Trend Watch | Texas Commission on the Arts

A demographic shift unlike anything we have ever seen is underway. It has more implications than anyone can easily calculate. This shift will impact all business in America, but will have a particular emphasis on the nonprofit sector. It will change the make-up of our boards, leaders, staff, donors, patrons, volunteers, and more. It will force us to change how we do business. Like all change, it could herald the beginning of an exciting new future or it could be a harbinger of darker days ahead. Use the tools in this document to help you build a successful plan. Ready or not, change is coming!

The baby boomers are retiring.

Q. What does this have to do with me?
A. Everything!

The workforce landscape

The baby boom generation is a demographic term for the population born between 1945 and 1964 and represents approximately 83 million Americans ages 42 to 61 years old. Gen X refers to the 49 million people who are between 27 and 40 years old. Gen Y or Yers refers to the 70 million people who are between 12 and 26 years old. (The specific dates for Gen X and Yers varies, so these are approximate.)

A notable demographic shift will begin in the next five years when baby boomers begin to retire. As boomers retire, more Gen X and Gen Yers will assume roles of greater leadership. The impact of this demographic transition is dramatic.

Today, most organizations in the U.S. are under the leadership of someone from the baby boom era. This is even more true for nonprofits where a high percentage of organizations are still directed by their founding leader. As retirement age approaches, many of these leaders are looking to transition to consultants and step down altogether, and that trend is just about to pick up some noticeable momentum.

These leaders have done admirable work in growing and solidifying their organizations, but often because of time and budgetary constraints, they have done this work largely as a solo act. The result is that many nonprofit organizations do not have a person ready and eager to step into the shoes of the outgoing leader.

The next generation of up and coming leaders, board members, audience members, and donors operates under a different paradigm. The members of this generation have different values, priorities, and interests. They are the first generations to be raised with computers in their homes and schools and we are just beginning to see the effects of these advantages on human development. They are information experts. They take in and process information quickly. They value themselves and their skills and want to be able to contribute at a high level. They will not accept or stay in a job requiring long hours with low compensation and limited benefits. They want more and the market needs them; so it will become harder to attract and retain these promising young leaders. Because they are so important to the market, they have been studied carefully and we have a lot of information on them.

So start planning now. Look at who you might bring up from within your organization. Start talking to your board about what they need to do to prepare for this change. Change your programs to appeal to these new audiences. Transform your use of technology to meet the demands of these new generations. Develop a succession plan and get prepared.

Today in the U.S.

The baby boomers comprise one-third of the nation’s population.

Eleven hundred people turn 50 every day.

The first wave of the baby boomers will turn age 62 and become eligible for Social Security benefits beginning in 2008.

The majority of baby boomers exiting the workforce hold mid-level to executive level management positions.

There will be a 30 percent shortfall of younger workers that will last for 40 years.

The shift within the nonprofit sector

Baby boomers make up over 72% of all nonprofit leaders and more than half of them are over 50 years old.

This generation of baby boomer leaders will transition out of the nonprofit sector in two waves. The first wave has already begun and will continue through 2010. The second wave will occur later and peak in 2020, as all baby boomers approach traditional retirement age.

Many of these outgoing executives plan to remain a resource to the field as consultants in some capacity. Others are taking private sector jobs as their last step before retirement.

Of these transitioning leaders, 34% have been in their executive level position for ten years or more and/or founded the organization.

There is limited leadership diversity in the nonprofit sectors, as people of color lead just 16% of nonprofit organizations. This is especially important to Texas, which is expected to become predominantly Hispanic by 2020.

The mass exit of baby boomers from the workforce will cause a significant shortage of experienced leadership across most industries. As such, the acquisition of talent will become much more competitive.

Studies have shown that Gen X and Yers have different expectations, priorities, and motivations than boomers and are quick and decisive decision makers.

Retiring baby boomers adjusting to life on a fixed income will be evaluating their charitable giving, memberships, and volunteer time.

Who are the Gen X and Yers?

Gen X

These are the children of baby boomers.
Their parents worked and placed a high priority on their careers.
They grew up with computers and gadgets, but did not have them as small children.
They grew up with AIDS and ADD.
They grew up with Ronald Reagan as president.
They grew up in a time when divorce rates were at their highest.
They grew up with inflation and recession.
They grew up after we first walked on the moon; they don’t question what we can achieve.
They were pushed to achieve in academics, sports, and community service simultaneously; they did.

Gen X remembers seeing Challenger explode; Gen Yers do not.

Gen Yers

These are the children of baby boomers.
Their parents worked and placed a high priority on their careers.
They grew up in a time of relative peace and prosperity.
They are one of the most diverse demographic groups; one out of three is a minority.
They grew up with AIDS and ADHD.
They grew up with George H. Bush and Bill Clinton as president.
They don’t remember not having a computer and gadgets.
They watched the dot com bust and were impacted by it.
They were nurtured and programmed to be smart, well-rounded, and high-achieving.
They were pushed to achieve in academics, sports, and community service simultaneously; they did.

Traits of Gen X and Yers

They were taught by their parents to question authority; they do.
They won’t go for a “just do it because I said so” answer.
They have no qualms about changing jobs.
They don’t expect to stay in a job or career for very long.
They prioritize their family and personal time over their work.
They are independent, entrepreneurial, and tech savvy.
They believe in themselves and have high expectations of what they can achieve.
They know their tech skills are light-years ahead of previous generations’ at their age.
They were taught to value their worth; they do.
They have financial smarts and are planning for their financial future now. Nearly half of the Gen Yers who are working are already saving for their retirement.
They want jobs with flexibility, telecommuting options, alternative work arrangements, and perks.
They want the ability to work part time or take extended leave to raise their children; this includes fathers.
They are multi-taskers and can walk, chew gum, and text message on their Blackberry while talking on their cell phone and listening to their iPod. They absorb information differently than previous generations and have developed the ability to make logical decisions very quickly.
They like to work in a team environment, but may prefer getting together online over making phone calls or holding face-to-face meetings.
They grew up getting constant feedback and recognition from teachers, parents, and coaches and tend to have problems with the once-a-year performance review paradigm.
They want to understand how their contributions impact the bottom line and they expect to be thanked and recognized for their work publicly.
They tend to forge very strong bonds with their friends and rely on that circle for their social and emotional needs more so than their family.
They are quickly repulsed by extreme approaches to leadership and management. You will lose their respect if you try to micromanage them.
They believe in fair and transparent systems where everyone is held to the same standards. You will lose their respect if you operate an unfair or uneven system of rules and consequences.
They know they are equal to anyone; they have proved this time and again in school. Senior staff can easily misinterpret this sense of equality as disrespectfulness.
They expect to be fairly compensated for their contributions.
They expect to be consulted when management decisions are being made that touch on their areas of expertise.
They want to express their personal freedom by being allowed to dress the way they like, listen to music they like, and fix up their work space as they like, all within reasonable limits.
They know they can think outside the box and will lose respect for coworkers who cannot.

How does this impact your organization? What can you do?

Leadership transitions within the next several years will challenge many organizations as they move from relative stability to instability. The development of a succession plan can help minimize the uncertainty. For it to work, the board and staff need to know and understand the plan, have input, and buy-in.

Don’t overlook the impact this will have on your board, too. Some board members may leave upon retirement; others may need to be asked to step down in order to make room for the younger generations. This is a good time to begin educating your board about these changes so your organization is poised to thrive in this new environment. Your board will need to be activated to prepare for this transition. They will need to take a serious look at your staff salaries and benefits packages to see if they are competitive in this new market; review your policies that surround human resources matters and workplace environment and culture; and consider building their own succession plan for the board. This is also a good time to refresh the board on the mission of the organization and the reason it exists. One of the keys to harnessing change well is having all of your decision makers clear about what your organization does and why.

Organizational history tends to reside in a few of the more tenured individuals and many of them may be leaving soon. Now is the time to find a way to capture some of that knowledge and pass it along to the next generation of leaders. Mentoring and cross-training programs can provide ways of preserving knowledge and processes. Both can be hard to implement with an over-extended staff, so they must be given structure, time, and priority in order to succeed.

Becoming a multigenerational organization that is friendly to Gen X and Yers as well as baby boomers will likely require some rethinking. Know that during the early part of this generational transition period, your organization will have a combination of older and younger workers. These people have different work cultures and communication practices and will require training, mediation, and counseling in order to work well together. One recent survey by LH Harrison found 60% of employers said they were experiencing tension between employees from different generations. Seventy percent of older employees dismissed the abilities of the younger workers; and the reverse was true, too, with younger employees dismissing the abilities of the older workers. In the nonprofit sector, another survey found the older generations dismissed the younger workers because they didn’t experience the 1960s and therefore did not know what it was like to be part of a social or political movement.

Get realistic, detailed, and accurate job descriptions from everyone. Make people use old calendars to list out workload by month or project and overlay the hours they actually worked on top of it. One of the top reasons cited by people leaving new jobs is a difference between the job they were being hired for and the job they were asked to do. This is even more important with Gen X and Yers who prioritize their personal and family lives over their jobs. They are less likely to stay in a job that is supposed to be 40 hours a week that actually requires 60 hours to perform.

see Job Descriptions (PDF)

Attracting the best and brightest young workers is hard, but retaining them is even harder. Look at your work environment and work policies and see what you could do to be more Gen X and Yer friendly. Beyond having a competitive salary and benefits package, know that these people are more tuned into retirement than their parents. Many have an IRA in their twenties. This a technologically savvy generation that does not subscribe to working in an office at a desk from 8 to 5 dressed in a suit. Look at your telecommuting, alternative work arrangement, and flex time policies. Consider whether you could relax your current dress code and allow a more casual work environment. Look at what kind of perks you could offer beyond the standard fare. Consider forging a partnership with other nonprofits in your community to offer reciprocal free admission for staff to each other’s events. Explore opportunities to do short-term staff exchanges with other local or regional organizations to provide new and different experiences for your staff. Consider offering paid time off for exercise, continuing education, as a reward, etc.

Attracting Gen X and Yers as patrons and donors will likely require some changes. This group does not just want to write a check and call it a day. They want opportunities to use their talents and skills to contribute to the organization; and they don’t write checks, they give e-payments. These younger generations expect financial transparency from nonprofits. They want to be able to do the research themselves online to know what your organization does and how it allocates its funding. An online annual report is a good first step, but you will want to go beyond that. You will want to find creative ways to tap into the talent, interests, and skills of this entrepreneurial high-tech crowd through your website, your programs, and your volunteer opportunities. Think about ways to add flexibility, technology, family fun, casualness, sophistication, participation, and new experiences to what you already do. These individuals are ready to be engaged, and if your organization doesn’t have a way to engage them, they will simply move on to another organization that does. Gen Xers are noted for being a wealthy generation with higher household incomes than baby boomers and they tend to prefer to give online. Online giving is a not a form you print out and mail in, it is a smooth secure online transaction. Finding ways to attract this group has been shown to pay off.

see a Donor Profile Template (PDF)

This generational shift will impact your volunteer program. The volunteers you likely have in place today do not have the same wants or needs as the baby boomers who will replace them. Studies indicate that baby boomers volunteer at a higher rate than any other age group, and soon more of them will have more time on their hands. The Gen X and Yer volunteers have been called the selfish volunteers. They are interested in what they can get out of volunteering and are looking for things like career experience, a chance to develop skills, and the opportunity to meet people. They are selective with their time and want to understand the impact of their time. One approach some nonprofits are taking is to package and market their volunteer opportunities with specific tasks that are measurable, achievable, relevant, and time-bound. Another trend to watch is the rise in teen volunteers. A recent study showed that more than half of American teens do volunteer work, a rate significantly higher than adults at about thirty percent.

Adapted from surveys, studies and reports conducted by the Annie E. Casey Foundation,BoardSource, BridgeWorks, CompassPoint, Corporation for National and Community Service,Forbes Funds, LH Harrison, Meyer Foundation, MTV Just Cause, nfpSynergy, OMG Center for Collaborative Learning, Points of Light Foundation, Rockfeller Foundation, US Government Accountability Office