The Dark Side of the Retirement Bubble

Is another perfect storm looming on the economic horizon once we sort through the current Wall Street banking crisis -- and will President-elect Barack Obama's administration be prepared to deal with it?

Management consultant Stephen Xavier, founder of Cornerstone Executive Development Group ( http://www.cornerstone-edg.com), argues that key industries have not addressed the loss of critical knowledge that will hit them when a huge number of baby boomers head for retirement by 2010. "In fact," says Xavier, "although the retirement crisis is already well underway, our current economic crisis has bought management a few crucial years or so by the fact that many boomers put off retirement when they saw recent and dramatic plunges in their 401(k) and related retirement accounts. But many companies face huge losses if this looming shortage of skilled labor and management is not addressed now." What industries are affected and why are we unprepared? Xavier cites ongoing studies by organizations such as the AARP, formerly the American Association of Retired Persons, and the Society for Human Resource Management (SHRM), among others, that have been sounding warning bells for the last ten years.

In 2005, SHRM President Susan R. Meisinger warned that these demographics present major challenges to America's workplaces, saying, "These are serious HR and workforce issues that could undermine the nation's global competitiveness and HR must determine how to meet these challenges." At the same time, SHRM's own studies showed that only a quarter of HR professionals were convinced that the flood of retiring baby boomers would be a problem for their organization. "Not so," says Xavier, "the crisis is upon us now and far more serious than many in business realize."

This lack of concern by HR professionals elicited a warning this fall from AARP's Chief People Officer Ellie Hollander, who said that few employers recognized the effect of the brain drain they will suffer when boomers retire and take all their knowledge and experience with them. Studies in the aerospace industry and manufacturing sectors, two areas likely to be hard hit, back up this concern.

According to Xavier, the current economic crisis may have bought companies a few years time to put plans in place. He cited one energy company that has seen a withdrawal of requests for retirement among many in management as their portfolios shrank dramatically this year. But this company and others are no longer waiting for their HR departments to take the lead, but are bringing in outside experts to set up programs on bench strength and succession. "More organizations need to take action now," Xavier concluded.

Contact: Cindy Rakowitz -- (818) 783-3307 and Jan Andrew -- (212) 989-3646

Cornerstone Executive Development Group
http://www.cornerstone-edg.com

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