Young. Tech Savvy. Politically aware. Entrepreneurial. Internationally-minded and highly educated. And the generation most likely to change jobs on a regular basis and expected to make up more than 50% of the workforce by 2020.
Meet the Millennials.
And now they are increasingly in charge: entering into positions of leadership at a younger age than generations before them and reshaping how employers think about traditional employee engagement and retention strategies.
There’s nothing unusual about this: workforces change, generations shift, and new skill sets and attitudes come in to replace their predecessors. But why are the Millennials a seemingly different generation. And how will organizations need to adapt to attract, retain and engage this powerful group?
Many organizations talk about employee engagement, but it’s important to define it carefully, and not just consider it the same thing as happiness or satisfaction.
An employee with a large compensation package, low workload and minimal supervision may be perfectly content in their role – but they won’t necessarily be a productive a member of an organization. And maybe in the long run won’t even be as happy as one that is actively engaged.
Engagement can be defined as the level of an employee’s psychological investment in their organization. Creating and maintaining a high level of employee engagement can result in higher levels of retention, less absenteeism, higher productivity, higher customer service and satisfaction; all of which ultimately lead to higher revenues, higher profits and higher shareholder returns. But Millennials may pose a distinct challenge.
Why Are Millennials Different?
Neil Shastri, Leader of Global Insights and Innovation, Aon has spent years researching how to drive stronger employee engagement, and the differences between different demographic groups. “While referring to an entire generation as if it is a homogenous group can be misleading, there are areas in which Millennials do differentiate themselves from other generations. We are currently learning and adapting to how these differences can be accommodated in the workplace,” he says.
Every generation has considered itself a little bit different and accommodating these differences is something that leadership has had to contend with for decades. But there are two concrete differences between the worlds in which millennials and their parents’ generations grew up, that makes millennials particularly different:
These two factors imply different approaches to pay and career paths, and different social and ethical values than those toward Gen-Xers or Baby Boomers. These differences present a distinct challenge for leaders looking to attract, retain and engage Millennial talent.
So What Motivates Millennials and How Do You Keep Them?
Aon’s most recent Workforce Mindset Study found three distinct things Millennials are looking for in a workplace:
– Experiences that matter as much as money
– Social value of work
– Transparency and honesty of the organization
Better Pay & Benefits
As children of the recession, millennials do not necessarily expect to live in the same economic world as their parents. They don’t necessarily have access to the housing ladder, and – in most developed world economies – have grown up under austerity, zero-hour contracts and mountainous student debts. Many of them may have had to do months of unpaid internships before their first salaried job.
So whilst in some respects, this generation is less enamored of the financial status symbols of previous generations, money is still of significant importance to Millennials.
This means that if Millennial workers feel they are not being paid enough, they will be more likely to leave – after all, the precarious working conditions many experience in early jobs can erode long-term loyalty to later employers. Studies have shown that in some conditions, non-financial rewards, like public recognition from one’s peers, can mean more to workers than financial rewards. But the same studies have also shown that if an employee is under-recognized and underpaid, engagement plummets to seriously low levels.
“Moving from one company to another is the only way to achieve a more significant pay increase. Salaries – especially for millennials – are flat otherwise. This is most likely one of the reasons this generation tends to make a number of career moves in a short period of time,” says Shastri.
But bigger salaries aren’t the only way to financially motivate millennials. Around 42% of all 18 – 29 year olds in the US carry some kind of student loan debt, something which will likely have long-term impacts on things like pension plans and mortgages. Providing robust retirement and other, longer-term benefits packages may also make Millennials feel they have a stronger stake in their company.
Career And Development Opportunities
“In many sectors, especially technology, managers and leaders are growing younger and younger… with many becoming managers in their early-to-mid 30s,” says Shastri. “It’s the first time they’ve led a workforce. They may have great technical expertise, but they may not have the ability yet to lead teams and effectively communicate their vision.”
A brief look at the leadership of some of the world’s most valuable tech companies reveals a remarkably young batch of CEOs. But not every twenty-something is going to become the new Mark Zuckerberg. Someone with great technical skills and expertise is not necessarily an effective leader.
Throwing people into leaderships as a promotion, when they aren’t actually suited or prepared for leadership can dilute operational integrity, and can even harm the person being promoted if the new role doesn’t align with their skills. Designing separate career paths, that allow technically-minded workers to get recognition and pay increases whilst not being forced into unsuitable leadership roles, could help ameliorate this, particularly if they are uninterested in leadership roles.
“More progressive firms are actually creating two different tracks, which are meant for people who are great individual contributors, but don’t want to be managers,” explains Shastri. “When you have someone who becomes a manager because they have to go to the next level, because they’re great at their performance, but they’re not necessarily cut out for managerial roles and responsibilities,” he says.
Similarly, Millennials are great team players, but are often less engaged with traditional, command-and-control hierarchical management structures. Flattened structures, where senior and junior members of staff can exchange ideas on a more equal footing, feel their views are listened to and valued, and where individuals are given more independence in how they do their jobs, can prove for more engaging workplaces for Millennials.
As a generation, Millennials are unlikely to sit in the same cubicle for forty years. “This generation seeks a broader range of experience,” says Shastri. “They want to influence multiple parts of the business.” Arguably, if a company is keeping them in the same role, and not offering them a variety of opportunities in their work, they are more likely to leave.
A company that gives Millennials a broad range of experiences, is more likely to be a company within which Millennials thrive. These experiences can include responsibility over different projects or access to learning experiences which teach them different skills.
Shastri advises: “Give your team the kind of experiences that will help their career. And be willing to let that person go. The best leaders are okay with their high performers leaving their organization, and then coming back after a tour of duty for a couple of years.”
Companies should also consider the social, moral and political values of the talent they are trying to engage, as studies have shown that millennials would be prepared to take a pay cut to work at a socially responsible company. The ideas of corporate social responsibility (CSR), and more recently “conscious capitalism”, seek to reposition the perception of the company from profit-focused to one that is leading social change, innovation, diversity, inclusivity, and environmental awareness. These changes will need to continue if such companies are going to engage the Millennials who share these socially conscious views.
In the midst of a global skills shortage, ongoing technological disruption, and with Baby Boomers increasingly retiring and taking their institutional knowledge with them, addressing the issue of Millennial engagement is vital for long-term business success. While individual employees will have differing personal needs, the general rule is that keeping workforces engaged is key to attracting and retaining the best talent in a highly competitive marketplace
“Asking employees for their ideas and feedback contributes to great engagement. It’s important to follow these up with actions to leverage employees’ ideas and ensure they feel heard and understood. Businesses that take steps to keep millennial workers engaged can have a significant impact on the bottom-line by reducing expensive staff turnover and boosting employee productivity.” – Rob Van Ess, CEO, REFFIND
“Most millennials seek to integrate their professional and personal lives, creating schedules that deliver workplace productivity while carving out necessary hours for family and social obligations. And, the rest of us are coming to realize that this is a pretty good idea.” – Doug Phillips, Managing Director, Horty & Horty
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