by J. Robert Beyster

As members of the Baby Boom generation begin to retire, businesses will find themselves facing a serious drain in employee brainpower, talent and experience. According to the U.S. Bureau of Labor Statistics, 43 percent of the workforce operating between 2004 and 2012 will be eligible to retire within the next ten years. However, as these men and women leave the workforce, there will not be enough younger employees to replace them. The Bureau of Labor Statistics projects a shortfall of 10 million workers in the U.S. by 2010, putting dramatically increased pressure on managers to find ways to recruit and retain talented workers at all levels.

The question is not, “Will your organization be impacted by the coming brain drain?” Instead, the question is “How soon?” With Baby Boomers roughly spanning the age group that is current from 44 to 62 years of age, some companies are already starting to feel the pain—a pain which will get worse as more of these employees reach retirement age. According to Ernst & Young’s 2007 Aging U.S. Workforce Survey, some companies are actively working to convince senior managers to stay on beyond their normal retirement age in hopes of at least partly meeting the challenge. This is a good first step, but I believe company owners and managers need to take more fundamental steps to both retain and attract the employees they will need to deal with the coming brain drain. Here are some suggestions:

• Encourage participation in decision making. Employees want to feel that they are important, and that their opinions and recommendations are being both heard by their managers, and acted upon. You can do a lot to improve the way employees feel about their place in your organization by routinely turning to them to make decisions that impact the company, and not keeping decision-making authority closely held among a small group of executives or managers.

• Put people first. It may be a bit cliché by now to say that people are your most important business asset, but it is certainly true. And as the pressure to recruit and retain a talented workforce increases, these assets will become even more valuable. When I say that you should put people first, I mean specifically that you should hire very smart people, encourage their entrepreneurial spirit, let them focus on customers, and reward them for their contributions. They will in turn reward you by remaining loyal and committed employees.

• Give your employees freedom, but with strings attached. While everyone has a job to do, there are often many different ways to do it. Not only that, but smart and talented employees often discover new ways of doing business—or even entirely new business opportunities—that their managers did not themselves see. You can do a lot to retain talented employees by freeing them to pursue work they are passionate about, while being accountable for achieving the goals and standards you set for them.

• Share ownership. I am a firm believer that those who contribute to the company should own it, and ownership should be commensurate with a person’s contribution and performance. As the pool of available workers shrinks in the coming years, managers and owners will need to employ innovative approaches to attract and retain the employees they will need to support their future growth. One proven approach is sharing company ownership widely—through stock options and direct grants of stock—and not just with those at the top of an organization.

You have a choice: wait until the coming brain drain hits your organization, or take steps to deal with it now. To stay ahead of the competition, and to ensure the long-term viability and profitability of your business, then the latter choice is really the only choice.

Dr. J. Robert Beyster (La Jolla, CA) is the founder of Science Applications International Corporation (SAIC) and author of the book The SAIC Solution: How We Built an $8 Billion Employee-Owned Technology Company (John Wiley & Sons, 2007) with Peter Economy. Dr. Beyster served as CEO and chairman of the company for 35 years, and he promotes innovation and employee ownership through his Foundation for Enterprise Development and the Beyster Institute at the Rady School of Management, University of California San Diego.