Next Generation Leadership

How to Ensure Young Talent Will Thrive with Your Organization

Adam Kingl

• Publisher: HarperCollins Leadership
• Year: 2020
• ISBN:
  9781400215614
• Topic: Commerce
• Subtopic: Leadership

Employers who don't adapt to the expectations of younger generations are losing top talent, as they leave for positions at companies with modern practices. Learn what companies need to do to fit into the new normal in the workplace.

Generation Y sees the world differently than any other generation in modern memory, and nowhere is this more evident than in the workplace. The shifts that this generation has seen in the economy, technology, and the world have changed what they want from life and work--which is not a 9-5 existence for forty-plus years, leading to a typical retirement at sixty-five.

What older generations call a poor work ethic from a spoiled generation, Gen Y sees as a different way of doing things.

Companies that take the time to listen realize that what Gen Y is asking for isn't that crazy; in fact, it's better in many ways such as:

• A demand for work-life balance isn't a cry for fewer work hours--it's a cry to be able to work from outside the office beyond a rigid 9-5 schedule (which can lead, to Gen Y employees working even more hours than you expected).
• Leaving a job after a couple years isn't an inability to commit--it's a need to learn more, expand their experience, and develop their career at a faster pace, which is helpful to companies that hire those individuals, including your own.
• Elevating nontraditional benefits over financial benefits is a step toward creating an emotional connection to the company where employees spend most of their time and invest mental and emotional efforts.
• The need to work for a company with a purpose reflects the power that social media has on the social consciousness.

Next Generation Leadership will explore what's behind these shifts in the character of the emerging workforce. It shows that, as Gen Y assumes managerial positions, the nature of leadership and business will change over the next few decades in irrevocable and profound ways.

SECTION 1

ALTERED STATES OF WORK AND EMPLOYMENT

Today we stand astride a fault line of how commerce may evolve in a global, interconnected society. What’s going on, and why now? If we take a very long view, we can observe that capitalism, and its role in society, is challenged and reinvented every one hundred to five hundred years. Feudalism, between the ninth and fifteenth centuries, was replaced by mercantile capitalism, which made way for industrial capitalism in the mid-nineteenth century, which evolved into shareholder capitalism in the twentieth. Capitalism has certainly not been a stagnant system.

When we look even closer, we not only see capitalism as we know it challenged, we must recognize that capitalism today does not manifest in just one form. Scandinavian capitalism certainly looks different from Anglo-Saxon capitalism, yet has created great productivity and social and economic stability; the Scandinavian economies very successfully navigated the last financial crisis. Yes, their citizens pay significantly more taxes than in the United States, but they enjoy a social safety net that reduces both economic and social anxiety. Nordic countries enjoy a healthy work-life balance with longer holidays and shorter workdays. As a result, Finland, Norway, Sweden, and Denmark almost always appear atop the “happiest countries of the world” tables.¹

Looking eastward, the largest capitalist economy in the world is controlled by the Central Committee of the Chinese Communist Party. Turn back to the West, and the United States is convulsed in debate about the role of government and the degree to which one citizen should contribute to another’s security. So, capitalism certainly doesn’t follow only one model.

While the wish “May you live in interesting times” is actually a Chinese curse, the reason I am optimistic today is that capitalism actually has a good track record of reinventing itself.² We happen to live in one of those inflection points. Shareholder capitalism had its day in the sun, making many executives and investors very wealthy. But every day, employee quality of life has bled out by a thousand paper cuts to pensions, real (adjusted for inflation) incomes, benefits, and work hours.

At the same time, executives from around the world are feeling an unprecedented pressure to reinvent how they lead, learn, operate, structure, incentivize, hire, promote, and communicate. Where is this pressure coming from? Their youngest employees, customers, analysts, and shareholders—the demographic we call Generation Y. Far from being contrary just as a naïve symptom of entitled youth, Generation Y is in fact wise beyond its years. They know, though perhaps subconsciously at times, that business must reflect the needs of its employees, customers, and society in a better way from what we experienced over the past thirty-some years. If capitalism requires reinvention and our societies demand a radical and swift evolution, then the alternative solutions will not come from our gray-haired, wise men in their plush executive suites. The answers may come from Gen Y.

1

IT ALL STARTS WITH A PATTERN

Each pattern describes a problem which occurs over and over again in our environment, and then describes the core of the solution to that problem.

—CHRISTOPHER ALEXANDER, human-centered design theorist¹

A seismic shift has rocked what we previously thought was a common understanding of work. Because the patterns of work-life and the employer-employee social contract have changed over decades rather than days, they have crept up on us. Today, we are immersed in a new normal, and we find ourselves scrambling to make sense of what this means for employers, employees, and even the very definition of what it means to work in the twenty-first century.

One of these patterns has altered so dramatically that if CEOs from the 1940s and ’50s were to step back into the office today, they would be profoundly shocked. Let me illustrate this particular pattern with my own family’s story. When I was growing up in Silicon Valley, I would visit my grandparents in Wisconsin every summer. On one of these visits, I remember my ninety-year-old grandfather (“Grandpa” to you and me) telling me that he retired when he was fifty-five. By the time he was relaying this story to me, he had been retired for as long as he had worked! Not only did he work for a single company his entire career, he also had the same job his entire professional life, and this was quite normal among his contemporaries.

My grandpa’s story was surprising to me because I knew that my parents each had had about three or four employers during their careers. Curiosity piqued, I started asking my friends and colleagues if their grandparents and parents had similar employment histories, and this pattern turned out to be almost always true for their families as well. So here was an intriguing circumstance: Our grandparents typically had one employer while our parents had three to four.

As I entered my thirties, I was still intrigued with this shift in the number of employers among different generations. If current patterns continue, most of my friends and colleagues belonging to Generation X (born between approximately 1961 and 1981) will probably have between six to eight employers during their lifetimes. Entering my forties, I began asking my youngest colleagues, Generation Y (born between approximately 1982 and 2004), about their career histories and discovered that if their typical rate of job changes were to continue, they would have fifteen to sixteen employers in their lifetimes. Even more dramatically, quite a few of my Generation Y colleagues think nothing of changing jobs every year or two: Acquire some experience or development and move on.

In this respect, a pattern emerges that is both sparklingly clear and breathtakingly exponential in its inexorable escalation. With each generation, the number of employers doubles.

We have to ask ourselves, should this trend continue, if our children and grandchildren in Generation Z are going to have thirty to thirty-two employers in their lifetime. When will this trend reach a breaking point? I’ll return to this theme later.

This phenomenon was fascinating, and further research indicated the trend was in fact more widely true, not just within my own observation. A recent Gallup survey reported that 21 percent of our youngest employees changed jobs within one year, more than three times the rate of their older counterparts, costing the U.S. economy $30.5 billion annually.³ What’s behind that erosion of constancy and reliability in the workforce?

In 2009, I was the director of an executive education open-enrollment program at London Business School called the Emerging Leaders Program. I realized that the participants were a gold mine of research data to help me answer these questions. They were almost all squarely within Generation Y, most in their twenties. I decided to issue a survey to this group and removed any respondent who was outside this generation, which was a very small number.

What was most exciting was that, by virtue of their companies’ nominating and sponsoring their attendance in this program, this group of students was a fine example of the future leaders of their companies and industries. This was much better than a generic sample of their generation. If these participants were the “high potentials” in their companies, then this group might tell us not only about their generation’s attitudes toward work, management, and leadership, but their opinions would be strong leading indicators of how companies might be led in the future.

GIVE ME DATA!

I had my dataset: two cohorts per year, surveyed while on the program over five years, and representing forty-four countries⁴ across five continents. I followed the survey with interviewing many of the participants to delve deeper into their answers, which gave me qualitative insights.

The first aspect I wished to explore was: If Generation Y themselves are consciously mobile in their employment, do they expect to move around with such unprecedented rapidity? Therefore, my first question in the survey was, “How long do you expect to stay with any given employer?” In other words, “When you join a company, what does the little voice in the back of your head tell you about how long you would expect to be there?” The answers demonstrated that these young managers did indeed enter a workplace with no desire to be a “company man or woman,” pursuing a job for life.

How long do you expect to stay with any given employer?

11+ years	5 percent
6–10 years	5 percent
3–5 years	53 percent
1–2 years	37 percent

Ninety percent of the participants reported that they fully anticipate leaving an employer within five years of joining it. More than a third believe they will leave within twenty-four months. Other research from the World Economic Forum indicates an even more sobering statistic—that 69 percent of workers aged eighteen to twenty-four will leave their employer within a year. I was shocked that the percent of answers in my survey did not increase one jot from “11+” years to the “6–10 years” responses—that the very idea of staying somewhere for more than five years seemed practically inconceivable. We will explore more fully in chapter 3 some of the reasons behind this destruction of the old employee-employer social contract, and that indeed both sides can take credit (or blame?) for this massive shift.

There is another critical consideration for managers if employees are going to leave with such casual haste. Namely, how can we “exit” our most valuable employees with the expectation that we can attract them back to the organization at a later date? In this environment where loyalty can no longer be expected, how can employers still gain some advantage over their competitors in the talent war? We’ll delve deep into this issue in chapters 3 and 4.

My next question in the survey attempted to scope where employee loyalty lay, if indeed it can be found anywhere. How much does the company brand—its mission, vision, and values—come into play, or is employee engagement among Gen Yers more aligned to one’s immediate, day-to-day experience with colleagues? The survey suggests the latter.

Do you feel more loyal to your team or to your organization?

Team	54 percent
Organization	46 percent

On the one hand, one might think, “The results are pretty close, so this is not so significant.” I would argue that we can just as easily flip that reasoning on its head and say, “The fact that more than half of Gen Y employees say they are more loyal to their colleagues than to their company is, in itself, hugely important.”

Many corporations today spend inordinate amounts of time and money on their “employer brand,” when in fact they might just need to turn their efforts more locally to the intimate environments of their myriad teams, who create and deliver value for customers and provide job satisfaction for the team members themselves, not only for a “job well done” but for being part of a community of friends and colleagues. This conclusion is consistent with one of Gallup’s studies, which found that a key dimension of an engaged organization is that its members can honestly say, “I have a best friend at work.”⁵ Even if we do not interact face-to-face with our colleagues every day, the behaviors and habits of social media have pivoted our employees’ focal point onto their relationships with their team members versus their institutions. I will discuss this shift in much more detail in chapter 5.

What are the factors, then, that attract high-flying Gen Ys to a given company? What would help to engage them and perhaps keep them a little bit longer? In seeking answers, my next question in the survey attempted to reveal what the most important employer benefits might be and if these are different from what many organizations expect to emphasize. In this case, I asked the survey-takers to rank their top three criteria from a list, and the ranking was weighted. In other words, an answer ranked as the “number one” most important factor was weighted more important than an answer rated number two or three.

The list of factors from which people chose was a mix of traditional and untraditional, financial and nonfinancial benefits and characteristics. Here’s the list of factors in alphabetical order:

What matters most to you in selecting an employer?

• Benefits package

• CEO’s reputation

• Corporate social responsibility

• Development opportunities

• Openness to innovation

• Organizational culture

• Performance-based bonus

• Share price performance

• Work-life balance

The answers represent a dramatic shift from previous expectations—not a single one of the top three most popular answers was a financial benefit.

The third most popular answer was “development opportunities.” But to avoid any confusion, when I followed up with the survey-takers in conversation, they were very clear that a development opportunity does not have to be a promotion. Indeed, one might assume that if the typical Gen Y employee is only going to stay for about two years, then the only way to keep that employee is to promote him or her every eighteen to twenty-four months. That is, of course, completely unrealistic; there just aren’t enough rungs on the corporate ladder. But if employers stop translating “development opportunity” as “promotion,” then a whole array of valuable offers reveals themse...