The Great Resignation and Silver Tsunami have received a lot of recent attention as two workforce trends making a significant impact on organizations. With the workforce rapidly graying, some employment experts are saying we are in the midst of the “Great Retirement.” According to the Pew Research Center, the rate of retirement for Baby Boomers has accelerated since COVID-19 began. Nearly 29 million people from this generation retired in 2020—three million more than in 2019—and a total of 75 million will retire by 2030.
Many employees also recognize that leaving is often the only way to get meaningful salary increases and be paid the rates they deserve. According to Pew Research Center analysis from July 2022, half of employees who switched jobs saw their pay increase nearly 10%, while the median worker who stayed put saw an inflation-adjusted loss of almost 2%. When paired with stress, burnout, organizational culture issues, understaffing, rising inflation, the looming prospect of a recession, and any number of other issues impacting work conditions, it is no wonder most people are either looking or at least open to leaving their job. Indeed, Randstad’s Employer Brand Research recently found that 70% of all workers are open to new job opportunities.
Whether they are retiring or moving on to new opportunities, departing workers take with them the subject-matter expertise and institutional knowledge they have accumulated over their professional careers. “What they leave behind is everything from relationships, knowledge of how things get done, technical expertise, alongside various aspects of product delivery, customer management or expertise around what is occurring in a market,” said talent risk management and knowledge transfer specialist Steve Trautman, principal and founder of the Steve Trautman Co.
This exodus of experienced and knowledgeable talent results in “brain drain.” Sometimes known as “human capital flight,” brain drain comes in three major forms. It can be organizational, as talented employees retire or move to rival companies; geographical, as highly skilled individuals and graduates depart their home country or region; or industrial, as workers shift from one sector to another. All three forms pose a threat to the success and viability of an organization, especially when highly experienced or “star performer” employees leave. Losing such skilled talent can impact productivity, and resulting recruitment efforts to find their replacements can be costly.
Brain Drain in Risk Management
As a specialized sector that requires a high level of skill, ability and experience, risk management is especially vulnerable to the negative effects of brain drain. Risk management often operates in a knowledge silo, and as risk specialists leave, so does their influence and knowledge.
Risk professionals possess a significant body of knowledge and understanding. “This kind of knowledge capital, intellectual capital, and even relationship capital is not on a form, in a report or part of a checklist,” said employee retention expert Chason Hecht, CEO of Retensa. “It evolved with the systems wrapped around intellectual property, customers and employees. Risk is not a one-size-fits-all world. Organizations’ interests and exposure have become more complex. The understanding of how those layers fit together and how to mitigate any issues is not easily replaced.”
Immediate Strategies for Combating Brain Drain
There are a number of strategies organizations can implement in the near term to retain vital knowledge and expertise and stop brain drain.
“An immediately actionable step could be to make knowledge-sharing a part of company values and policies,” said Amber Clayton, senior director of knowledge center operations at the Society for Human Resource Management. “This could include direction on capturing information—such as policies, procedures, instructions, graphs, photos and videos—before, during or after a project or task is complete. Leading by example is something that can start immediately too. Host lunch-and-learn sessions to share information about specific products, services or departments.”
Managing talent risk can and should be a regular team effort. “Managers and technical leaders should be scanning their teams for people with unique expertise and working to label exactly what these experts are doing that makes them unique,” Trautman said. “Think about this at the task level. What do they do? What problems do they solve? What relationships do they manage? Then managers can pair those unique experts with people who have the capacity to learn and provide backup.”
Another way to encourage retention is to foster a sense of connectedness to other team members or the organization’s mission, a sense of appreciation from leadership, and engagement in the output of the work being done. “As a manager in meetings, ask ‘How do you think we should do this?’ It enables the cross-pollination of ideas and increases knowledge-sharing,” Hecht said. “Standardize post-project ‘lessons learned’ meetings. Ask questions like: What worked? What did not? With unlimited time and budget, what would you do differently? Who should be acknowledged and why?”
Spot bonuses can also have an immediate impact on retention and morale. Look for opportunities to recognize employees who go above and beyond and consider rewarding that with a small cash bonus or extra paid time off. Be sure to do this as close to the effort as possible to clearly tie the bonus to the behavior.
For some employees, the decision to stay or leave can come down to engagement. “A failure to enable, support and develop your people will lead them to get bored and move on,” said Andrew Methven, head of risk and compliance at Hearing Australia. “Potentially, it can be [even] worse if they get bored and stay, as this means you lose their engagement and energy to support the organization’s outcomes.”
Methven suggested establishing a “risk champions” network to provide additional opportunities for employee collaboration across the organization. “This is especially useful when there is not a large, formally established risk team,” he said. “For example, my team has three people, but we work with clinical, cybersecurity, health and wellbeing, and a range of other teams who are risk experts in their subject areas. In terms of retaining good talent, you need to invest the time with them to understand how they want to develop and the opportunities they are seeking.”
To prevent the loss of knowledge with departing employees, organizations must also take a longer view and implement approaches with a view toward retention over time.
“Employers need to take proactive measures to ensure there is knowledge-sharing before someone takes a leave of absence, transfers to another position or leaves an organization,” Clayton said. “Know your employees and who is at a high risk of leaving. Watch for red flags like issues with health, family or work. Assess if there are employees of retirement age who may be planning to retire soon.”
It may also be helpful to conduct interviews with employees to better understand why employees want to stay with or leave an organization, and what you can do to better ensure the organization is a place people really want to work.
Of course, some turnover will always take place, and much can be done to smooth these cases for both the organization and the employees who remain. To that end, it is critical to know who does what and detail an employee’s skills and knowledge through job descriptions and other documentation.
“Develop processes for capturing instructions and procedures, encourage communication between employees and departments, and acknowledge ideas and recommendations so employees are more apt to share,” Clayton said. “Mentoring or job shadowing programs can help transfer knowledge by pairing someone with years of experience with someone with less experience, while job rotation or cross-training—where people learn other roles and responsibilities—are also measures that can be taken to ensure knowledge-sharing.”
Compensation is an important factor in retention, especially in the current economic climate. Given the Pew findings, if the options are making even less money by staying at current salaries and eating the costs of inflation or leaving to make what you should, it is little surprise people may want to leave. Employers should seriously assess what they can do to meet more competitive rates proactively, and how they can be organizations that workers want to stay with.
Salary alone is not enough for a long-term solution to talent risk, however. After a while, Hecht said, “the perception becomes ‘this is what I should have been paid all along—I earned it,’ so there is no residual impact on retention.”
Companies also need to consider the mindset of employees, particularly with stress levels and burnout at historic highs, and take meaningful steps to address those issues.
Flexibility is another consideration for increasing retention. For example, organizations may want to consider non-traditional or part-time work arrangements to keep knowledgeable employees on the payroll in some fashion. “Flexible work arrangements will soon become standard,” he said. “The idea of a 40-hour work week is already being diminished, if not undermined by reality. Flexible work arrangements are the next frontier for organizations.”
To ensure that expertise can be handed over to another employee, Trautman recommended that organizations construct a “knowledge silo” inventory. A knowledge silo is a block of work that someone has been doing that can take up to a year to learn. The objective is to determine how many knowledge silos an employee is responsible for so these can be handed over to existing or replacement employees in the event of their departure.
Organizations need to identify these silos as early as possible. “If you do an inventory of 300 employees, you are going to find 20 or 30 people who are uniquely relied upon,” Trautman said. “You can then start to run some scenarios to show what work will stop if you extract that person.”
By performing a talent risk assessment, organizations can build an understanding of each employee’s knowledge silos. This process can also double as a staff retention approach. “Perhaps there is a person who is operating in between 15 and 20 different knowledge silos, which would be a lot,” he said. “You might ask that person if they are happy working in that many silos and discover they feel buried in legacy work and have no focus on innovation. You can then actively extract people from blocks of work so that they can do something else. That can be incredibly powerful in helping somebody to choose to stay when the recruiter comes calling.”
Gathering this inventory and understanding these knowledge silos requires careful examination on an individual level and cannot be effectively achieved through company-wide surveys. “You have to look at what individual people do,” Trautman said. “We gather the data by interviewing frontline managers about what their people actually do every single day. For senior executives, their direct reports will know what their boss does. We look at the ecosystem around a person. We ask questions to get at what those people are doing and what is valuable about what they are doing.”
Fighting brain drain is part of every organization’s long-term talent risk management efforts. By engaging in more effective knowledge transfer strategies, organizations can ensure that, while individual employees may depart, their knowledge and expertise will remain.