Beware the Graying Workforce

February 27, 2008

We were recently in for a shock when we undertook a search to find a Vice-President of Sales in the so-called ‘Cleantech’ sector. Though the client organization is a manufacturer of environmental products gaining increasing attention, its roots are ‘old-economy’ building products which are being made sexy by market forces larger than itself.

What struck us in this search were the demographics of senior management in the companies from which we were asked to recruit. Overwhelmingly, the ages of executives in most of these companies ranged from fifty to over sixty with the average closer to the high end of that range.

Not only were the executives ‘seasoned’, but there was a significant gap between them and the layer below. As organizations have sought to become more efficient, lean and/or competitive, a large middle management layer has been wiped off the organizational chart. Thus, we found Vice-Presidents of Sales with direct responsibility for large teams of sales representatives and no intermediary or developmental regional sales management roles in between. At the same time, few if any of the lower level sales reps boast any management experience and thus when the Vice-Presidents retire, as they inevitably will, succession promises to be a big problem. While everyone we spoke to acknowledge the issue few could speak to how their organizations are addressing it.

Like many sectors, building products has been a somewhat closed, bottom-fed system within which people move around but few enter or leave at the more senior levels. Looming large-scale retirement will upset this dynamic and organizations will be forced to come to terms with replacement issues. For the few ‘up and comers’ with some management and industry experience it promises to be a bonanza of choice. But there will not be enough of these to go around.

This means that organizations are going to have to come to terms with importing people from other sectors. For this to happen, they will have to look at experience in a very different way than they have in the past. They will have to focus on what candidates know rather than who they know and how this knowledge can be applied to their sector. This shift will not be easy as evidenced by our client who insisted that we find the proverbial 40 year old ‘hot shot’ with 15 years of industry and management experience. Organizations will also have to think seriously about how to tether the retirement gold watch crowd so that knowledge can be passed down in a non disruptive manner.

On the positive side, the “Cleantech’ phenomenon will make several old-economy sectors attractive to a whole new generation of highly capable individuals. This is an opportunity for baby boomers looking to sell their businesses and companies looking to upgrade the quality of their teams. We plan to hang around to see what happens…