Trouble lurks ahead.
The United States is currently poised for a historic surge in workers who are retiring.
Data suggests that more than 4.1 million Americans are slated to retire each year between now and 2027 – some 11,200 people each and every day.
Covid accelerated this (by 2022 the share of retired people was 1.5 percentage points above the pre-pandemic level), and as more people reflect about what is important to them, this trend of what’s known as ‘excess retirements’ predicted to only accelerate. Already, in 2024, the US now has around 2.7 million more retirees than had previously been predicted.
Many retirees will be leaders
As well as this numerical loss of talent from the workforce, higher then normal retirements could spell disaster, because many of these retirees will be leaving key leadership positions at large organizations, creating an urgent need for qualified replacements.
So isn’t it time CHROs prepared for this?
I believe it’s vital CHROs start to anticipate upcoming exits, and start to develop comprehensive strategies for grooming their next generation of leadership. But where will these new leaders be coming from – well, fortunately there’s Generation Z.
The rise of Gen Z leaders
Despite regular age-based discrimination that paints this group as being entitled or somehow more ‘snow-flakey’ than previous generation, what we actually find with Gen Z is a highly ambitious and skilled pool of future leaders.
Yes, this fast-growing segment of the workplace, is known for its distinct professional demands. But arguably, we shouldn’t fear them.
For instance, Generation Z values career mobility much more highly than competitive salaries or even generous paid time off policies. In a recent study, 87% of undergraduate students say that professional learning and development benefits are an important or essential quality when evaluating job opportunities.
This suggests that companies can appeal to Gen Z job candidates by offering expansive up-skilling programs, in which the company sponsors employee participation in academic courses and even degree tracks.
By creating clear pathways for career advancement, companies can attract and retain younger employees while also expanding their cadre of employees who are ready to shift into leadership positions.
But a strategic approach is needed
In order to maximize participation, it’s imperative for organizations to take a strategic approach when developing an up-skilling program; one that targets undeniably relevant skills and suits both the organization’s and employees’ goals.
Before delving into further detail about the components of a successful program, let’s explore why up-skilling makes so much sense for the modern workforce.
Why up-skilling?
In the past, when employees wanted to learn new skills they were mostly on their own.
More often than not, people acquired essential skills for higher-earning positions on the job, as opposed to through formal education.
These days, however, companies don’t have time to wait for leaders to naturally develop at their own pace.
Not only are companies losing their leaders to retirement, but the chances are they may not have replacements waiting in the wings.
Recent research found that just 12% of companies are confident in the strength of their leadership bench.
Thankfully, Generation Z is known for its ambition and desire to make a real difference in the world.
When a Gen Z professional expresses interest in a job opportunity, it’s likely because they can see themselves playing an instrumental role in the company’s success.
Contrary to some stereotypes that Gen Z is not interested in management roles, one-quarter of Gen Z respondents said they plan to be managing employees in a corporate environment by the time they are just five years out of college.
Introducing accessible up-skilling programs allows companies to take advantage of this Gen Z ambition and secure the loyalty of new recruits.
Up=skilling has also proven to heighten employee engagement, which can make new recruits less jaded about their industries and more likely to pursue leadership roles.
And remember, regardless of their leadership plans, companies will inevitably have to hire more young adults in the near future.
According to the World Economic Forum, by 2025 Generation Z will account for a quarter of the global workforce.
Developing an up-skilling program
When developing an up-skilling program, companies should avoid offering the same generic courses to all employees, regardless of their position or goals.
Offering a broad range, with specific tracks tied to particular types of positions, will incentivize participation by explaining how certain skills are relevant to different departments and higher-earning positions.
The range and specificity of offerings will not only convey the variety of career advancement opportunities available to them, but also that their company sincerely wants them to succeed.
Employees are more likely to participate in up-skilling programs in which they can clearly see the connection between the subject matter of courses and the daily responsibilities of various positions.
Some 52% of undergraduate students say that they would find role-specific courses provided by their employer to be “very valuable.”
Target in-demand skills
Offering role-specific courses also ensures that an up-skilling program targets in-demand skills that directly align with the company’s needs.
But this may require research to determine which skills are most integral for staying competitive in a specific industry.
Companies seeking to strengthen their leadership benches might consider offering courses related to leadership, strategic thinking, or operations management.
Again, companies can incentivize up-skilling participation by outlining how certain courses can help employees qualify for specific positions.
Employees may be more inclined to take a challenging course if they know it will help them advance.
But, by outlining the specific skills and courses required for higher-earning positions, companies can grow leaders at an accelerated rate.
Final thoughts
As we look ahead, the strategic importance of up-skilling is clear.
It serves as a crucial tool that prepares the workforce for market shifts and enables them to actively shape the future of their organizations.
By building a culture that emphasizes continuous learning and advancement, companies can tap into the potential of Generation Z – individuals eager to innovate and lead.
Organizations that make talent development a priority will not just cope with the evolving business environment but will excel, establishing new benchmarks for leadership and success in the modern era.