The data is clear, and the trend is eye-opening: the Twin Cities Metro Area’s population is getting older. Since the turn of the century, the Metro Area has gained about 457,000 people, growing by 17.3 percent. Broken down, however, it is striking that all the age cohorts under 55 years witnessed slower growth than 17.3 percent, while every age cohort over 55 years grew much faster. In fact, the number of people between 55 and 64 years expanded by 99.9 percent between 2000 and 2018, a rate about six times faster than total population growth. Likewise, those between 65 and 74 years grew by 96.9 percent during that time.
As the population ages, so too does the workforce. Figure 1 below highlights the significant increase in the share that workers 55 years of age and older make up within the Metro Area’s major industry sectors. Take manufacturing for example. In 2008, approximately 17.7 percent of the region’s manufacturing workers were 55 years of age and older. Ten years later, this share had increased to 27.0 percent. In other words, over one in every four manufacturing workers in the Metro Area are 55 years of age and older. Overall, greater than one-in-five Metro Area workers are now 55 years of age and older (see Figure 1).
Succession Planning: A Smart Path to Take
Natural questions about retirement, retention, and hiring are sure to come up with these trends across the Metro Area’s labor markets. With such aging of the rapid overall population occurring in the Metro Area, companies and organizations should ensure that they have a strong succession plan in place for strong future leadership.
Liz Jennings, one of two Workforce Strategy Consultants for the Twin Cities, has some advice for employers regarding succession planning.
- First, determine ownership of the planning process and pull together a committee. Typically, the board president owns the process for developing a succession plan for the CEO or president and can form a committee comprising the HR director and select board members. From there, the CEO “owns” the process for replacing the executive leadership team. The senior HR director may oversee the entire planning process and all committees.
- Next, look at your most recent strategic plan. Where does the company want to go over the next five years? What are its priorities? What is the vision? Likewise, what are the skills a new leader needs to take you to that next level? You do not necessarily need a clone of the current CEO if the strategic plan suggests that a slightly different direction is where you are headed. For this reason, developing a succession plan in conjunction with the strategic plan is critical. If you don’t know where your company is headed, you don’t know what kind of leader will be most critical.
- With the strategic plan in mind, complete a full analysis of the skills of the leadership in your company. However, don’t look just at the CEO or a handful of executives; include the entire group of upper and middle level management. What are their hidden skills? What are their strengths that have not been utilized in your organization but could bring substantial value to your strategic plan in the next five years?
- By conducting a 360 review of the leadership you get to see how your employees interact with the people who report to them as well as the people to whom they report. Do they receive good reviews in one direction but not another? How well do they treat their employees and their customers? This is especially critical when grooming a new CEO. You want someone who understands the needs of the Board of Directors but also sets a positive, inclusive tone for your organization.
Now, use a spreadsheet to plot out your findings so that you know what and who you are working with.
- Who could be ready immediately and for what position?
- Who could be ready in 2-3 years with some grooming; and who will be stellar in 4-5 years, and for what positions?
- And lastly, for what positions would you need to search externally?
Jennings suggests that employers develop potential solutions to multiple scenarios for one, two, three years or sooner, so that you demonstrate to customers and clients that your business and brand are remaining strong. With a thorough succession plan, your company, your region, your local area, your stakeholders, and your customers will all appreciate a solid and smooth transition for whatever may happen.
For more information on the aging workforce and succession planning, contact Tim O’Neill timothy.oneill@state.mn.us or Liz Jennings liz.jennings@state.mn.us.
