Aon Hewitt

Talent, Rewards & Performance

Managing Millennials:
Changing Perspectives for a Changing Workforce

October 2016

Risk. Reinsurance. Human Resources.

Managing Millennials

Millennials have become quite the hot topic, and there is little wonder why. As of 2015,
Millennials, people born between 1979 and 1996, have officially become the largest generation
in the workforce.1 As companies are growing, they need to also consider how their consumer base
is changing as well. This means that understanding the preferences and desires of this emergent
segment is essential to recognizing future workforce trends, considering that Millennials will
become 50 percent of workforce by 2020.2 But within all the chatter surrounding Millennials,
there appears to be hardly any consensus on how to understand this population. While there
have been many attempts to pigeonhole Millennials as one group that has vastly different
preferences than other generations, the reality is more nuanced.

Millennials have certain needs that are the same for any generation entering the workforce for the
first time. However, they also have unique needs that are shaped by technology, constant
feedback (i.e., social media), changing workforce composition, and a volatile economy. Our
attempt in this paper is to take a holistic view of Millennials as a population, and the various HR
processes that will be impacted by Millennials. The way we have structured this paper is focused
on our Human Capital Strategy.

Projected Millennial Portion of Workforce in 2020

Silents
1%
Baby Boomers
22%

Millennials
50%

Generation X
20%

Generation Z
7%

Aon Hewitt Managing Millennials 1

 Workforce and Organization Design

Organizations should The key word that keeps emerging throughout all of the reports on Millennials is flexibility. In
consider: our most recent workforce mindset study, 60.3 percent of Millennials cited having a flexible
• How they can benefit schedule as one of their top priorities. Millennials are willing to put in the hours, but they also want
from new technology the freedom to manage their own schedules. Likewise, Millennials are hungry for promotions,
• Accounting for which mean organizations can benefit from examining job titles, organizational structures, and
telecommuting job leveling. The majority of Millennials indicated that they want regular feedback.
• Developing channels
of communication A changing workforce also will require new forms of communication, which will change the
• Creating job leveling boundaries of work-life balance. This is a generation that is “always on,” with access to technology
that changes the boundaries of work-life balance. On the same token, there is a growing interest
• Designing around
flexibility in telecommuting. This will require organizations to think about how they can build work
communities around an out-of-office population. Millennials are digital natives who are used to
communicating through technology and will typically adjust to new technology quicker. New
communication strategies will likely take the form of using text messaging for office memos, using
personal devices at the office, gamification systems, and internal social media platforms.

Case Study:
A major television firm designed a gamification platform to facilitate learning amongst its
Millennial employees. This platform was intended to offer challenges, publicize rewards, provide
immediate feedback, and align objectives with its talent. The platform was created to be both
visually stimulating and engaging. After implementing the platform, the firm reported enhanced
engagement and experienced a 30 percent decrease in issues with rollouts amongst IT employees.

Aon Hewitt Managing Millennials 2

 Acquisition and Development

Organizations should Millennials are the newest segment of the workforce and are eager for career development.
consider: Increasing the use of rotational programs will introduce the population to a wide breadth of skills.
• Establishing clear career Millennials are significantly more concerned than other generations with having access to
progression valuable career and/or development opportunities3 and cite development opportunities as key
• Using employment engagement drivers. But, this finding is to be expected for individuals just entering the
websites workforce. Whereas more senior employees typically have less potential for career growth, new
• Working to build EVP entrants are at the point in their career where they have the most potential for development.
• Implementing mobile
selection and assessment Likewise, Millennials also have had to become savvier about hiring than other generations. Many
Millennials faced entry to the economy in the wake of the great recession and have learned to use
every hiring resource at their disposal. Millennials use the most sources related to employment
compared to all other generations, with 41 percent of the generation using employment-oriented
websites such as PayScale, Glassdoor, or LinkedIn.4 Organizations can continue to ensure that they
are attracting the best talent pool by leveraging technology in their assessments to provide a
better acquisition process.

It’s important for organizations to consider their brand because of the emphasis on
employment websites. Since Millennials are early in their career and are eager for development
opportunities, organizations will benefit from continuing to develop their brand around
providing growth opportunities for new employees. A large part of creating a brand is creating
an internal community that employees are able to identify with and feel loyal to.

Case Study:
A Fortune 100 Technology firm was challenged by linking Millennial’s short-term needs to long-
term development goals. This organization developed a performance management tool that
directly connected needs to development goals. This program has fostered collaboration,
career development, increased rotation opportunities, and achieving professional goals. Since
implementing the program, Millennials have reported that they feel that their business group
supports their development, that they have the resources to progress in their career, and that
they have opportunities to enhance their skills.

Aon Hewitt Managing Millennials 3

 Total Rewards

Organizations should Base pay isn’t everything. In fact, Millennials indicate that flexibility, incentives/bonus pay,
consider: work/life and well-being programs, and career and development also are top determinants of job
• Think beyond base pay satisfaction.5 This fact should not be misinterpreted as Millennials being unconcerned with pay.
Optimize total rewards to They are. But a lot of Millennials are experience driven, eager to enjoy their youth, and are hoping
focus on Millennials
to find jobs that accommodate their wide array of needs. Just as priorities change with age, so do
• Complement rewards interests. And, a lot of these younger employees are displaying total rewards preferences that
programs with recognition
are typical for an emergent generation.
• Educate employees on
financial well-being Organizations also should remember that total rewards include everything the firm brings to the
• Target fun versus employees. Firms also should consider using recognition as a means to engage this new population.
empowerment based
Although recognition should be frequent, it need not be costly. Simply training managers to say
on population
“thank you” can empower the new workforce.

According to our Financial Mindset study, there is mixed sentiment regarding Millennials’
financial outlook. Forty-nine percent of Millennials stated that they feel intimidated by financial
matters.6 This population also is less likely to save for the future and consider retirement.
Thus, Millennials are likely to also consider the value, meaningfulness, and growth potential of
their role. While younger Millennials are more concerned with fun, established Millennials
are more concerned with empowerment.

Our recent study, Making Recognition Programs Successful, also revealed key differences amongst
Millennials in response to recognition programs. Traditional recognition programs were the least
effective with Millennials, with 23 percent of Millennials describing their recognition program as
ineffective. Nonetheless, the most effective recognition vehicles for Millennials were handwritten
notes, event tickets, and a “thank you” from peers, managers, or other leaders. These vehicles once
again reveal that Millennials desire unique experiences and acknowledgement from their leaders.

Aon Hewitt Managing Millennials 4

 Flexibility

Development Most Incentives/

Opportunities Desired Recog
Rewards

Well-being
Programs

Case Study:
A food retailer with 24,000 employees created a rewards plan to support its younger employees’
college education. This college achievement plan offers employees who work a minimum of
20 hours per week the opportunity to earn a Bachelor’s degree with full tuition reimbursement.
The firm stated that investing in its Millennial employees is one of the best investments that
it can make towards its future.

Aon Hewitt Managing Millennials 5

 Leadership

Organizations should Firms will benefit from having an acute knowledge of Millennials’ leadership needs. Millennials
consider: want honest leaders that are both trustworthy and willing to give sincere feedback. In fact,
• Create leaders that give our study of hourly Millennials revealed that 83.8 percent of respondents voted trustworthiness
honest and transparent as their primary concern. Likewise, Millennials value feedback more than any other generation.
feedback
Thus, mentorship will be an important component of leading Millennials.
• Have more frequent
feedback than annual Mentoring Millennials also is a two-way street and organizations should consider reverse
• Hold forums that allow for mentorship. Reverse mentorship can take the form of Millennials teaching more senior employees
exchanges between senior about technology and acculturating senior leaders on new ideas. Nonetheless, Millennials
leaders and Millennials
need role models from older generations that are both current with Millennial trends and who
• Adapt communication
can teach the new entrants valuable lessons.
style of the organization
on population
Leading Millennials also will require adapting to new styles of communication. Millennials are
often more direct about their needs and can be surprisingly frank with their leaders. This
provides both a challenge and growth opportunity for leaders. Current leaders can benefit from
the new generation’s directness and drive, but they also need to learn to rethink boundaries.

Case Study:
A global-pharma company used business challenges as a vehicle for pairing high-potential
Millennial employees with senior leaders. The firm created a planning committee that united
its senior leaders with Millennial employees to discuss issues of transparency, performance
differentiation, talent development, and decision-making accountability. This committee
promoted transparency by creating a video to highlight their recommendation, eventually
leading to key initiatives being rolled out throughout the organization.

Look for reverse mentorship opportunities

Aon Hewitt Managing Millennials 6

 Culture

Organizations should A lot of the data around Millennials’ contribution to culture runs counter to widespread stereotypes.
consider: Millennials were found to display only slightly more favorable views than other generations when
• Figure out your own describing their current employment experience. Millennials attitudes aren’t nearly as cynical as the
strategy rather than media describes. In fact, Millennials are “more likely to select words like efficient, loyal, respectful,
following the herd
recognition-oriented, honest, adaptable, and engagement-focused than are other generations”7
• Millennials are likely when describing their current work experience.
to be less cynical than
other generations
—give them a chance In addition, a changing workforce means a changing office environment. Literally. Millennials want
to be engaged by their environment. Creating an engaged workforce requires organizations to
• Reconsider your workplace
think about the entire work experience. Employers should consider how workplaces may become
• Think about approaches,
more customizable to meet the changing needs of their talent. Although not all organizations
like mass customization, to
give a unique experience require environmental makeovers, it’s important to consider the changing needs of the workforce.
to each employee
Case Study:
A quasi-governmental agency was challenged with declining engagement levels across the
organization. The organization responded to falling engagement levels by creating a multigenera-
tional group to participate in a two-day action-planning forum. The purpose of this group was
to facilitate learning across generations and to have a cross-practice conversation about working
more effectively. In addition, the group focused on solving the engagement issue as a collective.
The planning forum resulted in the creation and implementation of key initiatives to solve the
engagement challenge.

Aon Hewitt Managing Millennials 7

Take Away

Millennials will soon make up the majority of the workforce.8

Organizations are at a turning point with managing the next generation of talent. Future
business success depends on balancing business objectives while meeting the changing needs
of the workforce. These two objectives are not mutually exclusive but actually supportive of
each other. Organizations that are able to attract the most desirable talent will have a
competitive advantage in the future.

The Human Capital Strategy provides a simple yet effective framework for helping your
organization to adapt to the growing Millennial population. Finding organizational design,
acquisition, rewards, leadership, and culture solutions to the changing generational
composition of the workforce will be the key to future success.

Aon Hewitt Managing Millennials 8

References

1. http://www.aon.com/human-capital-consulting/thought-leadership/communication/2016-con
sumer-health-mindset.jsp

2. http://www.aon.com/human-capital-consulting/thought-leadership/health/2015-health-care-
survey.jsp

3. http://www.aon.com/attachments/human-capital-consulting/18787_Consumer_Workforce_Mind
set_Report_2016_v8_LR.pdf?elqTrackId=05e03668e18c4d42a119e7968054b635&elq=1923aea248
214f10bf064d9ef9ff43c1&elqaid=22638&elqat=1&elqCampaignId (p.13)

4. http://www.aon.com/attachments/human-capital-consulting/18787_Consumer_Workforce_Mind
set_Report_2016_v8_LR.pdf?elqTrackId=05e03668e18c4d42a119e7968054b635&elq=1923aea248
214f10bf064d9ef9ff43c1&elqaid=22638&elqat=1&elqCampaignId (p.54)

5. http://www.aon.com/attachments/human-capital-consulting/18787_Consumer_Workforce_Mind
set_Report_2016_v8_LR.pdf?elqTrackId=05e03668e18c4d42a119e7968054b635&elq=1923aea248
214f10bf064d9ef9ff43c1&elqaid=22638&elqat=1&elqCampaignId (p.26)

6. http://www.aon.com/human-capital-consulting/thought-leadership/communication/2015-
financial-mindset-study.pdf

7. http://www.aon.com/attachments/human-capital-consulting/18787_Consumer_Workforce_Mind
set_Report_2016_v8_LR.pdf?elqTrackId=05e03668e18c4d42a119e7968054b635&elq=1923aea248
214f10bf064d9ef9ff43c1&elqaid=22638&elqat=1&elqCampaignId (p.10)

8. http://www.aon.com/human-capital-consulting/thought-leadership/communication/2016-con
sumer-health-mindset.jsp

Aon Hewitt Managing Millennials 9

Contacts
Leslie Hauser
Senior Associate Consultant
Aon Hewitt
+1.212.441.2819
[email protected]

Neil Shastri
Leader—Global Insights & Innovations
Aon Hewitt
+1.212.441.1496
[email protected]

Reuben Weiss
Intern—Global Insights & Innovations
Aon Hewitt
+1.212.441.2000
[email protected]

Special Thanks
We’d like to thank John Capman, Sarah Chatfield, Laura Donald,
Anthony Egbo, Kelly Schlieder, and Jordan Stabley for their support.

Aon Hewitt Managing Millennials 10

About Aon
Aon plc (NYSE:AON) is a leading global provider
of risk management, insurance brokerage and
reinsurance brokerage, and human resources
solutions and outsourcing services. Through its
more than 72,000 colleagues worldwide, Aon unites
to empower results for clients in over 120 countries
via innovative risk and people solutions. For further
information on our capabilities and to learn how
we empower results for clients, please visit:
http://aon.mediaroom.com.

© Aon plc 2016. All rights reserved.

The information contained herein and the statements expressed are of
a general nature and are not intended to address the circumstances of
any particular individual or entity. Although we endeavor to provide
accurate and timely information and use sources we consider reliable,
there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future.
No one should act on such information without appropriate profes-
sional advice after a thorough examination of the particular situation.

About McLagan
McLagan helps financial services companies make
better decisions by applying market pay and
performance information to their business
problems. McLagan’s clients include virtually every
leading global financial services firm, including
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firms, investment management organizations, and
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Risk. Reinsurance. Human Resources.