Seventy-eight percent of executives agree that the threat of losing business-critical expertise is more of an issue than it was five years ago.
The term "brain drain" was first used to describe the movement of scientists and technologists to America from postwar Europe. Because today the chances of US talent emigrating to other countries is low, brain drain is now more commonly used in reference to Baby Boomers retiring without transferring their knowledge or expertise to successors. In other words, brain drain is the result of not having a succession plan.
In 2011, the first Baby Boomers turned sixty-five years old. Over the next nineteen years, ten thousand Baby Boomers will turn sixty-five each day. In 2029, all Baby Boomers will be sixty-five years old and over. Of employers at Fortune 1000 companies, 62 percent believe that future retirements will result in skilled-labor shortages over the next five years.
Companies will be facing the reality of brain drain in the coming years (if not already) with increased intensity. Having a succession plan, a process for identifying and developing new leaders who can replace previous leaders, is essential.
The Severity of Business Brain Drain
Knowledge-intensive industries such as education, health and medical, finance, federal government, distribution, and any employment structures that are heavily weighted toward scientists, engineers, and other experts are in jeopardy of being impacted most severely by brain drain.
Here are some startling numbers behind the impending brain drain...
- Baby Boomers account for approximately 29 percent of all jobs, and 56 percent hold leadership positions.
- Baby Boomers own four million companies, which make up 66 percent of all businesses with employees.
- An estimated $10 trillion worth of businesses will change ownership in the next twenty years.
- Seventy-five top HR and IT executives at midsize-to-large US-based companies answered these questions this way:
- Is the threat of losing business-critical expertise more or less an issue than it was five years ago?
- More (78 percent) / About the same (22 percent) / Less (0 percent)
- How frequently do you lose a top manager or other expert without a successor?
- Never (16 percent) / Sometimes (60 percent) / Frequently (24 percent)
- Is the threat of losing business-critical expertise more or less an issue than it was five years ago?
Organizations big and small are in danger of bleeding critical know-how at unprecedented rates. Yet, despite this urgent concern, few employers are actually doing anything to reduce the impact that brain drain will have on their organizations.
- 68 percent of employers have not analyzed the demographics of their workforces.
- 77 percent of employers have not analyzed the retirement rates of current employees.
- Only 19 to 37 percent of employers have taken action to prevent Baby Boomer brain drain.
The vacancies left behind by Baby Boomers will be too large for Generation X to fill. Thus, the bulk of the Baby Boomer replacement will be by Millennials. For this reason, recruiting and retaining Millennials is likely to become even more competitive moving forward.
(Learn more generational insights in Ryan's latest book, The Millennial Manual: The Complete How-To Guide to Manage, Develop, and Engage Millennials at Work.)
Consider Ryan Jenkins to be your next Millennial or Generation Z keynote speaker by clicking here...
This article was originally posted on Ryan's Inc.com column, Next Generation Insights.
