Making Sense of the Millennial Generation: What Organizations Need to Know

Alec Levenson
Posted: 03/30/2011

The "Millennial Generation" - people born in the 1980s and 1990s who are in their teens and 20s today - represents the latest chapter in a long-running tale of generational misunderstanding. Each new generation that enters the workforce is typically viewed by its elders as not sufficiently dedicated to the world of work, posing potentially large challenges to organizations and the way they structure the employment proposition.

The good news is that, just like any classic tale, we have seen it before and know how the story ends - at least one part of the story. A large part of the misunderstanding is due to a natural evolution as generations go through predictable life cycle stages.

Early career labor market experience is typically characterized by a lot of job and career "shopping." Whether voluntary or involuntary, the facts are clear that younger people tend to move around from job to job a lot more than older people. It's partly due to choice, as many are in the process of making up their minds about the kind of careers they want to have.

The other part is due to the nature of how human capital is built and valued in the marketplace. The opportunity cost of job switching is low for young people because they have not yet built up large amounts of occupation- and industry-specific human capital. After working for a number of years, accumulated human capital makes people more specialized in the types of jobs that offer the biggest financial rewards, so their options narrow - and this makes them much more dedicated to specific types of work and organizations, and thus, from the organizations' perspective, more dedicated and reliable. So part of the stereotype is due to expected differences in how young people interact with the labor market, and vice versa.

Another part of the stereotype is due to the ups and downs of the business cycle. Young people who enter the labor market when times are good face more options and can be pickier about their job choices than people who enter the labor market in tough times. Part of this may be temporary optimism that is enabled by a growing economy - optimism that should get tempered during a subsequent bust. That certainly has been the case for the Millennials.

The "old" Millennials - those born in the early 1980s - who entered the labor market during the latest economic expansion in 2002-07 found a relatively healthy economy with many job options. If they have been fortunate to keep their jobs in the recent deep recession, it is virtually certain that their expectations for their careers - and their demands on their organizations - have been tempered at least a little. Yet the pain of recessions is never spread evenly, and those who have been fortunate to keep their jobs have continued to develop skills and accumulate experience that will enable them to put further distance between themselves and other who have not been so fortunate.

While the pain of unemployment often gets spread over more people in younger generations (they typically have higher unemployment rates than older generations), people who lose jobs later in their careers face much steeper challenges finding work that suits their skills and thus greater economic adjustment on average. At the end of the day, the distinguishing feature of recessions is that they create winners and losers within each generation. And it is the differences between those thrown out of work versus those who keep their jobs that are more important defining features of labor market experience than generational differences.

There is a related, but different, economic trend that has been a defining feature of the US and other advanced economies for many years: a growing gap between economic winners and losers among people who in previous decades would have had much more similar economic fates. This trend started in the 1970s and 1980s, leading to greater dispersion of economic success - and failure - among people who one would think should have similar success in the labor market. This means, for example, that people who train and work today as lawyers, engineers, finance professionals, medical professionals, etc. are ending up with much more varied amounts of economic success and failure than their counterparts who chose those same professions in their parents' generation.

That times have changed like this is no accident, and is due in part to widespread deregulation and increased competition in sectors that in previous generations were much more shielded from competition both domestically and internationally. The recent rise of emerging economic dynamos like China, India, Brazil and Eastern Europe with large pools of well educated workers has helped continue the trend. The other contributing factor is organizations' increased use of pay for performance and accountability that create greater differentiation in both rewards and job security.

Taken together, these three issues - natural life cycle evolution, business cycle ups and downs, and growing dispersion of economic winners and losers - mean that there are real economic issues that Millennials face that organizations should be aware of. But whether and how organizations should respond with policies specifically targeted toward the Millennial Generation is another matter.

Existing HR programs and policies that address the different needs of single versus married people, old/late career versus young/early career, etc., should be sufficient to address the early-career life cycle issues the Millennials currently are facing. The other two trends do not necessarily require different HR programs and policies. They do, however, highlight the importance of recognizing that generational stereotypes often take too much attention away from the fact that it is difference among people in the same generation that often are much larger and more important than the differences between generations.

Recognizing the growing capriciousness of the labor market - things are more varied and random today - and what that means for both current and prospective employees will enable organizations to approach each person with the right perspective and compassion needed to engage and motivate each person. And that applies to both the Millennial Generation and their older brethren.

The other feature that distinguishes the Millennials from older generations is the widespread use of social networking and other new technologies that are the latest rage. This of course is to be expected because new technologies are always adapted much more quickly by the young. Yet the widespread adoption of these new tools by the young is not necessarily the issue on which organizations should focus. On the one hand, there always are new technologies, and we have to ask ourselves, How does this technology really change the way we can do work around here? If the new technology is just the latest version of an electronic water cooler - a place for people to gather and gab - then no response may be the right response. On the other hand, each new technology - the telegraph, telephone, cell phones, internet, etc. - eventually does change the way people interact in fundamental ways.

The issue that organizations need to address is how the new technologies can change the nature of work for everyone, not just the younger generation. The younger generation is the place to go to see what is possible with new technologies. But the real power to transform organizations lies in whether and how the technology changes the way we communicate, think and organize work in all corners of the organization. If the potential is high, then attending to the opportunity of new technologies should be given very high priority, and members of the Millennial Generation can be invited to help lead the task teams charged with exploring and acting on alternative scenarios. If the potential is low, then the new technologies should not be ignored, but they also should be put in perspective and not be allowed to dominate the conversation to the exclusion of other changes that could be more important (globalization, regulation, supply chain, etc.).

This article is based on a recently published paper - Millennials and the world of work: An economist's perspective - in the Journal of Business and Psychology
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Alec Levenson
Posted: 03/30/2011

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