EXECUTIVE EDUCATION

Age and the Economy: A Fresh Perspective on Management Training

~ Stephen Burnett, Associate Dean of Executive Education at the Kellogg School of Management where he is also a Professor of Strategic Management.   

One of the most interesting trends in executive education lies at the intersection of the economy and the most relentless of demographics - age. Let’s start with a few simple statistics. The number of people aged 55 or older in the civilian labor force doubled between the end of 1990 and May 2010, from 15 million to 30 million, as the Baby Boomers continue their journey through the labor force. During this same period, the number of workers in the 35-39 age category (prime ages for upward career movement) actually declined from 17 to 16 million, while the total labor force increased by over 20 percent. Add to these numbers the facts that the Dow is currently 2% below its level of five years ago and that housing prices have been falling since 2007, crucial years for Boomers to accumulate retirement assets, and what becomes apparent is the average age of managers in the United States is likely to continue to increase for some years to come. There is an important message in these numbers about the ways in which managers are trained over the course of their careers.

The Baby Boom Generation - Clearly Not Done Yet
While Baby Boomers cannot avoid their ultimate reward, they can, and increasingly are, delaying their retirement. A 60-year-old manager today, with perhaps another 10 or more years remaining in a leadership position, would be a member of the MBA class of 1975, give or take a couple of years. To some of us, 1975 may seem like yesterday, until we are reminded that one of the now notable events of that year is that Bill Gates first used the term “micro-soft” in a letter to Paul Allen. (Microsoft would not become a registered trademark until 1976.)

This point was driven home to a 61-year-old friend of mine, a senior manager, who told me that occasionally his first reaction in problem-solving sessions is to think about how similar situations were handled 10 or 15 years ago. He said he has realized that while the situations might have been similar, they took place when those sitting around the table were probably in high school or younger. So much has changed about strategy and the tools to implement it that my friend should not be surprised if his younger colleagues' eyes glaze over a bit when he says the equivalent of: 'Here’s how we handled it during the Spanish American War.'

In more ordinary times, my friend would be on a glide path to retirement. After all, he is 61 years old with about 30 years of progressively greater management responsibility and had been planning to retire at 63. Courtesy of the economy, he is now looking at extending his career by at least ten years. Clearly he should be thinking about continuing his management development. Ten years is too long a glide path for either the individual or the organization.

Based on our experience at Kellogg School Executive Education, my hypothesis is that most companies have not been thinking very much about the continued development of managers north of 60. While we do not ask age when people apply to our executive programs, we do collect data on years of experience and education. The vast majority of our participants are most likely in the 35 to 45 age category. A 60 year old participant would be rare and noticeable.

Generation X - Unmet Needs
Given the small and declining 35-39 age cohort, companies are going to have to pay even more attention to the management development of Gen Xers than their Baby Boom predecessors. The fact that there are fewer of them means that they will have to take on greater responsibility at somewhat younger ages than the prior generation. Many companies clearly understand and are responding to this challenge. It is not unusual to find applicants to our most senior management programs somewhat lacking in the required management experience, although they are currently in senior positions. When checking with their sponsors to clarify the situation, it immediately becomes obvious that these candidates are high potential Gen Xers who are being groomed at earlier ages than would have been the case with the prior generation. For this reason, we have become more flexible in the experience requirements for our general management programs.

Looking Ahead
The unusual intersection of age and the economy has set up a challenging situation for businesses. In bad times, companies tend to cut those expenses that can be cut in the short term, including current expenses that represent future investments such as management development and R&D. Such cuts entail costs in the future. When the economy improves and managers need to be promoted to positions of greater responsibility, they may not be properly prepared to be successful.

There is clearly a need to provide management development for younger workers, primarily those in their 30s and early 40s. There is an emerging, but so far largely unrecognized need for such training for those approaching their 60s and finding that their careers will be much longer than they might have thought.

The turbulent economy has brought about many changes in the world of business. Add to the list the need to prepare Gen X for greater responsibility at a younger age and the Baby Boomers for an extended period in which they must provide not only wisdom but up-to-the-minute strategy as well.

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