2012: The Beginning of the End of Retirement

A recent NPR broadcast about “The Future of Retirement” confirmed that even thought leaders from our most respected institutions are seeing an economic future through rose-colored glasses. 2012 will usher in the end of retirement and our society is not prepared to deal with it.

One guest (Ron Brownstein) on the show stated, “the image we have of retirement is as outdated as fallout shelter.” That image is reality and is unquestionably accurate. Mr. Brownstein cited results from the 11th quarterly Allstate-National Journal Heartland Monitor Poll, which explored Americans’ financial situations and attitudes toward retirement. On average, near-retirees (50 years and older) expect to retire six years later than the age at which current retirees did. More than two-thirds of Baby Boomers (68%) expect to work in some form after retirement – about half say, out of necessity – while only 11 percent of current retirees report that they work.

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In addition, the survey reported that 34 percent of near-retirees expect part-time work to be a major income source, while only 8 percent of current retirees report part-time work due to economic necessity. While 79 percent of current retirees say they’re confident about their retirement security, only 67 percent of near-retirees say the same, and only 19 person say they are “very confident.”

One often overlooked factor in this dramatic shift in how workers view retirement is the shift from defined benefit to defined contribution retirement plans. The effect of this shift is just beginning to hit retirees now. Up to this point both public and private retires could retire in their early 60s if not earlier and receive a check comparable to the one they received when working. These older workers retired, played golf, traveled, moved to Florida or Arizona, and then died – generally in that order. Sometimes that scenario lasted only 10 years, maybe 20, but rarely longer.

That era has ended and its impact on how people approach retirement has just begun. Its impact on the economy, and how employers approach talent management, is unprecedented. Today, life expectancy isn’t 65 or 70 but 85 or 90, maybe older. People can no longer expect to work only one-third of their life and living happily ever after for another 30 or 40 years. (One in 10 people who are 60 years old today will live to be 100!) And yet employers and workers still plan their workforce around workers ages 16 to 55.

I don’t have a problem with any of the above mentioned facts or survey results. They are what they are. I do have a problem with the presumptions of the second guest (Olivia Mitchell, Executive Director of the Pension Research Council at Wharton School).

Ms. Mitchell started by saying that 10,000 Baby Boomers will retire daily for the next 19 years? While Ms. Mitchell is highly respected, that stat is mispresented. Ten thousand Baby Boomers will turn 65 years old every year for the next two decades. But many Baby Boomers will not stop working. Yes, they might retire from their current job but then they will start a new business, change careers, and at the very least work part-time.

But maybe that’s my opinion vs hers. Here’s the real problem. If we don’t retire the old folks, their grandchildren won’t have jobs. That is already occurring because unemployment for the 16-25 year old cohort is near record highs while the only demographic group to increase labor force participation since 2008 is the 55+ age group.

Ms. Mitchell challenged this idea of a “gray ceiling” – that Baby Boomers were holding the jobs traditionally held by the next generation. In effect, she denied the gray ceiling exists. She proposed that the job market is flexible and as in the past, our economy will be able to absorb both older workers living longer and younger workers starting their careers. Maybe she should run for President!

 

She cited this example: from 1970 to 2000, the number of working women increased 87 percent. The number of jobs increased 40 percent. In other words, to repeat history we will need to create 40 percent more jobs. Currently we’re on pace to create approximately 2 million jobs, or 1.5 percent annual growth. With technology and globalization we live in a very different era than our parents and grandparents, even our adult children. I’ll stop short of saying the notion that we can create 52 million (130 million x 40%) new jobs is b#!!$&!t, but does anyone else see a problem?

The U.S. economy is no longer the job engine that could. We still have an industrial age workforce trying to get jobs in a Cyber-Mental age economy. The definition of work has changed. The definition of retirement has changed.

The likelihood of our economy creating enough middle class jobs for both Baby Boomers and Millennials, and still keep Generation X actively employed, is not very likely. I’m not even sure it’s possible. Unfortunately that scenario is the very problem plaguing our nation right now and employers, government, and politicians are in denial.

Employers who are waiting for politicians and government to fix our job markets need to get a grip on reality. We’ve got an election year coming up and a Congress that is more committed to self-interest than governance. Despite all that pessimistic sounding rhetoric, the economy and job markets are improving and companies that take control of their own destiny will survive and thrive.

Do I think we can create enough jobs for all the under-employed and unemployed? No. But 2012 is the time to shed the rose-colored glasses. Now is the time to ask yourself,” what will WE do differently this year to recruit, hire, retain, and develop talent?”

Gray Ceiling Casts Shadow on Millennials

The unemployment rate for young adults has skyrocketed to over 16 percent.  For teens (ages 16 to 19) the rate exceeds 25 percent. Slow job growth and delayed Baby Boomer retirement is erecting what I’ve called the “gray ceiling,” the inability of the next generation of employees (Generation X) to move up and the inability of the youngest generation to enter into their first career jobs.  In addition, many Baby Boomers who retire from one job don’t stop working.  They “pick up” entry level jobs formerly reserved for young adults to keep busy or supplement their income.  This gray ceiling has huge implications for business, society, and long-term earning potential for our next generation of workers.  Watch my 3-minute video interview about the “gray ceiling” on Behind the Lines with host Diane Dayton.

The Big Lesson for All Managers in ‘Tonight Show’ Feud

The unsuccessful hand-off of a business from one owner to another is so common these days that its mere mention likely brings an extended yawn to most people.  Many of the failures have been attributed to too-little or too-late succession planning. 

But the failed hand-off from Jay Leno to Conan O’Brien has not only become fodder for business school case studies but headline news on Entertainment Tonight and The National Enquirer. 

What’s the big deal about a TV show with a declining audience? Even after 70 years on the air, daytime's longest-running soap, "Guiding Light," was canceled. And CBS recently announced that "As the World Turns" will air its final episode soon after 54 years.

Times change and so do entertainment tastes.  So what then makes "The Tonight Show" fiasco so fascinating?

As the Wall Street Journal pointed out last week, ‘Leno-Conan Mess Offers Management Lessons.’  The article points out two critical missteps made by NBC: “It's a bad idea to promise someone a promotion in order to retain him … and so is naming a successor too far in advance.”

While I agree these are blatant mistakes, the article misses several inherent landmines management keeps tiptoeing around.

Leno, like many other Baby Boomers, wasn’t ready to leave. Unlike Traditionalists (born before 1946) and older Baby Boomers who aspire to retire, many Boomers are just launching new careers or getting a second wind. When they were 45 or 50 years old, retirement at 60 sounded good. But for a variety of reasons, retirement in the traditional sense of “stop working” is essentially dead. Compare this to the hand-off from Johnny Carson to Leno. Leno’s first year was no picnic but Carson remained silent and stayed away. Carson retired — period.  That was then — this is now.

I saw the same phenomenon 30 years ago in my prior career when dentists and physicians brought in associates to initiate a succession plan. They promised ownership and equity but just could never let go, get out of the way, or make room at the top. Today this trend is epidemic. Baby Boomers promised Gen X the opportunity to move up and take over but as the due date neared, they wanted an open-ended invitation to stay. Since they owned the game ball, Gen X is expected to play by their rules or leave.

Many Gen X (born 1965-1979) have and will choose the latter. Fed up with these shenanigans, their Gen X successors and future source of leadership talent are deciding they had enough with this artificially imposed “gray ceiling.” The Leno-Conan feud is a classic inter-generational conflict with grave consequences for NBC … and a huge lesson for anyone managing a business. While NBC had the best of both worlds for 5 years, they now are losing Conan anyway plus paying him along with his staff millions as part of severance. 

Leno, the ultimate Baby Boomer, is taking the helm again. How many times has this scenario been repeated in real-life? How many times has a business owner announced his retirement to allow the next generation to move up only to renege on the deal or jump back into the business at the first sign of trouble? With nearly 8,000 Baby Boomers turning 60 every day, this abortion of succession planning is being repeated with a frightening frequency… and only to get worse since most businesses have no plan at all.

NBC also ignore the demographics and the way different generations use media. In effect they ignored the demographics completely. Leno has a Baby Boomer following. Conan’s largest audience comes from Gen X and young Baby Boomers. Just like with any transition, you can’t dictate change. NBC’s plan was to tell Baby Boomers they can still watch Leno… but be forced to change their viewing habits. When has that strategy ever worked? 

They then allowed Conan to make his mark without any consideration to the viewers. Yes, Conan retained the Gen X  audience but lost many Baby Boomers. Did NBC even bother to consider that there are only half as many Gen X as Boomers? How did they expect to maintain or grow market share if Conan didn’t adapt his show?

The underlying lessons in this failed succession plan have much more to do with demographics and generational values than succession plan timing as the WSJ article pointed out.  NBC ignored the gray ceiling and miscalculated miserably the impact that generational difference will have on business.

The resentment between Gen X and Baby Boomers is heating up.  The recession kept the conflict on simmer for the past two years. But I predict that the failed succession of Leno to O’Brien is only the first sign of a generational melting pot ready to boil over.

Source: Workforce Trends

Coming Soon to Your Business: A Leadership Crisis

Worried about your next generation of leaders?

You’re not alone. According to a new survey about leadership skills from Pearson and Executive Development Associates Inc. (EDA), 57% of business executives said their leadership talent pipeline was the same or weaker today than it was two years ago. Seventy-five percent said increasing bench strength will be their top business priority for the next two to three years. Is this too little too effort? 

When asked what skills were needed to assume executive positions within the next three to five years, respondents cited strategic thinking, leading change, the ability to create a vision and engage others around it, the ability to inspire, and the ability to understand how the total enterprise works. But the respondents also agreed these were the very skills lacking in their current talent pool.

The right successor must have just the right blend of personality, time and experience. And with a more complex and faster changing marketplace destined to be our future, the ability to deal with ambiguity and paradox is paramount. This combination requires innate talent plus development.  Creating this competency can take years and many people just are not equipped to ascend to the role. And others who have the skills and experience aren’t willing to give up their personal and family lives in exchange for a promotion and title. What motivated the Baby Boomers doesn’t motivate Gen X and Gen Y.

In addition to lack of skills, a leadership shortage is all but a done deal. When the Baby Boomers finally decide to slow down or retire, pure demographics will stall the succession. Gen X, the succeeding generation, is little more than half the size of the Boomers. And many Gen X and Gen Y are putting family before careers. 

One more glitch: while three to five years may not be enough time to develop the next generation of leaders, it might also be too long in a competitive market. Many talented Gen X are tired of waiting for the Boomers to get out of the way. As the economy is rebounding, job  offers will start coming in. It is already happening. Competitors and emerging companies are scouring the job market for talent and your next leader could be their target. 

Source: Workforce Trends

The immortalists – The Boston Globe

In my new book (Geeks, Geezers, and Googlization – September 2009 release), I devoted a chapter to Gen X Hits Gray Ceiling. (I previously wrote an article under the same title too.)   In the chapter I wrote about the frustration many Gen X are experiencing with the prolonged careers of the Baby Boomers. 


In this week’s Boston Globe Sunday Magazine, the plight of Gen X is highlighted. The author cleverly describes Baby Boomers as “ageless Botoxed Parrotheads,” “Boomers Without End,” and describes a “Nation of Geezers.”  She also describes Gen X as the “Prince Charles” generation – a description I also used.


For a post worth reading, I’d recommend The immortalists – The Boston Globe.

Facing retirement: ’70 is the new 65′ – South Florida Sun-Sentinel.com

In some industries, such as nursing, the recession is almost a silver lining in the black cloud – it’s keeping some older workers on the job beyond the time they intended to retire.

Two-thirds of Americans 55 to 64 are in the workforce—the highest participation rate among that age group since the Bureau of Labor Statistics began keeping track in 1948.

Examples of similar deferred retirements show up across the nation.

The American Institute of Certified Public Accountants said 35 percent of its financial-planning professionals’ clients said they were postponing leaving the workforce because of the economy. The institute said two-thirds of the clients who said they would delay retirement expect to work an additional five years.


Ten years ago, 59 percent of the 55-to-64 age group was in the workforce. In May, that jumped to 65.6 percent, with 1.6 percentage points of the growth occurring since May 2008.

Among workers 65 and older, the labor force participation rate has grown even more precipitously. In May 1999, the participation rate was 12.5 percent; in May 2008, 16.6 percent; and in May 2009, 17.2 percent.


“What this suggests is that 70 is the new 65,” Institute Vice President James Metzler said in connection with the report’s release.


This lack of turnover due to slower baby boomer retirements is creating a false sense of security for many businesses. Just because the sun came out doesn’t mean the roof stopped leaking.  The longer Boomers stay, the more frustrated Gen X get frustrated by the Gray Ceiling.  Generation Y are also being turned away due to a lack of openings. 


Celebrating slower turnover due to delayed boomer retirements and ignoring the consequences of the delayed hiring and promotion of younger workers may come back to bite these businesses when business picks up and the competition for talent heats up.  Every organization needs to take a look 3 to 5 years out at their workforce demographics and plan accordingly. Ignorance is not bliss when it comes to workforce planning.


Read more about Facing retirement: ’70 is the new 65′ and the Gray Ceiling.


Read more about the Gray Ceiling and other trends in my new book, Geeks, Geezers, and Googlization.

Young workers hit gray ceiling

The recession has sparked intense competition between young and old for entry level jobs.  The number of employed Americans ages 16 to 24 has fallen by 2 million over the past two years.  The number of workers 65 and over has risen by 700,000.

Read more about Young Workers: Meet the Gray Ceiling

Gray ceiling disrupts succession plans for Gen Xers

     While some organizations are focusing on recruiting new and replacement workers, many others are urging and enticing older workers to stay longer. This is creating a new form of discrimination called the “gray ceiling.”  Unlike the more common cases involving discrimination such as gender, age, and sexual preference, the gray ceiling isn’t necessarilty protecting a protected class. The implications for ignoring the gray ceiling won’t likely result in an employee filing a discrimination claim. But this isn’t necessarily a time to celebrate.  The consequences may be much worse!

     Generation X, the former youngest generation in the workplace, are now the middle children at work.  They’ve been patiently – or at least reluctantly – waiting for a boomer to get out of the way so they can finally move up the career ladder.  But those aging, baby boomers just don’t seem to want to move on with their lives.  Whether it’s their workaholic nature or the need for money, they are not leaving the workplace as quickly as anticipated.

     While that might generate a sigh of relief for many executives and business owners, I’ll suggest you take a deep breath and …..ponder this.

    

     The most highly skilled Generation X workers are no longer waiting around.  They are leaving the workforce in record numbers. Their skill sets make them hot property. Their age (roughly late 20s to early 40s) offers another organization immediate talent and future capacity.

This exodus of Gen X skilled workers is not only the fault of gray-haired boomers staying longer.  It’s also the result of the newest generation, the Millennials, arriving on the scene.  Bright, ambitious, collaborative and technically advanced, this youngest cohort is catching the eye of the workplace elders and the wrath of the Xers. In fact, it’s not the Boomers who are complaining the most of these “irritating rug rats.”  It’s the Xers!

     

     What is beginning to happen in many workplaces is that the Millennials are leapfrogging the Xers into lead roles and projects.  Even more insulting, Millennials are like heat seeking missiles for knowledge.  Why waste no time going to his or her Gen X boss when they have a question.  They just go straight to the best source by sending an email or knocking on the door of the President.  This group is used to quick access to information. Why go to the library and borrow the book when you can "google" just about anything?  Playing politics to them is just like playing games.  You outmaneuver your opponents to get to the next level.  Gen Xers are just another level on the way to the top and these game-playing Millennials are smart and savvy. 

     

     The Xers, on the other hand, are restless and aren’t taking this lying down. Remember these kids grew up with latch-keys and learned to fend for themselves.  Ignore them and they’ll go away without anyone really noticing.  But when the boomers finally do decide to call it a career, a gaping talent hole will be discovered by those businesses who don’t consider the consequences and don’t plan ahead.

     Succession used to be so much easier!  What’s a business to do? 

1.  First things first.   Assess the demography of your workforce today. How many older workers are just biding time until retirement?  How soon will be they leaving?  Who is in line to replace them?  How many younger workers are at risk to be picked off by a competitor?

2. What is the capability of the younger workers?  Will they be prepared to move up into management and leadership position when the time comes?  What additional training will they need?

3. How prepared are your managers to deal with the wants and demands of four generations working side-by-side?  How prepared is your organization to squelch the workplace warfare between the Geeks, Geezers and other generations? What can you do to slow the boomer brain drain, retain the Gen Xers and recruit the Millennials all at the same time?