Companies Unprepared: As their employees near retirement, large U.S.
companies are woefully “unprepared for the looming brain drain” that will
result, according to a report by Ernst & Young. Based on responses of human
resources executives at Fortune 1,000 companies, it found that most companies
apparently are giving lip service to employee development. In particular,
organizations are at a crossroads in the area of succession planning. One in
four companies say their middle-management ranks will be most affected as waves
of retirement-bound employees exit the workforce. Even so, three-quarters of
those with formal succession strategies in place focus exclusively on
replacements for top senior executives, rather than identifying would-be middle
managers.
Not surprisingly, the lack of deliberate succession planning results in
higher costs: 52 percent of those surveyed say costs of recruitment have
increased, while 43 percent have seen an increase in their training and
development needs. The report warns that many companies will be exposed to
“economic and productivity challenges” within five years unless they implement
strategic succession plans.
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