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COMPENSATION & REWARDS
Dec 16, 2014

Organizations slow to respond to aging workforce

Limited focus on strategic workforce planning may intensify talent risks
    

By Claudine Kapel

It’s not exactly news. The Conference Board of Canada has released a study indicating Canadian organizations could be doing a better job at strategic workforce planning.

There have been countless studies in recent years calling on employers to prepare for the inevitable exodus of baby boomers from the workforce.

What’s especially troubling about the Conference Board report, entitled HR Trends and Metrics: The Canadian Context for Strategic Workforce Planning, is organizations are still defining the aging workforce as a “longer-term” challenge, even as they report that senior leaders will start retiring in droves as early as next year. The report reflected input from 169 Canadian organizations in the private and public sector.

Respondents reported their top five human capital challenges in the next 12 months included:

•leadership capacity

•attracting and recruiting employees

•employee engagement

•capacity to respond to change

•retaining employees.


An aging workforce was identified only as a key longer-term issue, topping the list of challenges organizations will be facing in the next three to five years.

The other key longer-term challenges included:

•leadership capacity

•attracting and recruiting employees

•retaining employees

•skill shortages.

Although the aging workforce was not seen as a key near-term challenge, the need to address longer-term talent issues did represent a key theme in respondents’ near-term HR priorities. The top priorities identified for the next 12 months included:

•management/leadership development

•strategic workforce planning

•performance management

•succession management

•managing change.

When looking out three to five years, the respondents became more focused on addressing the implications of retiring baby boomers. Strategic workforce planning emerged as the top longer-term priority, followed by succession management. Knowledge transfer also ranked among the top five, having been absent from the list of top short-term priorities.

“An improving business environment, labour force trends, skills shortages and changing demographics have elevated the need for strategic workforce planning,” said the Conference Board.

But, at the same time, the research findings indicate organizations are still not doing enough to prepare for the potentially significant implications of an aging workforce.

Only 43 per cent of respondents to the survey indicated their organization’s long-term business strategy is supported by a strategic workforce plan. And only 29 per cent indicated they have a “robust” workforce planning process.

These findings indicate “there are real opportunities for business and HR leaders to improve their workforce planning capabilities and thereby help drive enterprise-wide success,” said the Conference Board.

“To mitigate threats to business continuity, employers must plan for the wave of baby boomer retirements through HR programs such as succession planning, investments in learning and development, and diversity and inclusion strategies.”

A number of studies have already sounded the alarm about the lack of focus on strategic workforce planning, especially given the looming challenges associated with retiring baby boomers.

The recent recession may have caused such planning to become a lower priority. But the Conference Board notes the recession and unpredictable equity markets have only “temporarily delayed” the retirement plans of many baby boomers in Canada, warning this cohort is beginning to exit the workforce in growing numbers.

“This exodus, combined with fewer entrants to the workforce and a recovering economy, will lead to labour and skills shortages.”

The Conference Board observes retirement eligibility at senior management levels will be a major concern for employers, given the high percentage of employees in these groups eligible to retire. Eligibility is highest in the public sector, where nearly one-third of senior executives and 21 per cent of executives are eligible to retire in the next 12 months.

In other words, time is running out to develop proactive plans for responding to the aging workforce. That means many organizations will likely find themselves ill prepared to deal with the talent impact of baby boomers retiring en masse.

Many organizations still operate as though baby boomer retirements will happen “someday” — and potentially on someone else’s watch. The lack of proactive planning, however, may yield talent strategies that amount to closing the barn door after the horses have fled.



    
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