Silver Tsunami

What will your business do when the “silver tsunami” hits?

The story goes that Henry Ford once balked at paying $10,000 to General Electric for work done for troubleshooting a generator and asked for an itemized bill. The engineer, Charles Steinmetz sent this: “Making chalk mark on generator, $1. Knowing where to make the mark, $9,999.” Ford paid the bill. Experience matters. We don’t know how much profit was impacted prior to bringing in Charles Steinmetz, but it was important enough that Ford paid the invoice. What might happen when your critical energy conversion systems go down or operate out of specification? Do you have the right person that knows where to “put the chalk mark”?

According to the Bureau of Labor Statistics, by 2022, more than 25 percent of U.S. workers will be 55 years old or older, up from 14 percent in 2002.

According to ADP, a workforce research company, when it comes to an aging workforce, most organizations are unprepared for their workers to retire. Very few organizations have implemented specific policies and management practices to deal with the fluctuations that the “silver tsunami” will cause, leaving most businesses at risk of losing decades of knowledge and expertise, failing to continue to develop the workers who remain or unable to recruit more mature employees. With 10,000 baby boomers leaving the workplace every day, the loss of expertise is alarming.

Increasingly, company expertise is losing the respect that had previously earned it premiums; company uncertainty is present and complex knowledge valued. New client requirements are emerging and organizations are fearful that the loss of expertise leaves them in a vulnerable position. At the same time, customers are demanding instant, accurate responses at increasingly lower prices.

Consider this scenario. Your critical infrastructure hits an unplanned event and stops providing the energy consumables you need to manufacture your products or provide services to your patients. Your practices regarding replacement of skills to fix infrastructure that “just runs” have left a gap, and none of your current staff has experienced this unplanned event before. The person that has retired recently and decided to take a cruise. Every hour your unplanned event persists results in:

• Loss of expected profits
• Damage to your image
• Shareholder frustration

Like Ford, you would gladly pay the $10,000 if only you could get your expert off the cruise ship. Frustrating, right?

Companies must address the concerns of reputation, relationships, rework and regeneration skills. It’s important to capture and build on these foundations.

• Relationships – Experts may be a key contact with a vendor or customer, and thus be more easily able to start up a discussion with those individuals. Years of experience often provides your expert with intuition as to what can and can’t be negotiated, what can and can’t be pushed, and what should or shouldn’t be discussed, losing access to that insight has a real price.
• Reputation – They’ve learned that one person is their go-to for the right answer, right away. Replacing that person tests the faith of those clients and contacts.
• Rework – The ability to ask the right questions may be one of the most undervalued skills a team member might have. Veteran employees know those details from experience and can plan for them. Newer team members often don’t even know those hurdles exist.
• Regeneration – Breakthrough ideas are built on the back of years of learning and practice and as today’s businesses become more technical and complex, it takes more time than ever to truly become an expert.

Is your company ready? Some assume they are until the expert they depended on is no longer there. “If only Bob were here, he would know what to do.” Managers often don’t know what they have lost until after the expert leaves and, by then, it’s very difficult to recover quickly.

An article by Solutions 21 quoted Peter Drucker, the father of modern management, saying, “The only thing you can predict with absolute certainty is demographics.”

According to Field Service News 53 percent of respondents stated that replacing an aging workforce is a challenge for their organizations. It’s predictable and yet still an issue for more than half of the organizations worldwide. Other stats include:

• 21 percent of field service companies have adapted their training and development to be more suited to millennials
• 80 percent of field service companies who outsource their service engineering work state that they have increased the amount they outsource within the last three years
• 55 percent of field service companies have an on-boarding time of three to six months for new service engineers
• 93 percent of field service companies are now using their more experienced engineers as mentors for new recruits

From this data, we see that organizations are:

• Training new hires recognizing a three- to six-month ramp-up
• Mentoring new recruits
• Outsourcing

What about outsourcing?

Field Service News states that exactly half of the companies they spoke to outsource some of their service work. At companies who do use outsourcing as a means of ensuring they can meet their service demands, 34 percent of companies have seen the amount they outsource change across the last three years. This increase is both dramatic and significant as it seems many field service companies are increasingly turning to outsourcing as a means of maintaining their field technician levels.

Advantages of Outsourcing

There are specific benefits to outsourcing according to Forbes. These include:

• You don’t have to hire more employees
• Access to a larger talent pool
• Lower cost of labor

There are disadvantages like lack of control, communication issues, quality control and company culture. As with any business decision, risk needs to be considered and you need to select the right outsource partner.

Next steps.

Consider these points:

• What is your risk level of an unplanned infrastructure event?
• What are the true costs of losing your energy consumables for hours or days?
• Has the person that knows where to “put the chalk mark” retired?
• Is there a shortage of qualified resources that can quickly learn where to “put the chalk mark”?

If your answers to these questions leave you exposed, outsourcing might be a solution.

Today could be the day to change the way you approach the “silver tsunami.”

Every day, Duke Energy One helps customers optimize energy systems, improve their financial position and achieve sustainability goals. We offer a complete array of innovative services to customers including college campuses, municipalities, large facilities and Fortune 500 companies. Our professionals have been helping businesses for over 20 years and you can trust we’ll be here long into the future to serve you.