Baby Boomers are the largest generation in US history. They were born between 1946 and 1964. Research shows that between 75 and 80 million people were born during this time period. That is an average of 4 million per year. This generation grew up during the 1960’s and 1970’s. Baby boomers ages range from the mid forties to the mid sixties, and the first of them will turn 65 this year or already have. With this generation being so large and encompassing a wide range of ages it will present many challenges for organizations. As many of them begin retiring this year, it will cause a drastic change in the workforce in the United States for the years to come. According to the Monthly Labor Review, Arlene Dohm states, “By 2018, all but the youngest baby-boomers will be of retirement age.” The biggest problem is, there is a smaller pool of workers in the generations that followed the baby boomers. Paul Hodge, who states in the December 2005 White House Conference on Aging Report “ From 2010 to 2030, the 65+ population will ‘spike’ by 75% to over 69 million people.” Many companies are not prepared for the max exodus of people that will be retiring over the next 10 years from their organization. Companies now must find a way to replace these workers. People retiring will now outweigh the inflow of knowledge and experience of workers that are coming into the workforce or that in currently in the workforce today. Baby boomer’s possess more knowledge then any other previous, existing, or prospective employee group. Because of the knowledge and skills that they possess they have enabled organizations to be more effective, competitive, and enabled them to run more smoothly. Organizations should realize that people are it’s greatest asset. Many organizations do realize this, however some do not. The retirement of the baby boomers has brought to light two things that organizations can do to improve their organization and enhance their business. Human capital investment and succession planning are two things organizations should invest in and do to enhance their organizations as the baby boomers are starting to retire. Human capital investment, which we will call HCI, is the knowledge, competences, and personality attributes embodied in the ability to perform work that will produce an economic value. Adam Smith defined human capital as, “ The acquired and useful abilities of all the inhabitants or members of the society. The acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person. Those talents, as they make part of his fortune, so do they likewise that of the society to which her belongs. The improved dexterity of a workman may be considered in the same light as a machine or instrument of trade which facilitates and abridges labor, and which, though it costs a certain expense, repays that expense with a profit.” In short human capital simply means people. Each organization has it’s own human capital, and by investing in their own human capital it will have many benefits. Human capital that we each possess is nothing more than our experience that we have and our education. In vesting in HCI, can have great benefits for both the individual and the organization. Many organizations see that HCI as a source of competitive advantage and some organizations do not. As companies figure out how to raise the performance of their most valuable employees in a range of business activities, they will build distinctive capabilities based on a mix of talent and technologies (Johnson, 2005). There is a growing impact of human capital that can clearly be seen on organizations income statements and balance sheets. In 1982, tangible assets represented 62 percent of a U.S. corporation’s value on average. By 1992, that figure had dropped to 38 percent. More recent studies estimate that figure is...
References: Cross, T., (2005). Human Capital Strategy. Darden School of Business, July 2005.
Dohm, Arlene. (2000, July). Gauging the Labor Force Effects of Retiring Baby-Boomers. Monthly Labor Review.
Johnson, B.C., Manyika, J.M. & Yee, L. (2005). The Next Revolution in Interactions. The McKinsey Quartly, No. 4, p.23
Michaels, E., Hndfield-Jones, H & Axelrod, B. (2001). The War for Talent. McKinsey & Company, Inc.
Smith, Adam (1776). An Inquiry into the Nature and Causes of the Wealth of Nations Book 2- Of the Nature, Accumulation, and Employment of Stock.
Weatherly, L.A. (2003). The Value of People. HR Magazine, Alexandria: September 2, p. S1
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