September/October 2007

Managing Change
Plan for it before it’s too late

Each organization has developed its own culture. However, within the next decade companies will witness the loss of many key employees as the large and imposing baby boomer generation enters into retirement. Demographically, companies have not experienced the challenge that this generational event will cause. Not only will they lose a great deal of institutional knowledge and experience, but they also have to face a major disruption in the continuity of their corporate culture. How companies plan for this event will impact their long-term survivability and success.

An example of how to manage the challenge of continuity of culture can be seen in the way the U.S. Navy staffs a Nimitz Class aircraft carrier. In order to, literally, keep themselves afloat they have instituted a system that recruits and trains approximately 5,000 volunteers, many less than 25 years old, to manage and run an extremely complex and integrated system. This is complicated by the fact that it can take years to train a pilot and up to 18 months for an enlistee. Remarkably, every year one quarter of the carrier’s crew is replaced with new sailors. To deal with this, ship commanders have learned that leadership skills can’t be picked off of trees, they need to be built from the ground up. Even with the challenge of a revolving crew, these skills are quickly and effectively tapped through a “learn while doing” model. Leaders of all ages and levels of experience are tested in a real world and fast-paced environment that is fraught with risk and danger.

Much like the U.S. Navy, the question many organizations must address is how will they manage their own continuity of culture as they face an impending loss of key leadership employees in the not-so-distant future. This is often complicated by the need for companies to recruit and train employees to meet their growing demands, without even considering the loss of baby boomers.

Many feel that the problem can be ignored until the actual waves of retirement occur. However, this is faulty thinking. The issue goes beyond the replacement of retirees to include the transfer of the native knowledge and experience that these individuals possess. This institutional knowledge forms the basis for and underlies the value of the company, which is linked to the issue of the continuity of culture since the institutional knowledge is the foundation of its culture.

Undoubtedly there are many factors within corporate culture that can be disposed of to create positive ramifications, as old and outmoded methods are lost and replaced with fresh ideas and perspectives of younger employees. But one must be careful not to throw out the baby with the wash water. The majority of institutional knowledge has real value and cannot be lost. Companies don’t have the luxury of time in the fast-paced global economy to reinvent themselves and to recreate their culture.

Managers must address these issues while there is adequate time to develop effective succession programs to not only train pools of prospective managers and leaders, but also arrange for the transfer of the native knowledge, experience and expertise of the departing generation of baby boomers.

The method to accomplish this task will depend upon each company’s own culture and procedures, but time is still available for each company to adequately address this issue before it’s too late. As the U.S. Navy has learned, leadership doesn’t grow on trees, it must be built from the ground up.