Originally published in the June 2004 Issue of Link & Learn. 

The exodus of the Baby Boom generation from the U.S. workforce is on the horizon. The oldest members of this key demographic turn 58 in 2004; indeed, some have already begun retiring.

As the single largest generation in the history of the United States, the departure of Boomers from the working-age population spells potential disasters for organizations that are not prepared. In Part I of this series, we examined the impact of Boomer retirements and discussed important methods for organizations to capture their wisdom before it's too late. In this second half, we take a look at the generations who will replace Boomers - a new breed of worker who thrives on a different kind of work culture than their predecessors.

Diversity Is Key

The workplace that Baby Boomers entered was very different from the one they are leaving. One of the major differences is the wider range of cultural identities in organizations today.

Some 83.1% of boomers are White. Those coming up behind them are much more diverse. The US Bureau of Labor Statistics projects that by 2012, one out of every three workers will be non-White. From 2002 to 2012, the number of Whites entering the workforce will increase at a rate of only 0.3% annually. By comparison, the Black labor population will increase at 1.8% annually, Hispanics at 2.9%, and Asians at 4.2%.

In addition, immigration will be the chief source of growth for the US labor force over the next 30 years. (Immigration currently accounts for 40% of the overall population growth.) Indeed, this is not merely a trend, but a necessity: without immigration, the working-age population in the US would actually start shrinking in the next 20 years.

In addition to race and ethnicity, younger people in the workforce have different styles, expectations, and motivations than Baby Boomers. This aspect of their diversity is often overlooked, but is crucial for creating a work culture that allows all people to do their best work, and drives higher performance across the organization.

Creating Inclusive Organizations

Given that many organizations have struggled over the past ten years to make diversity work and to value and include all people, this influx of diverse people will prove disastrous for organizations that are not prepared. They need to do the culture change work that will make their environments attractive to an increasingly wide range of populations, work that will allow all people to contribute their talents and perspectives in a way that leads to higher and higher performance.

The good news is that a diverse, inclusive culture can be the strongest asset an organization possesses. In this sense, the demographic shift that the boomer retirement wave produces offers great opportunities for the organization that is prepared to leverage that asset. However, organizations that do not learn how to gain value for their diversity, or try to minimize its impact by stressing assimilation into a monocultural work style, may well find themselves subsumed with conflict and chaos.

The workplace - like the United States population itself - has become increasingly diverse over the past few decades, a trend that will accelerate over the next ten years. Given that many organizations have struggled in the past to leverage diversity by creating a truly inclusive culture, the work required to prepare for and develop next-generation workers needs to begin today. The business imperative for inclusion grows stronger every day.

The Need for a Strategic Approach

With an incoming workforce that is unprecedentedly diverse, organizations need to understand and support a greater range of identities and styles. Given the nature of the turnover about to begin - one population aging out of the workforce and being replaced by younger generations - there is a need to be particularly cognizant of creating a work culture that is sensitive to age differences.

Research suggests that the people who followed the Baby Boomers into the workplace - members of the so-called Generation X and Generation Y - are vastly different than the boomers when it comes to job expectations. Occasionally derided as demanding and self-absorbed, these in fact are individuals who have assimilated the lessons they have learned about the 21st century work relationship. Downsizings and lay-offs have destroyed loyalty. Younger workers will negotiate for the opportunities and compensation they desire. As a group, they are also much more interested in work-life-family integration than their predecessors and will forego salary for the sake of structuring their work around their desired lifestyles and needs.

Organizations must find new ways to prepare younger people for the duties they need to perform as attrition facilitates their rise. Training is an important part of their on-boarding process, of course, but formal education sessions alone won't do it. Effectively integrating younger workers into the essential functions of the organization requires a strategic approach and new behaviors that most organizations are only beginning to struggle to understand. These might include:

• Moving young people into stretch positions that accelerate their developmental opportunities. Strict adherence to seniority and an old-fashioned concept of dues-paying will deprive the organization of new energy and new ideas, and leave high potential young people feeling stagnant and frustrated. People need to be given the opportunities to learn and grow, and the grace to make inevitable mistakes along the way.
  
  The shrinking of organizational structures and hierarchies in many organizations over the past ten years has meant fewer developmental opportunities for younger people - fewer rungs on the ladder for them to climb. Companies looking to increase the knowledge and experience of younger talent must increase their opportunities for movement within the organization.
  
• Emphasizing sponsorship. Many organizations have mentoring programs, but their effectiveness varies widely. Many lack the focus and direction needed to develop younger people to the degree required by the imminent Boomer exodus. Creating sponsorship relationships between tenured people and the next generations is essential to creating a network of shared wisdom.
  
• Paying for expectations. Compensation must reflect the organization's faith in its younger people to grow into their positions. Pay based on current performance does not acknowledge a person's potential or the organization's goal of developing people. Younger people are famously mobile and ready to move on to other opportunities; organizations need to make the financial investments that indicate their long-term commitments to valued people.
  
• Populating all levels of the organization with younger people. Every project team and staff needs to have an age spread, so that whenever senior people are talking, younger people are listening. This kind of direct exposure to the ideas, work habits, experiences, and perspectives of the soon-departing Baby Boomers is the single best conduit for transferring knowledge.
  
• Making sure that senior leaders are constantly interacting with younger people. This means including them in staff meetings, having them head projects that report directly to upper management, and periodically meeting with them as sounding boards. Direct contact is essential to making sure that younger people learn from leaders … and that leaders learn from younger people. (Including learning about the needs and expectations of this key organizational constituency.) Senior leaders need to acknowledge a direct responsibility to develop and promote younger people.

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Judith H. Katz and Frederick A. Miller are the co-authors of The Inclusion Breakthrough: Unleashing the Real Power of Diversity (Berrett-Koehler, 2002) and co-owners of The Kaleel Jamison Consulting Group, one of the oldest and most respected consulting firms in the United States focusing on diversity and inclusion. For more information or to contact the authors, visit www.kjcg.com.