They are our future customers, our future employees, and our future leaders. Yet, far too many corporations lack the knowledge and competence on how to attract and retain the top talents among younger employees – Gen Y and Gen Z. Companies need to consider sustainability, innovation and digitalization as business imperatives when building their strategies and employer brands. It´s do, or die.
Gen Y and Gen Z
Gen Y (born 1981 – 1997), also referred to as Millennials, have on the one hand, in recent years, been in the spotlights and they are the most studied generation in history. Gen Z (born 1998 – present date), on the other hand, have been looming in the shadows and are now looking at enter the labor market and gain greater buying power. Understanding each generation and their preferences is necessary in order to attract and retain the right competences in a company as well as understanding market demand.
According to a report by the American agency Sparks & Honey it is evident that Gen Y and Gen Z are very different from each other. Being aware of these differences is crucial in order to connect with them.
Attracting Gen Z
Countless research has been done and reports have been written on how to connect and lead Gen Y employees. However, according to a study by Randstad US, many of the employers are not aware of the motivational factors for Gen Z. Their research shows that professional opportunity development was at 38 percent and meaningful work 28 percent. These were the most desired factor for this generation, above money or a good boss.
Retaining Gen Y and Gen Z
The earlier generations; Traditionalists (born 1928 – 1946), Baby Boomers (born 1946 – 1964) and Gen X (born 1965 – 1980), prefer to work in larger corporations with a clear career ladder, and with directives on office hours. These generations are also very loyal to one company and therefore rarely change workplace or career path.
In contrast to the Traditionalists, Baby Boomers and Gen X, Gen Y and Gen Z believe that knowledge development, empowerment and flexibility are more important when choosing the right workplace. Recent statistics, state that 37 percent of Gen Y intends to stay for two years with the same employer. Furthermore, a total of 90 percent of the generation intend to stay no longer than five years with one organization. In relation to the high staff turnover, statistics show that the cost of replacing any employee at an entry position is approximately $ 15,000 – $ 25,000. The high turnover on the young professionals is costly for the larger corporations and there are many side effects, for example the difficulty of creating a strong culture.
During a seminar in Stockholm, hosted by Implement Consulting Group, Håkan Nyberg, the CEO of Nordnet Bank, presented how the company is putting large focus on attracting and leading the next generations. It was evident that Nordnet Bank had understood the necessity to transform and think new, in order to become attractive to the future employees and customers.
Gen Z is the most entrepreneurial generation ever and they see value in helping society through volunteering or taking action against the environmental impact. Therefore, company’s sustainability initiatives are important to attract attention from a Gen Z.
Limiting the environmental footprint and becoming more sustainable is nothing new for companies today. However, the future generations and especially Gen Z take sustainability as given and for them it is a deal breaker. Employer branding to Gen Z benefit if it has a clear focus on sustainability. Notably, in a sustainability strategy, transparency is the key to be successful. Patagonia is one example of company, which shows full transparency with its customers.
The Absolut Company is another great example of a company with a strong focus on sustainability. In the end of January 2016, The Absolut Company invited its suppliers and retailers for a one-day seminar on the topic of sustainability and to workshop about ”the future bottle”. The purpose of the day was to share ideas, insights and knowledge with the common goal of becoming more sustainable.
Gen Y and especially Gen Z considers sustainability as a hygiene factor and in order to stay attractive as both a brand and an employer, companies needs to do the same – Googolian
Regardless of industry, company size or structure, innovation has become essential for the survival of any organization. A report from Statistics Sweden state that companies with greater diversity are more successful innovators. Companies therefore benefit from operating in cross functional- and interactive teams from diverse backgrounds, skills and generations.
In recent years, companies led by the younger generations have outperformed the larger and more traditional companies. Car2Go, Klarna and Spotify are only a few examples of innovative companies that have changed the industry.
Gen Y and Gen Z play an important role in the digital transformation of companies. These generations bring their digital native competence and attract peers to join. In the study by MIT’s Sloan Management Review, “Strategy, Not Technology, Drives Digital Transformation”, researchers found that talent is more attracted to digitally mature companies than previously imagined. The study shows that more than 70 percent of respondents aged 22 to 60 said that is “Very important” or “Extremely important” to work for an organization that is digitally enabled or is a digital leader. The figure for respondents 21 years and younger was 83 percent. It has become clear that digital maturity attracts talent and that companies need to reflect how their strategy embraces digitalization for future recruitment.
One example of a traditional company that has successfully transformed digitally is the Swedish newspaper Aftonbladet that re-innovated online. Another example is Volvo Cars that has heavily engaged in the area of the connected car and have developed the Roam Delivery service.
Companies around the world need to adapt to the digital era or the younger digital-savvy generations will opt out on them – Googolian
Sustainability, innovation and digitalization are three of the pillars to attract, maintain and retain Gen Y and Gen Z. Nevertheless, the integration of the new generations into the existing workforce of a company is equally important. Operating in cross-generational work teams where employees collaborate and share insights, knowledge and methods is key.
Given these insights on the topic, Gen Y and Gen Z should not be thought of as alarming challenges for companies. Instead, they should be seen as opportunities and value drivers to the future growth a company.
What is the value for your organization to integrate Gen Y and Gen Z in your workforce?
Text by Shirine Bauer – Gen Y