In 2001, in a series of essays for The Economist, Peter Drucker pointed to a demographic transformation unfolding across the developed world while, poetically, he found himself at the leading edge of the trend.

"The dominant factor in the Next Society will be something to which most people are only just beginning to pay attention: the rapid growth of the older population and the rapid shrinking of the younger generation," Drucker asserted. "Politicians still promise to save the existing pensions system, but they—and their constituents—know perfectly well that in another 25 years people will have to keep working until their mid-70s, health permitting."

At the time, Drucker was fast approaching his 92nd birthday and still writing, teaching, and consulting. Only the most blessed among us can hope to be going so strong at that age. But there's no denying the general phenomenon that Drucker identified as well as the important implications it holds for those leading corporations and nonprofits alike.

"Tectonic Shift"

Indeed, just last month, RAND, a nonprofit research institution in Santa Monica, Calif., issued a study showing that more and more Americans are delaying retirement. The study also predicted that this "tectonic shift" in the workplace is bound "to continue and even accelerate over the next two decades."

After declining for more than a century, according to RAND, the number of older men and women in the workforce began to rise modestly during the 1990s. While about 17 percent of Americans aged 65 to 75 were employed in 1990, that figure is expected to rise to 25 percent this year. RAND believes the pattern will persist until at least 2030—longer than other experts have forecast.

For government policymakers trying to ensure the health of Social Security and Medicare, the ramifications of this swing are quite substantial. But individual enterprises need to pay close attention, too.

"Employing organizations—and by no means only businesses—should start as soon as possible to experiment with new work relationships with older people and especially with older knowledge workers," Drucker wrote in his 1999 book, Management Challenges for the 21st Century. "The organization that first succeeds in attracting and holding knowledge workers past traditional retirement age, and makes them fully productive, will have a tremendous competitive advantage."

"New Ways of Working"

To get there, Drucker said, employers must learn to be more flexible. As baby boomers hit their 50s and 60s, he suggested, many of them are likely to want to serve as part-timers and consultants or to take on special assignments. "New ways of working with people at arm's length will increasingly become the central management issue" at many different organizations, Drucker wrote.

Compared with their younger colleagues, he added, older workers with sufficient education and talent "will have much more choice and will be able to combine traditional jobs, nonconventional jobs, and leisure in whatever proportion suits them best."

Part of the reason this group now finds itself in such a strong position boils down to supply and demand. Another recent study, released by the MetLife Foundation and the San Francisco think tank Civic Ventures, predicts that over the next eight years there could be as many as 5 million job vacancies in the U.S.—and workers 55 and older will be crucial to closing the gap.

"Not only will there be jobs for … experienced workers to fill," says Northeastern University economist Barry Bluestone, the study's author, "but the nation will absolutely need older workers to step up and take them."

Achieving Social Purpose

Bluestone projects that nearly half the labor shortages (2.4 million jobs) will be in four fields: education, health care, government, and the nonprofit arena. All of these stand to provide what many baby boomers, in particular, are looking for: a chance not only to stay active but also to make a meaningful contribution.

More than a decade ago, Drucker spotted this growing desire among knowledge workers to achieve some social purpose during the second half of their lives. "These people have substantial skills," Drucker wrote. "They know how to work. They need a community …. They need the income, too. But above all, they need the challenge."

To help them along, Civic Ventures launched a program last year in which Silicon Valley executives are given fellowships at area nonprofits. The idea is not only to bring these organizations much-needed expertise in marketing, finance, and human resources, but also to have the executives prepare for their eventual transition to an "encore career" in the social sector.

The irony, of course, is that all this activity and insight by Civic Ventures and RAND comes amid a brutally weak job market, especially for those 55 and older. Last month, the Pew Fiscal Analysis Initiative reported that about 30 percent of those in this age bracket have been unemployed for a year or more. "Another generation of U.S. workers, at least significant numbers of them, [is] being forced into retirement sooner than expected and without ceremony, by the bust," economics writer David Warsh noted earlier this week.

But smart organizations are aware that every bust is invariably followed by a boom. And the next one could well be a boom driven, in large part, by a bunch of aging boomers.

Source: Business Week

http://www.businessweek.com/managing/content/may2010/ca20100520_168995.htm