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Boomer Exodus

The bleak economic outlook notwithstanding, most baby boomers will still be packing up their desks and heading into some kind of retirement soon. How will companies fare when they leave?

Boomer Exodus

Carole Mostrum, a 59-year-old registered nurse from Duluth, has worked out the perfect transition from full-time employment to retirement. For the past five years, Mostrum has taken advantage of the snowbird program offered by her employer, Duluth-based SMDC Health System (the initials are for St. Mary’s Medical Center and the Duluth Clinic, which merged a decade ago). The program allows Mostrum to spend winters at her Florida condominium and return to a job in Duluth in the spring. SMDC, which has 7,000 employees at four hospitals and 17 clinics in northeastern Minnesota, requires its snowbirds to reapply for a job each time they return.

At a minimum, Mostrum is likely to get a “casual” position without benefits, she says. But so far, she’s secured a position with benefits each year. “I believe the arrangement will keep me working longer,” she adds. The snowbird program gives nurses who’ve been employees for at least five years the option of being gone October through April as long as they work a minimum number of hours while they’re in Minnesota.

“It’s a way of retaining these nurses and their knowledge, and it allows us to backfill work force needs in the summer, when people are taking vacations,” says Sandy O’Leary, SMDC’s human resources manager. So the program is a good solution all the way around—for now.

But Mostrum belongs to a sizable cohort of baby boomer employees who’ll retire in coming years. According to projections by the Minnesota state demographer’s office, people ages 44 to 64 (that tracks closely with the U.S. Census Bureau’s definition of the boomer generation: those born from 1946 to 1964) made up 35 percent of Minnesota’s labor force in 2005. And unlike SMDC, many companies have yet to heed the pending exodus of boomers from their ranks.

Asked to conduct a salary survey of employers in south-central Minnesota in 2006, the state’s Department of Employment and Economic Development added a question to the survey about the coming wave of boomer retirements. It found that—despite plenty of national media attention to the challenges that a glut of retirements could create—only about 8 percent of employers said they were concerned.

Why should they be? Kathy Hagen offers a for-instance. Hagen is founder and principal of K. L. Hagen Intellectual Capital Strategies, a consulting firm in Minnetonka that works internationally. She recounts how one of her clients, a North Carolina biotech business, lost millions of dollars after a senior-level employee retired. Following an initial rejection, the company needed to repeat a Food and Drug Administration approval process that the departing employee had led, and ended up repeating it not just once but twice, because the knowledge and experience garnered by the initial project team, including the retiring employee, hadn’t been passed successfully to the new team.

“The science was very good, the science was not the problem,” Hagen says. “It was understanding, in that case, how do you approach the FDA? What kind of conversations had happened in the past?” All the nuance of past FDA meetings and discussions was lost to the reconstituted team.

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