After years of serving in the workforce, the golden generation, or baby boomers, is well on their way into their golden years. Over the next two decades, approximately 10,000 baby boomers will retire every day. Their generation possesses decades’ worth of accumulated experience and knowledge. The exodus can result in a massive shift in the workforce since baby boomers account for 31 percent of all jobs and 56 percent hold leadership positions.
What can businesses expect from the mass exit of the golden generation?
The Baby Boomer Brain Drain
Brain drain refers to the rising number of baby boomers retiring, leaving employers to scamper as they figure out how to deal with the major loss in manpower. It may cost numerous companies long-established processes, key contacts, institutional structures, and tacit skills.
Ideally, employers could have prepared for this trend through an exit strategy and workforce planning. This highlights the importance of knowledge transfer from the boomers to the younger generation, in order to ensure that business-critical procedures and skills are passed over to the workers who will take the place of the retirees, keeping operations smooth-sailing despite the loss in manpower.
But not many companies are successful in establishing an effective knowledge transfer model. A survey by Express Employment Professionals, one of the leading staffing providers in the US, shows that only 18 percent of the 1,500 respondents have shared all of their knowledge before retiring. And 21 percent have failed to share any of their valuable knowledge.
Business-owners are to blame for the brain drain. They should be more proactive in mining the retirees for critical knowledge, especially since 81 percent of boomers are willing to mentor the next generation. A separate study by the AARP (formerly the American Association of Retired Persons) shows that 79 percent of young workers said older colleagues give them the chance to learn new skills.
A Booming Business Opportunity
Despite the fear of brain drain, the mass exit of boomers gives rise to several business opportunities. It could spell good news for buying, selling, and merger and acquisitions (M&) activities, so now’s a good time to expand or diversify your business or become a licensed business broker. The lack of succession plans and the overwhelming number of baby boomers retiring led to an all-time high in M&A activity.
Experts project that millions of baby boomer entrepreneurs will sell or close their business in the next decade. This is because 72 percent of small business owners don’t have an exit strategy. Instead of closing shop, they have the option to sell to younger business-minded individuals who are skilled enough to grow the company. This way, they won’t lose thousands of dollars worth of assets and still keep a share in the business.
The boomer exodus has the potential to change the business landscape. For long-established companies, this poses major losses in terms of human resource and business-critical skills and knowledge. But for younger, promising firms, this is a good chance to buy into well-known brands and diversify their business.