. Other knowledge sharing practices/plans to consider include:
   • Mentoring programs that get different generations sharing skills and knowledge and working together on projects.
   • Incentive programs to get workers to add legacy system knowledge to their skills repertoire.
   • External training and certifications to develop legacy skills – these may be difficult to find but do exist in some colleges and universities.
   • Simulation (i.e. mimicking) or work shadowing/paired work with new employees and experienced, soon to be retiring employees.
   • Documenting processes and creating information.
   • Structured On-the-Job training.
4. Roll out a succession plan. Work with HR to determine flexible work arrangements. Not all people able to retire will want to and legislation in many areas is removing mandatory retirement laws. As well, some people may want to continue working on a part time basis to ease themselves out of the workforce. Consider implementing "stay" incentives in situations where a person has a lot of critical knowledge that the company risks losing if they retire.

Avoid losing critical employee knowledge. Plan now for the demographic shift of baby boomers heading into retirement and avoid being left in a crisis situation.