American businesses have a new, multibillion-dollar problem: They can’t hold onto their youngest workers. More than one in five millennials changed jobs in the past year, triple the share of non-millennials who did so.
Such turnover is expensive. Every person who quits costs his employer about 20 percent of his annual salary, and that doesn’t include the cost of recruiting and training his replacement. Millennial turnover saps the U.S. economy an estimated $30 billion a year.
Today’s baby boomer bosses can avoid those costs by updating their workplaces to meet the psychological needs and aesthetic preferences of their youngest workers. Research shows that even small investments in workplace design and better management can deliver outsized returns.
Companies have little choice but to cater to millennials. They account for the largest share of the U.S. workforce: 35 percent. Next year, they’ll pass the baby boomers to become America’s largest generation.
Millennials don’t just have strength in numbers. They’re the best-educated and most technologically adept generation in history. It’s in corporate America’s interest to bring as many of them into the fold as possible.
Young adults want a workplace that cares about them as individuals, not just cogs in the corporate machine. Over 90 percent of millennials say work-life balance is a top priority when searching for a job, compared with 70 percent of baby boomers.
Unfortunately, just 29 percent of millennials say they’re engaged at work. Worse, companies don’t know what to do to fix this state of affairs. Forty-six percent of CEOs don’t have a plan to address the epidemic of disengagement within their ranks.
That’s a mistake. With unemployment near record lows, millennials can afford to job-hop until they find a company that offers them what they’re looking for.
That company is likely to prioritize a few things.
First, communication. Forty percent of millennials prefer weekly feedback from their supervisor—more than twice the share of any other generation.
There are other ways to boost communication between old hands and office rookies. Companies can experiment with reverse mentorship programs, whereby younger hires offer guidance to senior managers.
When millennials feel connected to their employers, they stick around. Financial services firm Pershing retained 96 percent of its millennial workforce over a three-year period after instituting a reverse mentorship program in 2013.
Second, the ideal millennial workplace will look like a college campus. Recent college graduates have spent four years switching seamlessly from group work in a coffee shop to cram sessions at the library.
But when they get to the workplace, they’re expected to sit at a desk eight hours a day. It shouldn’t be surprising that nearly 90 percent of college graduates say they feel “lost in transition” after moving to static office layouts.
Employers can meet their workers halfway by giving them tools to customize their workspaces. Some workers might use movable screens to grab some privacy. Others might wheel work tables together to create an ad hoc brainstorming space.
Empowering workers can boost productivity and revenue. A 2013 Cornell University study found that businesses that gave employees a choice over how to work grew four times faster than their inflexible counterparts.
In today’s tight labor market, successfully retaining employees can be a multibillion-dollar proposition. That’s a big enough sum to make even the most grizzled baby boomer boss embrace his millennial colleagues’ vision of work.
(Dick Resch is CEO of KI Furniture.)
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