The arrival of Generation Y into the workplace has had a dramatic impact both on business and the world around us. Facebook, Google and Twitter are three major brands that were created and then morphed, in an astonishingly short space of time, into global institutions thanks to Generation Y
So who are Generation Y? Sometimes referred to as millennials – employees who entered the workplace after 2000 – they are broadly classified as those born in the 1980s and early 1990s. They are characterised as a tech-savvy group, whose members are visionary, highly ambitious and not afraid to fail or to speak their mind. Mark Zuckerberg and Sergey Brin are among the elite few who have become standard-bearers for this generation.
Generation Y is bright, creative, what one might term ‘effectively disruptive’, and focused on driving change. This is partly because its members are far more aware about what is going on in the wider world. It is not a single issue that drives them, but many concerns, including poverty, hunger, climate change, war, natural disaster and disease.
When the tsunami hit the Japanese coast in 2011, gaming website Gameranx worked with Geeks Without Bounds – a not-for-profit accelerator for humanitarian projects – to produce a video game-style program which allowed gamers to survey the landscape through satellite images and inform disaster relief teams where the worst problems lay.
Last October, Zuckerberg announced he would donate $25m (£16.6m) to the Centers for Disease Control to help in the fight against Ebola. In comparison, the British government pledged to donate £5m – the third-largest commitment by any national government. Both examples demonstrate how new companies and their Generation Y chief executives look to use both their products and profits to meet major global challenges.
Rise of millennials
This generation’s rise to prominence within a relatively short period has been facilitated partly by the global recession. As the downturn bit, it led to sharp cuts in household income. Consumers sought alternative, cheaper products and services, which in turn created new markets.
The downturn has also had a huge impact on graduate jobs and it is to their credit that so many within this age group refused to be defined by the failures of previous generations, but sought to find their own way in the world, generating wealth as they did.
The influx of these fresh, talented individuals, many of whom find themselves among the business elite at a relatively young age, has proved a magnetic draw for organisations. Some businesses in pursuit of greater diversification have sought to bring Generation Y on board through such strategies as reverse mentoring (junior staff advising seasoned executives) or mergers and acquisitions, thus subscribing to a meritocratic culture that helps push aspirational young people to the top table.
Businesses understand that the competitive landscape is altering and they need to both bring in new talent and retain their top performers to remain relevant. The big four accountancy firms have had to adapt more quickly than most sectors to the millennials’ demands as they recruit 8,000 graduates a year.
Therefore it is worth noting the comments of Bob Moritz, US chairman of PwC, who said in an interview with the Harvard Business Review, that millennials are looking for more than just recognition through “compensation”. He suggested a first point might be to stop using a phrase which recognises loss – in this case of their time – as most millennials place far greater importance on enjoying their work than just being paid for it.
Moritz described how millennials were 30 per cent likelier to want to work overseas. Emphasising their global outlook, he explained how PwC instigated Project Belize, which looked to increase the financial literacy of students. Those on the scheme were twice as likely to stay with the company for another 12 months than those who did not.
The big firms may well have big budgets to spend on training, special projects and sabbaticals, but how can small and medium-sized firms adapt to this new reality? Unkindly, some liken attempts to educate older executives as to the merits of social media, as “like teaching dad to dance”.
SMEs must use their manoeuvrability to their advantage to make the aims of their firms align much more with that of Generation Y. As Moritz commented when comparing his arrival at PwC in 1985 to those who arrive today.
“Most of all, I would have been astonished that PwC’s millennials don’t only demand to know the organisation’s purpose – its reasons for being – but are prepared to leave the firm if that purpose doesn’t align with their own values… When I was coming up, we knew what we were doing, but we didn’t ask why we did it. We didn’t give much thought to our, or the firm’s, role in society. For me, that point crystallises the generational issues… as we hire a greater number of millennials.”
This is where SMEs can use their size to their advantage; they can allow members of Generation Y to have far greater input into the aims of the organisation. In a company of 50 people, a graduate or any individual in their twenties might have a far greater say in the allocation of the corporate social responsibility budget than in a worldwide firm that employs tens of thousands of people.
One way this can be achieved is by giving Generation Y a seat in the boardroom. All businesses will have something to gain from this, but promoting young talent to the top can be a particular advantage for companies whose consumer base is targeted towards that demographic.
The problems of ‘generation integration’ in the boardroom do not only lie with senior executives. Being a director, particularly of a large multinational, is not just about applying a standard set of procedures that might occasionally benefit from a shake-up and youthful energy.
A directorship is more complex, and perhaps better considered a distinct profession with clear expectations about competence, ethics and behaviours. All directors are bound by strict regulation and legislation, backed by severe penalties for the most serious transgressions.
Being a director is therefore a very different role – both legally and psychologically – from being a senior executive. This isn’t really talked about a good deal even in public policy discussions. It’s a highly complex job and brings unique responsibilities which are qualitatively different from other management and operational roles.
Directors must make difficult decisions often based on the available information, which may well be incomplete; this requires considerable skill, judgement, experience – and occasionally a dash of chutzpah.
Added to which, boards are under increasing scrutiny with growing public awareness that the buck stops with directors. When an organisation fails to meet the standards expected of it the questions are invariably: “Where was the board?” and “Where were the directors?”
Businesses can be highly complex and as the Co-operative Group and Tesco demonstrated, maintaining oversight across a large multi-faceted organisation is a huge task for any board. Being a director therefore requires both a very high level of professionalism and expert knowledge.
Ultimately, it is the board’s collective responsibility to achieve competitive advantage for their organisations, ensuring the long-term success of the company by finding that tough balance between entrepreneurship and risk management. In spite of the challenges outlined above, many new directors are given little opportunity to learn about their roles before joining.
This is surely problematic given there is not much scope to learn on the job, and liability and accountability exist from day one, and will continue even after a director has left a board. Any new board members need to be supported to ease the switch from senior manager or entrepreneur. Without this, a restructured board may become a less effective decision-making forum. New members may avoid speaking up for fear of ‘saying the wrong thing’, allowing dominant personalities to rise to the fore. Their opinions can prevail and board decisions may then be insufficiently thought through.
Balance of power
Understanding that it can take time for individuals, particularly those of a different generation, to ‘click into’ the language of a board and have their point heard by colleagues is crucial to avoid this imbalance of power developing. As a starting point, the IoD recommends new appointees are provided with an induction and a programme of professional development.
There are many courses provided by the IoD which explain the fundamentals of being a director – Role of the Director and the Board as well as Finance for non-Financial Directors, for example. Both these courses develop individuals’ skills in how to become an effective director and spot the problems ahead. They are valuable for new and aspiring directors, who will be entering the boardroom for the first time, as well as experienced executives.
Where inductions take place within a firm, they’re often organised by the company secretary and might include an induction pack, presentations from key managers, discussions with the chairman or company secretary, meetings with other directors, reports from external analysts and site visits to give a balanced, real-life overview.
The value of high-quality professional development for directors should be considered a requirement for first-time directors, and indeed be an essential component for established directors, ensuring they are up to date on the political, social and the ever-changing business landscape.
A tailored training package, including advice on governance, corporate finance, strategy development and risk management, will give new directors a full and better appreciation of the complexity of their role and its legal and regulatory requirements, especially if they have no experience of sitting on a board before.
This is something many leading organisations are investing in, despite the need for belt-tightening. The IoD’s director training figures show that 3,000 UK director development course places were filled last year, with more than 500 individuals completing the programmes and sitting certificate, diploma or Chartered Director examinations.
Another route for boards to consider is whether Generation Y might be more effective as non-executive directors (NEDs). NEDs fulfil the role of ‘critical friend’ providing objective, strategic advice to, and oversight of, the executive team. By appointing younger talent into these positions, businesses will benefit from their insights, without their being weighed down by the heavy responsibilities of an executive director.
However, regardless of their executive/non-executive responsibilities, all directors are equally accountable and liable for decisions taken within the boardroom, whether or not they also have operational duties to fulfil. To see the potential success of this kind of midway approach you only have to look at some of the early internet entrepreneurs within Generation X who blazed a trail for Generation Y. Individuals such as Martha Lane Fox, who started Lastminute.com and who has since established a prestigious portfolio of non-executive positions, including sitting on the boards of Channel 4 and Marks & Spencer among others.
While Generation Y injects fresh thinking into the established boards, others are taking the skills they have learnt from big companies and finding a new lease of life through the open-mindedness that often pervades younger businesses.
Some directors have continued as NEDs beyond retirement age, providing a rich source of advice from a previous generation. They can offer support to smaller firms from their ‘seen it before’ attitude, without the cost necessarily of employing another executive director. This sort of expertise is invaluable for Generation Y and start-ups.
A great example of the power of a non-executive specialist was highlighted at the IoD event, Connecting Entrepreneurs with Big Business. Brett Akker, co-founder of Streetcar, said that the “best thing” to happen to the firm was when Sir Trevor Chinn became chairman of the board. As a former chairman of the RAC, he had experience and contacts. Akker said: “He was able to open doors almost overnight for us. For three or four years we have tried to partner with Volkswagen, but we couldn’t even get in the door to tell them all the good things we were doing. As soon as Trevor came on board, they began calling us.”
A new industrial revolution?
Integrating fresh young talent into businesses has always been crucial but is not without its challenges. Each generation can disrupt custom and practice within an organisation, but the hope is always that this disruption can be a catalyst for something better to take its place. This is where it gets interesting, because Generation Y has not just opened up new markets with revolutionary products. Over the last few years we have also seen the huge impact of their input on core traditional industries.
The cleaning sector, for instance, has been transformed in the UK over the last two years and by the simplest idea. Pete Dowds and Tom Brooks, friends from Sheffield University, had a house party in 2013, and the following morning they wondered why there wasn’t a simple app that could find a cheap local cleaner for them – and so their company, Mopp, was born. Just 18 months later, it was acquired by US cleaning firm Handy in a multimillion-pound deal.
The way Generation Y can disrupt traditional industries is akin to a new industrial revolution. While such rapid change may make some feel uncomfortable, an even bigger upheaval is right round the corner. Just behind Generation Y is Generation Z. Born after the mid-1990s these are the first generation of ‘tech natives’, who have grown up never knowing life without the internet. Their impact on the workplace could make Generation Y seem like a mere blip in comparison.
- Generation Y’s rise to prominence within a relatively short time has been facilitated partly by the global recession
- Businesses understand that the competitive landscape is altering and they need to both bring
in new talent and retain their top employees to remain relevant
- SMEs can use their size to their advantage; they can allow members of Generation Y to have far greater input into the aims and objectives of the organisation
- Integrating fresh young talent into businesses has always been an imperative but is not without its challenges
- The way Generation Y can disrupt traditional industries and transform business models is akin to a new industrial revolution, possibly with even greater impact and certainly with greater speed
Watch Christian May, IoD head of communications, interview Jimmy McLoughlin, IoD deputy head of policy, about the rise of Generation Y