The retirement tsunami
As the point person for Houston’s initiative to maintain a quality workforce in the face of a rising tide of retirements, Kelly Schreck practices what she preaches. So, as head of employee development, she asked two employees in her department with very different specialties to swap jobs for a year.
For 12 months, each woman trained the other on how to perform her duties, so that each mastered the technical details of handling labor relations and public information.
“Now, I have back up for my operation,” Schreck says. “I have two people who can do each job.”
Such innovative human resource management is increasingly becoming the norm in the public sector as senior leaders and elected officials tackle the vast changes resulting from the exodus of Baby Boomers who are reaching retirement age.
Houston is not alone in its efforts to meet the mass turnover in the workforce expected in the next decade. Cities and counties around the nation are developing such programs as leadership institutes, onsite graduate level education, internship programs and extensive outreach to the next generation as their response to the demographic shift.
“The public sector workforce is getting older,” says Neil Reichenberg, executive director of the International Public Management Association for Human Resources (IPMA-HR). “We haven’t figured out how to delay aging.”
Retirement by the numbers
According to the Pew Research Center, approximately 10,000 Americans per day will turn 65 between 2011 and 2030, eventually comprising 26 percent of the U.S. population. A study by IPMA-HR found that four of 10 responding organizations indicated that they could lose 20 percent or more of their employees to retirement within the next five years.
Other studies have confirmed that retirements, if unanticipated, threaten all public sector employers to a greater degree than the private sector. The local government workforce is especially vulnerable, with the percentage of workers at least 50 years of age (37 percent) significantly greater than the private sector (28 percent), according to U.S. Bureau of Labor Statistic reports.
“I call it the ‘quiet crisis,’” says Frank Benest, a former city manager who heads an initiative to meet the issue head-on for the International City/County Management Association (ICMA), the Washington-based support group for the city management profession. “I estimate that 58 percent of the manager and professional employees could be retiring in the next three years.”
Beth Kellar, president of the Center for State and Local Government Excellence (SLGE), a Washington-based organization focused on local government issues, says its studies concur with the findings from IPMA-HR.
“Demographics don’t lie,” she says. “At one time, people said the retirements would come as a tsunami. Instead, we’re finding that they are coming wave after wave.”
A recent SLGE workforce study found that recruiting and retaining qualified personnel and workforce succession planning were the two most important issues facing human resources managers. In fact, every manager surveyed cited recruiting and retaining as important or somewhat important. Succession planning trailed slightly, in the high 90 percent range.
Despite the apparent need for preparation, only 27 percent of survey respondents told IPMA-HR that they had succession plans in place, citing, among the reasons, the press of day-to-day business, competition for resources and time and insufficient commitment from top leadership.
Quality of services could suffer
Experts in the field forecast that the quality of service in the public sector will be jeopardized unless leaders prepare for the broad shift. Without action today, the loss of leadership from senior- down to mid-level management because of retirements will cripple government operations as management skills and critical expertise are found lacking.
Without naming individual communities, Kellar says that examples of insufficient preparation already are apparent. “We can look at what happened here and here and here,” she says. “People don’t want to live in places like that.”
Experts see particular danger in specialized areas, such as technology, where competition with the private sector for good programmers is stiff. For counties that provide medical services, the loss of quality health professionals is a primary concern. And in general, replacing senior management, unless carefully planned, could leave a community short during crisis situations.
“If you’re not ready, you’re in trouble,” Benest warns.
While the deep recession that began in 2008 prompted many eligible retirees to reconsider their departure dates in light of their falling retirement accounts, giving governments a breather of sorts, not all communities took advantage of the time to prepare for the resumption of the wave, he says.
“Some agencies said that we don’t have to worry about retirements because people are staying,” he says. “But those that took the time to get ready were very smart. They’re way ahead of the game.”
Those communities that took the time to prepare were able to promote the advantages of working in the public sector, which has always been attractive for its strong benefit package, even if wages lag the public sector. While benefits in many communities have been trimmed in recent years, most compensation professionals still give the edge to the public sector, especially those that have been able to maintain their defined contribution plans, which are a rarity in the private sector. In addition, the public sector can promote itself to a younger generation which values improving the lives in the community over pure monetary gain.
“People who want to make a difference are attracted to government jobs,” Kellar says. “It’s still an important incentive.”
Developing programs and plans now
Many cities and counties around the country have already launched programs, whether in recruiting or other programs, to sustain their workforces.
In Multnomah County, Ore., which includes Portland, human resources leaders are counting on the value of public service as an incentive to help maintain the quality of their workforce, says Travis Graves, the county’s human resources director. “In public service, people feel that this work matters, an opportunity to give back to the community,” he says. “We’re helping the vulnerable and the needy.”
Multnomah developed its workforce strategy after a survey of county employees revealed that 16 percent of them were eligible to retire and that over 30 percent would be eligible by 2020, he says. “The wave of retirements is becoming the new normal,” Graves says. “It’s really just beginning. It’s going to be going on for a number of years.”
Fortunately, Multnomah is again beginning to add employees to its workforce after almost a dozen years of constant cuts because of financial constraints, which left the county vulnerable.
In particular, the county is concerned that unless it finds the right people to replace those leaving the workforce, the level of service would be at risk, with severe consequences for the general community. For many in the lower-income segments of the community, the county’s medical clinics provide basic health needs for many in lower-income segments of the community. “In many cases, we’re the provider of last resort,” he says.
As part of its strategy, the county created a leadership academy to train internal candidates to become the leaders of the future, Graves says. “We’re now in our sixth cohort,” he says. “Each has involved six months of intensive training. We do assessments, classes, working with a mentor and a strategic assignment project. It’s been really successful.”
A second benefit of the leadership academies, he says, has been the opportunity for employees in a variety of divisions to work together on projects. “So often, we stay in our own silos,” Graves says. “This allows us to cross pollinate, to share our learning and to network across departments.”
Succession plan spurs action
Seeing to gain similar benefits, San Mateo County, Calif., officials created a countywide succession management task force, says Donna Vaillancourt, the county’s director of human resources. “It cuts across all departments and has the support of the executive leadership,” she says.
The task force is the outgrowth of an entire organizational review in 2006 that developed 100 recommendations on county operations, including 30 that were targeted at succession planning and employee development. Among its findings, the survey reported that 65 percent of the directors and 54 percent of the mid-managers were eligible to retire. “It created a sense of urgency,” she says. “We understood that we needed to focus on this as a priority.”
While the county wanted its employees to speak openly about their retirement schedule, their focus groups revealed that employees are often reluctant to reveal their plans too soon. “They feel if they give too much notice, that they will be considered a lame duck, that they won’t be included in meetings,” she says.
As a result, the county developed strict guidelines about maintaining the confidentiality of the conversations and opened a discussion between employees and managers about how the skills could be transferred, she says. “It allowed the employee and the manager to work together to identify what skills are important and how they let the next person taking the job know them before the person leaves,” she says.
Competing in competitive markets
As an employer situated in the nation’s high tech center, San Mateo must focus especially hard on attracting young technology professionals who can be the leaders of the future. “We do regular internships and go on campus to interact,” she says. “We work collaboratively with career counselors to make sure that people consider public sector as an exciting career.
“For Millennials, it’s important to make a difference,” she adds. “We want to make a connection with them, so they know that they can build a career in public service.”
While San Mateo County must compete with local companies for technology professions, College Station, Texas must fight for engineers who are attracted to the surrounding petroleum industry, says Alison Pond, director of human resources and risk management.
After surveys showed that 40 to 50 percent of staff was eligible to retire within five years, the city inaugurated a leadership training program that included 30 employees who met monthly for half a day for 11 months. There they received instruction on such skills as self-management and organization development and guide them through a group project. “We gave them hands-on instruction on what it means to be a leader,” she says.
While the oil fields offer stiff competition for engineers, the city has the benefit of being the home of Texas A&M, a rich source of new engineering and technology graduates. “It’s a hot market,” Pond says. “We want to tap into the university, create a pipeline for the future. We’re trying to be creative, find the right marketing messages.”
Developing in-house talent
Across the state in El Paso, the emphasis is on training current staff to be the leaders of the future, through an extensive education program that includes post-graduate level courses taught by university instructors at city locations, says Linda Thomas, the city’s human resources director.
She notes that El Paso’s location on the western border of the state makes recruiting difficult against the state’s other major cities, and has given the city an incentive to encourage development of existing staff.
In all, almost 250 of the city’s 6,200 employees have participated in the program, she says, which has been developed with the University of Texas-El Paso. Classes include effective leadership of high-performance organizations, organizational behavior and personal leadership styles, organizational communication and effectiveness, team-based organizing and conflict management and strategic planning and strategic design of programs to better serve customers.
“It’s a fallacy that we in the public sector are somehow not a business operation,” she says, “but truly we are. We realize we’re going to have turnover and we need people with these skills. We asked ourselves what is the best way to develop talent within the city.”
Along with other resource development training and testing, the city is trying to broaden the outlook of its staff to consider what level of management each employee might want to pursue as well as the skills each would need to reach his or her objective, she says.
“We want to work with them to build their capacity and identify their strengths and deficiencies,” she says. “We want to open the eyes of our participants to their own potential.”