You can forgive HR departments if they are suddenly confused and more than a bit frustrated. In the past, there was an easy-to-follow formula for attracting and retaining top talent: Pay them more than the other guy. It was simple. It made economic sense. It worked.
And yet today, it’s a model that is becoming increasingly obsolete. The reason why is evident in the mounting empirical and anecdotal evidence that today’s millennial workforce is motivated by more than money.
This abrupt pivot from tradition by an entire generation is wreaking havoc on countless HR departments. Suddenly, even some of the world’s most innovative companies are finding themselves on the other end of disruptive ideas – and, somewhat ironically, are themselves struggling with how to adapt.
It doesn’t have to be this way. Like all generations, millennials share a common set of values based on a common set of experiences. Companies looking to hire the best and brightest workers from among their ranks just need to understand how this generation’s motivations differ from the generations they are replacing.
(Here’s a quick spoiler alert: Things like money and “office perks” are not on the top of the list.)
The Increasingly Millennial-Driven Workplace
It’s easy to understand why the disconnect between what millennials want and what companies think they want is causing so much angst across the entire corporate spectrum.
Millennials already make up 25 percent of the workforce in the United States – more than any other generation. By 2020, it’s estimated that Millennials will account for one in two employed adults worldwide.
Given the scope of the shift, the stakes for figuring out how to attract top millennial talent couldn’t be higher. Simply put, a company that can’t attract qualified millennials won’t continue to exist for very long.
The Proof Is in the Data: Millennials Are Looking for More Than Money.
Despite this race against the clock to discover the winning formula, change has been slow to come. Why? Because attracting qualified millennials requires companies to forget everything they think they know about what motivates employees.
Research shows that the baby boomer generation, which has shaped corporate culture for decades, was motivated by two things: financial benefits and job security. But the baby boomers are now approaching retirement age, and studies on the millennial employees replacing them have consistently shown that millennials do not value those things nearly as much as their parents or grandparents did. Millennials are more interested in the opportunities for growth that a job offers, and they are more willing to leave a company that they feel isn’t providing them.
For high-tech companies specifically, this changing of the guard is bringing stark changes in employee motivations. Jolt recently conducted a poll of millennial tech employees in California on the subject of what motivated them to take a job. Nearly half of respondents cited “career growth and development” as a key factor in their decision-making process. Money lagged behind, at just 17.4 percent.
Start-up perks? They were barely mentioned at all. Just 6.6 percent said that this golden calf of U.S. high-tech companies even entered their thinking when considering a job offer.
Understanding What Millennials Actually Want out of Their Careers
Millennials have been shaped by an interconnected world that values new experiences. It should come as no surprise then that a 2011 study by the National Association of Colleges and Employers found that the number-one overall motivating factor for millennials as employees was “opportunity for personal development.”
To remain competitive in today’s labor market, companies must make such opportunities a central pillar of their corporate culture. Directing HR resources toward higher salaries and office perks might have been attractive to previous generations, but using that strategy today will increasingly result in the same frustration that comes with trying to fit a square peg into a round hole.
Millennials Will Be Loyal – if You Give Them a Reason to Be
Millennials want to be engaged in a socially responsible workplace that reflects their values. That’s why many highly qualified millennial candidates eschew big tech salaries in favor of civic positions or nonprofit work where they believe they can grow more than just their bank account.
Paradoxically, companies often shift the blame for their own failure to attract and retain millennials onto the millennials themselves. Mantras like “millennials aren’t loyal” are often used to justify eliminating budgets for employee training. Some firms have even become so unwilling to invest in their own people that they actually encourage turnover, because the longer an employee stays with them, the more out-of-date their skills become.
This is a self-defeating attitude, because the reality is that a mutually beneficial relationship is still enough for a company to hire and retain top talent. What has changed is how millennials are defining what constitutes a mutually beneficial relationship. If you won’t provide it to prospective employees, then you are risking losing them to a competitor who will.
Previous generations viewed the relationship between companies and employees as primarily a game of numbers. Millennials view it in terms of opportunities for personal growth and development and, as a result, are changing the rules of the game to reflect those values. Companies that move now to reorient their HR strategy will be able to capitalize on these new realities. On the other hand, those that remain stuck in the old ways of doing things will be forced to stand on the sidelines, powerless to stop today’s top millennial talent from building tomorrow’s best tech companies somewhere else.
Roei Deutsch is the CEO and cofounder of JOLT, a marketplace for live talks given by professionals to teams who wish to keep up to speed with rapid market changes. He founded and sold his first company at the age of 15 and by the age of 18 served as new-media consultant for a number of media corporations.