A looming "tsunami" of baby boomer retirements could decimate the management ranks and hobble productivity at many corporations unless companies intensify efforts to develop younger talent, according to a new study. 

Many executives are aware of the coming "gray drain," the study, by the accounting firm Ernst & Young, said. But not enough of them have taken steps to head off skill shortages and turnover that could hurt the bottom line. 

"The demographics are irrefutable and irreversible," said William Arnone, one of the survey's authors, "and companies need to plan for it." 

The Bureau of Labor Statistics predicts that 43% of the U.S. labor force will become eligible to retire between 2004 and 2012. 

The skills and institutional knowledge lost when older workers retire won't easily be replaced, Arnone said. Management shortages already are appearing in some sectors that have experienced a number of early retirements, including utilities and among hospital nursing staffs, he added. 

"More enlightened employers are going to get ahead of the curve," Arnone said, and companies able to differentiate themselves as "older worker-friendly" will be poised to reap dividends. Those that don't will face the prospect of "serious financial and productivity issues" in the future as managers scramble to plug staffing holes when experienced employees retire, he said.

Of the human resource managers Ernst & Young surveyed, 43% said they needed to do more to train and develop their managers. A lack of succession planning will hit middle management particularly hard, according to the report.

Arnone and his colleagues urge companies to identify managers eligible to retire in coming years, decide who should replace them and begin training those individuals. 

Work-obsessed baby boomers have complicated the transition planning, observed Peter Rose, a partner with marketing research firm Yankelovich Inc. in Los Angeles.

Because the post-war generation "has defined work as a way to be a winner in the game of life," he said, boomers have been hesitant to hand over the reins, forcing many organizations to keep younger workers on the sidelines. 

He thinks firms can turn the reluctance of some older workers to retire completely into an advantage, by offering valued managers part-time or flexible schedules as an incentive to stay on the job to help train their successors. 

The second annual Aging Workforce Survey polled 3,300 human resources executives from Fortune 1000 companies.