Boomer Benefits

As workers retire, small companies face a talent crunch.

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Jim Wallace, president of GuideOne Insurance, needs a stellar talent pool to compete with much larger competitors, many of them based right near his West Des Moines, Iowa, headquarters. But in 2004, Wallace noticed a stark drop in the number of resumés GuideOne's job ads were attracting. The number of applications for professional positions, for example, had dropped by almost 40 percent since 2000. Meanwhile, 20 percent of the company's 800 employees were over the age of 55 and would soon be looking to retire. "Not enough young people are going into insurance sales," Wallace says. "We built up this great agency, but we don't see the replacements coming along."

For any company with older employees, the statistics are grim. Over the next two decades, 78 million baby boomers will turn 65, the traditional retirement age. That's going to create a talent shortage, particularly in industries such as health care, education, engineering, and financial services. In 2005, workers over 55 represented 16 percent of the work force; by 2020 that will rise to almost 25 percent. Many executives will see those statistics and breathe a sigh of relief. After all, those baby boomers have soaring health care costs. But they also possess crucial institutional knowledge, and what's more, there simply won't be enough younger workers to replace them. The unemployment rate for college graduates between 25 and 54 is only about 2 percent.

So companies need to retain their older workers as long as possible. "It's a critical issue now," says Deborah Russell, director of work force issues at AARP. "The aging of this country is going to have an impact on industries across the board." And even if your entire work force isn't in jeopardy, certain departments could still be at risk.

There's nothing a business owner can do to turn back the demographic tides. But there are a few cheap, simple ways to get older employees to stay onboard a little longer. According to research by AARP, the top two reasons boomers keep working are wages and health benefits. But other perks are attractive to older workers as well. Training, flexible work schedules, retirement planning, and eldercare assistance can be effective tools for retaining employees once they no longer need to work, says Diane Piktialis, head of mature work force research at the Conference Board, a research organization. Stanley Consultants, an engineering consulting firm based in Muscatine, Iowa, provides full health benefits to workers over 65 if they're working 20 hours per week or more. The company also offers referral services for eldercare and a health plan that covers gaps in Medicare. Partly because of its strong benefits package, Stanley's turnover rate is about 16.6 percent a year, compared with 30 percent for similar companies, according to the Bureau of Labor Statistics. That low turnover is particularly important for a company such as Stanley; more than 30 percent of its employees are 50 or older.

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