The retiring brain boom

Baby boomers are retiring and the experience they will take with them represents a huge potential loss for Australian businesses. ZDNet Australia investigate how this know-how can be retained.

Baby boomers are retiring and the experience they will take with them represents a huge potential loss for Australian businesses. Mark Wheeler investigates how this know-how can be retained.

In the 2002 film "About Schmidt" Jack Nicholson's character, 66-year-old Warren Schmidt, retires from his long held insurance job to face an ambiguous future. At a loose end in the days afterwards, he finds himself loitering around his old office interfering with advice for his replacement. The film may hold a satirical and fairly colourless view of retirement, but it also shows another great concern held by employers -- that the Schmidts in their own office may also retire a great deal of the company savvy and tacit wisdom.

It's a given that years of experience are valuable. Job specifications demand it and people are hired almost exclusively because of it. What employers clearly seek is the real "know how" required to get the job done. But "tacit" wisdom extends beyond this. A long-serving employee will know the answer to so many problems -- from how to best handle a particular client through to who you might ask about ordering new copy paper. Not having someone with this offhand knowledge can put you at a distinct disadvantage. Sure you can write it all down and hand it to a new starter as an enormous file, or put it on a database, but the sheer volume and complexity of doing it this way can make it worthless to do so.

Australia's baby boomer generation is currently contemplating retirement, meaning a large percentage of the workforce is about to collectively exit, taking with them a large proportion of their wisdom. This represents more than a few wrinkles of concern to those left behind but it seems that until recently, no one has really been that successful at implementing a system to maintain continuity of tacit knowledge.

Knowledge management
The issue has broadly been considered from two different approaches, says Phillip Allen, services research manager at IDC. "There is the codifying of knowledge -- extracting, recording, structuring, and storing knowledge into a library of data; and an idea of the water cooler -- tacit knowledge that is more difficult to document."

Knowledge management (KM), the documenting, recording, and storage of useful business knowledge is a well known "codifying" approach used by many businesses with varying success. Other manifestations such as customer relationship management (CRM), or business intelligence (BI) all offer specific knowledge, analysis, or understandings for useful purposes, but cannot capture the tacit experience that can seem uniquely illusive and so advantageous to business.

Most managers would agree that even careful documentation and structuring of any organisation's processes, contacts, policies, approaches, habits, relationships, systems, expectations, and so on -- down to knowing not to bother 'Big Kev' when he's just got back from a sales meeting -- is never achievable at the instinctual level of a seasoned employee.

So as an unparalleled number of employees begin to invest in caravans and look to the north, wise businesses are beginning to rethink their relationships with their prospective retirees -- and it turns out that gold watches might indeed be flashed around the office for a while to come.

What issue?
In April, recruitment company Accenture commissioned a study of 150 Australian workers between 40 and 50 years of age to gauge the usage of knowledge management systems and employees' attitudes to retirement. The study sampled a wide section of industries -- notably technology, telecoms, healthcare, finance, manufacturing, and business services.

The findings revealed that while many companies have some sort of tool or system in place to document their workplace knowledge, 36 percent of respondent's organisations had no workplace knowledge management system at all, and 18 percent of employees believe they will retire with no attempt at a transfer of knowledge.

Only 24 percent of respondents said they would expect to undertake an intensive process of knowledge transfer before they retire, while more than 50 percent anticipated lesser kinds of knowledge handovers. The study also suggests that 44 percent of companies would hire a new employee to replace those retiring, while 33 percent would most likely promote someone to fill the position. The same study conducted in the US showed similar results, but with nearly half of the respondents' organisations having no formal processes in place.

Catriona Byrnes, director at SageCo, a mature worker recruitment and consultant company, says that its research in Australia shows 90 percent of retiring employees say their organisations have no formal program to capture their knowledge. "Most do not even look at documenting anything, particularly about their role in the organisation and what they considered to be important to the organisation," she says.

What the research indicates is that some old problems are set to plague Australian business -- both with an aging workforce and with the way business has historically coped with this. With many sectors such as the public service having more than a third of their employees on approach to retirement, these issues will become much more familiar.

"Businesses need to consolidate their knowledge in the organisation as well as ensure that the processes and systems that are being used can continue to be used in coming generations"

Robert Becker
Catriona Brash, a partner at Accenture's human performance practice says: "It's (the aging population) starting to emerge as an issue for businesses. The government has certainly raised the issue of the aging workforce. The resource and the pharmaceutical industry are raising the issue, [as are the] communications and high tech [industries] -- particularly with their field force and technicians. They are realising a constraint in the extent to which they can introduce new products and innovate in the field as their experienced workforce begins to exit."

Legacy technology
The issue is compounded when technology itself starts to retire and as the employees who used to be experienced with older technology disappear, businesses are finding there is a scant experience base around to maintain and update their older systems.

Robert Becker, national product manager for servers and workstations with Sun Australia and New Zealand, says that outdated (or legacy) systems are becoming a major problem in regards to dwindling experience. "Businesses need to consolidate their knowledge in the organisation as well as ensure that the processes and systems that are being used can continue to be used in coming generations," Becker says.

"A good example of this is mainframes. They've been around for about 30 years so when you look at organisations that originally developed their own application codes, the programmers that were doing that are now in their mid 50's. These developers were using languages such as COBOL which isn't really taught much in universities today -- everyone wants to use the next generation languages like Java and HTML. It means that the resources required to provide maintenance, etcetera, for some of these very large COBOL-based applications that the large institutions and government built are becoming more and more scarce."

Walter Schroder, migration practice manager at Sun, says one solution for the mainframe example could be to do a mass conversion to one of the newer languages. "The problem then is that code like COBOL was never written with Java in mind. In IT, it is an ever-evolving journey. What is hot today can quickly become a legacy system. The challenge for organisations is to make sure that they don't let their legacy environments get too old, such that they don't get cornered and are unable to move," he says.

"There are three possible strategies. One -- to actually replace the entire environment, which is the most expensive option, but sometimes it is so much of a hairball this is the only thing you can do. Two -- actually rewriting the environment, taking the code and re-writing it using a code generator so that the old code is converted to another language but you don't know how maintainable this is [think lost in translation]. And third -- re-hosting the environment. We take the business logic and applications, for example, that were written in old code and re-deploy them on a more cost-effective platform."

Schroder says this really occurs through phases -- moving the knowledge and technology from one place to another without changing too much in between, allowing newer employees to develop experience in the space while older ones gradually adapt their knowledge and the environment in the new direction.

Slowly, as technology progressively evolves, this process draws together the knowledge and the environment to a point where management or knowledge of it can maintain a level of continuity over time.

Becker says, however, that most customers have engaged with Sun at a point when they have either run out of capacity or that they know there is going to be a significant reduction in staff. "Companies are becoming aware of these sorts of problems, but we still find we are doing a lot of work to let people know that they need to be preparing."

Planning for retirement
Having enough time to address the issues of an aging workforce is critical. Many employers still have a bad taste from solutions that didn't really capture the right knowledge and have abandoned their efforts says Byrnes. "If you talk about KM or to anyone in business their eyes glaze over and they start thinking of expensive IT systems," she says.

"A real solution requires you to start with the retiring person and work within their network. [Ask] who are the people they are actually sharing knowledge with as a matter of their role or relationships -- and maximise that. You can document as much as you can, but it needs to begin with the person. It's about getting them to have the right conversations and asking the right questions to get that knowledge flow maximised. Everyone knows the way it works -- you think 'oh, Bruce will know how you do that, I'll ask him' -- it's about getting the answers to that passed along," Byrnes says.

Consultants are clearly promoting a holistic approach that tackles the problems for the long term. Brash sees the whole aging workforce as a strategic challenge for business. "It goes to the heart of whether on not [business] is able to generate sustainable capabilities. Your workforce is a key source of competitive advantage -- if you're losing that capable group and you don't have a way to build it back up quickly or retain it from the start, then you lose your competitive advantage and your strategy is at risk. Whether that strategy is growth or cost containment, or whatever, because capability is so core to a businesses ability to achieve strategy, then you've watered down your ability to be successful."

Byrne agrees that preparation is critical. "Don't just wait until their [your staff's] retirement is upon you. Question where it is going to affect you, and where are you most at risk? Do you know the demographics of your workforce? Where are people leaving from and where is this going to impact? It really is a risk analysis in the early stages -- capturing critical knowledge a couple of years out and defining what is critical," she says.

SageCo's survey shows most (81 percent) employees would willingly participate in a knowledge-transfer program if it existed and 60 percent indicate they would like to reduce their full-time workload, phase their retirement ,or work (flexibly) post retirement to share their wisdom. In fact, Byrne says that for many people the idea of leaving "cold turkey" is not a satisfactory one. "Look at how you could maintain a portfolio of work with employees going part time or being involved in a mentoring capacity. Helping people prepare for retirement is like a retention tool," Byrne says.

Some of the real solutions may indeed suit everyone. Already, many retirees are subcontracting themselves back to their old employers. When flexible or phased retirement arrangements can be instituted, it creates possibilities for an atmosphere where "the right sorts of conversations" and "the right questions" can proceed. The transfer of the strategic and subtle knowledge becomes almost a natural reflection of the daily process of getting on with business.

About Schmidt explores what it is to reach the end of your working life and question your accomplishments. Businesses too might reflect on the changing demographics of their workplaces and see an opportunity for establishing real continuity of the most precious knowledge and know how, not only across generations of workers as a business strategy, but as part of a more sincere approach to retiring their most valuable resources.

This article was first published in Technology & Business magazine.
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