Successful Employee Retention Management of Generation Y. Theory and Best Practice Examples

Academic Paper, 2020

27 Pages, Grade: 1.3






Problem and Purpose of Paper

Literature Review

Methodology and Research Approach

Best Practice Examples To Retain Generation Y





Over the past few years, there is a paradigm shift in the workforce demographics with a continued influx of Generation Y employees (Singh, 2019). Despite the change in workforce dynamics, there is no significant change in HRM practices, which are less appealing to Generation Y employees, causing higher turnover rates. Enormous competition across the sectors and lucrative offers from competitors have compounded the issue of retention (Too & Kwasira, 2017; Tirta & Enrika, 2020). This paper will discuss successful organizational strategies that attract and retain Generation Y employees, also known as Millennials and provide best practice examples from two multinational companies.

Keywords:Retention Management, Generation Y, Employee Retention, Millennials, Human Resource Management Strategies.


The topic of employee retention is becoming more and more critical for companies. It is not just about the high fluctuation costs that arise when an employee leaves a company. Other factors will cause companies much more concern. For example, the demographic change, which makes it more difficult for companies to find good employees, or the high losses that can result from the employee's lack of attachment to the company (Younas & Bar, 2020). Given the importance of employee loyalty, the question arises as to how this can be increased. Various models are supposed to lead to higher employee loyalty. The proven theory of customer loyalty research is best suited to show the determining factors for employee loyalty. The determining factors result from the theories from economics and psychology. An employee loyalty model can be derived from these theories. That shows that a company can significantly influence its employees' loyalty, especially when it comes to satisfaction and trust (Yap et al., 2020). In the future, company managers will have to deal with complex issues relating to skilled employees' retention. On the one hand, this results from the demographic development, so the assumption is that the labor force potential will shrink over the next ten years, and thus the supply of qualified, skilled workers will also decrease. On the other hand, the assumption is that a new generation of employees will dominate the labor market with a different attitude and value conception towards work and no longer conform to the values and attitudes that shape today's working world (Tirta & Enrika, 2020).

The present research paper examines whether a connection can be established between retention management as an employee loyalty strategy and a new generation of employees - the so-called generation Y. It is assumed that generation Y can be linked to a company through retention management. To underpin the hypothesis, in the theoretical part of our paper, the literature review, we will discuss tomorrow's skilled workers to confirm that Generation Y are different from other previous generations in terms of attitudes and values and the demands on the employer. Besides, the theoretical framework of retention management, the historical generational tenure in organizations, and the organizational tenure of millennials will be examined. Furthermore, we will show best practice examples of the American company Google and the German company Daimler, and how their particular practices and strategies are successful for attracting and retaining the future generation of employees, often referred to as disloyal, for the company. Finally, we will discuss the recommendations of retention management action; this will underpin and consolidate the hypothesis, and a conclusion of our paper will be provided.

Problem and Purpose of Paper

In the course of a more knowledge-intensive, ever faster technical development within our society and a related decreasing half-life of knowledge, people, as its bearers, are coming to the fore. They are an essential part of productive actions in a company. To ensure the survivability of a company and innovative products, quality, price-performance ratio, and a corporate image, the human factor is also essential. The recruitment of young university graduates and specialists is the "war for talents," a fight for the knowledge carriers (Papa et al., 2018). Reaching, inspiring, and winning over individual employees or groups of employees is part of this framework. Fostering employee loyalty and performance and motivating them to stay with the company is also essential. Only the symbiosis of all these activities ensures a good starting position in the battle for knowledge carriers (Narayanan, 2019).

Since the company's success depends on its employees' motivation, qualifications, and loyalty, HR managers have to deal with future employees. The skilled workers of tomorrow have different expectations than their predecessors, and they can afford these expectations given the coming skills shortage. With the most varied interests and values in the future workplace, the composition of teams and groups is currently and will be shaped by four generations. These include the veterans, the baby boomers, Generation X, and a completely different-thinking Generation Y. Generation Y grew up in a time when technology was developing at breakneck speed. In the last ten years alone, so many innovations have come onto the market that one can get dizzy. Starting with DVD players, home cinema Dolby Surround systems, from flat-screen TVs to 3D TVs, constantly new game consoles from Playstation 2 and 3 to Wii game consoles, on to MP3 players, laptops and Internet platforms such as Facebook, and communication and accessibility via smartphone and tablet PC that is always and everywhere possible (Kultalahti & Viitala, 2015).

This generation, from which the present and the near future leaders are generated, is very flexible, less loyal to the company, and is quite open to a change of employer in which they expect monetary and non-monetary advantages. That is why companies have to respond to this generation and prepare for this generation. Almost a third of the companies have already developed concepts for this generation. However, these concepts have not yet been put into practice in all organizations. In order for companies to retain the specialists and executives of Generation Y in the long term, they are forced to generate new forms of employee loyalty models. The existing and established incentive models will no longer be sufficient in the future. Above all, Generation Y expects a pleasant work-life balance from their employers (Kong et al., 2020).

Literature Review

As estimated by Ng et al. (2010), Millennials, or Generation Y, will make up more than half of the work force by 2020. In recent years, readers of magazines, specialist journals, the daily press, and management and personnel literature have come across the term Generation Y more and more frequently. Some of them were undoubtedly still familiar with Generation Golf, Generation X, or Baby Boomer. However, hardly anyone knew about this new generation what impact it has on the world of work. However, for the understanding of the work, it is of the highest priority what exactly this generation is all about, as they or the way they are dealt with is the core of this work (Hassan et al., 2019). This chapter will review the literature regarding retention management, generation y and the millennial organizational tenure.

Retention management

Retention management is understood to mean activities from the management area that positively influence employees or employee groups employing certain measures for retention and performance improvement. These measures should lower the turnover rate and increase the motivation to achieve. From a company perspective, the term employee loyalty is understood to mean retaining and retaining efficient and qualified employees in the company over the long term. The goal should not be a forced commitment but rather the identification and emotional connection of an employee with his company. This aspect is reflected in the employee perspective, which understands the bond term to bond and bond with a company. To achieve this bond, the company must give the employee, among other things, meet with appreciation, trust, recognition, and fairness. That means that companies have to create incentives for their employees that motivate them to stay (Sing, 2019).

Nevertheless, the focus of employee loyalty is not exclusively on the staff's motivation to stay but also on its performance and loyalty. In this context, it is important to clarify to the employee that their work makes sense. Because satisfied and motivated employees feel more connected to the company, work more productively, and are absent less often. Managers play an important role in retaining staff. To implement sustainable employee loyalty, a superior must consistently implement the measures and set an example. As a result, high demands are placed on executives and top Management to succeed in employee loyalty. Your functions, tasks, and roles in creating a sustainable bond will be explained in more detail in the work's further course. The preceding explanations show that employee retention is a very complex and multi-layered topic. It affects the entire chain of human resource management. In this way, the basis for a long-term relationship between the employee and the company is already laid during recruiting. That then extends from the induction of the new employees through personnel support to the layoff of personnel. As a result, employee retention is not a one-off but an ongoing process in human resource management (Abdul Azeez, 2017).

Retention management knows two different fields of action:

1. Strategic retention management: This is mainly about the definition, design, and implementation of an employee retention strategy with a view to the corresponding corporate culture. Strategic retention management includes different fields of action: leadership, incentive systems, recruitment, personnel development, and job design. These serve to prepare the operational strategies.
2. Operational retention management aims to implement effective measures to retain strategically important employees. The labor market and strategically important people for the company are identified more concretely; their motivations and barriers to motivation are filtered out to design specific fields of action (Pandita & Ray, 2018).

Concerning Generation Y, it is above all the strategic fields of action that must be considered.

Generation Y

Generation Y (aka. Millennials) is not simply an alphabetical continuation of Generation X. It stands for the English word »Why«because Generation Y is known for questioning many valid ideas. This generation has a huge impact on working life, the economy, and talent management (Parment, 2013). It refers to people born between the early 1980s and the millennium (Twenge, 2010). Formative economic and social events were the fall of the Berlin Wall, the attacks on the World Trade Center in 2011 (Bruch, 2009), and the economic crisis in 2008 (Zemke, 2013). Despite these experiences and the knowledge of instability globally, the youngest generation is seen as energetic and optimistic (Zemke, 2013), sociable, tolerant, and multicultural (Bruch, 2009). Generation Y grew up in a time characterized by globalization and increasing insecurity (Klaffke, 2014). Globalization brought advantages such as worldwide networking and mobility, but it also increased competitive pressure on the labor market. In addition to new opportunities, this development also gives rise to uncertainties that force Generation Y members to plan their professional path flexibly and at short notice. Therefore, unlike the Baby Boomers, members of this generation are considered less loyal to their company. They like to keep several career options open and often terminate their employment if they are dissatisfied. Since many Generation Y members are still quite young, it is not particularly difficult for them to change jobs due to fewer private obligations. Often they not only change jobs but also switch to another industry (Dogan Gursoy, 2008). Employment relationships that have existed for decades and dictate a predictable career are rare in this generation (Bruch, 2009). Generation Y. is now questioning many things that used to be taken for granted. In contrast to their previous generations, they demand immediate, at best daily feedback, which poses new challenges for companies, as feedback was usually given in annual employee interviews (Parment, 2013). They also expect their superiors to know them personally and value their work (Dogan Gursoy, 2008). Generation Y grew up with the Internet and is therefore considered very "tech-savvy" (Martin, 2005). The casual use of the new technologies enables them to do several things simultaneously, which is why they have very good multi-tasking skills (Dogan Gursoy, 2008). By networking with the Internet, they can constantly gain new information. For the first time, that enables this generation to consider numerous options simultaneously and filter out the ones that are best for them. The young generation attaches great importance to their private life alongside their work. Friends, fun, and free time are very important (Parment, 2013). In this regard, they also make demands on their workplace, such as flexible working hours (Dogan Gursoy, 2008). While work is not a top priority for them, unlike the baby boomer generation, it does not mean that they do not take work and their professional development seriously. Generation Y works hard and ambitious; they are just not workaholics (Dogan Gursoy, 2008). Generation Y is considered to be very self-confident. Many members of this generation tend to be children of wealthy, educated, and indulgent parents of the Baby Boomer generation. For the first time, parents contributed to family life with two salaries and were thus able to offer their children a lot (Ruthus, 2013). This security enables Generation Y to look to the future with relative care (Salt, 2007). Since they are often only children or have only one sibling, they received a lot of care and attention. They rarely had to share anything and live according to the motto: "I want it now" (Zemke, 2013). Since they were used to discussing with adult authority figures from an early age, they have good negotiating skills, which they benefit from in their working life (Salt, 2007). Generation Y follows the attitude: "The more, the better." You are optimistic about the future and are considered committed employees. Because of their self-confidence, they tend to question rules and workplace norms. They are also not afraid to challenge employee-leadership relationships (Dogan Gursoy, 2008). Generation Y members often feel that they are not respected and valued enough because of their young age. They feel that older workers do not give them the recognition they deserve for their work (Dogan Gursoy, 2008). Since they often question work steps and want to act independently, they are often misunderstood by their superiors. Often they are accused of not listening or disregarding instructions (Martin, 2005). However, Generation Y needs to have role models in the workplace. They like to be guided by their mentors, and clear guidelines and personal support are important (Dogan Gursoy et al., 2008). However, they want the flexibility and freedom to do the work in their way (Martin, 2005). Generation Y works well alone, but they prefer teamwork. It is important to play a meaningful role in a committed and motivated team (Martin, 2005). In contrast to the baby boomers, they do not shy away from more responsibility; they even demand it. They see autonomous, responsible action as an opportunity to improve and demonstrate their skills. If Generation Y's needs are met, they have the potential to become a very productive generation in the world of work (Martin, 2005).

Historical Generational Tenure in Organizations

Hassan et al. (2019) and Rather (2018) both say that Millennials have a shorter tenure within institutions, but in contrast to whom and why? Baby Boomers (those born between 1946 and 1964) and Generation X (those born between 1965 and 1981) grew up in somewhat different economic environments. The Baby Boomers grew up through a time of economic hardship. The Great Depression in the United States of America took place mostly between 1929 and 1933; Baby Boomers were raised and grew up at a period when their parents were struggling to make ends meet as a result of the Great Depression's effects – seeing their parents as individuals with extraordinary work ethic, which boiled over into them and how they work (Boyd, 2002). Work had a profound sense for Baby Boomers, rather than any other generation, when they experienced firsthand the effects of the recession. Work was seen as a requirement for life, allowing for financial security and the provision of food for the household. With the experience of a financial burden and the need for financial security, Baby Boomers' work aspirations and preferences may vary from others who have not had those experiences and see a job as a means of survival. In comparison to the occupations of Baby Boomers, Generation X people have grown up with these ideals, having been educated by Baby Boomers or others concerned about the negative economic impacts. Older generations will usually remain where security can be found after watching their families grow up in an economically uncertain climate. Baby Boomers, according to Smith (2017), normally remain in one job for more than five years. Since a stable paycheck was necessary for life, Baby Boomers believed strongly in the Psychological Contract. According to the Psychological Contract, once workers provide a company with commitment and good jobs, they will be rewarded with a secure salary, wages, and employment protection (Thompson et al., 2012). Thanks to the economic instability as Baby Boomers became the majority of the workforce, it was more responsible for them to stick in an institution for a prolonged period of time, which explains the longer tenures spent with an organization in contrast to Millennials. In addition to the requisite sense of security that Baby Boomers had, Generation X was raised by people who grew up in difficult economic times, so their sense of security could not have been as solid. However, Generation X still maintains longer-term longevity within an enterprise, albeit not as long as Baby Boomers. As previously mentioned, Baby Boomers usually remain with an organization for more than five years (Smith, 2017), while Generation X stays with an organization for only five years (Rather, 2018). In contrast to Baby Boomers, during Generation X's prime working years, the economy gradually improved and recovered from the recession's negative effects, gradually fading the belief that a career is necessary for survival. Since Generations X are usually the parents of Millennial girls, this may be one reason for the Millennials' reputation for job hopping.

Millennial Organizational Tenure

According to new media accounts, Millennials have built a distinct identity from prior waves of staff. Studying Millennials has uncovered a variety of traits, habits, and an overall reputation, including the fact that they are work hoppers. Since job stability is less of a survival need for Millennials than it is for older generations, they seek out various values in their roles and organizations. Job is now a way to supplement the needs of life and earn a living so that you can do the things that make you happier, rather than being a means of survival. In the same way that Baby Boomers and Generation X respected the Psychological Contract and being loyal to an organization in exchange for income, rewards, and job protection, Millennials appreciate intangibles such as work-life balance, career growth and advancement opportunities, a supportive and attractive work climate, and respect for their work (Thompson et al.). These characteristics may have been needed in the workplace in the past, but they seem to be even more so today. Employees are now able to abandon their companies in search of a role that meets their desires and provides them with the things they want, when they are no longer under the burden of holding a job to fulfill subsistence needs. Millennials perceive a position that will provide them with the perks and advantages they seek as a result of their independence. They choose to be in companies for shorter periods of time than previous generations. Millennials, on average, remain in the same career for two years (Smith, 2017). This stereotype of job-hopping may not be far off the mark; rather, according to (2018), Millennial employees will change jobs about 20 times over their careers. Furthermore, according to the 2016 Deloitte Millennial Report, two out of every three workers in the Millennial community expected to shift jobs by the end of 2020 (Hassan et al., 2019). Rigoni and Adkins (2016) have discovered that in 2015, 21% of Millennial workers willingly abandoned their jobs, which is more than three times the percentage of non-Millennial employees who did the same. The population is unaccustomed to this generation of workers who willingly serve for brief spans of time, while older generations prefer to remain in one position for five years or more (Smith, 2017).


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Successful Employee Retention Management of Generation Y. Theory and Best Practice Examples
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