Workforce Planning

How to Prepare for a Multigenerational Workforce

Why an expected surge in retirements is putting critical skills and knowledge at risk, and what you can do about it

June 27, 2024
7-minute read

Organizations face a conundrum with an increasingly multigenerational workforce: Although it expands age diversity, addresses talent shortages, and encourages essential skill and knowledge sharing, it also promises a massive wave of retirements on the horizon. And if HR and other workforce planning teams don't prepare for this inevitable shift, it could mean losing valuable expertise needed for business continuity and growth.

Four working generations — Baby Boomers, Gen X, Millennials, and Gen Z — also means balancing different work expectations, which forces organizations to step up their employee value proposition (EVP) game to attract and retain skilled talent.  

In short, organizations need an inclusive plan to take on these imminent changes. And to help, here's a quick look at why preparing for a multigenerational workforce is important, the challenges and benefits it brings, and how data can help businesses strategize.

Why Managing a Multigenerational Workforce is Critical

Employees ages 65 and older are the fastest growing part of the global labor market today, according to the Pew Research Center and Eurostat data. About 19% of this age group are currently employed in the US, up from 11% in 1987, and about 6.5% across the European Union, up from 4.7% in 2014.

This also means the average age of workers has also risen, according to 2023 data from the European Central Bank and US Bureau of Labor Statistics.

So why are so many people still working in their golden years?

  • Increased life expectancy: Advances in medical science are helping people live longer, healthier, more productive lives.
  • Decreasing populations: Fewer families are having children, which affects the overall availability of talent. Spain, Italy, Germany, South Korea, and Japan, for example, are likely to see a decrease in population by 2050, according to a recent TalentNeuron webinar, "The Great Boomer Handoff."
  • Financial necessity: Retirement-age employees might need to support their income to afford their lifestyles. In Germany, for example, retirees still work several hours a week to supplement their pensions and savings.
  • Legislative changes: New laws and regulations have either raises the retirement age or reduced benefits. Age discrimination legislation, too, has protected older workers from being pushed out of the workplace.
  • Flexible work arrangements: The rise of part-time, remote, gig/freelance work options have made it easier for older workers to continue working beyond retirement age.
  • Economic changes: The shift from manufacturing to service-based economies have reduced the amount of physical labor involved, making it easier for older workers to stay employed for longer.

Forward-thinking organizations that are taking notice of this trend must grapple with two major questions: How will these employees on the cusp of retirement impact our future business goals and what solutions are there to navigate the oncoming change?  

A spike in retirements during the global Covid-19 lockdowns in 2020-2021 provided a sneak peek of how the scenario would likely play out. The "Great Retirement Boom" resulted in 2.7 million more retirees than anticipated in the US, and early retirements for 23% of European workers. This has led organizations to think critically about engagement and retention, as well as flexible work arrangements, added benefits, and other initiatives to prevent skill gaps and business disruptions.

Challenges of a Multigenerational Workforce

Probably the biggest challenge in multigenerational workforce planning is figuring out how to preserve essential institutional and industry knowledge held by senior employees and pass on those critical skills and responsibilities to younger generations. This means focusing on roles that are critical now and in the future, and providing options for soon-to-be retirees to pass along their expertise before they exit the workforce.

With four generations currently employed in the labor market, however, the trick for organizations is to juggle a variety of expectations and preferences for different age groups.

Millennials, for example, generally focus on career growth, training programs, mentorship, work-life balance, innovation, mental health support, and the company's commitment to social responsibility and sustainability," according to "The Great Boomer Handoff" webinar.

Baby boomers, however, widely prioritize stability and financial security. This includes more traditional benefits such as comprehensive healthcare coverage, family support, and generous retirement plans. They also seek recognition for their expertise and loyalty and belonging within organizations.

But there is some common ground. All generations prefer work flexibility, including remote and hybrid work options and scheduling. Baby Boomers, Millennials, and Gen Z also value continuous learning opportunities, including upskilling and reskilling, as well as professional career development.

Delivering on these expectations is vital for attracting and retaining multigenerational talent, both now and in the future. It also means the difference between a smooth handoff between generations, with all the pieces in place, and scrambling to fill gaps and ensure business continuity.

Advantages of a Multigenerational Workforce

Despite the challenges with maintaining a multigenerational workforce, it can also be a boon for hiring organizations. Overlapping generations can help strengthen and propel organizations forward in the following ways:

  • Knowledge and skill transfer: Having more experienced workers to train, mentor, and pass along skills to new workers helps ease the transition while preventing gaps.
  • Power innovation: A mix of developing and experienced workers boosts productivity, innovation, economic growth while reducing strain on services.
  • Address labor shortages: As Baby Boomers increasingly stay in the labor market for longer — sometimes well into retirement age — organizations have yet another talent pool from which to recruit.  
  • Promote age diversity: A range of generational representation is also beneficial for company culture and diversity, equity, and inclusion (DEI) initiatives.

But in order to take advantage of these strengths, organizations need to explore what to expect and how to effectively manage different age groups within a workforce.  

How to Plan for a Multigenerational Workforce

Developing a multigenerational workforce makes comprehensive planning essential. HR and workforce planning teams not only need to address the current needs of employees at different ages — they must also anticipate and prepare for future demands and potential challenges.

But best guesses will only get organizations so far. To truly understand the state of workforces today as well as tomorrow, leaders need objective, global labor market data to lead the way.

Here are a few data-driven steps organizations can take to help navigate planning for multigenerational workforces.

Recognize the trends

The degree to which organizations will need to shift depends on many factors, but a lot can be learned from industry trends.

In the US, 48% of those working in manufacturing roles are 45 and older while 33% of manufacturing employees in the EU are 50 and older, according to 2023 data from the US Bureau of Labor Statistics and European Central Bank. Also in the US, more than 40% of tradespeople and about 33% of those in legal services are older than 45. And 36% of those working in healthcare in the EU are older than 50.

In short, industries heavy in physically demanding roles and knowledge-dependent professionals are likely to be hit the hardest by a wave of retirements. Analyzing real-time and historical global labor market data, however, also offers insights into how leading employers are using their job postings to strengthen their EVPs and appeal to specific generations.  

Data indicates that within just a year, for example, three major companies — Toyota, Siemens, and BMW — have become more strategic in communicating their EVP offerings to more experienced workers.

Automotive manufacturer Toyota offers tailored benefits for senior team members, including part-time options and opportunities for skill sharing. Tech conglomerate Siemens has implemented continuous learning to help shift aging workers from physically demanding roles into more knowledge-based positions. And BMW is working toward having an age-inclusive workforce, making ergonomic improvements, and offering phased retirement.

Determine the skills needed

Robust succession planning around critical roles helps prevent brain drain, skill gaps, and other workforce disruptions. But it's important to remember that the roles and skills critical for organizations today won't necessarily be the same as those needed in the future.

Organizations need to start asking themselves:

  • What are our current critical roles, and what will be our key roles in the future?
  • Who are our potential successors? And are they ready now or need development?
  • What kind of training and development do we need to implement to make sure knowledge is transferred?

To answer these questions, HR and workforce planning teams need to do their workforce gap analysis homework. By creating talent inventories and using labor market data to track emerging skills and their demand, organizations can make informed build-borrow-buy decisions and develop the mentoring and learning opportunities needed to retain the knowledge of experienced workers.  

Create an enticing EVP

Attracting and retaining skilled talent in any age group comes down to the strength of an employee value proposition — the outlined benefits employers offer their employees in exchange for their skills, experience, and commitment.  

These commonly include salary, rewards, career development opportunities, organizational values, and other company offerings. But exceptionally well-crafted EVPs, those that really focus on people and their needs, can set organizations apart in a crowded market and resonate with employees.

The only question: How do you create an exceptional EVP?

This is where labor market data becomes essential. By analyzing job postings and hiring patterns, employers can benchmark their own EVPs  against competitors and leading organizations. And by understanding an employer's brand — how the market perceives an organization — HR teams can start strategizing on improvements.

Labor market data on Google and Pfizer, for example, can show how their EVPs have changed in the last year. Pfizer reinforced flexible location, family support, organizational resilience, and health benefits with its EVP, which would likely suit Baby Boomers. Google, however, emphasized career opportunities, compensation, workspace attractiveness, and innovation, which would appeal to a younger demographic.

In each of these data-driven steps, analytics and expert insights are crucial for developing effective, strategic workforce plans that involve multiple generations. But they're also vital for driving smarter decisions that overcome challenges and create a strong multigeneration workforce for the future.