Shortage of U.S. skilled workers by 2020 ?
By Tom Crouch, CPA, CIA, CISA, and Attorney
Part 8 – Key Process Continuity
Management is responsible for manpower and succession planning. Such planning is not happening on a widespread and in-depth basis. Management has not taken steps to ensure the continued smooth operation of key processes.
Fully 40% of government employees in the US will be eligible to retire by 2010. Businesses expect to experience a similar mass retirement problem but more spread-out through 2012. As noted in prior articles in this series, numerous authoritative sources project a skilled labor shortage due to aging baby boomers.
Twenty years ago top managers and middle managers were often able to perform the job tasks of nearly everyone below them in the organization. This was because those managers worked their way up in the organization. Today, lean organizations consider this a luxury they cannot afford. Others might say that management knows only management, and not the tasks themselves.
Greater job specialization over the last twenty years has increased the skilled labor jobs. Many skilled labor jobs might be relatively easy to fill if the compensation rate is high enough. The most difficult job replacements are likely to be the employees with unique skills. High technology work tools, computer software applications, and the increasing knowledge base required for many jobs have combined to create some unique high skilled jobs. In many cases, no one else may have handled this same set of job tasks for 5 to 20 years. When organizations run very lean, cross training, training job replacements, and good job documentation are likely to be lacking. An inherent weakness of lean operations is a smaller “margin of error” (no replacements or backup).
Most organizations have employees whose work is not performed unless one or more highly skilled employees are there. Work production might drop or quality dive if they were not there. No one else may know how to do the particular job. No one else may even be willing to learn how to do those tasks. The person might not even be willing to train someone else or document the work. Others might not have been cross-trained to perform even 50% of the unique work. A replacement might not be hired and trained before the unique worker leaves. Most organizations have not identified these unique high skilled employees. If these employees retire, or leave for any reason, the processes are unlikely to be performed smoothly.
Accountants, auditors, IS/IT professionals, and management could use some simple steps to reduce the risks to key processes. For example, consider using a short questionnaire, which would need to be test piloted before widespread use. Potential questions and documentation requests are:
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Has your work area identified key processes, and who works on each key process?
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Has your work area conducted manpower and succession planning for key programs and processes?
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Has your work area projected which people are likely to leave within 2 years, or 5 years, or 10 years?
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Is your work area already cross-training people to cover your operational risks?
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Is your work area already training replacements for those expected to depart?
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Will the replacements be adequately trained by the time the unique high skilled worker now handling the work leaves?
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Has your work area thoroughly documented processes, practices, etc.?
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Is your work area planning to re-engineer one or more key processes for the workers who will remain?
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If the process is going to be outsourced, have the needed planning and preparation steps been taken?
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Has your work area analyzed the consequences of the failure to plan for the above?
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Have you planned for contingencies if Plan A does not work out as expected?
If documentation is not available to support the “yes” answers to the above questions, the tasks probably have not been conducted. Even though there should be many “yes” answers to the questions above, it appears that most organizations have almost all “no” answers. The large number of “no” answers suggests that organizations probably have not covered their risks for the upcoming mass retirements.
These type questions could be asked by:
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Accountants, IS/IT professionals, and management in discussions in their organizations,
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Insurance companies and banks in their questionnaires, contracts, and other processes involving interactions with their customers,
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Industry and professional associations to ensure their members address such questions, and
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Auditors in internal control questionnaires and audit programs (The audit needs pale beside the need to get the work done.)
When key processes continue to operate smoothly, contracts are more likely to be honored and the risks for all stakeholders are usually reduced. These may be “going concern” level issues.
As noted in an earlier article in this series, baby boomer retirements are expected to impact all levels of government before impacting most businesses. Because 40% of government employees are eligible to retire by 2010, the rapid mass retirements in government will escalate the risks. (Another approach to this topic can be seen at http://www.governing.com/articles/2know.htm in an article titled “Memory Loss.”) Further, government’s tendency to hire replacements after positions become vacant may create very high risks to their processes.
Continuity requires systematic steps to ensure well-trained replacements, cross training, and good process documentation. Doing nothing could disrupt key processes, or result in process failure. Process disruptions increase control and compliance risks, and create fraud opportunities. Also, the potential for disruption creates a “going concern” risk. The “going concern” risk is very significant, and must be addressed by all stakeholders. Management and all other stakeholders should take steps to ensure the continued smooth operation of key processes.
Copyright © 2006 by Tom Crouch - This article may be forwarded via fax or email, including Internet mail lists, so long as the copyright is shown. Also, the article may be reprinted or posted on a web site, so long as the copyright is shown. The article may be reprinted anywhere, so long as the copyright is shown. All other rights are reserved. Email --- TFCrouch@aol.com
Previous articles in the series can be found at:
These website references provide background information.
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http://dayton.bizjournals.com/dayton/stories/2003/06/09/focus1.html
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http://entrepreneurialconnection.com/skills/Module29/one.asp
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http://www.businessweek.com/bwdaily/dnflash/mar2004/nf20040321_5457_db079.htm
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http://www.apprenticesearch.com/fpWhats_new/katherineharding.asp
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http://www.chemistry.org/portal/a/c/s/1/feature_pol.html?DOC=policymakers\pol_nsb_report.html
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http://www.cpcc.edu/president/presentations/community_colleges_skilled_labor.pps
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http://www.findarticles.com/p/articles/mi_m0KOC/is_4_6/ai_103380602/pg_4
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http://www.mrotoday.com/mro/archives/exclusives/LaborShortages.htm
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http://www.witc.edu/edfuture/docs/EnvironmentalScanningNotes.rtf
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http://www.shrm.org/hrmagazine/articles/0305/0305covstory.asp
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http://www.industryweek.com/ReadArticle.aspx?ArticleID=10383
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http://www.thefabricator.com/Articles/Fabricating_Exclusive.cfm?ID=30
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http://www.purdue.edu/hr/LeadingEdition/Ledi_403_recruiting.htm
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http://www.lionhrtpub.com/tmr/indreport98/011298workers.html
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