Can companies avoid a brain drain as retirements surge?

We live in a world where we can access online knowledge with the touch of a button. Whether we want to learn a new skill or hire for it on-demand, the opportunities are endless. And generative AI is accomplishing more and more.

So, this should mean that retaining organizational knowledge isn’t an issue—right? Well, as numerous US workers are aging into retirement, much industrial, engineering, and cultural knowledge will leave the workforce with them. Alas, over the past decades—thanks to workforce fragmentation, freelancing, high turnover, and remote work—knowledge transfer between generations and its retention within organizations has already been seriously jeopardized. Does this mean that the next waves of retirement will dumb down our workforce?

The US workforce is getting older

The US workforce is aging rapidly (albeit not as fast as the European and Southeast Asian workforces). As of 2020, about 25% of the workforce was aged 55 and older. Compare that to only 12% in 1990. The number of Americans aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, making up almost one fourth of the entire population. In short, today’s—and tomorrow’s—retirement waves are nothing like the previous ones because each age cohort contains many more people in proportion to the working population. By 2030, all Baby Boomers (born between 1946 and 1964) will be at least 65. Until then, on average about 10,000 Boomers are expected to retire each day!

These massive, unprecedented retirement waves don’t only reduce the overall size of the workforce, they also come with a severe skills gap, presenting a critical challenge for organizations in maintaining and transferring essentiel knowledge. A lot of people nowadays use the word “Boomer” as a disparaging term synonymous with “retrograde,” “obsolete,” or even “stupid,” but the truth is that Boomers possess decades of experience with a deep understanding of company processes and institutional knowledge. Their departure is likely to disrupt the mentorship chain, create a leadership vacuum, and impact business continuity.

Why the “process knowledge” of aging workers is key

I recently came across the concept of “process knowledge” and found it enlightening. It’s the sum of little things that go without saying to make things work. It’s the implicit knowledge that experienced people hold and transfer to others in the workplace. Process knowledge encompasses older workers’ understanding of how tasks and operations are carried out. It’s not only about hard skills because it includes tacit information about workflows, procedures, best practices, and the reasoning behind specific methods. It plays a crucial role in maintaining efficiency, ensuring quality, and enabling continuous improvement.

Process knowledge is particularly vulnerable today amidst all the impending retirements. As the most experienced employees leave the workforce, there is a risk that critical institutional insights will be lost. The thing is, the erosion of that knowledge has already been precipitated by a combination of outsourcing, turnover, and the relentless pursuit of financial optimization.

Case in point: Boeing. The downfall of the aeronautics giant can largely be explained by a loss of process knowledge. Boeing outsourced its production massively so key manufacturing processes were relocated to external contractors. It laid off its most experienced—and expensive—engineers in an attempt to cut costs. High turnover rates further exacerbated the issue, as the departure of experienced personnel disrupted the continuity of knowledge transfer. Thus, a relentless drive for optimization can inadvertently result in a loss of institutional memory. But even organizations that haven’t done their utmost to “optimize” and cut costs are at risk. With the coming retirement waves, the loss of process knowledge is poised to escalate into a crisis.

Industrial knowledge as a matter of economic resilience

The departure of seasoned professionals, coupled with the existing gaps in knowledge retention, presents a huge obstacle to the relocation of industrial production and the restoration of full economic sovereignty. In the context of the current geopolitical tension between the US and China, preserving and revitalizing process knowledge may become imperative for national security and economic resilience.

As the US seeks to repatriate industrial production previously outsourced to China, the mass retirement of Baby Boomers, many of whom hold deep expertise and extensive experience in manufacturing processes, creates a knowledge gap that younger, less experienced workers may struggle to fill.

In aerospace engineering or in the automotive industry, this is a particularly relevant issue. At original equipment manufacturers (OEMs), such as Boeing, General Motors, or Ford, veteran workers are the ones who have the most extensive experience with quality control and manufacturing operations. Their expertise in maintaining equipment ensures product quality. In the case of Boeing, this lack of expertise may have played a role in the tragic crashes involving its 737 aircraft that resulted in hundreds of deaths.

A loss of senior workers in the banking sector

Ever heard of COBOL? COBOL, or Common Business-Oriented Language, is a legacy programming language extensively used in the financial industry for mainframe systems that handle core banking functions, like account management or customer information systems. Well, the banking sector has encountered trouble because many experienced COBOL programmers have already retired. These programmers knew how to fix and update old computer systems, move important data, and understand the complex rules of the banking software.

COBOL is an old language which is no longer taught in schools. But many organizations still need workers who have knowledge of older technologies. Indeed new IT systems rarely replace older systems in full; instead, new systems are often added on top of existing ones. Over time, this creates layers upon layers of different technology generations within an organization’s infrastructure. Much like archeology, where understanding different historical periods is essential, working with these layered IT systems requires an understanding of various technological eras. Knowledge of older systems is crucial for maintaining and integrating these multi-generational stacks.

To bridge their COBOL skills gap, many banks have turned to retired COBOL programmers, bringing them back as consultants, part-time workers, or contractors. These experienced, retired professionals have provided valuable expertise in fixing and updating old systems, managing data migrations, and ensuring that critical banking operations continue smoothly.

3 ways organizations can help prevent a knowledge exodus when senior workers retire

1. Create a culture of knowledge sharing

Creating a culture of knowledge sharing means fostering an environment where employees are encouraged and rewarded for sharing their expertise. This involves recognizing and rewarding employees who actively contribute to knowledge-sharing initiatives, and providing the necessary tools and platforms to facilitate the exchange of information. Company leadership must lead by example and actively support and participate in these initiatives, thus encouraging widespread participation. Such a culture not only helps retain and disseminate knowledge, but also fosters innovation and continuous learning within the organization.

2. Involve senior workers in training programs and knowledge documentation

Leveraging the knowledge of aging workers early is crucial to address the future loss of senior employees, yet few organizations do it in a timely manner. We need to plan ahead! Formal mentorship programs facilitate the transfer of tacit knowledge and help build relationships. Identifying potential successors for key roles and providing them with targeted training opportunities ensures continuity in leadership and expertise. Involving senior employees in training programs and knowledge documentation efforts can capture their insights and ensure they are passed on to future generations of workers. Encouraging cross-training among employees ensures that critical knowledge is shared across the team, preparing employees to step into different roles when needed.

3. Cultivate a network of alumni and former employees, including retirees

While most retired workers are reluctant to return to full-time work, many may be willing to contribute a few hours each week if their expertise is valued and they can complement their pensions. Engaging retired workers on a part-time or contractual basis allows organizations to tap into their extensive experience without requiring a full-time commitment. This practice is increasingly common across various sectors, including technology, engineering, healthcare, and finance, where specialized knowledge and experience are critical. This approach provides a pragmatic solution to address the immediate skills gap while developing long-term strategies for knowledge transfer and workforce development.

Photo by Thomas Decamps for Welcome to the Jungle

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