News Nov 10, 2000

Juergen Daum’s News Service about New Economy Management Best Practice

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Generation Y: When the Internet generation is joining your workforce you better be prepared

News categories: enterprise and business strategy, human capital management and recruiting

 

Generations, such usually defined as a group of people that are born and living contemporaneously and sharing the same formative experiences, cultural mood and feelings, are important not only for consumer product marketers but also have to be taken into account by those, responsible for human resource and corporate culture management. This has become obvious as the so called Generation X was entering corporate workforces in the 90s – a generation much more cynical as the previous Baby Boom generation.

 

Just when some people were beginning to understand Generation X, here they come again. But it’s not Generation X, it’s Generation Y: 20-somethings that are not only shaping the so called Internet culture of today but are now entering the business world where they meet companies which are undergoing a fundamental change process into an e-Business world.

 

Today’s workforce is the most diverse in history. Many companies are just now beginning to recognize and address the issues caused by this diversity. What they are learning is that there are now three generations of employees (Baby Boomers – born between 1945-1964, Generation X – born between 1965-1976 and now Generation Y – born between 1977-1994) trying to create a cohesive and productive workplace. And because of the tight job market for talented people, managers are having to rethink and develop corporate cultures to address the needs of all generations.

 

But as Baby Boomers approach retirement, what will remain are two generations that feel little or no loyalty towards their employers. Their values differ significantly from the previous more loyal generation: Generations X and Y work to live, not live to work. Generation Y is even more self centric and focused on its own advantage than Generation X. Here a prototype of Generation Yers:

 

Peter is a specialist in LINUX, the operating system created and developed further by many different people via the Internet. He is actually working for a Silicon Valley company and he is developing one of the first applications running on LINUX. By accidents he meets one of his old high school mates in a Levi’s Super-Stores in San Francisco. This one is desperately searching for LINUX-application specialist and is asking Peter if he wouldn’t join his company as a senior LINUX application developer. Peter is considering: in the next week he has to start with the boring documentation for his new LINUX application. A new project at his mate’s company seems to him much more interesting and more fun than writing documentation. He immediately decides and sends from the Levi’s store an e-mail to his employer: “ Sorry, I am quitting. Have a new employer. Please send me the rest of my salary by check”.

 

Generation Yers are highly optimistic, are always in search of a “good time” and fun, they are asking “what’s cool” and “what’s not cool”, they are multicultural and exchange cultures like they change wardrobes, they are highly experimental and entrepreneurial, they are very informed using as information sources the Internet, business publications, entertainment media and niche magazines, and they prefer to discover things rather than learn about them directly. And for Yers the “I” comes always first: the own person is the starting point of the straight line to success in life. High school, university and companies (except the own start-up) are perceived as something not really helpful in that and are used only as means for the own success in a highly opportunistic way.

 

In about 10 years Yers will represent a large portion of the workforce. What does it mean for companies to deal with this generation ?

 

Yers are highly motivated. But they do not pursue necessarily the goals of the company, but their own ideas (see the example about Peter above). They also expect pay back for personal investments immediately and are hardly willing to sacrifice today’s leisure time and “fun” for future career promises.  Other than the loyal Baby Boomers, they are not loyal. But companies aren’t this either. As companies are becoming more “virtual” with a much smaller workforce of “game players” and many business partners and freelancers outside the company, which are providing services which have been delivered in the past through internal departments, companies are also not interested any more in tight relationships to this “non-core” employees. But this much looser relationship between companies and self-employed “free” entrepreneurs will represent for many of those Yers the fascinating new working environment which allows them at the same time to enjoy life and to develop and maximize (also economically) their own core competencies.

 

But two major questions are remaining for organizations:

 

·       How do you retain the smaller but much more important and really valuable “core” workforce, if many of them are then part of Generation Y ? (the typical 20% of today’s overall workforce which represents the real human capital, the ones that own the critical competencies to enable the company to develop break through products, the ones that know, how to deal with customers and to develop constantly new profitable business models) and

 

·       How can you motivate outside self-employed freelancers for high performance, who do not want to bind themselves to a company ?

 

The answer for both question probably is very similar, as companies will have to treat external freelancers in a similar way like internal employees, and because the “core” workforce isn’t that loyal anymore either. The answer is twofold:

 

First, companies have to invest into job-entertainment rather than into long-term personal development (remember: Yers expect short term payback and fun !). But entertainment also can mean: interesting trainings with a fun factor, virtual universities and work in multicultural project teams. So, there are still means for human capital managers to pursue personal development programs, but they have to wrap them into entertainment events – an interesting challenge.

 

Second, the motivation factor of money will probably become even more important with this generation. It’s focus on instant results for effort and the fact that they like very much shopping and enjoying life, makes money much more important to them than for the Baby Boom generation. Companies have to think of ways how to let at least “core” employees participate either through stock options or other means in financial corporate results and create wealth for them. This may create even more tension with classical institutional corporate investors like pension funds, who are looking for more long-term shareholder value and who may fear dilution of their investment through employee stock option programs.       

 

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… more ("They shop till they drop" - Seattle Times article from february 13, 1998)

 

 

 

 

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