Managing tomorrow’s workforce, today · Motivating Millennials: Managing tomorrow’s workforce, today 3 12 LESSONS LEARNED ABOUT MILLENNIALS Millennials are on the rise. In five

Motivating Millennials:Managing tomorrow’s workforce, today

G A L A X Y R E S E A R C H - J A N U A R Y 2 0 1 6

Motivating Millennials: Managing tomorrow’s workforce, today 2

Not so long ago, length of service data provided an index of a company’s workforce management programme. The longer the average tenure, the deeper the trust within the team, the more experienced its staff, the more successful the business. Right?

Perhaps it was right once, but it’s not right now.

Kronos works with a wide range of organisations from small and medium sized to large enterprises, assisting them to control labour costs, minimise compliance risks and improve workforce productivity. We help our customers manage an increasingly multi‑generational workforce, empowering them with best‑in‑class workforce management solutions.

Over the past few years, we have noticed one generational group’s rapid rise.

Born between 1981‑2000, the oldest among them are turning 35 this year, by 2025 they will make up 75 per cent of the Australian workforce. They’ve been called Millennials, Gen Y, Generation Flux, Generation Next. However, their brand is less important than their behaviour because it’s their behaviour that is re‑shaping our future workforce.

As a parent with children about to enter the workforce, I didn’t need a new study to show that Millennials move faster, further, and face more screens ‑ all the cultural clichés we’re familiar with. But, as a workforce management leader, I do want to start a conversation about the behaviours and expectations of the new workforce, as well as sharing our learnings on motivating Millennials and our findings on managing tomorrow’s workforce, today.

Beyond the usual discussion about ways to attract and retain the new workforce, we wanted to understand whether organisations need to get more comfortable managing higher attrition and rotation levels.

We commissioned Galaxy Research to find out. Their research findings capture the changing rhythm of Australian employment and explore the ways in which different interventions might extend an employee’s work cycle. When the average Millennial employee clocks up just over 40 months on the job, we ask whether ‘retention at all costs’ is the right approach, or whether companies need to adapt to a new ‘hiring half‑life’ rewarding peak performance alongside ‑ or even instead of ‑ long service.

Above all, we challenge organisations themselves to adapt to and embrace this change: taking on the talent taboo created by the Millennial workforce. Because when countless studies demonstrate that Millennials move regardless of managerial intervention, it is time to rethink our strategy from trying to change them to accepting change ourselves.

I believe it’s not their move that matters, but ours. I hope that the research will inspire you to lead this change within your organisation.

Peter Harte Managing Director Kronos Australia, New Zealand and South East Asia

FOREWORD


12 LESSONS LEARNED ABOUT MILLENNIALS

Millennials are on the rise. In five years’ time, they will make up half of the Australian workforce, further to 75% in 2025.

Millennials are well educated. Research suggests over half (54%) of Millennials have university degrees compared to 40% of Generation X and 26% of Baby Boomers.

Millennials swap jobs twice as quickly. Their hiring half-life - the time they spent in their last few roles - averages 3.4 years, compared to 7.3 years for Baby Boomers and 5.8 years for Generation X colleagues.

Millennials

Generation XBaby Boomers

More Millennials average less than two years in a role, a significate minority of Millennials (15%) compared to just 6% of Generation X and 1% of Baby Boomers.

Most Millennials swap strategically. Two thirds of Millennials say that they’ll stay at an employer as long as they are acquiring the skills and training, compared to a third of Generation X and 27% of Baby Boomers.

Millennials mobilise when their passion or performance passes its peak. 60% of Millennials had left a position within a year of feeling they were no longer giving their best, of which 32% left within three months.

Millennials are motivated more by money than their older colleagues. 61% of Millennials have pay in their top three reasons to stay energised and deliver their best.

Millennials Gen X Baby Boomers

Millennials stay in a job as long as they are paid well: the attitude of 84% of Millennials compared to 75% of Generation X and 69% of Baby Boomers.

Millennials will stay for better pay or promotion - but only for a limited time. More money will increase their service by a factor of 18 months, while promotion extends their work cycle by 19 months.

Millennial loyalty - however bought - often expires early. No incentive, from training to formalised mentorship, delivers more than 19 months from a Millennial, compared to 26 more months from Baby Boomers.

Millennials may make their moves more quickly, but they appear more open to managerial discussion. When presented with a list of incentives, only 19% said there was nothing an employer could have done to prevent their departure.

Millennials respond more positively to personalised plans. Two thirds (65%) of Millennials say they’d have stayed longer if management had shown interest in them as an individual, or simply asked what they needed to keep them there.


1. A HIRING HALF-LIFE REVEALED

When we embarked upon this study, we expected to see the speed of job switch quickening down the generations. It seemed reasonable to assume that those at the start of their career have more time and ‑ typically ‑ fewer responsibilities tying them to a role, and more interest in experimenting before they commit to a career. Millennials are in a hurry, against the Made‑It‑All Generation X and Baby Boomers settling into their lifestyles.

What we didn’t expect to find, however, was that Millennial employees swap jobs more than twice as quickly as their Baby Boomer and Gen X colleagues. Borrowing from nuclear physics, we’ve called this phenomenon a ‘hiring half‑life’ because Millennials spend less than half the time their older colleagues do in a role.

half-life/ˈhaf-laɪf/ (say ‘hahf-luyf)

noun the time required for one-half of a sample of unstable material to undergo chemical change, as the disintegration of radioactive material, the chemical change of free radicals, etc1.

However, half‑life originally meant a state of chemical decay. Should we automatically view the hiring half‑life as sign of workforce instability, or could it catalyse a different reaction? Let’s look closer at the findings.

Millennials averaged 3.4 years (nearly 41 months in their last few roles), compared to Gen X 5.8 years (70 months) and Baby Boomers 7.3 years (88 months)

The half‑life effect shown in the graph below still holds when you look at longer tenure: only a quarter (24%) of Millennials spent more than five years on average in their last few roles, compared to more than half of Generation X (59%) and three quarters of Baby Boomers (78%).

Half-life effect shown in longer tenure

Percentage of generation that have spent more than 5 years in a role

Average time in their last roles

MILLENNIALS7.3 years

3.4 years

5.8 years

GEN X

BABY BOOMERS24%

59%

78%

1 Macquarie Dictionary

Millennial employees swap jobs more than

twice as quickly as their Baby Boomer

and Gen X colleagues


We might explain away this data through relative youth and inexperience, but the 18‑35 band contains within it seasoned professionals and adults with considerable responsibility. Remember that the oldest Millennials are approaching their 35th birthdays and the median age of parents in Australia is 30.8 years for mothers and 33 years for fathers2. If we break out the data to look at older Millennials in isolation, do we see a clear difference between carefree 18‑24 year olds and more settled 25‑34 year olds?

No. ‘Mature’ Millennials still appear to job‑hop and swap: the average tenure of this ‘older’ young cohort is also 3.4 years.

The age and stage interpretation also doesn’t appear to work in reverse, explaining away the shorter hiring half‑life of Millennials through the numbers leaving their roles for family‑related career breaks. While research indicates women are more likely than men to leave a role for a planned career break, the trend is in fact far more noticeable among the older Generation X group, and still their employment cycle is almost twice as long as Millennials.

Overall 27% of Australians agree they left their last role for a career break. 29% of female Millennials versus 25% of male Millennials; 35% of female Gen X versus 26% of Male Gen X.

If life stage does not have a measurable impact on generational working behaviour, might attitude shape the shorter cycles of Millennials?

Perhaps. In places, the findings do not simply suggest that Millennials are constitutionally more comfortable with career change, they single‑mindedly pursue it:

• Two thirds (62%) of Millennials say that they’ll stay at an employer as long as they are acquiring the skills and training that will leapfrog them onto the next role ‑ compared to a third (35%) of Generation X and 27% of Baby Boomers

• One in seven Millennials spend less than two years on average in a role, compared to just 6% of Generation X and 1% of Baby Boomers

• 10% of Millennials actively try not to stay at an employer for more than two years; 7% say they attempt to cap their contracts at a year

These local findings corroborate recent international studies, which have variously suggested that 30% of Millennials intend to leave their role in the next year (and nearly half in the next two3) and that even when they are personally motivated and proud of their role, 57% of Millennials still plan to move on4.

Are Millennials organisational butterflies, flitting from role to role, or is something else going on? When 70% of Millennials tell us that they stay with an employer for ‘as long as they can’, we use the next chapter to try to explore what might be pushing them to take wing.

2 http://www.abs.gov.au/ausstats%[email protected]/mediareleasesbyCatalogue/8668A9A0D4B0156CCA25792F0016186A?Opendocument3 http://www.scribd.com/doc/211602632/The‑Millennial‑Compass‑The‑Millennial‑Generation‑In‑The‑Workplace4 75% of graduates proud of their roles; 73% personally motivated – and yet more than half still planning to move on (57% ), according to http://www.ashridge.org.uk/getattachment/Faculty‑Research/Research/Current‑Research/Research‑Projects/Great‑Expectations‑Managing‑Generation‑Y/GENY‑Report‑2011.pdf


2. LOSE THEIR GROOVE, GET ON THE MOVE

We’ve long been told by educators; academics, market researchers, marketeers and Millennials themselves that more matters to them than just money or material success.

Although we will see in later chapters that pay and promotion do play a major role in motivating Millennials, it is also clear that this generation prize and constantly refer back to their sense of employment engagement: how enthusiastic and stimulated they feel in a role.

A recent global study found that 60% of Millennials nominate a ‘sense of purpose’ as one of the core reasons they work for their current employer5. Building on this, our own research examined the link between performance, passion and time spent in a role.

The graph below provides a snapshot of what we found. A majority of Millennials are not comfortable overstaying with an employer once they feel their performance or enthusiasm has plateaued, and move relatively quickly to leave their disaffection at the door.

60% of Millennials had left a position within a year of feeling they were no longer giving their best, of which 32% left within three months.

By contrast, only 40% of Generation X left in a year (18% in under three months) and 21% of Baby Boomers (10% within three months)

By their own admission, Millennials appear far more likely than other generations to move on quickly after their enthusiasm ebbs away. It seems this connection between motivation and mobilisation also exists amongst older colleagues ‑ but only for a minority. 6% of Generation X resigned within a fortnight of recognising they were no longer giving their best, compared to 5% of Millennials and 3% of Baby Boomers.

MILLENNIALS

GEN X

BABY BOOMERS

40% LEFT IN A YEAR

21% LEFT IN A YEAR

18% UNDER 3 MNTHS

60% LEFT WITHIN A YEA

R32% LEFT W

ITHIN

THR

EE MO

NTHS

Left after feeling they

were no longer giving

their best

10% WITHIN 3 MNTHS

5 https://gls.london.edu/uploads/documents/gx‑wef‑2015‑millennial‑survey‑executivesummary2.pdf

Are Millennials organisational

butterflies, flitting from role to role, or is something else going on? Our own research

examined the link between performance,

passion and time spent in a role.


When you combine the half‑life findings of the previous chapter with this data, it indicates how we can harness the best of Millennials within their shorter stay.

What’s the relationship between enthusiasm and employment cycle for the rest of the workforce? Remembering that this data is self‑reported, older respondents were far more likely to claim they gave their best right up to their final day. Two‑thirds (69%) of Baby Boomers and half (51%) of Generation X asserted they remained on form until their final day, compared to 30% of Millennials.

Without wishing to impugn the honesty of these responses, many readers may well be sceptical of these claims. As employers we are familiar with the productivity drag created by overstayers, marking time until something better comes along. While we’d love every employee to be a paragon of professionalism, it’s fair to say that not all strive to succeed once they have mentally left the building.

Is overstaying, then, the shadow sister to the much more mentioned churn; less easily lamented because of the difficulties associated with employer‑initiated dismissal? Perhaps, but it’s not the focus of this report. Given Millennials are the most mobile generation in the workforce, is their mobility something employers should fight or let flow?

To inform these conversations, our next chapter looks at the impact of different workplace strategies on employment tenure amongst the different generations. How much time do they buy: are they cycle brakes or circuit breakers?

Millennials are the most mobile

generation in the workforce,

is their mobility something

employers should fight or let flow?

Percentage of generation that claim they gave their best right up to their final day

MILLENNIALS

GEN X

BABY BOOMERS

30%

51%

69%


3. BUY OR BYE: WHAT’S BEST FIT FOR MILLENNIALS?

Is long service as valuable as peak service? The rise of the Millennials is forcing employers to reassess what engagement interventions work, when, and with whom.

Managers can get caught in a vicious cycle: aware that Millennials may wish to move on, they themselves move quickly against signs of departure, offering improved packages and promotions that may not address the factors that caused the demotivation in the first place.

The diminishing returns of such strategies may not in themselves matter ‑ many employers seek to slow churn rather than choke it off altogether ‑ but as Millennials continue to move in numbers it is worth bearing in mind the long‑term efficacy of such strategies.

With this in mind we asked respondents to rank common sweeteners ‑ both the incentives they preferred and the ‘stickiness’ these incentives would deliver back to their employer.

Millennials appear to be the most motivated to perform by increased pay ‑ both compared to other incentives and to other generations.

In terms of money mattering most, the differences between the generations are not so marked: 32% of Millennials singled out money as the most important negotiation tool, compared to 26% of Generation X and 20% of Baby Boomers.

However, as the graph below illustrates, 61% of Millennials compared to 41% of Generation X and 44% of Baby Boomers have pay in their top three reasons to stay energised.

Preferred incentives - top three blended results

INCENTIVE MILLENNIAL (%) GENERATION X (%) BABY BOOMER (%)Increased pay 61 41 44Promotion (vertical move) 44 22 29Better flexible working opportunities 31 30 36Better personal development opportunities ‑ e.g. leadership training 29 25 15Increased opportunities in different roles or countries (horizontal moves) 28 25 28Better training opportunities 23 7 12Formalised mentorship opportunities 8 7 4Better social/work integration 8 5 3

Looking at the findings, training is clearly prized by Millennials more than other generations, but other incentives, for example changing roles or countries are welcomed equally across the workforce. It would be tempting to argue that as simple a thing as boredom cuts across age groups, and certain policies will help defer departure across all demographics. However, other ‘hero’ interventions like mentorships, often cited as ways to nurture young talent, do not have a significant following. Only 2% of Millennials put mentoring as the single most motivating intervention, compared to 3% of Generation X workers.

Many Millennials say pay would have got them to stay, but does cash really prevent dash?

Millennials prefer incentives of

increased pay, promotion and better training

significantly higher than other

generations


When asked about money in a different way, 84% of Millennials agreed they’d stay in a job that was well paid, compared to 75% of Generation X and 69% of Baby Boomers. However when asked to quantify the additional time they’d spend in a role the data implies there’s a clear expiry date on the loyalty bought from cash and prestige packages.

MILLENNIALS GEN X BABY BOOMERS

0

5

10

15

20

25

30

Increased pay Promotion Personal development

Better flexible working

Training Different roles/countries

Formalised mentorship

Better social/Work integration

MO

NTH

S P

EO

PLE

WIL

L S

TAY

Providing food for thought, there is not much difference between the ‘additional’ Millennial time bought through ‘expensive’ individual incentives like pay rises, compared to investing in wider programmes such creating a social culture or rolling out mentoring programs.

Equally interestingly, older colleagues appear prepared to have more time to offer, regardless of the incentive. For example, though only 12% of Baby Boomers put training in their top three policies to prolong their tenure, training would buy an additional 26 months service from them ‑ the single longest ‘service bonus’ in the data.

These findings make it clear that there are many ways an organisation can seek to motivate and retain its employees, but quantifying the time bought against the net cost of deferring a departure is a useful exercise, especially given the inherent mobility of Millennials.

Ultimately, however, the key to better motivating Millennials may not be in numbers, but in words. Do employers face a binary choice between rushing to keep or rushing to farewell Millennials, or is there another option to consider?

Millennials say pay would have

got them to stay, but does cash really prevent

dash? Ultimately, however, the key to better motivating

Millennials may not be in numbers, but

in words.


4. THEY MOVE, WE MOVE: OPENING THE CONVERSATION

Ironically, an open conversation about an employee’s intention to leave seems to be one of the key things that would lead them to stay.

This wish for transparent, grown‑up discussion cuts across the generations ‑ slightly more than half of Millennials (57%) say they would have stayed in their role longer if managers had asked them what they needed to keep them there.

Going further, two thirds (65%) of Millennials say they’d have stayed longer if managers had shown interest in them as an individual; a greater proportion than amongst Generation X (48%) and Baby Boomer respondents (49%).

When we consider the relatively high levels of support for personalised conversation and customised career plans across the workforce ‑ 50% of Generation X and Baby Boomers also would have stayed longer in role had they simply been asked what they wanted ‑ it seems a relatively low risk strategy for employers to stretch out current lines of communication.

After all, the worst that can happen is that employees want something that can’t be delivered, and the best is that their needs are relatively easy to supply.

Rather than “ask and we will see”, perhaps “ask and you can foresee” should be our new mantra: keeping pace with workforce mobility, if not ahead of it.

Looking specifically at Millennials, the data suggests that, of all demographic groups, they may be the most open to persuasion if employers ask the right questions. When given that list of incentives like pay, and mentoring, only 19% of Millennials say that there was nothing an employer could have done to prevent their departure once they’d decided to leave, versus a third of Generation X (31%) and Baby Boomers (35%).

Overall, this feels like an intriguing insight rather than an invitation to offer the world. Millennials may be malleable but this plasticity should not by itself shape retention strategy. After all, the very qualities that make the Millennial contribution to the workforce so important ‑ collaboration, a willingness to learn and be challenged, an interest in innovation ‑ may themselves carry an in‑built obsolescence, as working environments become familiar and skills are mastered. In this context, it may often be the right decision to set them free rather than to tempt them with gold.

Rather than “ask and we will

see”, perhaps “ask and you can

foresee” should be our new mantra.


CONCLUSION

This briefing ends, as it began, calling for conversation.

We believe this data emphasises the ways in which Millennial careers will differ from those of preceding generations, and demonstrates that companies will need to react to both hiring change and their method of managing and motivating a virtual, mobile workforce.

As workforce leaders, we foresee a change coming where employees give their best rather than serve their longest and from an organisation perspective where the ability to ‘manage in the moment’, especially given the rapid rise of the Millennial workforce, will be essential.

Of course, organisations will frame their Millennial management differently, depending on business conditions, the talent market and the individual employees themselves. But in our experience, many businesses have yet to create a cultural strategy for this important demographic shift, nor have invested in the workforce management technology required to empower managers to adapt to and embrace this change.

We recommend building a Millennial workforce strategy that encourages engagement, creating a thriving workforce culture. This should be a board‑level priority as it impacts the organisations ability to deliver an outstanding customer experience and we conclude therefore, by suggesting a few golden questions leaders should ask themselves.

• Does our churn data imply we have an underlying problem with a particular demographic?• Have we scrambled to stretch out employee cycles in the past ‑ if so offering what, and how successful

have these efforts been? • What message are we sending to Millennial employees who are considering joining and leaving? • Do our managers create an environment for honest discussion and negotiation? If not, why not?• What would our response be to a 10% lift in Millennial churn rates? What about a 20% increase?• How far are we from delivering that response now?• Do we have the systems in place to manage a rising Millennial workforce?• Are we prepared to lead the organisational shift required to make the change?

As much as delivering a strategic plan, these questions will also help manage our own expectation. Change is coming, employment cycles are shortening. In the near future we may be talking less about a job for life and more about managing in the moment; if so it’s incumbent upon us to make every moment count.

The key to better managing Millennials may

not be in numbers, but in words.

Motivating Millennials: Managing tomorrow’s workforce, today

Kronos commissioned Galaxy Research to investigate whether Millennial employees think differently, act differently, work and want differently to their older colleagues.

With no universal agreed nomenclature and age banding for the different generations Galaxy Research defined Millennials as born between 1981-2000; Generation X as constituted by those born between 1965-1980; and Baby Boomers as 1946-1964.

Using a permission-based panel (which is representative of the Australian population as a whole), the online study asked 600 Australians between 18-64 in-depth questions about their employment history and habits.

Interviews were only conducted amongst those who were in full-time employment that was not their first full-time job, and the full survey followed an initial roll-out of a 100 person pilot to confirm questionnaire design.

Millennials aged between 18-34 years were over-sampled to be 50% of the total sample with 25% of sample constituted by 35-49 years and 25% by 50-64 years.

We received 200 responses from NSW/ACT; 171 from Victoria/Tasmania; 117 from Queensland, 65 from Western Australia and 47 from South Australia.

This dataset was then weighted and projected to the population based on the latest ABS population estimates.

MORE INFORMATION

RESPONSES BY STATE

RESPONSES BY GENERATION

MILLENNIALS 1981–2000

BA

BY BOO

MERS 1946–1964 GENERATIO

N X 1

965–1

980

65 W

A

4

7 SA 200 NSW/ACT

11

7 QLD

171 TAS/VIC

ABOUT KRONOSKronos is the global leader in delivering workforce management solutions in the cloud. Tens of thousands of organisations in more than 100 countries — including more than half of the Fortune 1000® — use Kronos to control labour costs, minimise compliance risk, and improve workforce productivity. Learn more about Kronos industry-specific time and attendance, scheduling, absence management and labour analytics applications at www.kronos.com.au. Kronos: Workforce Innovation That Works™

http://www.kronos.com.au

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Managing tomorrow’s workforce, today · Motivating Millennials: Managing tomorrow’s workforce, today 3 12 LESSONS LEARNED ABOUT MILLENNIALS Millennials are on the rise. In five