Federal and state government, as well as industries such as aerospace, defense, energy and utilities, will be hit hard by the large-scale retirement of skilled workers, says David W. DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce. That’s because such sectors generally rely on older, legacy technologies and have not hired large numbers of younger workers in decades. "The demographic shift and change in the coming workforce are incredibly serious in certain sectors and work units," DeLong adds. These companies and agencies in particular need to act quickly.

"Companies need to figure out who has the important knowledge, and they need to capture it before it’s too late," says Carl Frappaolo, cofounder of consultancy Delphi Group. "If they don’t, they’ll be paying to reinvent the wheel."

Costs of Lost Knowledge

While most top managers are aware that they’ll soon have a lot of workers retiring, few are doing much to prepare for the event. That’s often because it’s hard to quantify the cost of losing knowledge. "The baby boomer exodus is the elephant in the room when I talk to managers," says Mary Corcoran, vice president and lead analyst at Outsell, a research and advisory firm. "Most are not doing anything in a major way about retaining knowledge."

CIOs can take a leading role in preventing baby boomer brain drain by being prepared to respond quickly when management decides the company needs a KM system to help retain crucial knowledge. "CIOs need to know what’s going on in this area because records management, search tools and databases will be running on their systems," says Frappaolo. In many cases, KM and human resources leaders can work closely with CIOs to put in place databases that track knowledge and other technologies as part of an overall plan. Northrop Grumman’s Shaffar, for example, says he works closely with the IT department and spends more than 50 percent of his KM budget on IT—and will continue to do so. "How would engineers connect across the U.S. if they didn’t have e-mail, instant messaging or document management systems?" he asks.

Shaffar and other KM experts stress that even within a single company, brain drain won’t hit all departments or units in the same way. Larry Mohl, chief learning officer for Children’s Healthcare of Atlanta, a pediatric health-care organization, says his past experience at Motorola and American Express showed him that while knowledge loss is an ongoing problem, it’s not pressing unless it involves a specialized skill that is crucial to the organization’s success. Mohl says that natural turnover from retirement won’t create a crisis at most companies. Still, he says, it’s important to identify top performers in the organization and work to keep them and accelerate promotions as a way to ensure good succession planning. And if key people are going to be retiring, a company must act quickly to keep their knowledge.