Ilitch Business professor published in Harvard Business Review
Matt Piszczek, assistant professor of management in the Mike Ilitch School of Business, co-wrote an article titled Retirement-Proof Your Company, which was published in the Harvard Business Review.
A substantial portion of the global workforce is nearing retirement age. In the United States, there were 65 million people over the age of 60 in 2017. This number is expected to grow to more than 77 million by 2020. Germany, the largest economy in Europe, has a population that is not only aging but also declining overall.
Studies suggest that these trends will have significant implications for workforce planning. Older workers may exit organizations in large numbers, for example. And when they exit may get more difficult to predict: Increasing numbers of older people are working longer, due to necessity, desire, or a combination of both. We don’t know much about how actual companies are preparing (or not) for an older, and less predictable, workforce. In particular, there’s very little research on how organizations are managing the transfer of knowledge and skills when older employees walk out the door.
Our research, funded by the Alfred P. Sloan foundation, begins to address this gap. It is aimed at understanding how organizations are adjusting their skill composition in response to demographic changes and what practices are working effectively. We are currently writing up a study consisting of interviews in eight manufacturing facilities: four in the U.S. and four in Germany. In total, we talked to 43 site managers, human resource managers, area supervisors, and employee representatives. We also conducted eight focus groups with older workers.
Unsurprisingly, we learned that an aging workforce increases firms’ risk of skill loss as older employees retire. This means companies must develop both younger workers and those in the middle of the age distribution, and then monitor and adjust their entire workforce based on the inflow and outflow of skills. Few companies are doing this, however, and only one firm we studied had a formal plan to monitor skills and adjust its workforce.