Human Resource Management Assignment 1

Human Resources Management Issues, Challenges and Trends: “Now and Around the Corner”, pages 163–184. Copyright © 2019 by Information Age Publishing All rights of reproduction in any form reserved. 163

CHAPTER 8

ATTRACTING AND RETAINING MILLENNIALS

Is Servant Leadership the Answer?

Shannon O. Jackson, Pamela Chandler Lee, and Jonathan Shoemaker

According to the Pew Research Census Bureau, more than a third of workers today are millennials, born between 1981–2000 (Fry, 2015). Research shows that this large and growing sector of the workforce expects a different work experience than their predecessors, such as GenXers and baby boomers. Undoubtedly, mil- lennials are the most educated, ethnically diverse, technologically competent and perhaps the most innovative generation in the workforce. Thus, as Mabrey (2015) explains, they want a work environment that is “less formal, less concerned with customs and traditions…honest about [the] view that excessive work demands might not be worth the cost of advancement” (pp. 1, 3). Significant to our discus- sion is the reporting that millennials also “look for meaningful work in a col- laborative environment… [and] a more sustainable work/life balance” (Mabrey, 2015, p. 2). Additionally, since millennials are in constant search of such balance, according to Taylor and Kester (2010), more than 65 percent of millennials plan to switch jobs throughout their careers (p. 48).

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So then, the question becomes, how do organizations attract and then retain this ever more important sector of the workforce? As discussed by Reuteman (2015), millennials are comfortable working with teams and having input; they want to feel a part of something bigger than themselves. However, in their desire for work-life balance, participative management, and immediate feedback, they are likely to leave an organization if they become dissatisfied (Ferri-Reed, 2014; Lowe, Levitt, & Wilson, 2008; Malcolm, 2016). As a matter of fact, the number one reason millennials leave their organizations is because they don’t feel valued or respected by the people for whom they work (Reuteman, 2015). As Reuteman (2015) explains, “People don’t leave companies; they leave managers… they’re not mad at the building…they’re mad at the people they work with on a day to day basis… they leave managers” (p. 8).

Consequently, this research emphasizes the significance of effective leadership for creating an organizational culture that attracts and retains millennials. In other words, if managers implement a leadership style that is consistent with millenni- als’ perspective of work, these workers will not only be interested in joining the organization, but they may also be more committed to staying with the company for the long-haul. Like the members of other generations, millennials have a desire to contribute and make an impact in their companies; they are motivated by chal- lenging work that allows them to grow and develop, and they especially “want to be part of innovative and energetic organizations that will value their ideas and encourage their creativity” (Lowe, Levitt, & Wilson, 2008, p. 47). However, mil- lennials generally have a different view of loyalty to organizations than other age groups. If the work environment does not meet their needs, they are more likely than other generations to leave the company and seek opportunities elsewhere (Fries, 2018; Lowe, Levitt, & Wilson, 2008; Malcolm, 2016). Additionally, these workers seek confirmation that their work and their contributions are appreci- ated. If this feedback is not readily provided by their leaders, they are likely to disengage from their work, from their coworkers, and then from the organization.

Thus, this essay proposes that servant leadership is the most appropriate lead- ership style for engaging millennials and meeting their need for participation, teamwork and serving a vision larger than themselves. Robert Greenleaf’s theory of servant leadership, also referred to as “leadership upside down” (Daft, 2010, p. 176), is “based in ethical and caring behavior...[which] enhances the growth of people, while at the same time improving the caring and quality of our many institutions” (Spears, 1996, p. 33). As Barbuto and Gottfredson (2016) insist, “millennials want what servant leaders are suited to provide, which is a leader who focuses on the developmental needs and human capital improvements of its employees, even beyond the needs of the organization or the leader” (p. 2).

In this chapter, we will first discuss the millennial generation and their pres- ence in the workplace. We will then provide a review of leadership research and discuss the relevance of leadership for creating an organizational culture which respects, attracts, and engages millennial workers. This analysis will emphasize

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Attracting and Retaining Millennials • 165

the principles of servant leadership and its relevance for the millennial genera- tion. We will then recommend specific strategies for attracting and retaining this expanding sector of the employee population.

THE MILLENNIAL GENERATION: WHO ARE THEY?

For the last few decades, the millennial generation has been the topic of extensive research, discussion and speculation, in popular press as well as academic publi- cations, by managers and practitioners, as well as researchers and scholars. The similarities and differences between millennials and other generations have been lauded, opposed, celebrated, and even denied. Some experts insist that millenni- als reflect some of the most unique—and possibly the most frustrating—habits in the workplace. There are others who maintain that, other than their age, millen- nials are not that much different from other generations (Costanza, 2018). In an article for Entrepreneur magazine, Christian Brucculeri, CEO of Snaps, a mobile platform that creates branded content, said, “The same basic principles apply to the millennial generation as to any other age group. Some people are inspired, excited, hardworking, humble and curious. Some are entitled, unfocused and po- litical. Not everyone is great!” (McCammon, 2016, para. 18).

Nevertheless, while some of the most sweeping generalizations about millen- nials may not apply to everyone in the age group, there is a great deal of support for generation theory, which represents generations as social constructs in which sets of ages are defined by historical or social events (Costanza, Badger, Fraser, Severt, & Gade, 2012; Strauss & Howe, 1991; Twenge, 2010). Although the de- scription of each cohort varies widely, prevailing research defines baby boomers as those as born between about 1945 and 1964, GenXers were born between 1965 and 1981, and millennials, also referred to as Generation Y, were born between 1981 and 2000 (Costanza et al., 2012). Millennials are referred to as tech-savvy multi-taskers, who desire instant gratification and recognition, work life balance, flexibility, transparency, career advancement, and team-oriented tasks (Abbot, 2013; Malcolm, 2016).

Millennials also seem to be more comfortable with technology than any other generation in the workforce. As a matter of fact, it is this familiarity with technol- ogy which defines the key features that set millennials apart from other genera- tions. Millennials represent the generation that grew up with tablets, laptops, the Internet, and social media as norms in their environment. Thus, immediate access to information and connection with others may inspire the need for teamwork, collaboration, and immediate feedback (Green et al, 2005; PWC, 2011). Along with an appreciation for technology and social media, millennials seek an organi- zational culture which encourages innovation and creativity, and which provides the resources and support for them to be their best selves. Leadership has the re- sponsibility for establishing and maintaining such a culture in order to attract and retain this growing segment of the workforce.

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166 • JACKSON, LEE, & SHOEMAKER

A REVIEW OF LEADERSHIP

Analyzing the relevance of leadership for engaging millennials in the workplace is a worthwhile endeavor. As this discussion will confirm, leadership influences the culture, climate, and even the performance of an organization more than any other single component. Historical analyses reflect a scholarly interest in the lead- ership construct since the 1800s. An examination of peer-reviewed articles reveals hundreds of definitions from a variety of perspectives. While there are some dis- tinctions in these viewpoints, there are also some similarities. For example, the most oft-cited definitions of leadership consist of the following components: Power or influence

• Communication • Inspiration • Purpose • Visioning • Change • Outcomes • Objectives • Process • People or relationships (Daft, 2010; Rost, 1993; Yukl, 2013)

Some of the most basic functions of leadership, or what leaders do in their organizations include:

• Guiding the activities of the organization to meet a common objective • Directing and facilitating programs and opportunities for organizational

profitability • Empowering followers to support the mission and vision of the organiza-

tion • Training, developing, and supporting followers in their roles • Influencing the behavior of followers, and • Establishing and maintaining the organizational culture (Eberly, Johnson,

Hernandez, & Avolio, 2013; House & Aditya, 1997; Rost, 1993; Schein, 2010)

Significantly, contemporary research consistently emphasizes the importance of leadership for organizational performance (Center on Leadership, 2009; Yukl, 2008). According to Citigroup (2007), some of the most well publicized corporate failures have pointed to the critical role of leadership in the success or failure of organizations. Kaiser, Hogan, & Craig (2008) concluded that as much as 15–45% of a firm’s performance can be attributed to leadership functions. These research- ers conducted a meta-analysis of studies investigating managerial succession. Through various methodologies, consistently, the research showed a relationship

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Attracting and Retaining Millennials • 167

between leadership and organizational performance. Specifically, changes in lead- ership were closely followed by changes in the organization’s performance.

Studies have also linked organizational performance with organizational or corporate culture (Gordon & DiTomaso, 1992; Kotter & Heskett, 1992). Orga- nizational culture generally refers to the pattern of shared assumptions, beliefs, and values of its members (Schein, 2010; Trice & Beyer, 1993). Schein (2010) further emphasizes that this pattern is then “taught to new members as the correct way to perceive, think, and feel” (p. 18) about organizational problems. Some researchers have postulated that one of the most—if not the most—important role of leadership is to establish and maintain the culture of the organization. As a matter of fact, Schein (2010) contends that leadership is manifested “when we are influential in shaping the behavior and values of others…and are creating the conditions for new culture formation” (p. 3).

Scholars assert that leadership has a more significant impact on organizational culture than any other element of a company (Bass & Avolio, 1993; Schein, 2010; Trice & Beyer, 1993). It is important to note that the influence of leadership not only refers to top level leaders, such as the Chief Executive Officer (CEO) of a company, but also mid-level managers and supervisors performing the function of leadership. In his seminal work examining leadership and organizational cul- ture, Schein (1985, 2010) identifies specific mechanisms or tools that leaders use to teach and then reinforce the values, beliefs, and assumptions of the organiza- tion. Schein refers to these tools as Primary Embedding Mechanisms and Sec- ondary Articulation and Reinforcement Mechanisms. The Primary Embedding Mechanisms represent “the most powerful daily behavioral things that leaders do” (Schein, 2010, p. 236); the Secondary Mechanisms represent “the more formal mechanisms that come to support and reinforce the primary messages” (Schein, 2010, p. 236). Importantly, the secondary mechanisms are only effective if they are consistent with the primary mechanisms. Schein identifies the following lead- ership behaviors as the Primary Embedding Mechanisms:

• What leaders pay attention to, measure, and control on a regular basis • How leaders react to critical incidents and organizational crises • How leaders allocate resources • Deliberate role modeling, teaching, and coaching • How leaders allocate rewards and status • How leaders recruit, select, promote, and excommunicate

Thus, according to Schein (2010), new employees learn more about the culture of their organizations from the daily behaviors of leadership than they learn from formal training or orientation sessions (p. 250). Significant for this research is the leader’s role in recruiting, rewarding, and retaining employees.

Because millennials are assigned to and work in various levels and depart- ments throughout an organization, the organizational culture must reflect an ap- preciation for millennials and their contributions. In other words, an organiza-

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168 • JACKSON, LEE, & SHOEMAKER

tional culture which embraces millennials’ perspective of work must permeate the company. The role of leadership for establishing and maintaining organizational culture cannot be ignored. The following subsections will briefly discuss the pro- gression of leadership research from the 19th through the 21st centuries.

Trait Approach

The scholarly and practical appreciation for the relevance of leadership for or- ganizational performance has evolved through more than a century of research. In the early days, scholars presumed that the basis for leadership was found in a set of innate traits such as drive, a desire to lead, honesty, integrity, self-confidence, intelligence, job-relevant knowledge, extraversion and a leaning toward guilt as a way of encouraging a sense of responsibility for others (Kirkpatrick & Locke, 1981). Hundreds of empirical studies investigated the correlation between traits and a propensity for leadership; and traits and leadership effectiveness. The re- sults of these studies “…failed to find any traits that would guarantee leadership success” (Yukl, 2013, p. 12). Scholars concluded that the narrow view of leaders as being born did not explain the relevance of followers, nor did it acknowledge the importance of the leaders’ behaviors for organizational performance.

Behavioral Approach

In the late 1930s and early 1940s, several researchers demonstrated that a per- son’s behaviors are more significant for understanding the function or practice of leadership than his innate traits. The implications of these findings indicated that leadership could be learned. For example, in 1939, Lewin, Lippett and White led a research project commonly known as the Iowa State Studies, published in the Journal of Social Psychology. This seminal research found that leaders tended to display one of three leadership styles: (1) a democratic style, in which follower participation was a key element; (2) an autocratic style, in which decision making was centralized rather than participative; or (3) a laissez-faire style, in which the leader relegated responsibility for decision making to followers. Lewin, Lippett and White found that the democratic style, in which followers were empowered and encouraged to participate, was correlated with the most positive organiza- tional outcomes (Lewin, Lippett, & White, 1939).

A decade later, in the 1950s, Stogdill and Coons led the Ohio State Studies, which also examined the behavioral tendencies of leaders. The research showed that there were two dimensions involved in how leaders behaved: (1) they held a high consideration for followers’ ideas and feelings, or (2) they were more con- cerned with the structure through which relationships were oriented toward com- pleting work tasks. Stogdill and Coons discovered that having a high consider- ation for employee needs and feelings, combined with a high recognition for the importance of a structure in which job completion was paramount, was the most effective leadership style (Stogdill & Coons, 1951).

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Attracting and Retaining Millennials • 169

Research in the 1960s brought us the University of Michigan studies by Kahn and Katz. These studies followed a similar line of thought to the Iowa State and Ohio State studies, in that Kahn and Katz examined the behavior of leaders in terms of whether they were primarily employee oriented or production oriented. Again, the question of whether followers’ needs mattered for effective leadership was the primary research question. Kahn and Katz found that leaders who were primarily concerned with their followers had the highest levels of productivity, and their employees experienced the highest levels of job satisfaction (Kahn & Katz, 1960).

Then in the mid-1980s, Blake and Mouton published their now famous Mana- gerial Grid, once again examining the relationship between productivity and at- tention to follower needs, wants and desires. Blake and Mouton found that leaders performed best when they demonstrated a high consideration for both people and production (Blake & Mouton, 1984).

Transforming Approach

In 1978, while leadership scholars were proclaiming the significance of rela- tionships between leaders and followers for organizational success, James Mac- Gregor Burns introduced the theory of the “transforming” or transformational leader (Burns, 1978). Distinct from transactional leadership, in which leaders and followers exchange services to meet organizational objectives, Burns suggested that effective leadership is based on trusting and mutual relationships between leaders and followers that evolve over time. He defined transforming leadership as a process through which “leaders and followers raise one another to higher levels of morality and motivation” (p. 20). In many ways, transformational lead- ership is a motivational theory, in which the leader appeals to followers’ moral values, in order to influence followers to transcend their self-interests for the good of the organization (Bass, 1985; Burns, 1978). Thus, while the theory focuses on developing and transforming individuals, the end goal is transformation in the organization to achieve organizational objectives.

Over the last two decades, transformational leadership has become the most popular and most well-regarded theory of leadership in the literature. With hun- dreds of articles extoling its virtues, transformational leadership has been cor- related with constructs such as profitability, job satisfaction, trust, emotional in- telligence, charisma, and corporate social responsibility (DuBrin, 2013; Groves & LaRocca, 2011; Rubin, Munz, & Bommer, 2005). Nevertheless, many of the leaders in these organizations are concerned about attracting and engaging millen- nials, suggesting that there may be some inconsistency between the components of transformational leadership and the needs of the millennial generation.

It could be argued that while transformational leadership appeals to followers’ morality and values, the objective of the model is organizational performance, profitability, and success. Conversely, while millennials certainly want to be com- pensated fairly, they are more concerned about work-life balance and quality of

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170 • JACKSON, LEE, & SHOEMAKER

life (Dixon, 2016; Scalco, 2017). Interestingly, some researchers have suggested that the leader’s focus—on the organization or on the employee—is what dis- tinguishes transformational leaders from servant leaders (Chaudhuri, Kettunen, Naskar, 2015; Stone, Russell, & Patterson, 2003). According to Stone, Russell, and Patterson (2003), “the transformational leader’s focus is directed toward the organization, and his or her behavior builds follower commitment toward orga- nizational objectives, while the servant leader’s focus is on the followers…the achievement of organizational objectives is a subordinate outcome” (p. 1).

Thus, leaders who listen to their employees and demonstrate concern for their individual growth and development may be in the best position to establish an organizational culture in which millennials are valued and appreciated. As Fries (2018) asserts:

Millennials want to work with leaders who value feedback from all employees… millennials are often keenly aware that the further up the corporate food chain lead- ers are, the more they tend to lose understanding of the challenges other employees face…and tend to dismiss the validity of their experiences. (para. 9, 10)

Based on these findings, this analysis proposes that Servant Leadership is an appropriate model for recruiting, rewarding, and retaining this millennial wave of employees.

SERVANT LEADERSHIP THEORY

In the 1970s, based on an illustrious 40-year career in management at AT&T, and after reading Herman Hesse’s short novel entitled Journey to the East, Robert Greenleaf began examining the concept of leaders as servants (Spears, 1996). As a result of his research, Greenleaf concluded that “the great leader is first experi- enced as a servant to others...true leadership emerges from those whose primary motivation is a deep desire to help others” (Spears, 1996, p. 33).

Researchers have noted that the concept of leaders as servants is not original to Greenleaf. This model is seen in ancient, historic, religious and even contempo- rary leaders such as Jesus Christ, Moses, Confucius, Mother Theresa, and Martin Luther King, Jr. (Keith, 2008). It is important to acknowledge that it is not neces- sary for one to be a deity or a Saint to be characterized as a servant leader. Many successful contemporary leaders are identified as servant leaders. One of the most notable is C. William Pollard (Sendjaya & Sarros, 2002), a former executive of ServiceMaster who twice served as CEO of the firm (1983–1993 and 1999–2001). Describing himself as a person who leads with a servant’s heart:

Pollard contends that the real leader is not the person with the most distinguished title, the highest pay, or the longest tenure...but the role model, the risk taker, the servant; not the person who promotes himself or herself, but the promoter of others. (Sendjaya & Sarros, 2002, para. 50)

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Attracting and Retaining Millennials • 171

Also, according to the founder and former CEO of Southwest Airlines, Herb Kelleher, Southwest was founded in 1971 based on Kelleher’s desire to serve; Kelleher insists that Southwest’s success is sustained by people “who have a pre- disposition to serve others” (Leader Network.org, 2007, para. 6). While Kelle- her has not held an active leadership role at Southwest since 2008, the airline is consistently recognized as one of the most admired companies in the world. One of the four core values which creates the foundation for the organization’s busi- ness strategy and unique corporate culture encourages employees to demonstrate a “Servant’s Heart” (Southwest, 2015).

Servant leadership is becoming widely accepted as an effective model of lead- ership for the 21st century. Servant leaders are more concerned about developing others than promoting themselves; they welcome and appreciate the importance of diversity, empowerment, and collaboration for their organizations’ success. Unlike many other leadership theories which are defined by the actions of the leader, servant leadership relates to the character of the leader who has a heart for serving and ministering to the needs of others (Carter & Baghurst, 2014).

When Greenleaf first introduced the theory in the 1970s, scholars were initially skeptical of its merits and its practicality for contemporary business. However, in the last four decades, some of the most successful leaders in the world have demonstrated a leadership style consistent with this theory. The theory has also received widespread attention in mainstream media outlets such as Fortune maga- zine and Dateline NBC. Leading scholars in the management and leadership disci- plines—such as Max DePree, Stephen Covey, Peter Block and Peter Senge—have also confirmed the positive impact of servant leadership in organizations.

Based on Greenleaf’s work, Spears (1995) identified the following 10 charac- teristics of servant leaders:

• Listening: Servant leaders listen intently to others, without prejudging • Empathy: Servant leaders know that people need to be recognized for their

unique gifts • Healing: Servant leaders recognize the opportunity to help make whole

those they serve • Awareness: Servant leaders have general as well as self-awareness; they

view situations from a perspective of ethics, power and values • Persuasion: Servant leaders build consensus rather than coerce compli-

ance • Conceptualization: Servant leaders dream great dreams; they stretch tra-

ditional thinking and are not consumed with attaining short term goals • Foresight: Servant leaders foresee and forecast the likely outcome of a

situation based on the lessons of the past, the realities of the present, and the consequences of decisions for the future

• Stewardship: Servant leaders assume a commitment to serving the needs of others, such as employees, shareholders and the wider community

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172 • JACKSON, LEE, & SHOEMAKER

• Commitment to the Growth of People: Servant leaders believe people have an intrinsic value that is more than their value as employees or work- ers

• Building Community: Servant leaders believe true community is created among those who work in an institution as well as the institution’s external constituents

Greenleaf (1977) was careful to emphasize that the primary outcome of effec- tive servant leadership is not organizational performance: “The best test and the most difficult to administer is: Do those served grow as persons? Do they, while being served, become healthier, wiser, freer, more autonomous, [and] more likely themselves to become servants?” (pp. 13–14).

The following section discusses key strategies that today’s employers should adhere to in order to create and sustain a work environment in which the specific needs of millennials are considered primary.

RECRUITING, REWARDING, AND RETAINING MILLENNIALS

Human Resource departments exist to find the right people and to keep the right people once they are found. Among other objectives, this mission relates to three specific strategies: Recruiting, Rewarding and Retaining high-performing em- ployees. All three strategies are integrated, and, in fact, there are significant over- laps among them (see Figure 8.1).

For example, as potential job candidates are being recruited, they will want to know about the kinds of rewards they can expect, and then decide whether those rewards will motivate and interest them enough to apply for the position. Reten- tion may also be emphasized during the recruiting phase, as employees consider

FIGURE 8.1. Recruiting, Rewarding, Retaining

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Attracting and Retaining Millennials • 173

joining Company XYZ for a career, and not just a job. Finally, there is significant overlap between Rewarding and Retaining, as many types of rewards are pro- vided to employees to prevent them from leaving for greener pastures.

Importantly, as Schein (2010) offers, two of the most significant leadership behaviors which establish and maintain organizational culture relate to how re- wards are allocated, and how leaders recruit, select, and promote employees. Con- sidering these leadership behaviors, we will discuss Recruiting, Rewarding and Retaining in terms of the needs of millennials and the implications for servant leaders.

Recruiting

Finding the right employees begins with good recruiting practices. Recruiting must be performed strategically, just like any other function of the organization. Thus, if the organization is focused on hiring millennials, some strategies will be more effective than others.

For example, millennials are attracted to a psychologically healthy workplace as well as a workplace that supports corporate social responsibility (CSR). Thus, when recruiting millennials, it is important to communicate that the employer values CSR and psychological health. CSR refers to the extent to which the orga- nization values protection of its environment, support of its community, and re- spect for its employees (Ferri-Reed, 2014). A psychologically healthy workplace is one which prioritizes work-life balance, professional growth and development, and recognition and involvement of all employees (Catano & Hines, 2016). All of these priorities are reflective of the characteristics of servant leadership.

In some instances, millennials were in favor of accepting lower wages if they felt the organization made a positive contribution to issues they felt strongly about (Cone Communications, 2015). Interestingly, CSR programs seem to be effective in attracting millennial candidates, regardless of whether the millennial is more strongly motivated by social concerns or making money (Catano & Hines, 2016).

Research has also demonstrated that millennials seek organizations in which the leadership provides regular feedback and is committeed to open and trans- parent communication (Ferri-Reed, 2014). This transparency should begin with providing a realistic job preview for applicants, even as early as first contact. First contact with a potential applicant could occur in person at a job fair, on the orga- nization’s employment website, or through social media. Even early-career job applicants are savvy enough to know if they are being fed a company line instead of being given realistic expectations about the job (Tucker, 2012). A realistic job preview could mean providing employee testimonials or allowing the employee to experience the organization through an interactive simulation or “try-out day” (Sabel, 2018).

Millennials are also accustomed to communication via social media. They seek an organization that is able to promote social and technological integration (Ferri- Reed, 2014). A robust website and social media presence are requirements in the

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174 • JACKSON, LEE, & SHOEMAKER

current recruiting market. These resources are of paramount importance to mil- lennials who get much of their information from these sources. Posts to various social media platforms should be engaging and frequent, and websites should be easy to navigate and user-friendly.

Organizations that wish to attract millennials should also emphasize a healthy and responsible organizational culture in recruiting materials. Millennials gener- ally prefer an organization that is willing to offer job security and a future with- in the company (Ferri-Reed, 2014). Best Companies to Work For, such as 3M, Google, St. Jude Research Hospital, and the Walt Disney Company, tend to pro- mote this aspect of their culture (Thurman, 2016).

It is important for organizations to maintain focus on their purpose, and not just their products. Many firms complain that their work is not glamorous and, thus, will not appeal to millennials. For example, manufacturing and insurance are two critical industries that have historically been challenged to attract millen- nial job candidates (Duett et al., 2017; Putre, 2016). One solution is to focus the recruiting message not so much on what the company does, but on why the work is important and how it contributes to the community and society at large. Fully 60% of millennials said they chose their current employer to fulfill a sense of purpose above all (Islam, 2016). Millennials want to know that the work they do has significance and fulfills a need.

Finally, making it known that the organization values a culture of servant lead- ership is important for attracting millennials. This message should be a natural fit as servant leadership is congruent with many of the factors millennials value, in- cluding open, honest communication, CSR, a psychologically healthy workplace, and a focus on being purpose-driven (Marshall, 2018).

A culture of servant leadership is uniquely appealing to millennials because of their motivation to enact change that improves their organizations for the future; they want to make a difference and solve problems as soon as they begin a new job (Fox, 2015). Servant leaders who are willing to serve first and lead second are more likely to respond to the new organizational reality of volatility and complex- ity where millennials are the dominant employee population (Islam, 2016).

Rewarding

When considering Rewards, let’s call the question: Which rewards can talent acquisition and human capital management professionals offer to attract and re- tain millennials? Perhaps a better question is whether there is one set of rewards that will appeal to every millennial. The likely answer is, no. The first rule of Total Rewards is an understanding that every employee is motivated differently; the key is to determine which incentives will be attractive to the majority of the work- force. For example, employers are realizing that compensation packages must be flexible to appeal to the largest number of employees with different needs and motivations. A recent compensation survey indicated that employees prioritize flexibility and choice in benefits offerings (Nyce & Gardner, 2017).

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Attracting and Retaining Millennials • 175

It is also important to note that there can be just as much diversity within a gen- eration as there is between generations (Costanza, 2018). Certainly, some benefits appeal to some age groups more than others, but most employees—not just mil- lennials—would prefer work that is flexible and offers some level of job security.

Typically, employers offer a combination of three types of rewards: Direct Fi- nancial Compensation, Indirect Financial Compensation and Non-financial Com- pensation. Direct Financial Compensation is easy to peg: here we’re talking about wages, tips, commissions and bonuses, any tangible reward the employee earns that can be spent immediately. Indirect Financial Compensation is any tangible reward that has a measurable monetary value, but is spent on behalf of the em- ployee, instead of being paid directly to the employee. These include employer subsidies of health care benefit premiums, administrative fees and matches for retirement plans, use of a company car, a housing allowance, or free meals. The employee doesn’t receive the money for these benefits, but she does enjoy the reward that the employer is paying for on her behalf. Even paid time off can be considered Indirect Financial Compensation. While employees get paid directly when they call out for sick, personal or vacation time, the employer is potentially paying for someone else to cover the absent employees while they are out.

Direct Financial Compensation (a.k.a. pay) will always be a popular incentive for employees, and millennials are no exception. When asked about their priority for Rewards, at least 44% listed competitive wages as one of their most important priorities (Zimmerman, 2016). However, pay is not a generational motivator, but an early career motivator. Every past generation has hoped for a high-paying job after years spent perpetually pinching pennies and eating Ramen noodles while in school or training. This perspective can be particularly true when recent graduates are carrying historically high tuition and student loan debt (Zimmerman, 2016).

However, in a departure from previous generations, millennials don’t neces- sarily only prioritize pay. Pay seems to run a close race with opportunities for advancement and professional development (Malcolm, 2016). Millennials rated “advancement potential” as their second highest priority in what made an industry desirable; their first priority was availability of jobs (Duett et al., 2017). Thirty percent of employees described “building a long term career” with their employer as a major career goal (Whitten, 2017). Consistent with advancement must come a focus on professional and personal development. Eighty-nine percent of millenni- als reported that they want to be constantly learning on the job (Islam, 2016). The organization must be intentional about offering their millennial employees formal and informal development opportunities (Fox, 2015). The dual motivations of pay and advancement underscore the importance of balancing a Total Rewards pack- age with both Direct and Indirect Financial Compensation. Additional Indirect Financial incentives that are likely to be attractive to millennials include tuition reimbursement, which many organizations have been offering for decades. A few forward-thinking companies are even offering student loan debt repayment; this

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benefit is especially important to millennials, who graduated with an average of $37K in debt in 2016 (DiCamillo, 2017).

However, the jury is still out about which benefits millennials value most. Some surveys of rewards for millennials suggest that health care benefits are important (Zimmerman, 2017). This finding can be partially explained by rising health care costs throughout the U.S., and the challenge of starting a family while also recov- ering from student loan debt. Allowing more flexibility for employees to custom- ize health care plans and benefits also appeals to millennials who are interested in optimizing the benefits they will use most (Gilmore, 2017). Cafeteria-style ben- efits plans, where employees can choose from a wide range of services that fit their needs, are most desirable. Other sources recommend early vesting periods for defined contribution plan matches, a budget allotment for technology tied to each employee, and time for outside projects and innovation (Kruman, 2016).

Ultimately, millennials are also concerned about fairness and equity. More than ever, employees are able to understand their comparable worth to employers through readily accessible commercial and government sources such as salary. com, glassdoor.com, the Bureau of Labor Statistics and the U.S. Department of Labor’s Occupational Network Online (O*NET). Millennials seek pay transpar- ency and information about how their compensation is determined (Dixon, 2016). Sharing this information with employees is simply a good business practice; if compensation is based on reasonable and fair standards, there’s no reason those standards should not be shared.

Of course, some millennials would like to be rewarded with individualized perquisites. Perks like ping-pong tables, free snacks, nap pods and the opportunity to bring pets to work fit this category. These are only some of the high-end benefits that are trumpeted in popular press as evidence that millennials are entitled. Man- agement may believe that these perks are a waste of time and resources. However, there are two major problems with this mentality. First, the price-tags of these perks to the employer are in reality not that high. As a matter of fact, the price can be considered low compared to the costs of health care premiums, higher salaries, and better matches toward deferred contribution plans that previous generations have come to expect. The second problem is that research continues to show that these perks actually work to lower employee stress, increase organizational loy- alty, and improve contextual performance (Oden-Hall, 2017).

Many employers believe that they must throw money at employees (whether directly or indirectly) in order to attract millennials. While some attention must be given to Financial Compensation of both types, it is becoming clearer that sup- plementing rewards with Non-financial Compensation may be the most effective way to motivate employees, particularly millennials. Non-financial compensation includes those elements that are difficult (if not impossible) to put a price on. These include aspects of work that are often built into the organizational culture, such as a high degree of work-life balance, high quality of life at work, feeling valued, performing meaningful and challenging work, and having flexibility and

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Attracting and Retaining Millennials • 177

autonomy. The good news is these benefits are low or no cost for the employer. The bad news is they can be difficult to effectively implement without significant attention to organizational development (Sommer, 2011).

Work-life balance is an important non-financial concept. Rather than repre- senting one specific benefit, this concept refers to policies that allow employees to better attend to non-work responsibilities that in the past may have been im- possible to address. Flexible hours, telecommuting or working from home, and a culture that values productivity over face-time are examples of perks that are essentially free to the employer, but can significantly improve employee perfor- mance, efficiency and even health (Gaskell, 2016). Establishing for job applicants that the organization encourages flexible scheduling can be a useful recruiting tool (Scalco, 2017).

Quality of life at work is an important consideration that can attract millenni- als. It is imperative for employees to feel valued by their organizations (Dixon, 2016; Malcolm, 2016). Respect from supervisors and management is one compo- nent of feeling valued. Millennials expect direct, straightforward communication and list respectful treatment as one of their top priorities (Gilmore, 2017). Mil- lennials also appreciate regular constructive feedback that contributes to profes- sional growth. Quality of life can also refer to how much control the employee has over his or her own work. Research shows that millennials who received regular feedback from their supervisors were significantly more engaged at work than their peers (Marshall, 2018). Millennials also prefer significant autonomy and the ability to self-manage their workload whenever possible (Islam, 2016). A physical example of how employers are emphasizing quality of life is the trend toward a less-traditional and more comfortable and collaborative work environ- ment, eliminating cubicles and desks in favor of common areas and fewer walls (Islam, 2016).

Servant leadership, while not a reward on its own, is closely related to many of the elements of Non-financial Compensation. Servant leaders will strive for inclusion of employees in decision-making, emphasize empowerment and auton- omy, and embrace opportunities to maximize quality of life at work (Barbuto & Gottfredson, 2016). Offering Financial Compensation can also be linked to ser- vant leadership. For example, servant leaders empathize and put themselves in the place of their entry-level employees in order to appreciate which benefits would be most desirable and how to best motivate employees through fair and equitable rewards (Fox, 2015).

Any cultural change that will result in improved Non-financial Compensation must begin with support from leadership and an active effort to make the change work. Start small with achievable changes, such as allowing best performers to work from home on certain days of the week, or providing flex time to employees as a performance-related privilege. If these are successful and well-received, it will be easier to gradually make more significant cultural changes.

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Retaining

Millennials have earned an undeserved reputation as job hoppers. It is thought that they leave jobs quickly, presumably for better opportunities. No matter the numbers or the reasons, losing a talented employee—of any generation—can be costly. As a matter of fact, the cost of replacing a fully trained professional em- ployee, even at the early career stage, can be as high as $20,000 (Fries, 2017). Clearly, retaining employees should be a major concern of any organization.

Retention of high performing employees can be particularly difficult because these are the employees who have the most alternatives for better or different employment opportunities. This is especially true of millennials who are early in their working lives; thus, they are more open to changing jobs or even careers, particularly if they do not perceive opportunities for advancement or promotion. Organizations need to offer swift opportunities for advancement along with spe- cific criteria for how to earn promotions and advancement. Entry-level jobs are often arduous, but they are always necessary. It is up to early-career leadership to help entry-level employees recognize the pathways between their current work and future opportunities (Fox, 2015). It should go without saying that a significant amount of recruiting and promotion should be focused internally to the organiza- tion. Here, Rewards must support Retention as leadership earmarks a significant budget for training and development. Millennials are also innovators. Creating opportunities for employees to work on specific problems, seek new business op- portunities, or pitch new ideas can be rewarding for both the organization and the employee (Fries, 2017).

Open and efficient communication is also an imperative. For the most part, millennials have grown up with email, texting and instant messaging and may prefer more succinct, more frequent communications (Hackel, 2017). Transparen- cy and directness in communicating what employees need to know will minimize the negativity of gossip and the office rumor-mill. Communication also means giving employees the opportunity to voice their opinions and contributions, re- gardless of their level in the organization (Malone, 2017). Communication even includes getting feedback when all else fails: the exit interview. Some employees will leave despite the company’s best efforts; it is important for the organization to know why (Fries, 2017).

Servant leadership is important to Retention. Employees are more likely to remain with an organization where they are led by example, and when employees all the way to the C-Suite are expected to abide by the same rules, norms and val- ues as everyone else (Malone, 2017). Contrary to the stereotypes about millenni- als’ work ethics, they do not readily leave their organizations to seek more money or other rewards. The number one reason millennials leave their organizations is because they don’t feel valued or respected by the people for whom they work (Reuteman, 2015). Displaying empathy and emphasizing a commitment to com- munity and the growth and development of all people, servant leaders establish

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Attracting and Retaining Millennials • 179

a culture in which employees feel heard, valued, and empowered to be their best selves.

YOU AND YOUR WHOLE GENERATION!

Millennials are pigeon-holed far too often. They are known as the “generation of entitlement,” and “job-hoppers” who “cannot live” without their technology (Roepe, 2017). Based on the discussion in this research, it might be tempting to believe that millennials are seeking an awful lot of perquisites to which they may not be entitled. Yet, good strategies for recruiting, rewarding and retaining millen- nial’ employees means understanding the resources they need to succeed. Provid- ing a combination of motivating extrinsic and intrinsic rewards to employees is essentially what makes the employer/employee relationship work, regardless of the age or the career stage of the employee.

Generational labels, while convenient, can never be completely representa- tive of every member of a generation. The rewards employees tend to seek are a combined product of their career stage and what is available in their time, not only their particular generation. Millennials seek many of the same perks that previ- ous generations looked for when they were early in their careers. Additionally, not all millennials are seeking the same rewards. Shifts in the economy and the labor market do not conveniently happen every 20 years (Costanza, 2018). One researcher suggested that the millennial generation should be more accurately split into two groups: “Early Millennials” (born during the first half of the 1980s) and “Recessionists” (born between 1988 and the mid-1990s). These groups differ according to how much they are motivated by money and the degree of balance they desire between work and life (Roepe, 2017).

Further, while millennials may appear to take modern workplace perks for granted, they do so in the same way previous generations may have taken some elements of compensation for granted. For example, consider subsidized health care premiums, safety in the workplace, paid time off, or even a guaranteed mini- mum wage. Before these perks became standards, past generations would never have expected that most (or all) employers would offer them. When they first entered the workforce, most baby boomers and GenXers simply did not conceive that these rewards were even possible. After all, little emphasis was put on Non- financial compensation, and the importance of concepts such as corporate social responsibility and team-based incentives were less researched and even less un- derstood.

CONCLUSION

Because they represent such a large and influential percentage of the labor force, attracting millennials is critically important for an organization’s success and sur- vival. Even as they appreciate the significance of this growing population, many organizations seem to be missing the mark in recruiting and retaining these em-

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180 • JACKSON, LEE, & SHOEMAKER

ployees. A review of the literature reveals that financial compensation may not be the only way, nor is it always the most effective way to engage millennials. Millennial workers seek opportunities to advance in their organizations, and they have a desire to innovate, create and contribute to their societies. They may also value flexible work schedules, autonomy at work, or the opportunity to telecom- mute even more than monetary incentives. These kinds of opportunities should not be viewed as isolated components on a list of benefits; rather, they are indica- tive of an organizational culture which acknowledges the significance of work life balance and is concerned about employees’ quality of life at work. Establishing and maintaining such a culture requires leadership which values the needs and concerns of employees, prioritizes their personal and professional development, respects their ideas, encourages their creativity, and supports their quest to realize their potential. Servant Leadership is the answer. By leveraging Recruiting, Re- warding, and Retaining strategies that will attract, motivate, and keep millennials engaged, employees of every age are certain to be served.

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