Cecily O'Connor
RedwoodAge.com

Many American employers know baby boomers' retirement could create a talent shortage, but few companies are confronting key issues to plug the gaps.

One of the biggest problems is that companies are misguided about how to prepare for and develop programs that meet demands associated with the retirement of baby boomers, who are now aged 43 to 61.

About 41 percent of companies think middle-management will be the most affected by the so-called boomer brain drain, according to recent research from Ernst & Young based on interviews with human resources executives at Fortune 1000 companies.

However, three-quarters of employers are focusing their succession planning on senior management positions only.

“When you consider how many employees will be retiring in the next few years, it’s clear that an aging workforce will impact the entire organization," said Bill Leisy, principal in the firm's practice focusing on markets and services in the western hemisphere. "Finding a way to solve this will be a shared responsibility across the company.”

Stuck in Neutral
However, some employers have yet to step up to the plate in planning. For example, about 44 percent of companies said it would be desirable to have senior management stay beyond the normal retirement age. However, 60 percent rated their current programs as “neutral” in terms of encouraging or discouraging retirement at a certain age.

Less than 10 percent have a phased retirement program in place that allows employees to work reduced hours, enjoy flextime and even collect some retirement benefits in exchange for a smaller paycheck. But 29 percent are considering such an offering.

When it comes to keeping employees on board, 39 percent agree health care is a main driver in one’s decision to retire, but more than half are considering increasing employee co-payments, a step that could lead to the loss of talent. Additionally, 58 percent either have not or do not know if their company has analyzed their benefit plans and conducted a compliance review to gauge whether employees are receiving the benefits they're due.

The message to employers is that retirement is "no longer the main event; it's a process," said William J. Arnone, a principal for the firm's employee financial services.

With that in mind, some companies have already started addressing workplace shifts. Boston Scientific, First Horizon, The Aerospace Corp. and Weyerhaeuser are among businesses that have implemented various programs such as retirement workshops, apprenticeships and flexible work arrangements to ensure talent gaps are filled. 

Ernst & Young also suggested that employers should help human resources executives understand how certain regulations will impact their benefits and compensation programs. About three-quarters of HR executives are responsible for identifying the financial risks associated with their aging workforce, yet about half said they are neither making nor considering changes to their benefits and compensation programs in light of potential financial risks.

“A greater level of coordination between HR executives, the C-suite and the board of directors on both regulatory and operational issues as they pertain to the aging workforce is necessary to avoid serious financial consequences,” said Christopher Lipski, a principal for the firm's HR risk group.