Baby Boomers: The Way Out
The director of learning and development for a major US energy firm describes a key issue faced by her organization: “We are run by Baby Boomers who will retire soon. We will be run by Millennials in ten to fifteen years. Are we ready?” As companies look to emerging markets for future growth, it becomes particularly important to address this issue proactively on a global scale. Aperian Global, a global talent management firm, works with companies to address the challenge of knowledge transfer and leadership development across generational, cultural and organizational boundaries. Based on this experience, we are able to identify the core obstacles faced by multinational businesses with a large retirement-age leadership contingent. We have also identified the organizational best practices that equip senior leaders with skills to ensure that their legacy is not lost even as their enterprise expands into new markets.
The term “Baby Boomer” officially refers to the generation born in the U.S., Europe, and Japan in the years immediately following World War II. In the U.S this generation comprises a huge demographic of almost 83 million people who were born between 1946 and 1964, and is currently around 25% of the entire population. As this generation enters retirement, many organizations are beginning to feel the critical impact of their departure, from loss of key leadership to the disappearance of less tangible, but equally important, tacit knowledge that often forms the bedrock of organizational culture. However, mitigating this impact by ensuring a strong leadership pipeline and the transfer of knowledge, both implicit and explicit, is fraught with its own unique hurdles. Do Baby Boomer leaders possess the knowledge transfer skills to impart their expertise across generational and cultural gaps? How does the organizational shift to a global, virtual environment with a matrix reporting structure affect a leader’s ability to mentor and develop high potentials?
One of the Baby Boomer’s defining characteristics has been a greater focus on self-actualization through work. This has produced a generation of leaders who have heavily invested in their organizations, often over the long term. Many of them not only hold senior leadership positions, but also embedded institutional knowledge: information that has not been documented but is no less than essential to the organization. One of the key difficulties in passing on this tacit knowledge is that Generation Xers and Millennials have a very different approach toward career development and a different value system driving this approach. Rarely do members of these younger generations see themselves staying with a company long-term, and their expectations for career progression are often extremely ambitious.
Many companies struggle with the sustainability of knowledge transfer in such a high turnover environment. In addition, the expectations of high potentials have often been set by a much different education system than that of the Baby Boomers. Younger employees often have a more egalitarian approach to learning, assuming that they should be equal partners in the learning process, able to both add value and receive input, regardless of their disparity of experience vis-à-vis older counterparts. A US-headquartered client describes this phenomenon: “We hire the best of the best so we have all these new people who think that they should lead or be at a higher level immediately. We get college kids who come in thinking ‘you need my fresh perspective.’”
These expectations manifest themselves in learning style differences that make implementing a knowledge transfer initiative across generations hugely challenging. The job of navigating these differences while still maintaining responsibility for key deliverables places a substantial burden on many older leaders. A leadership development professional in a global firm explains it this way:
I work with senior level people and they do not really know how to coach – our old style was to just tell people what to do. The pressure to just get the work done is enormous. But, as a result of this ineptitude, we fail to motivate our younger employees and end up losing some of our best and brightest.
To add to an already challenging situation, most knowledge transfer initiatives involve a virtual communication component and take place within a matrix environment. Creating the level of trust necessary for a successful mentoring relationship, for example, proves much more difficult across time and space. A new recruit working for a pharmaceutical company explains that, “if you are twenty-five, trying to build a bond virtually with someone who is fifty-five is quite tough: you are not talking the same language and you don’t have the same drivers.”
In a virtual scenario, Baby Boomers are often at a disadvantage and sometimes do not possess the technological or communication skills needed to transfer knowledge successfully. A learning and development director explained that in her organization,
Some of the virtual communication tools are not state-of-the-art and not as user friendly to some parts of the organization. I observed a senior leader trying to use Net Meeting and it was awkward. We need to improve our leadership’s ability to lead virtually and develop others through that medium.
The matrix environment also brings confusion and competing priorities into a knowledge transfer or mentoring scenario. The dotted line reporting structure adds additional stress to a relationship already burdened by generational differences and weakens the influence or pull that a leader has with his or her subordinate. It also reduces the visibility and immediacy of the development need, often depriving high potentials of a ‘champion’ within the organization. One high potential describes the impact of the matrix environment this way: “Because of the way we are set up, people who work with subordinates are not close to them.”
Many of the challenges mentioned above are further compounded when “global” is added to the mix of generational diversity, virtual communication and matrix management. A large percentage of MNCs are operating within business environments with an incredibly young employee population, while the institutional knowledge and leadership is located at headquarters and held by people who are reaching retirement age. Cultural barriers and a lack of sightline to local context often mean that leadership development efforts come across as inappropriate or irrelevant. An expatriate employee makes the point that,
When senior mangers visit, they do not grasp the local employees’ specific role in the organization. They lack context. They do not always grasp or understand the activities the employees here are working on. When they are sitting in their offices back at headquarters making decisions, they do not understand the implications of those decisions to the employees here.
Young high potentials in important growth markets often see the organizational power centers as unassailable, become frustrated with their lack of opportunity, and leave. The lack of a viable leadership pipeline is a key driver behind the appalling retention rates multinationals are facing in places like India and China.In his exit interview, a Chinese high potential pointed out that the “higher level positions are all back at headquarters.”
The different generational dynamics at play in fast-growth markets such as China and India add an extra layer of complexity to the knowledge transfer process. The ‘next generation’ in China is defined by Deng Xiaoping’s “open door policy” beginning in 1978, and is sometimes contrasted with the “Lost Generation” of the Cultural Revolution that did not have the same opportunities for education and training while the country’s universities were shut down. In India, the next generation employees are those who entered the workforce after the major economic reforms of the early 1990s; many of their predecessors were trained by counterparts from the former Soviet Union during India’s socialist era.
In contrast to the U.S., where Millennials have watched jobs migrate to countries with lower-cost talent pools, China and India have seen an increase of higher skilled jobs and a resulting war for talent. In this hyper-competitive environment, international organizations are struggling to understand the motivating factors of the global ‘next generation’. Yet, this understanding has never been more critical. Competition for the best resources in these fast-growth markets has resulted in an acute job-hopping trend among young workers. Companies lose or retain talent based on factors such as salary, titles, promotion speed, work-life balance and leadership opportunities. The dramatically changed economic landscapes that differentiate this generation of emerging leaders from their parents also has huge implications for international corporations who urgently need to understand the differences and adapt accordingly.*
At Aperian Global, we have identified some key best practices for addressing and overcoming the substantial barriers to knowledge transfer within an organization.
Gathering the Knowledge
- Ensure that senior leaders understand the critical business need for knowledge transfer in the organization.
- Align metrics to prioritize the knowledge transfer process. Identify and address challenges that make knowledge transfer a lower priority.
- Provide a vehicle for retiring leaders to create a legacy in the organization. Identify the tacit and explicit knowledge that needs to be transferred within the organization.
- Create a systematic format for leaders to identify knowledge transfer requirements by analyzing the information that each of their strategic global counterparts needs to be successful.
Conveying the Knowledge
- Promote organizational awareness around generational and cultural diversity and its impact on learning styles and motivation.
- Provide skills training for leaders to recognize and adapt to cultural and personal learning style differences.
- Equip leaders with virtual facilitation skills and ensure organization-wide availability of and competency in communication technology tools.
- Leverage technology to build relationships, share knowledge and develop talent in a virtual setting. For example, encourage use of multiple media for relationship-building: one-on-one phone calls, instant messaging, and webcams to augment e-mails and conference calls. Create intranet sites and utilize visualization tools for knowledge sharing.
Getting the Knowledge to Stick
- Invest in coaching and mentoring skills for key leaders. Have leaders create a specific plan for whom they will transfer knowledge to and how they will transfer it.
- Recognize and leverage generational features that may promote effective learning. For example, one client saw that “Millenials tend to be very comfortable with networking – just give them the name and they will contact that person no matter the level. So instead of ‘mentoring’ which often sounds stodgy to them, we should focus more on networking and mirroring some of the social networking methods of connecting people.”
- Tailor mentoring relationships to reflect the more “flat” values of younger generations by finding ways to ‘check in’ in a non-supervisory capacity.
- Work with local HR leaders to create relevant leadership paths in key markets. Assign local high potentials ‘internal champions’ at HQ to ensure visibility and opportunity.
Generating New Knowledge
- Track the progress of knowledge transfer efforts and look for further opportunities to disseminate knowledge within key growth regions.
- Reposition functions such as subsidiary R&D sites to take on roles that require greater innovation rather than simply adaptation of headquarters technologies.
- Set up venues for reverse knowledge transfer across generational, cultural, and geographical lines.
- Seek out, recognize, and reward the creation of new knowledge regardless of its point of origin.
For organizations that have a large percentage of their leadership retiring in the next several years, these systemic initiatives will go far towards ensuring that Baby Boomers leave a positive legacy and contribute to the growth of the next generation of leadership.