Baby Boomer executives continue to win and keep top jobs in the C-suites – and it’s setting up a possible succession crisis across corporate America.
From Boeing to Verizon to Cracker Barrel, boards at major firms have been hiring older and even previously retired chief executives to guide them out of corporate messes. As of June, 42% of sitting CEOs were 60 or older — an “elevated” level versus historical averages, according to research by Cowen Partners that looked at SEC proxy filings across an S&P 500 sample.
Meanwhile, a major chunk of white-collar Boomers are grappling with what experts call an “identity crisis” — reluctant to leave for a traditional retirement. That, along with a lack of timely succession planning, could spark chaos in the workplace in the coming years.
“You know when someone passes away and there is zero will and you don’t know where anything is and now everyone is left to pick up the pieces? That is exactly what is happening across corporate America right now,” according to Shawn Cole, president and co-founder of Cowen Partners Executive Search.
For years, economists forecasted a “Silver Tsunami” — the prediction that Boomers born between 1946 and 1964 will age out of the workforce in a great wave. But that’s not happening, as the 12-month average labor force participation rate for those 65 and over hit 19.2% – up from the 10% range in the 1980s and around 12% at the turn of the century.
John Challenger, CEO of Challenger, Gray & Christmas, an executive outplacement firm, notes that people are living longer and “just in a different place in their 60s and 70s than they used to be,” so the idea of retiring at 65 seems like an arbitrary number.
“There’s also a sense that it’s not healthy to stop working, people feel they need that in their lives,” he added.
Cole puts it more bluntly: “There’s also a fear that if I stop moving, I might die … because they all know someone who retired and then all of a sudden their body started falling apart and they quickly deteriorated.”
At more than a third of the S&P 500 firms sampled by Cowen, the CEO and chief financial officer – the top two seats of a company – were sitting in the retirement window at the same time. Meanwhile, external CEO hires at S&P 500 firms nearly doubled in the past year, and median CEO pay jumped 9.5% to $25.6 million.
When Boomers finally leave these cushy jobs, Generation X – those born between 1965 and 1980 – could get passed over altogether as they near retirement age themselves. In theory, it’s an opportunity for Gen Y, better known as millennials, to quickly move up the food chain – but there are risks there too, experts said.
Companies could suffer as relatively inexperienced millennials face a “trial by fire,” putting their professional reputations on the line to enter a C-suite spot for which they might not be prepared, per the Cowen research.
“These people were never allowed in the rooms and over the course of one or two years it’s gonna be a rapid succession and then they’re gonna be given the keys. Who thinks that’s a good idea?” Cole said.
The shift may have started during the Great Recession, when companies kept proven Boomers in their seats to steer them out of a crisis instead of promoting Gen Xers. That threw off the succession timeline, since it takes 15 to 20 years of experience to build an executive ready to take over the CEO seat, according to Cowen.
Meanwhile, employer training dollars are often spent on workers who are already in leadership positions — an example of how companies are overlooking development opportunities that will hurt them later, said Maria Flynn, CEO of nonprofit Jobs for the Future.
It doesn’t necessarily help that “Reverse mentoring” also has picked up, where younger workers are paired with older employees on their teams to keep them up-to-date on newer technologies and share fresh perspectives, according to Flynn.
Many Boomers simply need the wages, facing stubbornly high inflation and rising gas prices, according to Flynn. But in other cases, white-collar workers simply don’t want to let go.
“For folks who may not want to retire, I think a big piece of it is the strong connection between their identity and their job,” Flynn said. “Younger generations may not see that connection as tightly.”
Gen Z – those born between 1997 and 2012 – have started contributing to their workplace retirement plans earlier than ever and believe the ideal retirement age is 59, according to a Manulife John Hancock Retirement report.
On the other hand, Challenger said he’s noticed more Boomers looking for a “second chapter” instead of retiring.
“There are more options with job sharing, part-time work, consulting work, entrepreneurial work, contingent work. There was, at one point, a pretty solid line: You worked full-time permanent,” he added.
Gen X is already a far smaller generation with about 65 million people, trailing Baby Boomers’ peak population and that of both Gen Z and the largest cohort, millennials.
Cole – a Gen Xer – said one of his millennial friends who works at BNSF Railway recently got a promotion because a Baby Boomer four levels above him suddenly retired. The friend was given three days’ notice to move his family to Texas for the new role.
“As an employer, you don’t want to wait until the last minute for succession planning and a lot of times folks do wait until it becomes an emergency,” Flynn told The Post.