Catalyst for Change

THE IMPACT OF MILLENNIALS ON ORGANIZATION CULTURE AND POLICY

Celia Berenguer June Delano Karin Stawarky

MONITOR

Millennials heightened expectations are likely to CHANGE THE WORKPLACE for everyone: employers and employees of all generations.

CATALYST FOR CHANGE

THE IMPACT OF MILLENNIALS ON ORGANIZATION CULTURE AND POLICY

Newly hired college graduates at a large global company are introduced to senior executives during a yearly orientation at NYC headquarters. Over dinner and cocktails, the most junior employees rub shoulders with the top executives, something that happens infrequently in the companys formal and hierarchical culture. At a recent orientation, Millennial Matt chatted with the CEO and his wife, and discovered that he lived close to them in a posh suburb (Matt in a studio and the CEO on the family estate). During the holidays a few months later, Matt found himself in need of a ride to the oce party. So he did what any well-networked Millennial would do: called the CEOs wife to see if he could catch a lift into the city.
The Importance of Context
This story could be about impetuous youth, but its more than that. This slightly disguised event really happened, and it aptly illustrates the dierent expectations that Millennials (the generation born between 1977 and 2000) bring to a workplace shaped by Boomers and Generation X. Earlier generations of corporate employees would not have called the CEOs spouse at home to ask a favor. Nor would they have strolled uninvited into top executive oces or expected time o to build a school in Guatemala.

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Boomers and Xers might have wanted to do these things. They certainly hoped for a more egalitarian organization and a more balanced life. The dierence, therefore, lies not in the hopes and dreams of Boomers, Xers and Millennials but in what Millennials expect and demand. Further, Monitor research suggests those heightened expectations are likely to change the workplace for everyone: employers and employees of all generations. There has been an enormous amount of buzz in the media about Millennials as teenagers and young adults. Some of what is written could perhaps be written about any group of young adults, but some is unique to the Millennial Generation. They are technology savvy in ways unimagined by previous generations. They have complex social networks of friends, maintained by texting and internet sites. They spend long hours in virtual games, building relationships with people they never meet face-to-face. They freely disclose personal information and lifestyle choices. They involve parents in their lives to an extent that puzzles earlier generations. Their politics combine environmental awareness, social responsibility and community action. And, it appears, they expect work to be challenging and rewarding and accommodating. Millennials are just reaching management levels in corporations, so we are only beginning to see the impact they will have on the organizations that employ them. However, Monitor research has surfaced intriguing ideas about how Millennials might trigger change in the workplace. These are the ve most signicant outcomes:
Increasing transparency and loss of privacy Unprecedented exibility in working conditions and benets New approaches to development and career planning Insistence on integrated, interconnected technologies Scarcity of qualied and willing employees for traditional jobs

Our research involved conversations with more than 100 senior HR executives in diverse companies and industries, backed by a review of the literature on Millennials. The results were surprisingly consistent, although

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there are still too few of this new generation at management levels to be certain about the long-term eects. Nonetheless, some industries (notably the consulting industry) have employment cycles that rely heavily on new college graduates, and can be looked to for indicators. Further, other companies are thinking hard about Millennials as they prepare for the wave of Boomer retirements that will happen soon though how soon will be inuenced by current economic conditions. Our research, therefore, also suggests ways that companies can anticipate and prepare for the increased representation of the Millennial Generation in the talent pool, from practical managerial advice to largescale policy changes.

Increasing transparency and loss of privacy

Perhaps the most radical impact of Millennials on the workplace will be triggered by their inclination to freely share private information and their expectation that others will reciprocate. This generational phenomenon represents a dramatic change in behavior and could inuence corporate culture and practices in many ways.
A Boomer mother volunteered to help her daughter move to Atlanta to begin her rst professional job at a major corporation. On the drive, they talked about what her rst day would be like, and the daughter said, Come have lunch with me and my new boss. The mother quickly said that it wouldnt be appropriate; the rst day was a time to get to know people especially the new boss. Oh Mom, sighed the daughter, Ive already been texting with him and everyone else in the oce. Plus I met his wife on-line and saw a picture of his dog. These people are already my friends and theyve told me everything about the place.

Human resource policies and, to a greater extent, managerial practices, tend to assume that people wont talk about salaries, bonuses and other intimate details of their employment relationship. That assumption wont be safe as Millennials come into the workforce with a decade or more of exposure on myspace, Friendster, Facebook and other social networking sites. Theres already evidence that they will openly share salary information, coaching conversations and development plans testing the integrity of the organizational systems.
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The most radical impact of Millennials on the workplace may be triggered by their inclination to FREELY SHARE PRIVATE INFORMATION and their expectation that others will reciprocate.

Theres a tendency to compare themselves to what others do on the outside. They are more open with one another about who gets paid what than other generations both internal and external. They talk about this openly. Millennials are forcing us to be more transparent around processes, to be more upfront on needs and expectations.

The candid information exchange could easily expose a manager who is allocating bonuses or plum assignments in a way seen as unfair. That managers behavior could be posted on line in a blog or chat room, further exposing what goes on behind company walls. Other activities safety violations, environmental risks, sexual harassment claims could be similarly shared. Many organizations have intellectualized about the front page rule, e.g., would we be comfortable if this decision appears on the front page of the local newspaper. With Millennials in the workplace, it may no longer be an intellectual exercise. In general, this new generation of workers will have dierent values about company information. People who grew up with the Internet at their ngertips have extraordinary skill at accessing and disseminating information. Then theres the sheer volume of information available in the public domain, and the almost instantaneous sharing of newsworthy events, as well as public processing of them. These combined factors have changed attitudes about sharing information, including less regard for historical norms about ownership and plagiarism. As one academic said, privacy is being redened by this generation.

Unprecedented flexibility in working conditions and benefits

Millennials were raised to believe they could have it all. Earlier generations expected to sacrice in one or more areas of their lives in order to achieve in another. They accepted as inevitable the tradeos between friends and family, career advancement, political activism, travel, personal expression, nancial security, etc. But Millennials believe dierently. They expect to work hard, they expect to deliver results and they expect their need for a balanced life to be accommodated. That will have considerable impact on organizations.

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They feel like they are entitled to certain things. Theyre not so much compensation driven its more like its all going to work for them the way they want it to be.

The HR executives in the research told story after story about Millennials who expected time o to visit out-of-town friends, go hiking in Chile, build a school in Zimbabwe, work in the garden, co-write a book, etc. The fundamental assumption is that work should be uid enough to make room for other interests and activities, which will push companies to focus on outcomes rather than attendance and compliance. Managers will need to be crystal clear about the results they want if employees are unwilling to punch a clock, sit at a desk or follow timeworn procedures.
They expect the workplace to bend to their needs. We try to give them the exibility, on the other hand, it is a workplace; were here to make money and youre here to work. Our policy about time o is only two weeks plus 10 holidays. Boomers paid their dues and earned extra weeks of vacation. Their feathers are rued if a 25-year-old walks in demanding a month of vacation to go hiking in Europe every year. We have to gure out this generational divide and how to work with it.

A related issue may originate with the fact that Millennials grew up on computers, shaping the way they interact with the world. Imagine website pull-down menus that allow you to make a series of choices about a topic or product. Thats the interface the new generation wants when it comes to benets, working conditions and career choices. Over and over, the HR executives we interviewed talked about Millennials asking for individualized options way beyond current cafeteria-style plans.
A lot of programs, processes and structures are built for people who are more willing to put up with less autonomy, more willing to be part of a bigger structure. We need to develop just-in-time choices give them what they need to be highly successfully in the right way.

Companies that cant accommodate this need for choice will nd themselves struggling to hire and retain Millennials when the Boomer retirement wave peaks.

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Creative development and career planning

Millennials are coming into a workplace that was actually shaped in the 50s and 60s, and then rened by Boomers and Xers. The assumptions that underlie traditional career planning and development activities are based on organizational stability and employee longevity, and are irrelevant to the new generation. So companies are inventing new ways to think about careers and new ways to prepare employees for them.
Were doing a lot of work with on-boarding. Our sense with that group is they tend to be much more tribal they like to be with a group. Were thinking about treating them as a cohort that can move through their careers together.

Several companies have tried hiring groups of classmates or moving intact cohort groups from project to project, looking for ways to motivate and retain young employees. Theres some evidence its working, perhaps because it parallels Millennials culture.
They do better in groups, working on meaningful projects that can be applied. They travel in packs. They eat together. Thats how they were in college and high school and they want that in the workplace as well. We laugh if you see one, you see ve. They live together in the apartment complex.

Recognition is another interesting challenge for companies. As children, Millennials were rewarded almost regardless of accomplishment a generation that earned prizes for showing up and trying. In the workplace, that appears to translate into wanting rapid promotions and lots of feedback. A number of companies are trying frequent mini-promotions with small wage increases as a way to keep Millennials satised about their career movement. That may signal a swing away from compensation broad-banding and back toward more complex pay matrixes. And what about training? Several HR executives reported that Millennials simply wont stay put for a day-long class. Other generations may have been equally unhappy in the classroom, but they put up with it. Millennials grew up accustomed to lots of stimulation and self-directed learning, and they wont tolerate less. Just-in-time learning delivered through media seems to be the preferred alternative.

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We need dierent training approaches to use with the Millennials as opposed to Gen X and Boomers. Were looking at podcasts, mobile learning, getting it delivered over phones.

Other companies are trying small cohort learning groups and peer mentoring, using the Millennials natural social style as a platform for developing new skills and knowledge. But whatever the approach, its clear that the era of multi-day, faculty-centric programs is nally coming to an end. Lastly, on the high potential front, companies are just beginning to think about how to prepare Millennials for leadership roles. If Boomers retire sooner rather than later, there will be no choice but to put young, relatively untested employees into management and executive positions. And it may be harder to recognize the best leadership talent.
Perhaps our denition of a high potential may evolve. The denition of performance would have to be modied. High performing has meant working a 60-hour week; if you dont put that in, youre not a high performer. This is not the expectation of Millennials.

At a minimum, our HR executives said, the importance of job rotations and supervised on-the-job learning will increase dramatically.

Insistence on integrated, interconnected technology

There is a story the military tells about young soldiers in Iraq who grew impatient with the slow ow of information about roadblocks and snipers and other security details. Their impatience led them to create informal web sites where they shared critical information on a minute-by-minute basis, live from the action. The solution was typically Millennial, using new technology to bypass a frustratingly slow system (and, the military will tell you, triggering a host of security concerns in the process). Similar stories were told in the research interviews about Millennials. Frustrated with the ubiquitous low-quality conference phones, young employees used a cluster of cell phones instead. Or, engaged in round robin use of data thumbs to quickly share a document. Or used freeware on the internet or texted a friend in another company for help. Whatever the

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Millennials fundamental assumption is that work should be FLUID ENOUGH TO MAKE ROOM FOR OTHER INTERESTS AND ACTIVITIES.

solution, the generation that grew up with the latest and greatest gadgets doesnt have patience with anything less. One HR executive reported that Millennials consider the companys technology an important criterion for whether they will take a job.
Technology within the work environment makes a dierence. They nd it shocking that their conference rooms dont have built-in projectors. They say, I want to work in a modern facility thats up-to-date.

Another characteristic of the under-30 crowd is their continuous, on-line interaction with friends, families, colleagues and the world at large. Access to this kind of communication is a condition of employment for many in the generation, and companies are struggling to gure out the rules. Is it okay to text during a meeting? Boomers say its rude; Millennials say its multi-tasking. Is it okay to complain about work on your Facebook page? Boomers say its disloyal. Millennials say its being honest (and, by the way, none of the companys business). Clearly, corporate cultures will need to sort this one out, and the most common approach so far is to ght re with re.
Our company launched a Facebook-like company directory. People put the info they want on them. Its a very dierent way to look each other up, to know about other people in the organization. We have our own corporate version of Facebook that mostly Millennials are using sharing a lot more than others in the organization, way beyond work-related information.

Companies with signicant populations of young adults are rapidly building internal social networks. In fact, a whole new consulting specialty is growing to help create them. And forward-thinking employers are putting networks to good use.
We have a next generation network for anyone in the Millennial generation. It seems to be very social, very fun (that is high on their agenda); it is an informal way to generate and rene new ideas, to open up a dialogue with that generation of workers to give them chance to interact, share ideas, not bound by a particularly structure so that innovation happens organically, naturally.

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Scarcity of qualified and willing employees for traditional jobs

Without going into all the demographics, Boomers were a big generation, Gen X was a relatively small generation, and Millennials are a huge generation that is entering the workforce. The economy is the key unknown variable in how this will play out: will Boomers stay for another decade, blocking Millennials advancement or will they depart en masse leaving millions of empty jobs for unprepared young adults? Our interviewees didnt know which scenario is more likely, but in either case they expect that recruiting and retaining Millennials will be a challenge. This is a generation that harbors considerable distrust of large companies, probably from watching their parents troubled careers. It wont take much for them to abandon corporate life altogether, yet the demographics mean that companies must be able to attract them Since compensation doesnt seem to be a major motivator, they are looking for other forms of reward: travel, new experience, camaraderie, contribution to the greater good and rapid advancement. Earlier generations would have been happy with these rewards, too, but it wasnt in their nature to insist on all of them.
Millennials are saying to us, If I am still in this role in a year, and no one is talking about what my next move is, then I am going to look outside of this company.

Forbes magazine recently ran an article which questioned whether Millennials are entrepreneurial enough and competitive enough to start major new business enterprises. The following response appeared on a popular blog targeted to the under-25 generation:
OMG. What if Millennials are so ingrained with Barney-style values like fairness, and cooperation, and love that we never build the next GE or Coke? Heaven forbid, right?

That attitude is leading large companies to project-based work environments, where they hope to recreate the experience of moving from one small company to another. One HR executive described his companys approach as a carefully crafted sequence of 3-year projects. Millennials

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stay for the duration of a project, and then the rm launches an aggressive campaign to attract them to another project. So far, its working for them, but it is still early. Smaller companies benet from the Millennials preferences on the recruiting side, but are nding it hard to retain them. Their strategy, for the moment, appears to be retooling their systems to tolerate much higher turnover rates than in the past. That may be a harbinger of things to come for everyone.

Conclusion
The one, absolute consistent in Monitors research is that the entry of Millennials into the workforce is going to bring about major change for everyone. The expectations of these young adults are simply too dierent from previous generations for it to be any other way. With that assumption, our research suggests a short list of actions that will help any company prepare for the future:
Conduct multigenerational focus groups to surface and prioritize HR policies and practices that need to be modernized Establish internal social networks on-line and otherwise to channel and amplify communication Increase the use of rotational programs to provide lots of stimulus and feedback Use various kinds of cohort groupings for orientation, learning, career planning and other purposes Try many small experiments and advertise the successes

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The generation that grew up with THE LATEST AND GREATEST GADGETS doesnt have patience with anything less.

June Delano
June Delano is an innovator in the field of executive development who focuses on executive capability-building as a source of competitive advantage. She is known for her deep understanding of the relationship between strategy and executive learning, as well as her ground-breaking designs. June joined Monitor as a leader of the executive development practice after many years in the corporate learning world. June has recently led strategic, enterprise-level projects with clients in telecommunications, biopharmaceuticals and investment banking, working in Asia, Europe and the Americas.

Celia Berenguer
Celia Berenguer had been dedicated to learning and development for 10 years. She has primarily worked with large, global clients, crafting solutions to address a variety of issues including postmerger integration, new culture development and working across cultures. Celia joined Monitor Group as a lead practitioner in the field of leadership development where she has focused on developing experiences that push the boundaries of traditional executive development. It was at Monitor that she has been most exposed to developing High Potential populations and developed a keen interest in understanding how Millennials will affect the future of organizations as a whole, and organizational development in particular. Celia has led a variety of learning and development projects for pharmaceutical, consumer goods, telecommunications and financial services companies. Prior to joining Monitor, Celia worked in the executive development arena at several renowned business schools in the US and Europe, most extensively at Harvard Business School.

Karin E. Stawarky
Karin Stawarky is a founding leader of Monitors organization and leadership practice and is the managing partner of the San Francisco office. In her practice, she works with client executives on a spectrum of challenges related to aligning organizational and business strategy to drive results. Her client work includes creating and implementing customer-driven, analytically based, and implementable strategies, designing and building high-performance organizations to meet new challenges and opportunities, developing the capabilities required for sustained growth, and improving profitability through greater organizational effectiveness. Her industry spans multiple industries, from life sciences and high tech to consumer products and financial services. Previously, Karin was in strategy and operations consulting with a focus on organizational transformation and change; she also worked in marketing and brand management. Karin received her M.B.A. from the Amos Tuck School of Business at Dartmouth College and is a summa cum laude, Phi Beta Kappa graduate of Bowdoin College. While at Tuck, Karin was selected by the faculty for the Joshua and Sabra Hamilton Prize for excellence as a general manager and selected by her peers to receive the Julia B. Stell Award for her leadership.

MONITOR
Founded in 1983 by six entrepreneurs, Monitor is a global firm which serves clients through a range of professional services strategic advisory, capability building and capital services and integrates these services in a customized way for each client. Monitor has close to 1,500 employees worldwide who are focused on helping our clients grow in the ways that are most important to them. To that end, we offer a portfolio of services to those who seek to stay competitive in their global markets. We employ or collaborate with some of the worlds foremost business experts and thought leaders to develop and deliver specialized capabilities in areas including Strategy, Marketing and Sales, M&A Advisory, Organization Effectiveness and People Development, National Economic Development and Security, and Social Action.