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News & Knowledge

Succession Planning for Baby Boomers

25th July 2016
Dominic Rollerson, McKinley Plowman & Associates

With Australia’s ageing population, its workforce is also facing a huge transformation. Succession planning is important for any business, but as the baby boomer generation continues to retire in waves, it’s more vital now than ever. MSI's Perth accounting member McKinley Plowman provides insight into this matter.

Baby Boomers

Baby boomers are reaching retirement and some 5 million individuals will be dropping out of the Australia’s working force in the next two decades with approximately 10,000 Baby Boomers hanging up their gloves daily.

This retiring generation represents a large chunk of the working population, not to mention many of the senior positions in business organisations. As expected, this large scale retirement of Baby Boomers from their decades-long careers will create major changes in the labour market, and will affect the country’s economy.

Bridging the Gap

With this dilemma at hand, it is high time that businesses actively commence succession planning. Succession planning refers to identifying qualified employees to take over when senior employees, owner managers and directors leave their companies for reasons such as retirement. “Succession planning helps build the bench strength of an organization to ensure the long-term health, growth and stability,” says Certified Human Resource Leader, Teala Wilson in a published article.

Succession planning is extremely important, especially in Australia, where 70% of businesses in the country are owned by families. Obviously, many of these companies would want the business to stay in the family and would prefer the succeeding generation to run it; however, this is not possible without planning.

Indeed that same planning may indicate a gap at that next generation that will then identify the need for other strategies to be formulated.

Next in Line

With Boomers reaching retirement age, next comes the Gen Xers or those born in 1965-1980 and now in their late 30s to early 50s who are poised to step up to the plate.

Although they are wedged in between two large (and “noisy”) generations, the Gen X have the potential to drive businesses forward. As the “middle child”, the Gen Xers share the same values that both the Boomers and Millennials have. For example, Gen Xers are hardworking like the Boomers, at the same time, they also value family and personal time like the Millennials. Research undertaken indicates that Gen X “the most effective managers compared to the managers from the Boomer or Gen Y (Millennial) generations.”

Ironically, the same research also indicates that Gen X lack the presence of the previous generation.

Unless businesses make succession planning a top priority, Australia’s workforce will see a deficit in top level management employees if the next in line (Gen Xers) are not groomed for it.

Yes, it will take time and intense preparation in creating a succession plan, even more so implementing it, but the most important thing is that companies should start working on this critical task now.

About McKinley Plowman - Perth

McKinley Plowman is one of WA’s largest and most successful privately owned, independent accounting firms. We have a dedicated team of accountants, wealth experts, superannuation and audit advisors, property specialists, pension transfer consultants, finance brokers, entrepreneurs, and most recently, our own internal advertising and branding agency.

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