Social Changes

Businesses today are operating in a society that expects more out of companies, that is more demographically diverse, and whose members aren’t afraid of speaking up and out. In effect, people are holding the companies in their lives to a higher standard as consumers, investors, and employees.

In the wake of the Great Recession of 2008, consumers now seek “value and values,” according to research by journalist Michael D’Antonio and John Gerzema, the president of Brand Asset Consulting for global advertising firm Young ＆ Rubicam. D’Antonio and Gerzema found that more than 71 percent of Americans are part of a “spend shift,” in which consumers are actively aligning their spending with their values. This shift cuts across demographic groups and is rewarding companies that demonstrate transparency, authenticity, and kindness in their operations.

Meanwhile, American businesses face an increasingly diverse marketplace. Whites made up 80 to 90 percent of the U.S. population from 1790 to 1980. The year 2011 marked the first “majority-minority” birth cohort, in which the majority of U.S. babies were nonwhite minorities.

The demographic changes come with cultural divides. Many baby boomers (those born from 1946 to 1964) and seniors (those born earlier still) resist the changing racial makeup of the country, while the millennial generation (those born from 1981 to 2004) is more inclusive. One study found just 36 percent of baby boomers thought more people of different races marrying each other was a change for the better, compared to 60 percent of millennials who applauded the trend.

The millennial generation is one businesses have to pay close attention to, as both consumers and workers. Millennials surpassed their Generation X elders (born from 1965 to 2000) as the largest cohort in the U.S. workforce in 2015. That year, there were an estimated 53.5 million millennials at work, or about one-third of U.S. workers.

As employees, millennials prioritize meaning, balance, and job stability. A recent survey of 81,100 U.S. undergraduates found young people ranked an inspiring purpose as the most desired characteristic in an employer, with other top priorities being job security, work–life balance, and working for a firm with fewer than 1,000 employees. Millennials also expect a more personalized, development-oriented, participatory, collaborative, and transparent workplace, other research shows.

That’s not to say that desires like purpose and cooperation are absent in people of other generations. After all, the “Greatest Generation” of Americans had the courage to defeat the Nazis in World War II, rebuild Europe, and put a man on the moon. Baby boomers and Generation Xers have had the vision and persistence to launch companies that have reshaped the way we live: firms like Microsoft, Genentech, Whole Foods Market, Apple, and Google, to name a few.

It could be that millennials have such lofty standards for work in part because they happen to have been raised during the economic boom of the 1990s. And many have entered the workforce during the U.S. recovery that began in 2009. In any event, this generation does stand out from others when it comes to the traditional climb up the corporate ladder. Our research, for example, discovered that baby boomers or Gen Xers generally have a more positive workplace experience the higher the job level they attain. Millennial executives, though, have a less positive experience than millennials in more junior management roles (see Figure 7). This could be a result of a clash between the demands of C-suite positions and millennials’ yearning for a rich life outside of work.

Figure 7
Millennials: A Dip at the Top
Millennial leaders see their work experience drop when they reach the executive level

What’s more, millennials are not afraid to seek employment elsewhere if their expectations are not met. Our research on different generations in the workforce found fewer than 5 percent of millennials who do not experience a great workplace plan a long-term future at their companies. That compares to 7 percent of Gen Xers and 11 percent of baby boomers who intend to stay at their companies despite not considering it a great workplace.

On the other hand, our data dispelled a commonly held myth: that millennials are inveterate job hoppers. We discovered that when young people are at a great workplace, they are nearly as likely as their peers in older generations to want to remain at their companies. Fully 90 percent of millennials who feel they are at a great workplace want to stay there for a long time. In other words, a great workplace makes a 20× improvement when it comes to retention (see Figure 8).

Figure 8
Trust Drives Millennial Retention

Millennials also tend to voice their opinions and concerns publicly, in company forums, on Facebook, and in blogs. Former Uber employee Susan Fowler, who graduated from the University of Pennsylvania with a bachelor’s degree in 2014, is a case in point. Not only did Fowler quit Uber for another firm after just over a year, but she documented her experience for the world to see. Her account not only painted the company as negligent and deceptive regarding her sexual harassment claim but described a back-stabbing, chaotic culture in which a manager allegedly bragged about withholding “business-critical” information from one executive in order to curry favor with another.

Fowler’s blog, in effect, was the last straw for Kalanick’s reign at Uber. She painted the company as the last place millennials seeking an inspiring, cooperative, transparent culture would want to join or do business with. And given the increasingly important role millennials are playing in the workforce and as consumers, no company can afford to leave this generation behind.