I was reading a very interesting article in the Bloomberg Businessweek†“Chowing Down on Boomers’ Brains“, which talks about the huge loss of “tribal knowledge” with the retirement of the Baby Boomers from the workforce, and it has me wondering just how well our Banks are going to deal with this “brain drain” from their ranks? Evidently some very large firms in the states (GE, GM and others) have this as a major risk in the near future. Is our financial knowledge just draining away?
As an example in my little part of the Government, about 25% of our department is going to retire this year. This might be an extreme example, but how we are going to keep all that “tribal knowledge” or “industrial memory” is not clear to me (as most folks are not being hounded to do “brain dumps” of what they know).
What does this have to do with banks, you might ask? The banks and government have 1 common stream, they both have very nice Pensions for their employees (in most cases), so in most cases folks who can retire, will retire (i.e. will not keep working because they can’t afford to retire).
If you want a concrete example of the danger of “brain drain due to retirement”, you need only look at the infamous Y2K fracas, where banks had to pay an exorbitant amount of money to “contractors” to repair COBOL code that could not deal with the concept of a year having more than 2 digits.
What Does the Future Hold?
Is this going to happen again? I don’t know, but I just wonder how much “collective knowledge” in the banks (about day to day business, information technology and other operational areas) is simply wandering off into the sunset of retirement? I guess we will find out when we see how many folks are hired back on contract to maintain antiquated but essential systems. Another interesting angle to this discussion is that the CRA is a government agency and is most likely suffering the same issues with retirements as well? Maybe they will forget how to tax us? (OK, maybe that one is a stretch).
Can the banks plug the brain drain? Let us hope they are thinking about that.
†– Note that while Bloomberg Businessweek is an expensive magazine to buy and read, it is available from the Ottawa Public Library (for free) using the Zinio application, keep that in mind.
Photo by satit_srihin. Published on 31 January 2016 at FreeDigitalPhotos.net
In my little corner of government (City of Kitchener) our CEO, now councillor, made a genius decision to “gap” all vacated position for 2 months to save money and to see if those positions really needed to be filled. One result was that a huge amount of acquired knowledge walked out the door with not even a chance to be passed on to the new employee. I have no idea how much it costs in time and error to replace this lost knowledge but since it can’t be track on a spreadsheet to offset the “savings” I expect the practice to continue forever.
By the way, this policy specifically never applied to vital employees like personal assistants to managers and above just useless drones from engineers to gas, water and sewer pipeline workers.
#WowWowWow I thought that kind of forward thinking was reserved to higher levels of Government. Yikes.
I guess we’ll find out as we approach January 19th, 2038.
For those wondering what that meant, read more here https://en.wikipedia.org/wiki/Year_2038_problem
“The Year 2038 problem is an issue for computing and data storage situations in which time values are stored or calculated as a signed 32-bit integer, and this number is interpreted as the number of seconds since 00:00:00 UTC on 1 January 1970 (“the epoch”).”
As a relative youngin, I was freaked out being labeled the resident expert.
I guess it evolves into job security when it turns into a legacy system.
I did have a supervisor ask me to write things out how stuff worked, but he also mentioned to “write it for yourself, because no one will know what you are talking about,” and that “you’ll need it 7-8 years later.”
Maybe, I knew a bunch of folks who refused to create documentation on what they did so they created “job security”, I thought it was a bit juvenile, but maybe it worked ?
I don’t think that the banks will suffer greatly in their financial operations as those are heavily regulated and as a result, well defined. They are far more vulnerable within their IT operations which is often characterized as a cost centre rather than a profit centre.
Thank you for writing about one of my big peeves, “tribal knowledge” although decades ago it was referred to as “Folklore” during your days at BNR. This is a management problem, or more specifically, a lack of good management. A company with good management policies will have in place the necessary mechanisms to ensure proper training and system documentation. Sadly, the fixation on costs over the last two decades has probably driven these practices out of previously good companies.
What will happen is that the situation will become a crisis and suddenly HR departments worldwide will be shocked at this “New” problem. Many management consultants will write trend setting articles on this phenomenon and management ranks will have offsite retreats to come up with a strategy to deal with this previously unknown factor.
Everyone will forget that this is essentially their own doing and was predicted about 25 years ago. One of my favourite books is “Boom, Bust, Echo” by Dr. Foot.
One of my favourite anecdotes about “tribal knowledge” is about the National Arts Centre in Ottawa. They had a massive workforce reduction, i.e. “culling” where about 50% of the support staff were given the opportunity to find new challenging work. As a result, the electronic sign on Elgin street remained unchanged for six months. It appeared one of the “redundant” people that they let go was the only person who knew how to change the sign. This was reported in the Ottawa Citizen later that same year.
Keep this topic handy, BCM, it will be trending for the next few years.
BTW, Happy New Year and all the best for you and your family in 2016.
rob…
Trending downwards in terms of number of old folk who remember the old systems and upwards in terms of “Crisis of lost knowledge”.
And a Happy New Year to you and yours as well RM!
As it was once explained to me, the most expensive thing at work is what is on two legs. It wants breaks, raises, vacations, etc, etc.
So when it comes time to “replace” spmeone who is retiring there are not many companies that are that forward looking to assign an “apprentice” with that person for 6-12 mths so that they can get that transfer of work intelligence. Just too expensive.
I am in the same situation. I have handed in my retirment notice and the only thing I got back was that they would like me to keep on working a little longer. They are not planning on me retiring.’
No one is irreplaceble but at times it might behove a manager to acknowledge that an employeee just may be of some value to the company for what they know about operations and that that knowledge might be of some use to a new hire.
As the the cost of “reading” Bloomberg I am of the opinion that is a fairly inexpensive activity if you go to the library. Now buying it would be more costly.
RICARDO
Remember it is FREE at the library and now with Zinio, you can read it (off line if you have a tablet) in the safety of your own living room.
Oh, and Congrats on your retirement too!!! 🎊 🎉
Presently failing at retirement!
Still working partially because it suits me for the momnet.
But in principal I could just phone them up and say I am finished today. I gave them six months notice last June (2015)
Not writing any, “In case you want to know how the system works” documents for the person who comes next? Don’t answer, I know the answer is, “No one has asked me to do that”.