maximizing millennial roi - finchwaygroup.com€¦ · maximizing millennial roi: retaining and...

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.


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 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.


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)


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.


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


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?


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


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.


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


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.


FIND OUT MORE

To find out more about what The

Finchway Group does, email

[email protected]. 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.

mailto:[email protected]

maximizing millennial roi - finchwaygroup.com€¦ · maximizing millennial roi: retaining and...

Documents