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Finchway Market Intelligence
2015
Maximizing
millennial ROI: Retaining and developing
young talent for long-term
performance
The Finchway Group | 1
The Finchway Group is a strategy and HR
consultancy that helps world-class companies
recruit, retain, and maximize the performance
of young talent under 30. We know young
people, how they think, how they behave, and
what motivates them, because the entire
consulting team, including partners, is under 30.
We advise clients on how to systematically
ensure young employees do not deceive them
and are motivated to work hard.
The Finchway Group | 2
PREFACE
Recruiting great young talent is now
more difficult than it has ever been.
Still, as hard as recruiting has become,
organizations are struggling even more
to retain the young talent that they are
able to hire. Turnover amongst
employees under 30 in almost every
industry has risen as the millennial
generation floods into the workforce.
The secret has been out for years: as
costly as filling a newly created
position is, filling an old position that
has seen turnover is significantly more
costly.
Hence, as young people are less
committed than ever to stability in the
same position or the same company,
human resources professionals and
entire organizations face a macro shift
that will change how we look at our
staff. Processes will have to adapt to
attract and onboard talent more
frequently as well as to allocate more
resources to creating workplaces that
retain current talent.
RESEARCH
The research that we did involved
interviewing and surveying over 200
hiring managers, human resources
professionals, and young employees.
We emphasized a balance of both
quantitative and qualitative techniques
in our methodology. Only using
quantitative techniques would have
sacrificed the rich insights that talking
in-depth with participants brought.
Only using qualitative techniques
would have missed the concrete
judgments and comparisons that can
only be derived from numbers.
It helped that the research was about
the people we know best, young talent.
The company is made up exclusively of
young people and herein lies
Finchway’s advantage: we have an
immersive understanding of how young
talent thinks because we live, work,
and hang out with them.
The Finchway Group | 3
The corporate environment trains us to
systematize. Systems are important to
mitigate risk and stabilize growth, but
in our workplaces systems will need to
change. The systems were built to
maximize the productivity of a baby-
boomer generation that prioritized
steadiness; this millennial generation
has no such priority and welcomes
volatility and excitement. The systems
were not built for this generation.
The underlying principle that Finchway
bases our strategy for employee
retention on is entropy. Entropy, in the
context of thermodynamics, is a
measure of the number of different
ways in which a system can be
arranged. This mouthful can be
simplified to represent a measure of
disorder or chaos. A system or
substance with high entropy is
generally thought of as more chaotic.
Organizations have been set up in the
past to minimize entropy. We propose
that the new organization must invite,
tolerate, and even leverage the results
of naturally occurring entropy. We say
“naturally occurring” because the
millennial generation today naturally
gravitates toward and creates change
and entropy. They are most productive
and satisfied with where they are
working when it allows for this natural
tendency. Controlled chaos is the key.
A
FOUNDATION
IN ENTROPY.
The Finchway Group | 4
ENGINEER NOVELTY
Amazing young talent hates a stagnant
environment. Of the young talent that
we polled that had made an active
decision to leave a job, lack of change
and inflexibility were the leading
reasons for their departure. We must
engineer people systems in which
young talent is constantly greeted by
unexpectedness and change. You will
find that young people will not only be
more loyal to changing companies, but
also perform at a higher rate because
they are kept on their toes.
HubSpot, one of the world’s top
inbound marketing platforms, does
frequent seating rotations where
members of every team are put at a
different seat. Mingling between teams
is encouraged and new relationships are
built every time one of these beloved
rotations occurs.
Several highly innovative companies
have used the strategy of “20% time”.
For many years, Google allowed
employees to work on anything they
wanted to every Friday. A few of these
“random projects” became Gmail,
Google AdSense, and Google News,
three of their most successful products.
3M was the original pioneer of the
approach and one of their “random
projects” was the Post-It note.
HELP EMPLOYEES
DEVELOP
THEMSELVES OUTSIDE
OF WORK
Many companies pay employees to do
professional development. Oftentimes,
the thousands of dollars that are spent
to send employees to conferences,
training programs, and degree
programs go wasted simply because the
employee herself has no real interest in
these types of development. Young
Boredom and lack of
change, 23%
Relationship with boss, 7%
Relationship with co-
workers, 7%
Disagreement with company direction, 9%
Insufficient pay or
benefits, 19%
Too difficult,
11%
Inflexibility of position,
32%
Reasons for Young Talent Actively Leaving Jobs
0%
10%
20%
Overall Millenialls BabyBoomers
Annual Voluntary Turnover Rates (US 2009)
The Finchway Group | 5
talent should be given more freedom in
terms of how they develop themselves.
They may prefer a form of
development that is unconventional and
even unrelated to what they do right
now. However, supporting employees’
journey toward fulfillment will be
rewarded through greater morale and
productivity. LinkedIn actually pays its
employees to plant community gardens
in urban spaces, as a corporate social
responsibility and employee
engagement initiative.
INTRAPRENEURSHIP
Incredible and unprecedented growth is
driven by employees who are both
capable and permitted to skip
bureaucracy and autonomously lead a
project. The problem with most large
companies is that as revenue,
headcount, and market capitalization
increase, the stakes get higher.
Executives react by imposing
restrictions to limit what could go
wrong. This practice will repel great
modern workers and will ensure that an
organization is staffed with mediocrity.
A modern organization that has gotten
intrapreneurship right is Facebook.
Facebook has a culture built on
community-oriented accountability, a
version of accountability that does not
turn employees off failure. One of their
mantras is actually, “Fail harder.” They
give employees a pathway to create
their own projects within Facebook and
are encouraged to create them at a scale
that could result in failing harder. This
is what gives employees a sense of
ownership over a $200 billion
company; employees have seen that
working toward Facebook’s goals and
working toward their own goals can be
one and the same.
The Finchway Group | 6
There is nothing wrong with talking
about corporate culture. In fact, there is
something wrong if this important
conversation is not being had regularly.
However, “culture” has been the
buzzword du jour in talent management
for the past five decades and thought
leaders are having a hard time thinking
of new things to say about it. Today,
there is so much abstraction in expert
opinion about the topic that most
companies are too intimidated to think
about this big, hairy monster called
culture.
The conversation needs to be less
abstract and less hipster. We list a few
concrete strategies for culture that
works for the coming generation of
employees.
TRANSPARENCY
No young person comes into the
workforce with an intuitive grasp of
office politics. They come in blind to
the horrors and roller coaster rides that
office politics can create – we call this
blindness “naiveté” because of course,
the best players of office politics are
the wisest. This mindset needs to
change; for the first time in several
decades, we have an opportunity to
make sure that a generation of our
workforce never engages in the
productivity-zapping exercise of office
politics.
The first step is to increase the
transparency with which we deal with
young employees. 68% of young
people surveyed felt that organizations
they had worked for were not
transparent enough. As well, several
hiring managers said that they
consciously hid or did not bother to
inform young employees of certain
things happening in the team or
workplace. They reasoned that young
employees simply do not need to know
and that it would be a waste of time to
tell them. Indeed, it may be true that a
young employee does not need to know
a specific detail or piece of
information. However, intentionally
keeping them in the dark will lead to
deeply-rooted mistrust, which is a
motivation and productivity killer.
More importantly, lack of transparency
has direct implications on performance
of young employees. Young people do
not perform well as black boxes. We
take this term from the world of object-
oriented programming, where functions
within a computer program should be
A CONCRETE,
NON-HIPSTER
VIEW ON
CULTURE.
0 5
Transparency
Professionalism
Company Performance
Employer Ratings in 3 Categories
The Finchway Group | 7
written as “black boxes”. Most
information in the program should not
be publically available to every
function; each function should only
receive the very small amount of
information it needs to do its
specialized task. It should not ask
additional questions and no additional
questions should be asked of it. Young
people do not behave like computer
functions – they have all the complex
irrationality of humans (surprise,
surprise). They will actually perform
better in environments where
information is transparent and readily
available. Having information allows
them to understand the entire context of
a task, why they are doing it, and what
impact it will have on the organization.
They like to know the bigger problem
that their small task is solving as well
as who else is doing what to contribute
to solving the same problem. One of
the companies that has ingrained
transparency into their culture is
Google; they post all the meeting
minutes from even the highest level
meetings for all employees to see.
MERITOCRACY
Let us theoretically consider a
definitive scale of employee value. It is
only theoretical so we can attribute to it
the ability to perfectly rank every
employee we have had work for us,
based on the value they have brought to
us and our organizations. The people at
the higher end of this scale are our
smartest and most valuable employees.
The people at the lower end do not
bring much to the organization at all.
What is common amongst every
employee on this scale is that they will
gravitate and stay loyal to organizations
where they feel that they are treated as
valuable employees. Both great and
poor employees want to work for
organizations where they will be
treated as great. The best organizations
create meritocratic environments where
great employees are rewarded and poor
ones are not. Lesser organizations are
unable to create these environments
and end up retaining the poor
employees that they have
systematically rewarded.
The answer for how to create
meritocracy is not easy or structured. It
does not involve more bureaucracy and
checks for quality. What it involves is
managers communicating to their
teams and superiors the objectives that
the team is hoping to achieve. They
need to know and communicate how
PoorPolitical savvy is
rewarded
MediocreMerit and politcal savvy are equally
rewarded
Excellent Merit is rewarded
0%
50%
100%
Quality of Employee How Meritocratic is the Company?
The Finchway Group | 8
these objectives will be measured and
what each person on the team can
individually contribute. Once everyone
knows the team’s objectives, constant
feedback should be given.
The last paragraph was filled with
management truisms. The key
difference in the modern workforce is
that after all this has been put into
place, the young employees that you
have taken the time to communicate
with will be less dependent on
managers to give feedback and will
learn to provide self-feedback. They
will actively learn to judge and police
their own actions because they now
know what they are working toward.
The self-imposed meritocracy will be a
powerful tool for organizations
leveraging the new workforce.
EFFORTLESS
COOLNESS
One of the greatest complaints that
senior management has about HR
departments is that they have a warped
perception of how the company works.
Almost two times as many HR
professionals that we surveyed felt that
their company was “cool”, compared to
non-HR professionals. In fact, usually
the average employee thinks of HR as
the department that is responsible for
making the company less cool. They
make sure everybody is in line with
meaningless policies and try to meddle
with everything fun.
The path to “coolness” is a long,
winding one and one that is too long
and too winding for the average
organization today. Organizations that
young people think of as “cool” have
slides and bean-bag chairs and free
lunches five days a week. The business
value of being cool to this degree is
unsubstantiated and unmeasurable.
Therefore, we preach effortless
coolness, which encompasses two
strategies that make an organization
cooler, without dramatic costs or
controversy.
Have one unique perk that
employees can brag about.
Youth is the time when we are most
social and most concerned with our
The Finchway Group | 9
image. A critical part of a young
person’s image is the company they
work for and namely, whether there is
anything about this company that they
can brag about. Having a unique perk is
not only a morale booster but also a
way to stimulate word-of-mouth
marketing for your employment brand.
Smart employees will tell their smart
friends about this perk, making your
company that much more desirable to
work for. In addition, young employees
will be more loyal to companies that
have a unique perk, because they feel
privileged to be a part of something
different.
There are several perks that both small
and large organizations can and have
used. One of Canada’s three large
telecom providers has employees
assemble to taste scotches every
Thursday. Companies can incur the
small cost of providing free snacks,
such as chocolate bars and chips to
employees. A foosball table or golf
putting mat is a small one-time cost
that can result in healthy relationships
being developed within teams and
across functional groups, all over a
quick game at lunch or after work.
Our natural reaction to these ideas
cannot be to be skeptical and think of
what could go wrong with the
provision of a perk. Think of the
benefits first, then think of ways to
make these perks possible, without
causing controversy.
Do not stop cool things that
naturally happen.
More than large sweeping
improvements, employee morale is
affected by small things. Small things
that contribute to coolness can happen
naturally, without any funding or
devoted time. Somebody might bring a
golf putter and putt a golf ball around
the office, somebody might start
shooting a stress ball into a
wastebasket, or somebody might start a
jalapeno-eating contest that people
gather around to watch every few
weeks.
These are small things that make
employees’ days more enjoyable and
more importantly to us, keep them
loyal to the organization.
The Finchway Group | 10
Employee development is a massive
and difficult task. How do you ensure
that employees across so many
different functions understand their
function, industry, and company
sufficiently, all without taking too
much of their time or costing the
company too much money? Now
consider the even larger task of doing
all of that for young employees, who
have even more to learn and
understand.
As is the solution for the average
company to most truly difficult
problems, we usually dedicate some
budget to pay for solutions that make it
look like progress is being made.
Employee development is presently
dominated by expensive conferences,
expensive formal training programs,
and expensive production of manuals
and literature. Each of these solutions
has a role in training and development
but certainly, the role should not be as
large as it is today.
Ask any young employee (and we did)
what part of their first two months
resulted in the largest amount of
development and they will say that
what co-workers taught them in one-
on-one conversation was infinitely
more valuable than what they learned
at any formal training session. Delve
deeper into the specifics of these
conversations and what emerges is that
the most valuable conversations are not
with direct supervisors or highly
experienced company veterans, but
rather with peers who have been with
the company for slightly longer than
they have. The best teacher is the
employee who is also young and has
been with the company for roughly a
year before a new employee’s start
date, precisely because she is not a
teacher. New young employees benefit
less from teacher-to-student
PEER
DEVELOPMENT
AND
MENTORSHIP.
0
10
Progression of Learning Using Training Techniques
Peer development/mentorship Mentorship by superiors Formal training
The Finchway Group | 11
relationships than they do from peer-to-
peer relationships. The more
experienced individual is not so far
removed from when she started at the
company and is able to empathize with
the new employee’s journey. She likely
has several things she knows she
should have done in the first few
months of her job. Perhaps the more
experienced individual used to hold the
new employee’s position, in which case
she can offer advice on how best to
tackle the tasks that will be assigned to
the new employee.
It is important that the hiring manager
takes the initiative to set up
conversations for peer-to-peer
mentorship to be started.
The Finchway Group | 12
FIND OUT MORE
To find out more about what The
Finchway Group does, email
contact@finchwaygroup.com. We
operate under the Finchway Promise. If
a client is not 100% satisfied, we give
them 105% of their fees back.
ACKNOWLEDGEMENTS
We would like to take the opportunity
to thank the Human Resources
Professionals’ Association, Canada’s
premiere HR organization, with 20,000
members. They organize the HRPA
Annual Conference and gave Jerry
Zhang the chance to speak about young
talent to top HR professionals in both
2014 and 2015. Also, we would like to
thank Deta Constantine, somebody who
has enthusiastically supported Jerry as
a speaker and thought leader.
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