Demographics Changes Coming; Is Your Company Prepared?

Is it just me, or is everyone around me getting older? We’re witnessing substantial demographic changes, affecting the population as a whole, and the workplace in particular. Is your company prepared for these changes?

I could quote a bunch of statistics that show the rate of baby boomer retirement and the lower number of workers to take their place, with dire predictions of a labor shortage. Then I could quote some studies that show the effect will be minimized by boomers working longer, outsourcing, a rise in immigrant labor, and technological advances resulting in labor efficiencies (like robots I talked about last month).

So, depending on your industry, geography and other factors, your company may face a labor shortage, or you’ll be dealing with an older, more diverse workforce, or both. What plans have you made to effectively deal with these issues?

Think about what happened to Boeing in the mid-nineties. They let about 9,000 workers go by offering early retirement incentives. Giddy over the prospects of cutting labor costs, Boeing forgot about the Law Of Unintended Consequences. The “brain drain” resulting from all that experience leaving at once hurled Boeing production lines into chaos. In a move that shocked the aviation world, Boeing executives shut down production of their best selling aircraft, the 737 and 747 for an entire month, to sort out production difficulties. Bad move.

How will you cope with the majority of your experienced workforce retiring over the next several years? In Japan, Mitsubishi faced the challenge of a shrinking applicant pool to replace retiring workers. They developed a plan to rehire retired workers, many of who just wanted to keep busy, paying the “boomerang” retirees just 60% of what they were paid before leaving the company. Mitsubishi also has intensified efforts to relocate some production from Japan.

Speaking of relocating production, did you know some financial forecasters prognosticate a $3 Euro in just a couple of years? Can you imagine how attractive the U.S. would be to European manufacturers? We may see significant transfers of European production lines here to America, with shipping containers full of cars, appliances and other goods shipped from East Coast ports back to Europe. That’s another trend for another article, so back to the issues at hand.

“What issues?” you may be thinking to yourself. An older, more diverse workforce presents concerns. Think of all those diversity programs you’ve gone through. Did any of them talk about unity? Creating a spirit of teamwork and unity of effort will be the real challenge for managers as these demographic changes unfold. What is your plan for getting (and keeping) your 20-somethings and 70-somethings on the same page? A recent survey conducted by Atlantic Associates, a Boston-based staffing company, asked a sample of executives in Massachusetts which of these generation groups was the "most difficult to manage." Here's their result: millennials/Generation Y (ages 18-31): 53%; Generation X (ages 32-42): 17%; baby boomers (ages 43 - 61): 14%; not sure: 16%. Even though it makes me wonder if the results were skewed by the age of the executives responding to the survey, as a parent of two “millennials” I have to think it is difficult getting these disparate age groups to play nice in the workplace.

What about the physical challenges an older workforce might present? Nippon Paint in Singapore, with an average age of 48 among logistics department workers, began noticing an increased rate of human errors like wrong colors of paint delivered to customers and goods stored improperly in warehouses. To combat the problems, Nippon instituted a bar coding system to assist workers with eyesight limitations and worker-friendly materials handling systems to carry heavy loads of raw materials and finished product. The result? Higher productivity, fewer mistakes, happy workforce.

Increased numbers of immigrant workers present potential tribulation as well. The Migration Policy Institute used U.S. Census data to study Los Angeles’ immigrant work force and determined that one-third of immigrants have not graduated from high school and 60 percent do not speak English fluently. Sounds like quite the skills gap.

Imagine if that was your workforce. It might be in a few years time, so you better plan for ways to either attract the best workers available or come up with some workforce development initiatives to enhance the skills of your employees.

There is one common aspect to all of these demographic changes: you, the leader. Take charge, look forward, and prepare your company for the changing workplace.