Catalyst for Change: The Impact of Millennials on Organization Culture and Policy

Catalyst for ChangeTHE IMPACT OF MILLENNIALS ON

ORGANIZATION CULTURE AND POLICYCelia Berenguer June Delano Karin Stawarky

MONITORMONITOR

Millennials’ heightened expectations are likely to

CHANGE THE WORKPLACE for everyone: employers and employees of all generations.

© 2009 Monitor Group

CATALYST FOR CHANGETHE 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 orien-

tation at NYC headquarters. Over dinner and cocktails,

the most junior employees rub shoulders with the top

executives, something that happens infrequently in the

company’s 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 offi ce party. So he did what

any well-networked Millennial would do: called the CEO’s

wife to see if he could catch a lift into the city.

The Importance of Context

Th is story could be about impetuous youth, but it’s more than that. Th is

slightly disguised event really happened, and it aptly illustrates the diff er-

ent 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 CEO’s

spouse at home to ask a favor. Nor would they have strolled uninvited into

top executive offi ces or expected time off to build a school in Guatemala.

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Boomers and Xers might have wanted to do these things. Th ey certainly

hoped for a more egalitarian organization and a more balanced life. Th e

diff erence, 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.

Th ere has been an enormous amount of buzz in the media about Mil-

lennials 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. Th ey are technology savvy in ways unimagined

by previous generations. Th ey have complex social networks of friends,

maintained by texting and internet sites. Th ey spend long hours in virtual

games, building relationships with people they never meet face-to-face.

Th ey freely disclose personal information and lifestyle choices. Th ey

involve parents in their lives to an extent that puzzles earlier generations.

Th eir 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.

Th ese are the fi ve most signifi cant outcomes:

• Increasing transparency and loss of privacy

• Unprecedented fl exibility in working conditions and benefi ts

• New approaches to development and career planning

• Insistence on integrated, interconnected technologies

• Scarcity of qualifi ed and willing employees for “traditional” jobs

Our research involved conversations with more than 100 senior HR ex-

ecutives in diverse companies and industries, backed by a review of the lit-

erature on Millennials. Th e 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 eff ects.

Nonetheless, some industries (notably the consulting industry) have em-

ployment 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 infl uenced 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 large-

scale 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. Th is generational phenomenon

represents a dramatic change in behavior and could infl uence corporate

culture and practices in many ways.

A Boomer mother volunteered to help her daughter move to Atlanta to

begin her fi rst professional job at a major corporation. On the drive, they

talked about what her fi rst day would be like, and the daughter said,

“Come have lunch with me and my new boss.” Th e mother quickly said

that it wouldn’t be appropriate; the fi rst day was a time to get to know

people — especially the new boss. “Oh Mom,” sighed the daughter, “I’ve

already been texting with him and everyone else in the offi ce. Plus I met

his wife on-line and saw a picture of his dog. Th ese people are already my

friends and they’ve told me everything about the place.”

Human resource policies and, to a greater extent, managerial practices,

tend to assume that people won’t talk about salaries, bonuses and other

intimate details of their employment relationship. Th at assumption won’t

be safe as Millennials come into the workforce with a decade or more of

exposure on myspace, Friendster, Facebook and other social networking

sites. Th ere’s already evidence that they will openly share salary informa-

tion, coaching conversations and development plans — testing the integ-

rity of the organizational systems.

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Th e 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.


Th ere’s a tendency to compare themselves to what others do on the outside.

Th ey are more open with one another about who gets paid what than other

generations — both internal and external. Th ey talk about this openly.

Millennials are forcing us to be more transparent around processes, to be

more upfront on needs and expectations.

Th e candid information exchange could easily expose a manager who

is allocating bonuses or plum assignments in a way seen as unfair. Th at

manager’s 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 simi-

larly 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 diff erent values about

company information. People who grew up with the Internet at their

fi ngertips have extraordinary skill at accessing and disseminating informa-

tion. Th en there’s 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. Th ese 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 redefi ned by this generation.”

Unprecedented flexibility in working conditions and benefits

Millennials were raised to believe they could have it all. Earlier generations

expected to sacrifi ce in one or more areas of their lives in order to achieve in

another. Th ey accepted as inevitable the tradeoff s between friends and family,

career advancement, political activism, travel, personal expression, fi nancial

security, etc. But Millennials believe diff erently. Th ey expect to work hard,

they expect to deliver results and they expect their need for a balanced life

to be accommodated. Th at will have considerable impact on organizations.

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Th ey feel like they are entitled to certain things. Th ey’re not so much com-

pensation driven — it’s more like it’s all going to work for them the way

they want it to be.

Th e HR executives in the research told story after story about Millennials

who expected time off to visit out-of-town friends, go hiking in Chile,

build a school in Zimbabwe, work in the garden, co-write a book, etc. Th e

fundamental assumption is that work should be fl 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.

Th ey expect the workplace to bend to their needs. We try to give them the

fl exibility, on the other hand, it is a workplace; we’re here to make money

and you’re here to work.

Our policy about time off is only two weeks plus 10 holidays. Boomers paid

their dues and earned extra weeks of vacation. Th eir feathers are ruffl ed if

a 25-year-old walks in demanding a month of vacation to go hiking in

Europe every year. We have to fi 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. Th at’s the interface the new generation wants when it comes

to benefi ts, working conditions and career choices. Over and over, the HR

executives we interviewed talked about Millennials asking for individual-

ized 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 can’t accommodate this need for choice will fi nd them-

selves struggling to hire and retain Millennials when the Boomer retire-

ment 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 refi ned by Boomers and Xers. Th e 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.

We’re 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. We’re

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. Th ere’s some evidence it’s working, perhaps

because it parallels Millennials culture.

Th ey do better in groups, working on meaningful projects that can be applied.

Th ey travel in packs. Th ey eat together. Th at’s 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 fi ve. Th ey 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 work-

place, 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 satisfi ed about

their career movement. Th at 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 Millenni-

als simply won’t stay put for a day-long class. Other generations may have

been equally unhappy in the classroom, but they put up with it. Millenni-

als grew up accustomed to lots of stimulation and self-directed learning,

and they won’t tolerate less. Just-in-time learning delivered through media

seems to be the preferred alternative.

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We need diff erent training approaches to use with the Millennials as

opposed to Gen X and Boomers. We’re looking at podcasts, mobile learning,

getting it delivered over phones.

Other companies are trying small cohort learning groups and peer men-

toring, using the Millennials’ natural social style as a platform for develop-

ing new skills and knowledge. But whatever the approach, it’s clear that

the era of multi-day, faculty-centric programs is fi 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 defi nition of a high potential may evolve. Th e defi nition of

performance would have to be modifi ed. High performing has meant

working a 60-hour week; if you don’t put that in, you’re not a high

performer. Th is 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

Th ere is a story the military tells about young soldiers in Iraq who grew

impatient with the slow fl ow of information about roadblocks and snipers

and other security details. Th eir impatience led them to create informal

web sites where they shared critical information on a minute-by-minute

basis, live from the action. Th e 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 em-

ployees 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

doesn’t have patience with anything less. One HR executive reported that

Millennials consider the company’s technology an important criterion for

whether they will take a job.

Technology within the work environment makes a diff erence. Th ey fi nd it

shocking that their conference rooms don’t have built-in projectors. Th ey

say, “I want to work in a modern facility that’s 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 fi gure out the rules. Is it

okay to text during a meeting? Boomers say it’s rude; Millennials say it’s

multi-tasking. Is it okay to complain about work on your Facebook page?

Boomers say it’s disloyal. Millennials say its being honest (and, by the way,

none of the company’s business). Clearly, corporate cultures will need to

sort this one out, and the most common approach so far is to fi ght fi re

with fi re.

Our company launched a Facebook-like company directory. People put the

info they want on them. It’s a very diff erent way to look each other up, to

know about other people in the organization.

We have our own corporate version of Facebook that mostly Millenni-

als are using — sharing a lot more than others in the organization, way

beyond work-related information.

Companies with signifi cant populations of young adults are rapidly build-

ing 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 genera-

tion. It seems to be very social, very fun (that is high on their agenda); it is

an informal way to generate and refi ne 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 hap-

pens — 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 gen-

eration that is entering the workforce. Th e 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

didn’t know which scenario is more likely, but in either case they expect

that recruiting and retaining Millennials will be a challenge.

Th is is a generation that harbors considerable distrust of large companies,

probably from watching their parents’ troubled careers. It won’t take much

for them to abandon corporate life altogether, yet the demographics mean

that companies must be able to attract them

Since compensation doesn’t seem to be a major motivator, they are looking

for other forms of reward: travel, new experience, camaraderie, contribu-

tion to the greater good and rapid advancement. Earlier generations would

have been happy with these rewards, too, but it wasn’t 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 Mil-

lennials are entrepreneurial enough and competitive enough to start major

new business enterprises. Th e 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?

Th at attitude is leading large companies to project-based work environ-

ments, where they hope to recreate the experience of moving from one

small company to another. One HR executive described his company’s

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 fi rm launches an aggressive

campaign to attract them to another project. So far, it’s working for them,

but it is still early.

Smaller companies benefi t from the Millennials’ preferences on the re-

cruiting side, but are fi nding it hard to retain them. Th eir strategy, for the

moment, appears to be retooling their systems to tolerate much higher

turnover rates than in the past. Th at may be a harbinger of things to come

for everyone.

Conclusion

Th e one, absolute consistent in Monitor’s research is that the entry of Mil-

lennials into the workforce is going to bring about major change for every-

one. Th e expectations of these young adults are simply too diff erent 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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Th e generation that grew up with

THE LATEST AND GREATEST GADGETS

doesn’t have patience

with anything less.

June DelanoJune Delano is an innovator in the field of executive development who focuses on executive capa-bility-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 telecommuni-cations, biopharmaceuticals and investment banking, working in Asia, Europe and the Americas.

Celia BerenguerCelia 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 post-merger 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 pharma-ceutical, 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. StawarkyKarin Stawarky is a founding leader of Monitor’s 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 imple-mentable strategies, designing and building high-performance organizations to meet new challenges and opportunities, developing the capabilities required for sustained growth, and improving profit-ability 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.

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Catalyst for Change: The Impact of Millennials on Organization Culture and Policy