No question, traditional succession planning is failing your organization.
It is a big deal when the CEO announces their retirement. The company alerts employees with an email, issues a press release, names a successor, and holds a blowout party.
But when Sarah, the only computer programmer at the company who understands Cobol retires, she might enjoy a piece of cake with a few of her office mates, they wish her well, and she is out the door.
Sarah’s departure, however, could spell serious problems that the executives at the top of the org chart haven’t thought of. Who else at the company understands Sarah’s job? Is there someone who can quickly replace her? Does anyone at the company even understand Cobol, the ancient computer programming language still used today?
This scenario is playing out at companies across the country as Baby Boomers retire in droves. As of now, Boomers hold 33% of all U.S. jobs, and 10,000 Baby Boomers are reaching retirement age every day. By 2030, all Boomers will be 65 or older, marking the first time in U.S. history that older adults will outnumber children.
What this means for business is clear. Corporations are facing a succession crisis, and it is not just at the top. These departures represent an unprecedented exodus of experience and knowledge from the American workforce. The impact is already being felt. Nearly $1 trillion in market value has been erased from S&P 1500 companies due to poorly managed leadership transitions, according to a recent article in the Harvard Business Review.
The Real Succession Crisis: It’s Not Just About Leadership
The cost of replacing a single employee can reach up to 213% of their salary, according to Management Concepts, a management training company.
But this figure fails to capture the true impact of losing deep operational expertise. A recent survey by the National Institute on Retirement Security found that 83% of Americans believe all workers should have access to retirement planning and knowledge transfer programs – yet most organizations still lack comprehensive succession strategies that extend beyond the C-suite.
This knowledge gap is particularly critical as organizations navigate digital transformation. Legacy systems, which often form the backbone of operational infrastructure, require both maintenance and careful transition. As companies adopt new technologies the expertise needed to bridge this gap typically resides with experienced workers who are now approaching retirement – the same workers who are often overlooked in traditional succession planning efforts.
Why Traditional Approaches Are Failing
The conventional approach to succession planning – focusing primarily on leadership roles and using standardized development programs – is inadequate. Pew Research Center data shows that the U.S. workforce is not just aging, it’s transforming fundamentally, with the number of workers aged 65 and older growing by 117% in the past 20 years. This approach fails to address:
- The tacit knowledge embedded in day-to-day operations
- The intricate understanding of legacy systems and processes
- The nuanced problem-solving skills developed through years of hands-on experience
- The cultural and historical context that influences decision-making
A New Paradigm: Comprehensive Knowledge Retention
What is the solution? Leadership must be open minded and embrace succession planning strategies that addresses these critical gaps, preferable a methodology that goes beyond traditional leadership pipeline development to create a comprehensive knowledge retention strategy that:
- Rapidly diagnoses critical knowledge gaps across all organizational levels
- Creates customized knowledge transfer programs that capture both explicit and tacit knowledge
- Facilitates smooth transitions between legacy and new technologies
- Builds a culture of continuous learning and knowledge sharing
The wave of Baby Boomer retirements isn’t coming – it’s here. More than 2.4 million excess retirements occurred during the pandemic alone, accelerating a trend that was already reshaping the American workforce, according to the Federal Reserve.
Companies that fail to act now risk losing not just their leadership pipeline, but the very knowledge foundation that has built their success. The question isn’t whether you need a comprehensive succession and knowledge retention strategy, but whether you’ll implement one before it’s too late.
By Joe Poling, President and Chief Revenue Officer, Think Consulting. Joe can be reached at jpoling@thinkconsulting.com.
