Graying Government

he baby boom, long the darling of demographers, is slowly becoming a headache for federal human resources managers.

The first wave of babies born between 1946 and 1964 are now workers in their early 50s. Many of them occupy positions of great responsibility or have years of experience within their organizations. As the largest generation in the workforce, though, their gradual shift to the senior end is a cause for concern among personnel managers. Human resource professionals and analysts are anticipating a wave of retirements in the next decade.

"Throughout the workforce," says Diane Disney, deputy assistant secretary of Defense for civilian personnel policy, "you see an awful lot of workers who are now in their 40s getting into their 50s. 2001 will be the year the first boomer is eligible for normal retirement. At that point, turnover is going to accelerate, if all other things are equal."

Agencies are concerned not just about people retiring, but about the great numbers in which they'll be leaving and the experience they'll be taking with them.

"Nearly 20 percent of our employees will be eligible for regular retirement between now and 2002, with many of those being managers and more experienced employees," says Paul Barnes, the Social Security Administration's deputy commissioner for human resources.

Boom Goes Bust

The graying of America is evident in all sectors of the economy. The portion of people working who are between the ages of 45 and 54 has increased by almost 20 percent this decade, from 16.4 percent of the workforce in 1990 to 19.5 percent in 1995, according to the 1997 Handbook of U.S. Labor Statistics.

But personnel managers should not panic, many researchers say. They contend that an aging workforce is not a crisis. After all, the boomers are spread out over 18 years. And those who study aging say people into their 80s are physically and mentally able to handle office work. The jobs that make up much of government work are "well within the capabilities of the older worker," says Robert C. Atchley, director of the Scripps Gerontology Center at the University of Miami in Oxford, Ohio.

However, many companies, and many federal agencies, have climates that discourage older workers from continuing their careers into their 60s, which could cause problems as the baby boomers approach retirement age. For example, the federal government continues health coverage for workers who retire, allowing them to leave well before they are eligible for Medicare at age 65.

"Probably the only thing that will push people to stay in the labor force longer is need, not desire," says Cynthia Costello, a senior research and policy associate at the Radcliffe Public Policy Institute in Cambridge, Mass.

Downsizing programs have been another contributor to the recent exodus of older workers. Federal workers retire on average at age 61, according to the Office of Personnel Management, not much different from the national average of 62.

But an increase in early retirements can have a big effect on the average retirement age, and in recent years agencies have been actively encouraging senior workers to leave through both early-out and buyout offers.

In 1993, for example, according to OPM, 34,000 people took early retirement offers, largely due to Defense downsizing. The regular retirement total was 54,000. The high number of early retirees (whose average age is 53, OPM says) drove down the average retirement age in the federal government to 58.3 that year.

Workplace factors, such as the difficulty of serving under political appointees focused on short-term agendas, also tend to push federal workers out the door. "As soon as they hit the magic number and can get out of there, they do," Atchley says.

Changing Hiring Trends

Each agency's history has a role in determining the impact of the graying of government. Many, of course, are downsizing. Although buyouts have received the most publicity, most of the staff reductions have been accomplished simply through attrition.

In fact, human resource managers are astounded that, despite the widespread use of buyouts and attrition, the number of retirement-eligible employees continues to swell. In 1990, 340,000 federal employees were eligible for retirement. By 1996, though more than 120,000 employees had taken buyouts, nearly 400,000 retirement-eligible employees were still working. And that's in a workforce one-fourth smaller.

Not only is a large portion of the workforce eligible to retire, the pool of workers from which to replace retirees is shrinking.

Through the early 1990s, the government typically hired more than 100,000 new people each year for full-time positions. Not all of them were kids right out of school, but, as with any organization, new hires tended to be much younger than the people they replaced. Recently, though, hiring has sagged, to a low of 41,000 in 1994, representing only 2 percent of the federal workforce. Hiring has picked up slightly since then, to nearly 50,000 a year, or 2.5 percent of the workforce, but most of the increase is concentrated in a few law enforcement agencies.

The effect of changing hiring patterns can be seen by looking at two agencies, the Defense Department and NASA.

DoD has had a massive civilian workforce for decades, totaling more than 1 million when its drawdown began in 1989. The downsizing within the federal government's largest employer continues today. About 320,000 of DoD's jobs have been eliminated, and thousands more cuts are in the works.

In November, Defense Secretary William Cohen announced that staffing in the Office of the Secretary of Defense would be cut by 33 percent over the next 18 months. Personnel in Defense agencies will be reduced by 21 percent over the next five years, Cohen said, and DoD field activities personnel will be reduced by 36 percent in the next two years.

If all the envisioned cuts are completed, the department's civilian workforce will stand at 43 percent of its 1989 strength, says DoD's Disney.

Nearly a decade of downsizing has left the Pentagon's workforce top-heavy, Disney says. The average age of DoD civilians is 45.3, up 1.4 years since 1993. The number of DoD employees in their 30s is down 40 percent since 1989, a reduction far exceeding overall staff cuts, Disney says. "That cuts across all kinds of occupations across the organization."

"The concern is having enough skilled workers in the pipeline to meet the department's mission as the current employees retire," she says.

At NASA, on the other hand, the effects of a downsizing that has eliminated nearly one in four jobs haven't been as severe. That's because NASA started its workforce reduction on the heels of a growth spurt.

NASA's workforce had hovered at about 21,000 through the 1980s. However, the January 1986 Challenger explosion raised concerns among agency leaders that "staffing in the core engineering disciplines was inadequate," says Stan Kask, director of management systems for NASA's human resources office.

So the agency boosted its corps of scientists and engineers. With hiring peaking at about 2,000 in 1992, the workforce expanded to 25,000 workers. But the growth was followed immediately in 1993 by downsizing. The agency is to scale down to 19,600 people by 1998, on its way to 18,000 by 2000.

Although the downsizing has been difficult, the fact that it came right behind an increase has mitigated some of the potential damage, Kask says. Even though the average employee age has increased by a year, to 43.7, since 1993, the agency has been able to feed off its earlier growth spurt during the current fast.

The hiring slowdown is "creating a void at the bottom end of the employee pipeline," Kask acknowledges. "But we assumed that we could work with that for a year or two or three and not cause irreversible damage to the agency."

Future Force

Just as an organization's history can determine the impact of an aging workforce, its future plays a role, too. Consider the case of the Army Materiel Command.

AMC, like the rest of the Defense Department, has steadily downsized through the 1990s. As the command's mission of developing land warfare weapons and equipment has shrunk with the end of the Cold War, so has its workforce. Civilian staffing has declined from 102,000 in 1989 to 61,000 today. About 20,000 of the reductions have come through buyouts. And there are more reductions to come, says George Jones, AMC's deputy chief of staff for personnel. AMC expects to shrink to 50,000 civilians, but the number could go as low as 30,000.

AMC, like many federal organizations, is undergoing a laborious review of how it goes about its business and what its central focus should be. As command leaders look into the next century, they see an acquisition environment greatly changed from previous eras. As technologies bloom and wilt seemingly overnight, turnaround time on projects will shorten. The pace of work will ebb and flow depending on needs, potential threats, emerging technologies and other external factors.

Like many other agencies, AMC is casting the mold for its future workforce by deciding which functions are inherently governmental and which can be done by outside contractors. In the next century, Jones says, the command will rely on a mix of government employees-career workers hired for the long term and temporary hires for specific projects.

The AMC civilian workforce of 10 or 15 years from now will primarily consist of full-timers with multiple skills rather than one specialty. They will contract for, organize and supervise projects rather than perform functional tasks themselves. "The doers probably [will be] mostly contractors with a mix of temps and [term hires] to accommodate the rise and fall in workload and the uncertainty of what Congress is going to do with [the acquisition] budget," Jones says.

Facing those kinds of changes, downsizing and the coming wave of retirements are a "mixed blessing," Jones says. Not only does the command need to reduce its civilian workforce, but it needs to bring on an entirely new inventory of skills. The pending flood of retirements "is going to help us get there faster," he says.

Other DoD agencies also face the prospect of mixing long- and short-term workers. Disney described such a mix in an August information paper on possible changes to the department's civilian personnel policy. Among the "workforce challenges" Disney described in the paper are "an older, more senior workforce caused by limited accessions, multiple reductions-in-force and demographic forces; pipeline [succession] problems in certain occupations; [and] continued reductions to DoD civilian personnel staff."

Disney's paper proposed a personnel management system consisting of three layers: the first a "cadre of permanent, career employees," the second consisting of full-timers with full benefits but hired for short terms of up to five years, and the third made up of contractors. The second layer would be employed for certain projects that occur cyclically or arise suddenly and require extra hands.

In a recent interview, Disney distanced herself from the information paper, saying it was a draft and not yet an active plan. However, one source familiar with federal personnel programs doubts the paper is insignificant. "I'm sure they did a fair amount of staff work before they wrote the concept paper," the source says. "It stands to reason that they would want to explore all options."

Replacing Senior Leaders

Whether or not agencies are contemplating the kind of dramatic personnel changes DoD is considering, they are all concerned about replacing senior leaders as the baby boomers inch their way toward retirement age.

Some agencies face a greater degree of urgency than others. The Social Security Administration, for example, had an expansion in the early 1970s, and many of the employees brought on then are now managers nearing retirement eligibility.

Barnes says 80 percent of SSA's Senior Executive Service members will be eligible for early or regular retirement in the next five years. Barnes doesn't expect them to all leave the first year they are able; typically, he says, about 18 percent of the agency's retirement-eligible workers actually retire. But in an organization where 57 percent of the workforce is 45 or older, succession planning is important.

Many other departments and agencies face similar situations. However, succession planning, even in the best of situations, is not something the federal government does particularly well, says Ray Blunt, an analyst with the National Academy of Public Administration. Blunt recently wrote a report called Managing Succession and Developing Leadership: Growing the Next Generation of Public Service Leaders, that NAPA published in October.

Part of the problem with leadership development in the federal government, Blunt says, is the political layers atop all organizations. In both the public and private sectors, he says, effective succession planning requires the attention of the organization's leaders, but most federal department heads don't get involved in their organization's leadership development plans. The current environment of downsizing, technology changes, globalization and competitiveness, calls for more than incremental change, he says. "Leadership and change are very much tied together," Blunt says. "The conditions that we're facing are ones the government hasn't faced."

The one federal organization that Blunt rates highly is the Defense Department. He says the military culture makes leadership development a critical task, even for political appointees. For instance, secretaries of the individual services are responsible for panels that select officers for promotion.

Another concern, especially among highly technical agencies, is maintaining a steady influx of fresh brainpower. "That is probably the one unifying theme we hear from our managers out in the field," says NASA's Kask. "They really feel that it's time to get on with it and that we can't afford to go too much further in this without bringing some fresh blood in."

Battle Plans

Many agencies facing a glut of retirements among key workers are adopting programs to prepare the next tier of workers for greater responsibility. The Social Security Administration is planning to expand its leadership development efforts for senior executives, middle managers and management interns. Each program will run about two years and provide a range of job experience and training for those enrolled.

The idea, says Barnes, is to provide workers with the skills and experience they'll need for the next step of their careers, which might come several years sooner than it has in the past. A management intern himself in 1970, Barnes says, "In the two years I was in that program, I had the opportunity for a lot of developmental assignments that normally could take a person five or 10 years."

Human resource managers across government agree training will be critical as their workforce ages. As functions shift, missions change and technology reshapes jobs, workers will need to be more flexible. Blunt warns that preparing the next generation of leaders is a long-term process that needs to be embedded in organizations. "Typically, the [organization's] culture doesn't reinforce what people are learning," he says. "The top management is not involved in it."

Federal personnel managers think it will be three to five years before they notice a sharp increase in retirements due to the aging baby boomers. In the meantime, they are trying to define broad approaches to the succession problem.

"This is not a problem you can solve in a day or a week," Disney says. "It has to be a process. We have to take a look at ways of increasing [hiring], of developing the people who are here, and of investing in their training and education so they have the capacity to do a greater variety of things than perhaps was required of their predecessors at the same point of their careers."

Bernard Adelsberger is a Washington freelance writer who has been covering the federal government for more than 10 years.