Issue Date: September 1, 2008
As Baby Boomers Retire
ACCORDING TO current projections by the Department of Labor, the U.S. workforce will be shrinking from now until about 2050. Perhaps the biggest contributor will be the waves of retirements of people in the baby boom generation, who were born between 1946 and 1964.
Across the board, U.S. industries, including the chemical industry, will have to deal with these employee losses and a shrinking labor pool, the Labor Department warns. The decade after 2008, it says, is expected to be the most intense because the majority of baby boomers will reach retirement age in that span.
"As the oldest baby boomers begin retiring in the next several years, the implications for the workforce could be enormous," Arlene Dohm, an economist with the Bureau of Labor Statistics (BLS), wrote in the bureau's Monthly Labor Review last year. "The current tight labor market situation could be exacerbated, hindering prospects for economic growth and putting a greater burden on those remaining in the workforce."
Once the baby boomers exit the last years of the prime age group (between 25 and 54 years old) and enter the 55-and-older age group, in which labor force participation rates are roughly half that of the prime group, the overall labor force participation rate will decline significantly, BLS states. The boomers' lower participation rate, coupled with a larger population of older people, is projected to decrease the overall labor force participation rate, it continues.
So it's no secret what's happening. The chemical industry, like other industries, will have to find ways to transfer knowledge from retiring U.S. workers to the remaining workforce. Companies also will have to replace workers lost to retirement and train the replacements intensively. No doubt, some institutional knowledge will be lost as baby boomers retire, but firms will be doing all they can to mitigate the loss.
Some companies contacted by C&EN about the baby boomer retirement issue shrug it off as irrelevant in a global economy. Perhaps that's the case, but I doubt it. The companies that did talk to C&EN shared planning and strategies to deal with the situation. They reveal simple, sometimes commonsense measures that will go a long way toward minimizing the impact of the baby boomer retirements.
"We regularly review internal demographics and the external marketplace so that we understand our talent gaps," says Robin Lysek, a human resources manager at Air Products & Chemicals. "We know retirements are coming, so we are stepping up university recruitments from recruiting at 17 universities to 35. We have to hire people now. We can't wait five to 10 years."
Indeed, as with any problem, the first step is to recognize the challenge. "We have done a lot of analyses and see [baby boomer] retirements as a big problem," says Joseph Cavallaro, director of global rewards and North American talent management at Rohm and Haas. "These are big, huge bubbles that we will start to see materialize in five years, but definitely in 10 years."
Rohm and Haas is trying to stay ahead of the game. "We are trying to hire people with 10 to 15 years of experience," says Stephen J. Rauscher, the firm's director of specialty materials operations. Business leaders don't always know who is going to retire among those eligible, he says, but they try to make projections and plan accordingly. According to Rauscher, because retirees often take with them experience that can't be taught, part of his division's strategy is to build the population of mid-career workers.
"We try to get knowledge and experience transferred as well as we can to this middle group," he says. "We have some retirees writing a knowledge guide—basically it's a brain dump. We want to codify and institutionalize what's in people's heads.
"But some things, like good project management, you can't write down," Rauscher continues. "You have to expose younger workers to more, earlier. Our young folks get real projects to do."
ENSURING THE SMOOTH TRANSFER of skills and knowledge is also a priority at Occidental Chemical. A corporate manager at OxyChem says the company "has reenergized its recruitment and training programs and has extended succession planning to key positions at all levels of the company."
Such a multifaceted strategy for dealing with baby boomer retirements seems to be the preferred approach. "Corporations will face a significant challenge as their workforce ages and exits the workplace," says Garry Schraeder, a vice president at Celerant Consulting. "In addition to succession planning, training, and mentoring, corporations must support these actions with management systems, standard operating procedures or processes, and clearly defined roles and responsibilities to ensure sustainable results once the new workforce takes charge."
Recent economic news, including glum employment forecasts, could alter the picture concerning baby boomer retirements. It could be that those people leaving the workforce will match up with employers' needs to trim payroll in a slowing economy. But the impact of the baby boomers has been undeniable at every stage of their lives, and their retirements are not likely to be an exception. It will be interesting to watch how this plays out for the chemical industry.
Views expressed on this page are those of the author and not necessarily those of ACS.
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