The Upcoming Crisis in Talent Management

A crisis of shortages and gaps in talent at U.S. companies is gathering on the horizon. The coming wave of retiring business executives at companies in the developed world, extreme shortages in the numbers of their replacements, looming gaps in the talent and skills of these replacements, global competition for talent and falling birthrates in the developed world are some of the key forces acting together. This crisis is powerful; it will radically change companies and the effects will be felt for a very long time.

The looming gap in business talent is not simply an issue of the talent disciplines — talent management, HR, succession planning and training — but is a fundamental, far-reaching strategic business challenge. Companies that respond quickly in the short term and intelligently over the long term as they manage their knowledge workers will enjoy a substantial competitive advantage. Companies that don’t respond may not even realize their misstep until it’s too late, as sales, margins, efficiencies and other competitive advantages quickly erode due to the inadequate decision making of poorly prepared managers and leaders.
Leadership at companies has always eventually changed, and retirement is not a new phenomenon. However, understanding the roots of the crisis in talent lies in understanding that while in the past this process occurred over a manageable period of time, allowing for planning and smooth transitions between leaders, the current crisis involves an unusually large number of leaders retiring in a wave over a short period of time.

A Surge of Retirements of Current Leaders
Consider these alarming statistics: 40 percent of the U.S. labor force is currently made up of baby boomers (born between 1946 and 1964), according to the U.S. Bureau of Labor Statistics and “Business Executives’ Attitudes Toward the Aging Workforce: Aware But Not Prepared?” — a survey conducted by BusinessWeek Research Services for AARP. However, by 2010, there will be a 52 percent increase in workers in the 55-to-64 age bracket compared with 2005, and 40 percent of the U.S. workforce will be considering retirement, according to “Talent Management: The New Business Imperative” by BusinessWeek Research Services. The first wave of executive retirements will begin in the next four years, according to “Workforce Analytics: Driving Talent Management Strategies Through Workforce Data.”