As each new generation of young people enters the workforce, they are almost always different from the generations before because of advents in technology and culture.
Millennials are no different. Not only are they known for seeking greater workplace flexibility, praise and tolerance, recent studies have shown they jump from job to job, never with an employer for more than two or three years.
Much like employers have had to adjust to an aging and ever-diversifying workforce, they're adjusting to workers who do not see their careers as linear like a ladder, but rather more like a lattice; they move from one employer to the next, in perhaps the same job but with slight pay or responsibility increases.
"The companies that have built the traditional job structure are finding themselves left out to dry," says Carol Ann Caccioppoli, adjunct faculty in the MBA program at Adelphi University and a training and management consultant. "[Millennials are] not looking for the same goals, so they're not going to follow the track you laid out for [them]; their idea of having a career differs greatly from what the boomers were looking at it."
According to Bureau of Labor Statistics, an average of five applicants applied for each available position in 2010, compared to a prerecession average of about two applicants per opening.
Investing in future leaders
The economic environment has led to a decrease in new-hire turnover, with metrics such as 90-day and first-year turnover declining since the recession set in. Nearly one in three employees switched jobs within the first year of service between 2007 and 2009, but that proportion dropped to less than a quarter in 2010. According to projections, voluntary turnover will increase in 2011 and continue to climb year-over-year through 2013 across industries.
This turnover translates into money with separation processing, replacement hiring, training new hires and lost productivity or business.
The cost of replacing a person making $50,000/year can easily reach $75,000, according to William G. Bliss, president of Bliss & Associates Inc., a consulting firm providing advisory services to companies.
"Organizations that tend to be more successful are those that focus on what it means to acquire and assimilate new talent into their workplace," says Shebani Patel, a director of PricewaterhouseCoopers Saratoga. A main worry of employers is what the impact of such fluidity will be on future leaders. The largest percentage of the workforce now lies with Gen X because "that's where the next level of leaders and that's where the most skilled people are." Although the influence of Gen Y is increasing, Gen X outnumbers the relative newcomers by more than five-to-one. And just as the industry wondered if Gen X would ever settle down, they now wonder if Gen Y will.
"We read all these stories about their five careers in one lifetime, and now I'm seeing that they do settle down because they're changing what they want in life," Caccioppoli says. Thus, once Gen Y starts marrying and having children, they too will want the stability reminiscent of baby boomers. "Sooner or later the baby boomers will get to leave, and there are enough Xers to take over those positions, and the companies that are not utilizing their Ys, I don't know what's going to happen to them. They'll find themselves in a bad position and become less competitive."
The institutional knowledge that is passed from one leader to the next generation of workers is what has, historically, made companies strong. In a 2008 study conducted by the Institute for Corporate Productivity, 30% of companies admitted they retained knowledge either poorly or not at all, 49% said they did just a fair job, and 78% admitted they had not even designated anyone responsible for organization knowledge retention.
"Some companies get it and others don't. A company that has not changed its attitude about retention or turnover, hasn't taken the trouble to calculate the cost of turnover and done something about it, is falling behind in keeping them," says Pat Galagan, executive director of American Society for Training and Development.
When asked to name what talent concerns would be among the most important in three years, 38% of surveyed business executives listed developing leaders and succession planning. When asked to narrow their concerns down to just the single most pressing issue, surveyed executives predicted leadership development would be their greatest talent concern three years from now, according to a Deloitte survey of talent issues in 2010.
That concern is very real for companies, but some are taking proactive steps to keep Gen Y employees, or at least increase their engagement while they're there.
In January 2010, Rho, a contract research organization, came together with a leadership team to brainstorm ways to advance employees careers, not just vertically, but laterally. Each employee has a personalized career map and a coach who talks with him/her about goals, providing a neutral support system.
"The goal was to provide a mechanism for getting breadth opposed to just depth, and we wanted to change the upward-steps model because we're a pretty flat organization," says Robin Rowan, senior human resources generalist. Rho does not have the six layers of management that are common in other companies. Rho's turnover rate for 2010 was 9%, while the average in their industry for 2010 was 15.4%. They couldn't say for sure if their turnover comes from their Gen Y employees (their median age is mid-30s), but the career map they laid out is the type of clear communication that experts stay Gen Y needs to succeed.
"It requires more attention on their part and more hand holding," says Ryan Kase, 27, an MBA student at Adelphi University. He thinks Gen Y is less inclined to do their own research, and needs more coaching and training. The career map does just that. If an employee is working in human resources and wants to go into another field, it lays out what the skills needed are, how to get them and who to talk to.
"It was intended to demystify what it took to get from A to B. What we wanted to avoid was the one-trick pony, the person who does one thing really well but is hard to work with," Rowan says. "Companies will need to continue to be responsive to their needs for flexibility and transparency. Rho's career path is an attempt at doing this."
Galagan agrees that companies must change with a new population of workers.
"There is a potential loss of great talent; they're bringing new thinking, they have a different skill set and outlook," she says. "When the older workers retire, and you haven't been successful attracting young people, you'll be in a bind."
McKinney, an advertising agency out of North Carolina, has recognized this and embraced transparency as a way to engage younger workers that may otherwise leave in a highly transient field.
"We all worry about what's going on with our high potentials and how we're retaining them," says Lea Wharton, McKinney senior vice president of Talent Management. Though she says their retention rate is high, they still work to keep employees using flexible work schedules or on-site recreation such as ping-pong and a pool. Advertising is known for being a high-turnover industry and a young one, at that.
"It's not necessarily because someone is unhappy, they're just ready to move on, and it's accepted in this industry. We accept it. It's reality."
CEO Andrew Delbridge regularly holds staff meetings that go beyond the regular business updates into the financial bottom line.
"We are a service industry and clients come and go, as with other other agencies we compete against; it's important to know what business is coming in the door," Wharton says. "They know they're working for someone who is real and there are no secrets, and that is a great retention tool."
That acceptance of the trend might be the way companies will survive the change, or Gen Y will eventually settle down, but some experts say that even if they do settle down, it will be in a much more global, transient way.
"One of the ways they have to change is to understand that they're not lifetime employees; it's not womb to tomb," Caccioppoli says.
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