Fears of a massive retirement-driven brain drain haven’t quite panned out as predicted.

But for agencies already facing decreasing budgets, declining staffs and diminishing morale, even a moderate uptick in retirements could pose a challenge.

That’s because agencies’ most experienced employees and managers are the most likely to retire in the next few years, while fiscal pressures have made hiring and training more difficult.

“We’re seeing experienced folks go out and, in some places — it’s not uniform across government — it’s stretching organizations to the breaking point,” said John Palguta, vice president for policy at the Partnership for Public Service.

In part three of our special report, “Retirement Conundrum,” Federal News Radio examines how agencies plan to retain institutional knowledge as longtime employees head for the exits.

Boss loss?

Retirements will likely hit the government’s ranks of federal managers and supervisors — disproportionately older and with more years of service — hardest.

By 2016 about 58 percent of Senior Executive Service members and 45 percent of GS- 15s will be eligible to retire, according to the Government Accountability Office.

“Behind these people, there’s going to be a real paucity of middle managers who can come up behind them because of the age of the population,” Carol Bonosaro, president of the Senior Executives Association, said. “It’s going to be so difficult because a lot of [agencies] are not able to hire now and start building towards that point where you’re really going to need to be — moving people into middle and upper management.”

But while the thought of an agency’s most experienced employees walking out the door is alarming for many agencies, there may be a silver lining.

“The predicted retirement wave and subsequent hiring effort presents not just an opportunity to change who works for an agency, but also an opportunity to change how the organization functions for the better,” Merit Systems Protection Board researchers wrote in the 2009 report, “As Supervisors Retire: An Opportunity to Reshape Organizations”

Too often, the government promotes those with technical expertise and know-how as opposed to management skills, said Peter Leeds, senior staff psychologist for MSPB’s Office of Policy and Evaluation.

“They get the promotion and, a lot of times, we have supervisors who are poorly fit to a supervisory role,” Leeds said. “As these folks retire, it allows us then to replace them with well-selected supervisors and managers from the remaining ranks.”

Chief learning officers on the front lines

But even if a retirement wave allows agencies to reshuffle their senior leadership, Leeds said he understands why agencies are concerned it could also wash away vital institutional knowledge.

“When people retire, they retire with a lot of the information that organizations need to function,” he said. “So, that is a big concern.”

On the front lines in the effort to maintain that knowledge are agency chief learning officers. Employee training and development directors have existed for decades as a key human-resources function, but it’s only been recently that their role has been elevated within agencies.

“I think we’ve migrated and shifted, if you will, to the role of chief learning officer, which actually is to think more strategically about implementing learning throughout the department,” said Sheila Wright, the chief learning officer at the Housing and Urban Development Department.

HUD’s workforce is creeping toward retirement age more quickly than the federal government as a whole. By 2016, 40 percent of the department’s workforce will be eligible to retire, according to GAO, compared to 30 percent for the entire federal workforce.

With that in mind, Wright said many of her learning initiatives focus on what is known as knowledge transfer. One program, in essence, allows soon-to-retire subject-matter experts to act as teacher-for-a-day, she said. “Before they leave, they can deliver their expertise in a course-type framework or a broadcast-type framework to employees, so we do our best to maintain or retain that type of legacy knowledge.”

The Veterans Affairs Department conducted an extensive agencywide competency assessment to determine where gaps were likely to emerge. The VA Learning University (VALU) then went about designing training initiatives to fill those gaps.

“I think anyone in the federal government in a management position should be concerned about the pending wave of retirements — when it comes — and the loss of institutional knowledge,” said Cathy Biggs-Silver, VA’s associate director for administration and acting dean of the university.

VA also rolled out an online Web application called MyCareer@VA designed to help employees plot out their careers and identify training or educational gaps they need to fill to continue moving up the career ladder at the department.

Is the pipeline prepared?

Leeds predicts such knowledge-management initiatives are likely to become an emerging trend in the government in the coming years.

“Finding ways to document the knowledge that exists among our senior employees, especially supervisors and managers, and making it available for the next generation, the folks in the pipeline, I think is something worthy of study.”

According to Office of Personnel Management statistics, the pipeline is well-stocked.

Nearly 30 percent of the current federal workforce is under age 40, and the number of younger federal employees is likely to continue to swell, thanks to recent hiring reform efforts, such as the Pathways Program. Pathways provides internship and entry-level career opportunities, allowing the government to better compete with the private sector to fill openings with recent college graduates.

While many agency efforts focus on getting senior employees to pass on their knowledge before they leave, what if you could delay them from walking out the door in the first place?

That’s the idea behind phased retirement, an update to the laws and regulations governing federal retirement designed to make the workplace more flexible. Once implemented, phased retirement would allow federal employees to officially retire and draw on part of their annuity but continue to work part-time and earn pay.

But the option isn’t just about delaying the pain of an experienced employee leaving.

“Phased retirement will help transfer knowledge when someone does decide to retire,” said Angela Bailey, the associate director of the Office of Personnel Management for Employee Services and OPM’s chief human capital officer. “It will allow the most experienced federal employees to extend their contributions to the existing federal workforce and people they serve, as a tool to ensure continuity of operations and to facilitate knowledge management.”

Congress and the president signed off on legislative changes last summer, and former OPM Director John Berry said the agency would fast-track the writing of new regulations. However, the proposed rules, which OPM had hoped to have ready by early 2013, have yet to be published.

Planning is key

One of the issues with training and learning initiatives, however, is a lack of funding. The automatic, across-the-board budget cuts known as sequestration took a chunk out of training budgets and largely put the kibosh on new hiring at agencies.

That’s left agency chief learning officers with their hands tied in many ways.

“Being a chief learning officer — in some cases — it’s like being a firefighter with the fire engine and the hoses but you don’t have a hydrant to hook up to,” Palguta said.

Constrained budgets have compelled HUD to rethink its approach, Wright said, by experimenting more with virtual options, such as webinars.

“It forces us to think outside the box as to how we can still deliver quality products and quality service as it relates to learning but keep in mind our fiscal constraints.” she said.

But even if sequestration hadn’t tightened the purse strings on new hiring and training, planning is key.

“When folks get closer to the retirement age, they can actually leave with pretty much no notice,” Wright said. “You come in Friday, and they’ve worked out a package and they’re on the way out the door. So, one of the challenges is timing.”

Jeff Neal, the former chief human capital officer of the Homeland Security Department and now a senior vice president at ICF International, agreed that agencies need to start planning now — ahead of any potential wave of retirements.

“Eventually, you will replace everybody in the organization and you’ll keep on doing that until the end of time,” he said. “So, it’s really a question of how well you plan for it, and can you plan for it? If you can plan for it, turnover is a fact of life and it’s a very manageable thing. If you can’t plan for it, it can eat you alive.”

GAO has included human-capital management on its “High Risk List” for the past dozen years in part because of concerns that a widespread increase in retirement across the federal government could create critical skills gaps within some agencies.

“The everyday activities that federal agencies do, call for very high-caliber, talented people,” Robert Goldenkoff, director of strategic issues at GAO, told Federal News Radio. “And it’s important that the government has an infrastructure there to attract and retain really high-caliber people.”

GAO identified a number of critical job functions governmentwide that are prone to gaps, in part because of an impending retirement wave, including IT managers, human-resources specialists and contract specialists.

Many of these fields require very specific knowledge of often arcane laws and regulations specific to the federal government, Neal said.

“If you start losing those folks at a large number, you can find yourself in a pretty painful position, because the market’s just not going to provide the people that you need very quickly,” Neal said.

MORE FROM THE SPECIAL REPORT, RETIREMENT CONUNDRUM:

Part 1: Forecasting the retirement wave: What’s behind the flubbed predictions?

Part 2: Sequestration threatens OPM’s low-tech plan to beat retirement backlog

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