The Silver Tsunami

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					The Silver Tsunami
The role of the Baby Boomer in defeating the Recession

The Silver Tsunami is a term with its origins in the US. The concept relates to those
individuals who might have considered leaving the workplace through early
retirement… if the recession had not occurred. However, the recession is impacting
on the numbers and timing of these individuals wishing to leave the workforce.
Could these changes in personal circumstances and the resulting retention of those
born in the Baby Boom years assist in managing the difficulties of a recession?

This paper looks at the potential role for experienced leaders in navigating
businesses through recession.

Over recent years, there has been much talk about the impact that the Baby
Boomers have had on the labour market. There has also been much speculation as
to what will happen as these individuals retire.

Baby Boomers are those individuals born in the middle of the 20th century. The
specific birth years are subject to some differing opinions but generally are seen as
1945 - 1964. The post WW2 increase in births gave rise to the demographic bulge
associated with the Baby Boomers.

The original anticipated retirement of these Baby Boomers was from the early to
mid-part of this decade onwards but with the real movement being from 2010. It
was thought that the next decade would see not only the expected retirement of
those reaching 60 or 65 years but also those in their 50s electing to take early
retirement. These early retirees were those who have benefitted from significant
earnings potential and other benefits such as Final Salary Pensions in the last 10-20
years. Such financial advantages allowed individuals the opportunities to consider
enjoying the fruits of their labours in middle age as opposed to waiting until old age.

The demographic bulge represented by the Baby Boomers and the potential mass
exodus of these individuals from the labour market, particularly within middle and
senior management positions, had previously given rise to concerns as to how
these skills would be replaced in such large numbers.

The last 2 years however has seen the economy move into a global recession. This
has directly impacted the value of earnings as well as investments and savings
including pensions.

So, the question is; to what extent will the current economic climate impact on
the decision to retire early? How will a reversal of the anticipated mass
exodus of the Baby Boomers from the working population affect the economy?
How will the potential redundancies occurring at senior levels contribute to
the ability (not just desire) of the individuals to remain in full-time employment?
Finally, how will the decisions which the Baby Boomers make impact not only
on the economy but on the aspirations of Generation X?

The purpose of this paper is, based on comments and insights from our
extensive network, to review the possibility and impact of a Silver Tsunami on
the economy. It also seeks to stimulate further debate on this fascinating
subject as it unfolds before us, impacting at both a micro and macro
economic level.

The Needs of the Business
A good place to start is to review the situation from the needs of the economy and of
the corporate employers. It is now more than 15 years since the UK (and much of
Europe) came out of its last major recession. Since then we have enjoyed a
significant period of benevolent trading. A whole generation of senior management
and Boards have grown up with their only focus being on the growth of the
businesses in their charge. As a result, the skill sets these key individuals have
acquired and developed have been very much around the management and
expansion of successful businesses.

The skills required in a recession are very different. Clearly there will be a focus on
the identification and exploitation of those opportunities which every recession offers.
The primary need for many businesses however, will be to survive and the onus on
leadership teams will be to ensure that this is achieved. Has the training and
experience of the last 15 years equipped leaders to do this? The answer must
effectively be no.

Many strong talented leaders who did not hold senior roles in the late 1980s/early
1990s will of course be able to quickly develop the necessary skills to manage in a
recession. The guidance and experience of those who did lead through the last
recession will undoubtedly be valuable in the rapid development of these skills.
Perhaps equally significant will be the fact that the hands-on experience gained in
the last recession will be essential to replace those talented leaders of growth who
cannot flex their skills to match today's very different trading environment.

The conclusion therefore must be that there is a need for experienced (Silver
Tsunami) leaders in the current recession.

The Needs of the Individual Baby Boomer
Some of the financial drivers of the individual, and how these have changed, have
been discussed above. However, as they reach the nearing of their retirement goal
many (not all) Baby Boomers have come to realise that mentally and emotionally
they are not ready to retire yet. Many are finding that they feel they have a great
deal more to achieve and contribute. Some will find a solution to this specific need
within a portfolio of NED roles. For others, the plural NED role still seems like a
medium to long-term solution as opposed to an option which is immediately
attractive. For some the reduced value of investments drives the need to continue
to work into the Silver Tsunami years.

Leaders need energy and never more so than in a recession. Energy is all too often
associated with youth. Those in the category of 'Silver Tsunami' may feel the need
to evidence energy. Perhaps a recession is time to consider exactly what type of
energy is now required. Energy can often be associated with rapid action and
multiple activities. The need to identify and exploit opportunities will continue to
demand this type of energy.

In addition however, the depth and harshness of this recession will require stamina
and resilience as much as it requires energy in the sense we have considered it in
recent years. It will also require judgement of when to action and when to consider.
Stamina is as likely to be found in the Silver Tsunami generation as it is in younger
generations. Judgement is a skill which can exist in any individual. Experience
should develop and refine judgement (although this is not always the case). If
judgement has been enhanced from experience then the Baby Boomers actually
have an advantage in recession.

The Needs of the Next Generation
Arguably the intended retirement of the Baby Boomers was going to create
opportunities for the next generation. So, if the Silver Tsunami does sweep over the
economy and businesses, what happens to these individuals?

The advantage for Generation X to absorb the learnings from experienced leaders
gained during a previous recession has already been referred to above.

There is perhaps another, more fundamental point to be considered, which is
around how careers are developed by Generation X compared to how careers were
pursued by Baby Boomers.

Gap Years, international travel etc. prior to embarking on a career were privileges
enjoyed by only a small percentage of Baby Boomers. The priorities of the Baby
Boomers (perhaps the result of pressure from parents who had grown up during

WW2) was to embark on professional training and a career as soon as possible.
Not only were training and careers valued for themselves but were essential to the
acquiring of a first home, mortgage etc.

The Baby Boomers, like their parents before them, want their children to have more
than they did. Hence not only do we see Generation X benefitting from the gap
years and international travel, we also see graduates returning to the parental home
on completion of tertiary education or receiving help with the huge deposit a first
home now requires. As a result, Generation X are collectively not so driven to
embark on a career at such an early stage. Given the fragilities of pensions and the
ever extending life expectancy, Generation X can look forward to having to work
ever longer than their predecessors. So why would they not want to enjoy life in
their 20s and take their time to make their career choice? Perhaps they are happy
for the Silver Tsunami to occur and for the Baby Boomers to remain in key roles
during this recession.

The original concerns of the Baby Boomer generation retiring en masse were
around the burden this would create for the remaining workforce, given the
demographic bulge around the Baby Boomers. If this mass retirement is delayed
then so is this burden on the next generation.

It would appear that the Silver Tsunami has advantages for the individuals involved
in that Baby Boomers want to and may need to work; Generation X are not in great
numbers seeking to move the Baby Boomers out of businesses immediately and
finally, there is a need for Generation X to benefit from experience gained during the
last recession.

Businesses generally will need the previous experience of navigating a recession
and the stamina/judgement of experienced individuals. This does not negate the
need for businesses to recruit, retain and develop Generation X. It also does not
ignore the many talents of the individuals from Generation X who have already
achieved top roles through significant delivery. Clearly there will also be many
instances of CEOs and management teams without prior experience of recession,
successfully bringing their businesses through the current difficult trading
circumstances. It does however, suggest that it will be easier for such teams to do
so if they utilise somewhere (in an Executive, NED or supporting capacity) skills
from a previous recession.

The manner of contribution from the Silver Tsunami has the potential to take several
forms. In addition to Executive appointments, NED roles may be of interest/suitable
if the level of real involvement increases. Likewise consulting and defined projects

are options for this essential knowledge transfer. A key opportunity for knowledge
transfer has always been around the Senior Interim market.

What Next?
So if the theory behind a Silver Tsunami holds true, a number of questions
and scenarios arise. Organisations may gain from the use of ‘Baby Boomer’
experience to negotiate difficult times. The burden of an aging population
may be delayed. But is this phenomenon going to assist the next generation
of leaders through enhanced learning opportunities, or impact adversely on
them by delaying their career development? Seen in hindsight, will a Silver
Tsunami be judged to have been a positive thing, or to have delayed the
impact of a demographic timebomb?

Karen Wilson

Chief Executive, Hoggett Bowers

July 2009