North East businesses need to act now to survive mass retirement of baby boom generation

As the baby boom generation nears an often comfortable retirement, Adam Luke looks at the skills gap they will leave behind.

©Neil Denham Neil Atkinson, Managing Director of Deminos
Neil Atkinson, Managing Director of Deminos

The ecstasy, relief and reunions that marked the end of the Second World War in 1945 brought one of the most dramatic population changes in UK history.

Along with much of the Western world, Britain experienced an enormous baby boom when peace arrived, followed by another in the early 1960s, and the impact of that sizable generation has been felt ever since.

Having grown up in a post-war world, those born in the period beginning in 1946 and ending in the mid-1960s have become known for being healthier and wealthier than previous generations, while also being able to look forward to a comfortable retirement and good pension denied to previous generations and now under threat for their offspring.

And now that more and more of these baby boomers are reaching retirement age - with enough savings to ensure they don’t have to delay their withdrawal from working life - businesses have a challenge on their hands.

A recent survey of 200 finance chiefs from UK companies by recruitment company Robert Half Management Resources found 69% of them were worried about losing the baby boomer generation from their workforce over the next two years.

Almost a quarter said they were “very concerned” about experienced professionals leaving their team, while nearly half were “somewhat concerned”.

The loss of legacy knowledge - skills, systems and expertise brought to the businesses by long-serving staff - appears to be the biggest worry for employers (43%), ahead of leadership abilities (20%).

Those questioned also acknowledged that finding a way to retain these business leaders and manage succession plans was a chief priority in the coming years.

One of the employment sectors being hit hardest by mass retirement of baby boomers is engineering, which proved a popular industry for the age group but has struggled to attract younger workers in recent decades.

James Ramsbotham
James Ramsbotham
 

James Ramsbotham is chief executive of the North East Chamber of Commerce, which has taken a close interest in the sector.

He said: “This is an issue we are all too aware of. With research suggesting that over 8,500 skilled people across the North East will retire from the sector before 2016, considerable danger is being posed to the industry, with many companies reaching full capacity in their ability to recruit and deliver.

“The North East boasts some of the best parts of the UK economy and we’re fortunate to have such dedicated and successful businesses blazing a trail in the process, manufacturing and engineering sectors.

“However, it is not just the responsibility of large firms and schools, colleges and universities to ensure our future workforce is equipped with the requisite skills. This issue is something that we must address throughout the business community and while we have a plethora of large companies dedicated to apprenticeships and employee development, not enough is being done by the SMEs in regional supply chains to address the potentially serious skills shortage.”

He added: “Around 80% of our engineering firms do not have apprentices or are not engaged in the skills development agenda. It is vital that these companies explore the potential of recruiting apprentices – motivated learners who can be moulded to meet the needs of the individual business.

“I would urge all firms to consider apprenticeships. It is not only good for your business, it is also good for regional business.

“To a young person, it is a way to gain vital on the job training, earn a wage while learning and also experience priceless workplace skills and experience. For a business, apprenticeships are an ideal way to mould ambitious and enthusiastic young workers to meet the needs of their business.”

Meanwhile, new research from First Class Technical Recruitment, which has an office in Whitley Bay, highlights a similar skills crisis facing the North East’s chemical and oil and gas sectors due to retirements.

It found 62.2% of workers in these sectors are aged 50 plus, with 54% due to reach the average industry retirement age of 61 within the next seven years.

The largest percentage of workers (47.6%) falls within the 50-59 age bracket, which is more than the 20-29, 30-39 and 40-49 age groups combined. Only 4.8% of the workforce is in the 20-29 age range.

Andy Buchanan/PA Wire An oil rig in the North Sea
An oil rig in the North Sea
 

James Gill, director of First Class Technical Recruitment, said the study of 3,000 workers from the region’s sector, which employs more than 50,000 workers, highlights the increasing challenge facing the North East to maintain its globally-respected skills base.

He explained: “Baby Boomer retirement is one of the biggest threats to the UK oil and gas and chemical industries.

“This generation have formed the backbone of these sectors for many years and our research sends a clear warning that the pool of workers is reducing significantly.

“Having a top heavy workforce can only be detrimental to these industries. Investments in apprenticeships is still playing catch up and more than half of the over 50s age group is reaching retirement age. This leaves a significant gap in the workforce in the huge 20 to 49 age group where the oil & gas and chemical sectors require skilled and competent individuals.”

He added: “The challenge to fill this group can be achieved in part by attracting those from other sectors, which have complementary transferable skills.

“With effective reskilling programmes, supported by government and employers, as well as sourcing returning UK professionals from overseas, significant steps can be taken towards addressing this major issue for the North East.”

Neil Atkinson, managing director of North East HR specialists Deminos, said the retirement of the baby boom generation means “the gradual winding down and disappearance of a very important part of the workforce”.

He explained: “This generation represents experience and skills amassed over decades which younger generations will be less likely to possess.

“Younger people are more likely to have the cutting edge skills represented by new technologies, but the older workers make good leaders because they often have stronger communication skills than their younger colleagues. Older workers remember a time when communication wasn’t dominated by e-mail, instant messaging, texting or social media.

“Baby boomers have been working their entire lives and are often not searching for the next opportunity like younger workers. They know exactly what they want to do and are focused on getting the work done making it more likely that they have been with their current employer for longer and will be more loyal and less likely to be searching for the ‘next opportunity’.

“As the baby boomers start to leave the labour market, employers will increasingly be without the certainty and loyalty that this generation has represented.”

So how do employers respond to this imminent danger?

Former chairman of the Northern Business Forum and baby boomer Alistair Arkley, who has run several hospitality companies across the UK including a multi-million pound crockery business, has called for all medium and large companies to be forced to draw up succession plans.

He said: “What people from my generation must try to do is take a step back and pass authority on to younger workers so they can run the business, but show that we still have something to contribute.

“We need to accept there is a way of exiting and it is not just walking out when we hit our retirement age. This process is something which should be encouraged because it is positive for both the person in charge and the organisation as a whole.

“I do understand however that it may be difficult for some people in my generation to accept a back seat and lower salary at the business they are already working at but it is important to pass knowledge and experience on.”

He added: “There will be opportunities created by the retirement of the retirement of our generation. We have tended to be male dominated so I think more women will enter the boardroom, while the younger generation will bring technological know-how to take on business.”

David Cliff, chairman of the Institute of Directors in the North East and managing director of Gedanken Ltd, believes persuading the baby boom generation to stick around in some capacity during their 50s, 60s and 70s rather than retiring is key.

He said: “Employers need to think differently about how they utilise the skills of those baby boomers still active in the workforce. There will be a natural tendency to defend their lifestyle, so expectations of a 60-hour week will be far from the mark, with greater flexibility required.

“This might even include employers creating the opportunity for the staff member to be indirectly employed as a supplier, giving them that increased control over their own work-life balance.

“Employers also need to be aware that baby boomers will be less likely to be impressed by the latest fad in working techniques, but they will be more inclined to cut to the chase, improvising to find ways and means to get the job done.

“The other element employers must be conscious of is the more established value set of the baby boomer generation, in comparison with some younger workers. There will be a greater aversion to the bending of ethics, due to their organisational conscience and solid experience.”

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