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Surviving The Aging Workforce

By Mary Clarke, CEO, Cognisco As baby-boomers begin to retire, the manufacturing industry’s knowledge base is about to walk out the door. It’s important that businesses ensure that the wealth of knowledge amassed from workers in the field is passed on to future employees.

As America struggles with a crushing economic decline, businesses of all sizes, in all sectors, have been feeling the negative effects. And in case the faltering American economy wasn’t enough to make CEOs sweat, manufacturing industry executives are also currently faced with yet another industry crippling problem: the aging workforce.

As baby-boomers begin to retire, the industry is faced with the fact that its knowledge base is about to walk out the door. In fact, a survey conducted last spring by Advanced Technology Services Inc. (ATS) and Nielsen Research suggested that manufacturing executives should expect approximately 40 percent of their skilled workforce to retire within the next five years. For manufacturing companies with annual revenues ranging from $10 million to $1 billion, this reduction in their skilled workforce will mean an average loss of $52 million per company, with losses for larger companies reaching closer to $100 million.

Large manufacturing companies aren’t the only ones who will be affected by this trend, however.  Smaller companies are also expected to feel the pinch. According to a 2007 survey by the National Association of Manufacturers, approximately 20 percent of small to medium manufacturing companies with 2,000 workers or fewer reported that retaining or training employees was their number one concern.

So what can manufacturing companies do to help ensure their future security in these unsure times? One critical step that manufacturing executives should take is to be sure they have a clear picture of who in their workforce is best suited to pass on crucial knowledge before leaving the industry for good. It is important for executives to capitalize on the industry knowledge amassed by workers who have spent decades in the field and ensure that it is passed on to future employees. 

A recent survey conducted by a top manufacturing publication questioned 400 members of the corporate, operational and IT Management segments of the publication’s readership and found that nearly all described themselves as highly educated, with 74 percent boasting a bachelor, multiple bachelors or a master’s degree. Seventy-five percent of respondents listed themselves as being between 44 and 60 years of age, and 66 percent said they had been in the industry for between 11 and 30 years. The knowledge and experience amassed after that many years of education and on-the-job learning is a priceless resource that needs to be tapped before it is no longer available.

Despite their experience, not everyone is prepared to help train the future of the manufacturing workforce. One effective way to evaluate who in the workforce is best suited to help train, mentor and educate incoming workers is to institute an employee assessment program. While most seasoned manufacturing employees will possess extensive industry knowledge, not all of them will have the ability and the confidence to pass this knowledge on in an effective manner. Just because someone has an understanding of a subject matter doesn’t mean they are able to teach it.

Customized employee assessments can help determine who is best suited to help train newcomers because they measure competence and knowledge in conjunction with confidence. Assessing confidence along with knowledge is a key aspect of a successful employee assessment program because this approach provides executives with a more complete picture of their workforce. In order to ensure the healthy future of the manufacturing industry, it is critical to know which employees possess the knowledge to help train the future generation of manufacturing workers, as well as the ability to do it effectively.

In addition to the effect that the aging workforce will have on industry newcomers, it is also likely that the upcoming retirement boom will create a shift in the job roles of many current manufacturing workers. As thousands of seasoned workers leave the industry there will be an influx of vacancies in high level positions. This means that many workers currently holding lower level positions will likely receive promotions and move up the ranks.

Once again, employee assessments can be utilized in this situation to help executives determine who is most capable of taking on more responsibility and thus most worthy of a promotion. It could be a potentially costly mistake to promote someone who doesn’t possess adequate knowledge, confidence and competence to succeed at a higher level, higher responsibility job. Employee assessments can help mitigate that potential risk by allowing employers to accurately assess both employee’s ability and confidence in that ability.

The manufacturing industry has long been a cornerstone of the American economy. According to a 2006 study conducted by the Industrial College of the Armed Forces, the manufacturing industry is the fourth largest contributor to the country’s economic growth, accounting for 22 percent of the gross domestic product growth at the time of the study.

Manufacturing has a direct impact on the health of other industries on both sides of the supply chain. It creates huge demand for raw materials, and its products affect industries spanning the spectrum of health to high tech to retail and beyond, not to mention the transportation industry that allows for the delivery of both the raw and finished materials. The future health of the manufacturing industry affects not only those working in the field, but also the health of the economy as a whole. 

It is vital that manufacturing executives make efforts to pass along critical knowledge now, before the masses of skilled baby boomers make their exit. Employee assessment programs are an invaluable tool for determining who can best help pass on this knowledge, as well as who is currently ready in the industry to assume more responsibility and fill the shoes of the retirees.  The impending retirement boom is not a problem that will go away. Ensuring successful knowledge hand-over now is one of the most important steps that manufacturing executives can take to preserve the health of their companies, the industry and the economy.

Mary Clarke is CEO of Cognisco, a global intelligent assessment solutions company dedicated to helping manufacturing executives accurately assess their workforce and use that knowledge to improve business practices. For more information visit,