'Lost knowledge' threatens business growth, safety

By Beth McConnell Apr 10, 2006
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If NASA wanted to send an astronaut to the moon, it couldn’t do it.

Thirty-seven years ago, $24 billion and countless hours worked by 400,000 employees landed Neil Armstrong on the moon. But in the 1990s, budget cuts and offers of early retirement led engineers to leave the space program—and they took with them the knowledge, experience and judgment needed to re-create a moon landing. Archives of research and blueprints of rocket boosters are lost. To put another human on the moon, NASA will have to start from scratch.

That’s just one example that author, researcher and consultant David DeLong, can cite of the effects of the loss of the huge number of highly skilled professionals and managers within the next several years as the baby boom generation reaches retirement age.

DeLong discussed strategies to deal with the exodus—including retaining older workers

and facilitating knowledge transfer—at the second annual benefits symposium hosted by MetLife, “Envisioning the Future: The Impact of Longevity on the Workplace,” held April 3 in Washington, D.C.

DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce (Oxford University Press, 2004), told attendees that the coming workforce changes will mean that companies will not be able to bring new products to market as quickly. The workforce is losing senior engineers—and other professionals whose jobs require years of training—faster than young engineers are joining in. Innovation and new growth, including global opportunities, will be stunted, he said. “You don’t start up new locations in Asia with junior people,” he added.

Some industries will be hit particularly hard, he noted:

  • Fifty percent of federal workers will be eligible to retire in 2008.
  • Twenty-eight percent of employees in the nuclear power industry will be able to retire in five years, while 18 percent of young employees leave after just a few years on the job.
  • Fifteen years from now, 50 percent of nurses will be at or beyond retirement age.
  • Nearly two-thirds of the engineers in the petroleum industry have retired, and the pipeline to replace them is drying up—there is a record low number of students in petroleum engineering programs.

The idea of inexperienced nuclear engineers at the helm of the country’s nuclear plants is frightening. And the consequences of lost knowledge in the workplace can be deadly.

At the Fort Worth Water Park, a civic water facility featuring fountains and a shallow pool in Fort Worth, Texas, longtime caretakers retired in the 1990s, DeLong said. They were the only ones on staff who knew how deep to maintain the water in the pool, where children liked to play and where nearby workers ate their lunches. The depth crept from three-and-a-half feet to over nine feet. The park was shut down after three people drowned, he said.

So much of our knowledge-based economy revolves around integrated, specialized procedures and systems, he said, and “senior executives don’t have a clue about knowledge walking out the door.”

It all adds up to a “looming HR crisis,” DeLong told attendees. He advised the benefits professionals with young employees not to be too confident: “If you don’t have an aging workforce, your competitors will cherry-pick your workers.”

Succession planning is no longer just for C-suite executives, he said. Drill down through the layers of your company to find the hidden, skilled workers with history and institutional knowledge locked in their heads.

Also, DeLong advised, “don’t incent people to leave early.” One company he has worked with changed its pension plan so that offerings did not peak for employees at age 54; now the most benefits can be reaped at age 62, he said. When the change was announced, one employee walked into his manager’s office and said, “You’ve got me for seven more years,” DeLong recounted.

There are several barriers to keeping employees and tracking down their knowledge before they leave. DeLong listed these:

  • There is no clear ownership of the problem. Is it an HR problem, a management problem, a documentation problem?
  • Costs of lost knowledge are often hidden. If an employee who works on a production line retires, and he or she is the only one who knows that the best way to work the machines is not what’s written in the operating manual, and rectifying the resulting mistakes costs $200,000, that expense won’t be chalked up to “lost knowledge” at the end of the year, DeLong said.
  • Companies need to look for creative ways to keep younger people engaged while they hang on to older workers. While both groups may want flexible work schedules and work/life balance, younger employees may become resentful if they can’t see a path for advancement through the company. That path might appear to be clogged with older workers, DeLong said.

Hanging on to older workers may not be that difficult. According to a study commissioned by MetLife Mature Market Institute and conducted by DeLong and Zogby International, retirees are returning to the workforce and opting for a “portfolio” of paid and volunteer positions.

“Today, older workers view retirement as a desirable state, not a particular date,” DeLong said in a press release accompanying the study, “Living Longer, Working Longer,” which was released at the symposium. “When we conducted the study, we found that mature workers are struggling to balance the conflicting pressures of income security, post-retirement-age employment and, often, age discrimination—perceived or real—as they look for a sense of security and meaning in their ‘retirement’ years.”

The study found that 78 percent of respondents age 55-59 are working or looking for work, as are 60 percent of 60 to 65-year-olds and 37 percent of 66 to 70-year-olds. Across all three age groups, roughly 15 percent have accepted retirement benefits from a previous employer and have then chosen to return to work or are seeking work. The survey polled 2,719 respondents between the ages of 55 and 70.

Results of the survey showed that the “working retired” are drawn back to the workplace looking for meaningful activity. Many said they wanted to try something new and different, the study noted. Financial necessity also is a driver: 18 percent of baby boom workers age 55-59 report they expect to have no access to retirement benefits, such as pension or 401(k), when they stop working.

Also, the survey noted that only 15 percent of 66-to-70-year-olds moved to warmer climates once they started receiving retirement benefits, while 21 percent of 60-to-65-year-olds and 28 percent of 55-to-59-year-olds chose to relocate. Approximately half of all respondents in each age group characterized their health as excellent or very good.

Beth McConnell is associate editor for HR News . She can be reached at emcconnell@shrm.org.

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