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March 10, 2008

Move up or move out | Where is your company's next generation headed? Right out the door, if you're not careful.

Based on issues discussed at our symposium on pessimism in Maine's business community in October, our three-part series wraps this issue. Here's a recap:

Part one: In the Feb. 11 issue, we explored the myth and reality of the great Maine worker.
Part two: In the Feb. 25 issue, we asked if Maine is taking the right steps to educate its workforce.
Part three: In this issue, we examine how Maine companies are fostering the next generation of leaders. While some companies have figured out what it takes to retain ambitious, young workers, others are losing critical staff.


In early February, WBRC Architects-Engineers unveiled a dramatic testament to its efforts to retain young architects. WBRC opened a 75-seat, $100,000 lecture hall in its Bangor headquarters for the sole purpose of hosting industry speakers for its young employees. CEO John Rohman says the hall, and its new related professional development program, "The Leadership Ladder," is a direct response to exit interviews he conducted with two young architects, ages 28 and 24, who last year declined promotions and left the company and the state. The 24-year-old architect said no to a spot in middle management, the 28-year-old, to a position as partner. Rohman, 62, who jumped at the position of partner when it was offered to him 40 years ago, was baffled. "I asked them what we could have done differently," he says.

The young architects told him they wanted a job with less emphasis on the bottom line, and more on the creative side of architecture. So this year WBRC will meet that challenge by bringing speakers like renowned Portland designer Angela Adams to lecture its 75 employees. Rohman says retaining young architects has been difficult over the last five years (his engineers, he says, are less transient because they were usually educated in-state and have families here).

But Rohman knows hanging onto those young creative types is especially critical now that his partners are approaching retirement age. One partner retired in January at age 62, and Rohman says four more of the firm's 10 partners will likely retire by 2015.
Rohman knows a lot has changed about work since he was a young employee. Back then, "if somebody said, 'You can stay here forever and be a partner,' I'd say 'Where do I sign?'" Today, Rohman says he's lucky if a 30-something architect sticks with WBRC for five years. "These folks are much more mobile," he explains. "They don't usually think in terms of what the firm is going to give me 10 years from now, it's what they need this year and next year."

Young professionals, typically defined as those ages 20 to 40, have proven nationwide to be tough to corral. They face a relatively competitive career track, with plenty of management positions currently occupied by baby boomers, but can easily strap on their walking shoes thanks to a global economy and a cultural priorities shift from loyalty to the company to loyalty to self. And in one of the oldest and most rapidly aging states in the country, Maine's next business generation faces its own mixed bag of opportunity and challenges.

In classic be-careful-what-you-wish-for form, businesses trying to convince millions of older, company-critical workers to hang around are lately facing a new, peculiar problem: How do they keep young talent with an eye on the executive office if boomers at the top delay retirement? Faced with mountains of personal debt, concerns over rising health care costs and 401(k) plans that have lately taken a beating, many boomers can't afford to retire on time at age 65. And while this is in many ways good news for our old state, it also means Maine companies need to find ways to keep those antsy young people who will eventually run the company from wandering if they perceive top spots won't be open for them anytime soon. So far, it doesn't appear many companies have received that memo.

"The generation that is in power now, a lot of them don't want to think about succession planning," says 31-year-old Brewer Economic Development Specialist Tanya Pereira, who also serves on the steering committee for Realize! Maine, a statewide network of over 300 young professionals. "Because of that I think there may be a bit of unwillingness to bring people forward as we might have. There are a number of companies that have wonderful, talented people who aren't moving up to positions of power."

Making space
For better and worse, we are living in a world where retirement can wait. According to the AARP, 80% of baby boomers intend to continue working after traditional retirement age. These millions of employees will balloon the share of the workforce occupied by people who, according to the old cultural norm, should have already said sayonara.
The U.S. Census projects that the proportion of workers age 65 and older will increase from about one in eight people to one in five by 2030. Late in life, boomers are giving new meaning to the phrase their generation coined: workaholic.

Thanks to aging workaholics, the younger set has one more thing to blame on Mom and Dad: We can't move up in the company because you won't move out. According to the Society for Human Resource Management, 62% of surveyed companies employing 500 or more people lost Gen X and millennial employees because baby boomers already hold the company's top positions. In smaller companies, that problem is less pronounced ˆ— 33% of companies employing 100 to 499 people said they lost young employees because the boomers were hanging on, and 39% of companies employing fewer than 100 employees said it was an issue.

In Maine, balancing the working needs of boomers with those of the young and ambitious is a relatively new concept. The state Department of Labor has not studied the issue, and Mainebiz spoke with as many companies who say they have plenty of management position available to workers 40 and younger as those who said they don't. But even if the conundrum isn't keeping business leaders up at night now, John Richardson, commissioner of the Maine Department of Economic and Community Development, believes accommodating career-entrenched boomers and upwardly mobile young professionals will be one of the business community's biggest headaches in the coming decades.

Richardson says businesses that institute mentoring programs and flex-time for baby boomer employees will do well at the parallel goals of making space for young leaders and benefiting from the wisdom of established managers.

"If I know I'm on the fast track, if I know you're grooming me for the future, I know I have a future with that company," says Richardson.

Mary Warren, senior recruiter for professional placement firm Pro Search in Portland and a member of the steering committee of the Portland young professionals networking group PROPEL, says 30%-40% of the permanent placement clients she works with cite an inability to move up in their company because top positions are occupied as one of the main reasons they want to move on. Warren notes that people often have several reasons for wanting to find a new job, but that limited opportunity to progress is a relatively common concern for her clients. Warren's clients complain they aren't able to attain a better title or more compensation and responsibility within their current company.

Warren says employees of the state's largest companies, like Unum and Wright Express, tend to be able to move within to increase responsibility and job skills. But the real challenge is retaining ambitious youth at small companies, which have fewer positions and departments to groom employees for management positions.

Before she takes on a client with an itchy trigger finger, Warren says she advises them to see if there is still room to move within their current company. "The first thing we tell them is to talk to their managers and see what options there are to do other things, to cross-train and give them more opportunities," Warren explains.

"Economically, it's become difficult for boomers to even consider retirement," says Rick Dacri, a human resources consultant based in Kennebunk. "And there's a real effort to retain them. That clearly creates a problem for younger workers."

Dacri says companies today must use a horizontal approach to promotions, one that involves new projects and duties but not necessarily a clear vertical ascension up the management ladder. "Really," he says, "it's a re-definition of the expectation that career means moving upward."

Solving real problems
In January, Chattanooga, Tenn.-based Unum hired Zachary Nelson as its first vice president of talent development. The insurance company, which employs 9,000 people nationwide and 3,100 in Portland, offers dozens of professional development programs to employees, from entry-level hires just out of college to executives, in hopes of attracting and retaining top talent. Nelson, a 33-year-old industrial-organizational psychologist who grew up in Portland, will oversee those programs worldwide from the Maine office.

One of the programs, called "Aspiring Leaders," asks 25 Unum employees selected from a pool of dozens of applicants to solve a real company problem as a team and then present it to senior management at the end of one year. Participants are able to learn about other aspects of the company and network with top-level management, and senior management get the opportunity to peg future company leaders.

"These programs demonstrate to employees that they have potential to do great things, and that we are invested in their development," Nelson explains. The company says the programs, all of which were started within the last five years, have improved voluntary retention by about 3% over that time in all age groups.

"It's very common," says Nancy Glube of losing the young because of sedentary boomers. Glube, a member of the Society for Human Resource Management's Special Expertise Panel on Employee Relations and the executive director of HR at the Atlanta headquarters of AT&T Wireless, says companies combat the brain drain by giving responsibility to employees at all levels through, for example, task forces, group projects or community outreach.

Glube says even the smallest companies can apply some of the professional development programs larger ones use to retain talent, by creating team projects or reaching out to the community with volunteer efforts. "I know it's different and I know it's more limiting [in a smaller company]," she says. "But I've never been in a workplace where there wasn't more work to do than there were people to do it."

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