JUN 12, 2014
Boards and the 'Baby Boomer' Retirement Effect
How Could Your Company Be Affected?
What’s that noise you ask? It is likely a combination of two sounds resonating together and emanating from the Baby Boomer generation. One sound includes a happy (yet cautious) humming from Baby Boomers due to markets not only enjoying an elevated state since its lows starting in 2008/2009, but the realization that their 401k and IRAs are back within or above realistic retirement range. The other sound is from the air, in its early stages, starting to whoosh into the impending vacuum to be left by Baby Boomers in the wake of what some consider to the largest exodus from the workforce (both in numbers and percentages) ever witnessed.
What does this have to do with Boards, Board Advisors and Board Committees? We will get to that - first, some astounding numbers and data…
To put some perspective on the numbers, there are approximately 76 million people in the US considered to be members of the ‘Baby Boomer’ generation – those born between the years of 1946 and 1964. Furthermore, those born within 1946 and 1955 are considered to be ‘Leading-Edge’ Baby Boomers and account for slightly more than half of the generation. The remaining, those born within 1956 and 1964, are typically called Late Boomers or ‘Trailing Edge’ Boomers. With this knowledge in hand, it points directly to January of 2011 as the starting point for those in ‘Leading Edge’ Baby Boomer generation turning 65 years of age – the generally accepted ‘legal’ age for retirement (although it could be argued that 62 is more accurate due to availability of certain benefits – either scenario is supportive of the points being made in this article).
Boomers grew up during a time of dramatic social change. This is also true to a certain extent today. General concerns such as health care costs and social security (among many others) still linger for the collective group entering retirement, although it could be strongly argued that not enough strategic consideration has been given to the significant business leadership experience, expertise and clout that will exit U.S. business organizations, and their boards, during this relatively short retirement transition. Even forward-thinking companies who have created sound internal programs to cover these gaps will surely encounter externally-facing challenges with companies that have not taken early initiative. Leveraging of efficiencies and automation through technology can help to offset some of these pressures, but this will not be the panacea in all cases.
In my experience, many board members stay in their positions, and will likely continue to do so, well past their eligible retirement age. This may cause an elongated period of relative overlap and calm for a decade, however, we will still see much movement and positioning (hopefully detailed succession planning) within boards throughout this timeframe. This will create very interesting boardroom interactions by mixing Baby Boomers with Generation X as they enter the board theater en masse. I personally foresee amazing potential by creating structures that allow for these generations to interact constructively in a boardroom setting. Both will bring different approaches and valuable ideas. Both will learn from one another. Both will most definitely have to compromise in their areas of ‘style’ for this to be successful and reach full potential. Companies that are prepared, fully understand the dynamics of both generations and have put effort in creating constructive boardroom environments to simultaneously accommodate these different styles will benefit immensely.
Yes, the laws of supply & demand as well as other market factors will help to automatically level and suppress some of this impending expertise and experience vacuum… but those who have board membership in their sights can benefit by the ubiquitous unsteadiness. Up-and-comers can leverage and take advantage of board member opportunities, but there must be a strategy. For those looking for a future in sitting on one or multiple boards, gearing up now can be essential while you have the runway (and will also benefit in terms of knowledge transfer from the Baby Boomer overlap). In addition to executive experience, coursework and focused learning will be paramount. Most board member searches and nominating committees are not only interested in potential candidates with in-depth business knowledge and experience, but more importantly the expertise that can be leveraged within specific board committees. Some examples of in-demand board member committee expertise areas include technology, accounting & audit, data security and social media (through the marketing channel) among others. Focus on skillsets that can be directly matched to specific board committees and that also have a profound governance tie. This combination is extremely powerful.
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Mark A. Pfister
Chairman & CEO
Integral Board Group
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