The number one asset for organizations competing in a global economy is its people. This point is generally shared, but more typically than not the value of human resources is diluted as current affairs, emerging issues, and the woes of the marketplace cloud critical and strategic (deliberate) planning on maintaining and enriching these critical assets.

As companies try to save a dollar in this global recession, many are opting to not replace senior staff when they retire, or hire staff with less experience. In some industries, the short-term gain from lower operating expenses may be a net long-term competitive disadvantage.

In prior articles, I have pointed out that beginning this year, 10,000 Baby Boomers will turn 65 every day and continue to do so for the next for 20 years; and by 2030, almost one out of every five Americans -- some 72 million people -- will be 65 years or older.

The point is simple but alarming for many organizational leaders reaching retirement age: A large portion of senior leadership within government, corporate, and non-government-organizations (NGOs) will be transitioning out of their positions in the next five years. How can these organizations and their existing leadership develop a strategic succession plan, and one that embraces the new generation of leaders needed to address issues of constraint, growth, enterprise risk, innovation, and sustainability?

People Make Business Go

Numbers and statistics can paint many pictures, often causing undue anxiety about the state of the present and fate of the future. Over simplification of certain trends, like the aging workforce is equally dangerous. A lack of care and concern over the impact of organizational change in the wake of retirements could leave many companies ill-equipped to effectively achieve transact their business strategy.

In a nutshell, the transition of the older generation out of certain careers and the advancement of the younger generation into their shoes is an enterprise risk which can impact reputation and image, business continuity, and fundamental pillars of business value like quality, performance, price and overall competitiveness.

The beating heart of every organization (manufacturing, IT, government services, oil and gas, transportation, etc.) is its people. People innovate and make these complex systems work, providing them purpose and life, enhancing their value and reputation, and working to ensure safety and compliance so that their enterprise continuously earns the right to do business in the eyes of society.

Many people I work with are in leadership positions, Vice President's of Environment, Chief Sustainability Officers, CEOs, CFOs, and others. The leaders in these positions, from early-stage innovative companies going to market for the first time, or very mature multi-billion dollar Fortune 500 companies, share a certain amount of concern over succession planning, and what the next five years will bring.

Their concern is for their own position, and who will fill their shoes, but also for the entire enterprise, where for some companies, thousands of highly skilled employees that have been with a company for 20 or 30 or more years will be retiring. This issue transcends senior management, mid-level management, and all operational employees of the organization. And, the issue is not just about the loss of technical and highly skilled labor, but also a loss in corporate knowledge, culture, and identity.

For those companies that have a heavy base of employees that have been with the business for decades, there may be a greater enterprise risk at hand versus companies that have been nurturing the growth and realignment of their workforce for some time.

The risks will be different for every organization but in short they relate to: loss of organizational knowledge; potential disruption in operating controls and procedures; loss of talented and skilled labor; shifts in behaviors and norms that represent the "culture" of the company and in a sense, the internal and external identity that have afforded its reputation; and in worst case scenarios, deterioration of product/service quality and value to customers.

Managing Enterprise Risks: The People Factor

As an ever-present enterprise risk, managing the talent of the organization is essential to do as early and frequently as possible, and to minimize or altogether avoid crisis events, and the long-tail of uncertainty and crisis management that can occur.

Obtaining concrete data and information on the enterprise vulnerability and resiliency to changes in workforce status is essential to curtail any "crisis event" that could be associated with the loss of any knowledge and practical experience from employees transitioning to retirement. Too often "perceptions" of what is happening in the enterprise rule out analysis grounded in data, facts, and active "sensing" of the employee base.

Next page: The Long Tail of crisis management