Avoid the Credit Management Brain Drain
Across all industries, accounting departments are facing a common challenge: Experienced workers are heading for retirement, and they’ll be taking their specialized knowledge of credit management and industry-specific accounting and regulatory issues with them.
While we can’t blame anyone for planning for the next step in life, there are some strategies your company, and specifically the accounting team, can employ to avoid losing the valuable knowledge and skills that your older workers have built up during their tenure.
The “brain drain” is real
As baby boomers reach retirement age, many establishments are facing a brain drain. This term refers to what happens when a large number of people leave the workforce at once — and specific, job-related knowledge and know-how leaves with them. In the accounting and credit industries, retirees take regulatory knowledge, risk-management best practices, business relationships, client-specific information, and more with them.
How serious is this issue? Of the total U.S. population, 26% are considered baby boomers, and in 2011, employers began to see those workers retiring at a dramatic rate. According to the Pew Research Center, 10,000 Americans reach the retirement age of 65 every day. This trend is expected to continue until the year 2030.
Many companies have not handled this transition well. How do accounting departments keep vital skills and information as their workforce ages?
Hiring new, young workers has its perks. They add energy, enthusiasm, and a fresh perspective to business practices. But the challenge of hiring new workers is they lack deep experience and specific business knowledge that comes only with facing and solving problems over time.
Regardless of the pros or cons of new employees, many accounting departments have no choice but to hire junior employees and bring them up to speed as quickly as possible.
Preparation and partnership
The good news is retirement is a gradual process. Not everyone retires at the same time, and the move usually doesn’t come as a surprise. If your senior credit managers are nearing retirement age, now is the time to start planning ahead so your business doesn’t suffer.
- To start, consider offering incentives to keep experienced employees on the team until new members are trained.
- Find ways to encourage overlap between the experienced and new employees. Some employers develop formal mentoring programs to allow new employees to learn from senior members.
- All places of businesses should create systems to transfer knowledge; steps may include creating manuals that document policies, standard operating procedures, training programs, and other long-term knowledge-transfer mechanisms.
If a brain drain has already occurred or is on the horizon, be sure to engage your credit management business partners as a resource to reduce the burden on new employees as they learn.
- Connect with industry groups. Industry-specific credit management meetings bring together credit managers who work in your industry to share experiences and best practices.
- Leverage data sources. Commercial credit reports offer a wealth of information to support sound credit decisions; data contribution programs provide an extended pool of information that can help credit managers strategically manage ongoing customer relationships.
- Dig into portfolio management tools. Advanced analysis tools can help as new employees learn to manage risk, both delivering early warnings about potential customer issues and revealing trends that can lead to new opportunities with thriving companies.
Find ways to help new employees learn the ropes and understand specifics of credit management in your industry. Regardless of your business size, meet the generational transition with a plan in place to help ensure a sustainable future for your organization.