Successful retention management of Generation Z

Theory and first best practice examples


Seminar Paper, 2019

26 Pages, Grade: 1,0

Anonymous


Excerpt

Table of Contents

List of figures

List of abbreviations

1. Introduction
1.1 Problem definition
1.2 Way of approach

2. Background information
2.1 Employee retention management
2.2 Overview of the relevant generations
2.3 Expectations of Generation Z

3. Best practices to retain Generation Z
3.1 Google LLC
3.2 Daimler AG
3.3 Further recommendations

4. Summary

List of references

List of figures

Figure 1: Conditions for successful employee retention

Figure 2: Generation overview in companies

Figure 3: Expectations of Generation Z to an employer

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1. Introduction

1.1 Problem definition

The present labour market faces many challenges with one of them being an ageing popula­tion. Also, demographic changes affect companies for more than two decades now. By 2050, the middle age group of 30 to 49-year-olds will fall from just over 50% to below 45%, while the over-50 age group will increase from around 26% to just under 34%.1 Especially medium-sized and large companies have a high proportion of older employees resulting in many workers retiring in the coming years due to age. Companies are therefore faced with the task of safe­guarding »human capital«.2 In order to absorb the collective knowledge of experienced em­ployees, junior staff must learn for a long time. This can hardly be achieved if only the gener­ations transfer their knowledge to the next.3

Not only demographic change, but also the shortage of skilled workers is having an impact on companies. The business consultancy Ernst & Young states that the shortage of skilled work­ers costs 33 billion euros annually for German medium-sized enterprises.4 Young people are hardly interested in technical and scientific professions. This is shown by a recent study by the market research agency Atomik Research on behalf of the US automation and measurement technology provider Emerson. More than 18,000 consumers from ten countries were surveyed. Especially in Germany, the younger generation cannot find a passion in mathematics, com­puter science, natural sciences and technology (MINT). The initiators of the study warn that the shortage of skilled workers will therefore become even worse in the coming years.5

In addition, human resources (HR) work has increasingly been focused on Generation Y lead­ing to the next problem. While now a new generation is entering the labour market, new and even bigger changes will occur than in previous generations, according to human resources experts.6 The new Generation Z will flood the labour market in a short period of time and es­tablished companies have to satisfy four generations who all have different demands at once.7 In practice, this will lead to more frequent conflicts of objectives, as the satisfaction of all gen­erations through different interests is very difficult. Conflicts between employees, teams or su­periors due to different values, views or behaviours have a negative impact on the working atmosphere and have a long-term effect on the company's success. Therefore, companies must make decisions as quickly as possible, especially in personnel management and deal with the new generation at an early stage. However, this is very difficult due to the lack of experience with the new generation, particularly in the context of employee retention.8 Employee retention is generally a major challenge for companies of all sizes. This is confirmed by the annual study of the Gallup Engagement Index for Germany. In 2018 only 15% have a high emotional bond to the company. A remarkable 71% have a very low emotional attachment and 14% have no emotional attachment at all and have already terminated their contract men- tally.9 Most companies have no knowledge about the new generation and about the changed expectations towards employers. For improving the low percentage of employee-employer at­tachment for the new generation it is key to be aware of the changed expectations towards employers.10 According to Scholz, the loyalty deficit in the new generation will be even greater than before.11 From this point of view, this paper will deal with the question: What measures do companies take to retain Generation Z for long-term loyalty? For a structural answer to this research question, the next chapter describes the approach of this paper.

1.2 Way of approach

After the previous chapter presented the extensive problem and the goal of this paper, the next section provides fundamental background information about the research topic. The back­ground information is sectioned in three key aspects. First of all, a basic understanding of employee retention management will be created of which measures can be implemented and which framework conditions should exist in the company for successful employee retention. This will later serve as a foundation when it comes to binding Generation Z to companies. In order to be able to place Generation Z in an overall context, the previous generations are first going to be defined. The overview of the four relevant generations illustrates how the genera­tions were shaped by the time of their birth and how they partly differ from the other genera­tions. After a profound knowledge of Generation Z is acquired, the expectations and needs of this group must be determined next. Generation Z's expectations to the employer should pro­vide initial insights into the measure's companies need to take in order to retain the new gen­eration in the long term. In the main section of this paper, the two companies Google and Daimler are used as pioneers for the retention of the new generation as best practice exam­ples. Subsequently, these will be compared with the findings from the expectations of Gener­ation Z and further recommendations will be formulated and defined. The summary at the end of the paper will conclude the answer to the stated research question and the way to go for­ward.

2. Background information

2.1 Employee retention management

“We have to get used to the thought that companies are much more dependent on their best employees than the good people from the company.”12

Peter Drucker has already recognized that the contribution of employees to the company's success and their growing independence from their current employer is becoming increasingly important in personnel management. Employee retention (ER) can be understood as security of a company's existence if it is assumed that the shortage of sufficiently qualified personnel will gradually affect every sector and every company. It is therefore crucial that the employee's commitment to a company is implemented in advance prior to employees switching to a com­petitor due to dissatisfaction.13 14

In relation to the objective of this paper it is important to find out what measures established companies are taking to guarantee ER in the long-term. Companies ask themselves how they can retain their employees and which conditions make them more attractive employers. The following statistic (figure 1) shows the conditions for successful ER. The percentages illustrate the importance of the individual conditions based on many surveys in German-speaking coun­tries.

Abbildung in dieser Leseprobe nicht enthalten

The survey showed that 49% of the participants state that a good working atmosphere is im­portant for ER. The right leadership style is a part of this. Which leadership style to apply depends on the situation, especially on the employee's level of development. Therefore, exec­utive leaders should be trained in this regard so that they can make the right decisions in a variety of situations to improve the good working atmosphere.15 This is even more important for the interviewed than the salary on second place. The salary plays a greater role in the case of a longer period of employment, as the question of money is first clarified at the beginning of the employment relationship. Supervisors should therefore provide for measures such as reg­ular increases, bonus payments or performance-related pay.16 Flexible working hours are very close in regard to the priority as the salary. This trend has been created in recent years pri­marily by increasing digitalization.17 Measures for this can be working time models such as part-time work, trust-based working hours, flexitime or job-sharing, which take account the time flexibility.18 Job security (36%), interesting tasks (35%) and the work-life-balance (34%) are closely related among the respondents. It appears that these are important prerequisites but do not have the highest priority. Job security can be guaranteed by companies through unlim­ited employment contracts.19 In order to find out what kind of interesting tasks are important for employees, feedback meetings could be held at regular intervals.20 The work-life-balance is not only about the compatibility of classic family and career, but about every single employee in the company, regardless of marital status, age or gender.21 Companies therefore often pro­vide local childcare, massage services during lunch breaks or information lectures for example on the prevention of burnout diseases.22 Foreign professionals can benefit from support by companies in dealing with the authorities, finding accommodation or due to language barriers when regularly shopping.23 On the seventh place are good career perspectives. Motivated em­ployees who want to climb the career ladder must be especially challenged and supported if an opportunity arises.24 Additional company benefits are difficult to interpret in this context, as all services such as employee offers, discounts on own products or a canteen are combined. The last point in the chart could theoretically also be assigned to the work-life-balance de­scribed above. Mobile work deals with the flexibility of the place where the work is performed.25 Due to their relevance, the other conditions from the statistics were left out due to their lower percentages. After the general retention management has been explained in more detail, the matter of the generation problem is described in the following section.

2.2 Overview of the relevant generations

Hypothesized that the economic miracle generation (born until 1955) has completely left the workforce, companies currently have employees from four different generations. The following figure 2 shows the current generations that can be found on the labour market. Of course, not all generations have to be present in every company.26

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: Generation overview in companies27

Baby-Boomer

Sociologists use this term to describe the baby boom of the post-war generation up to the beginning of the 1960s. It is currently the oldest generation to be found entirely on the labour market. In Germany, the boom peaked in 1964, when the all-time high of 1,357,304 live births was reached. On statistical average, a woman gave birth to 2.53 children at that time. Still, 1964 is the year with the highest number of births since the introduction of the contraceptive pill led to a steady decline in the number of births.26 27 28 That is why the name »Baby Boomers« was introduced for this generation.29 Most of them have grown up with more than three or four siblings.30 Characteristic of this generation is risk aversion, »live to work« and high loyalty to an employer.31 Technologically, however, there is a lack of skills and a willingness to adapt. In their daily work, they rely above all on the well-known and refuse to accept new methods.32 Regarding to the age, Baby Boomers are the majority of today's politicians and directors.33

Generation X

Generation X by definition includes all middle-aged adults between 39 and 54 years of age. It was no longer characterised by an economic miracle like its previous generation but by in­creasing uncertainties on the labour market, the consequences of the oil price crisis and the associated stagnation.34 Although in Germany the 1980s were characterised by a certain eco­nomic prosperity, a professional entry into the world of work as well as a career advancement were considered difficult and therefore particularly hard work, career and the deserved luxury goods were desirable status factors of this generation.35 The new technological developments and the media revolution from the mid-1980s onwards shaped Generation X in its childhood and youth phase in dealing with the new media and demanded a high degree of adaptability.36 Loyalty to their employer is not important for Generation X.37 On the contrary, a frequent change of employer leads to career leaps, which corresponds to the high ambitions of this generation.38

Generation Y

The name of 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.39 Y-ers grew up with wireless devices and they are connected with others through social networks.40 “They were born into an over-planned world where everybody is occupied in doing something.”41 This Generation not only benefited decisively from the ad­vantages of globalisation, such as global networking and mobility, but is also the first genera­tion that grew up with digital media and uses them freely.42 Gen Y already represents the second largest group of the world's working population. In 2020, this generation will make up half of the workforce, making it the largest group.43 They show less loyalty to their employer compared to their work and they are interested in leading positions.44

Generation Z

People born after 1995 are the first to have grown up with digital networking, computers and an often very careless approach to these technological innovations. As they are therefore very computer- and technology-oriented, they are often referred to as »digital natives«.45 Since 2011, they are also been represented on the labour market and in 2014, for the first time, overtook the number of accesses of Generation Y.46 Generation Z is described as realistic. They have seen the previous generation's career dreams burst and mass layoffs shatter family relationships. Therefore, they approach companies from a different angle and make more de­mands than any previous generation.47

Multiculturalism and ethnic diversity are self-evident characteristics of the socialization of Gen­eration Z. While only half a million foreigners lived in Germany in 1950, every fifth person living in Germany now has a migration background. Most young people associate advantages with this facet of diversity. A multi-ethnic circle of friends offers, among other things, the opportunity to expand language skills in everyday life, develop intercultural skills and demonstrate the own worldliness.48 Generation Z is not only growing up multiculturally, but also in times of percepti­ble climate change. Nowadays, every Friday, thousands of students around the world strike their school classes. This strike is under the motto »Fridays for Future« and Z-ers demonstrate for effective climate protection. The movement was initiated by 16-year-old Swede Greta Thun- berg, who in 2018 began striking her school classes until Sweden implements the Paris climate agreement.49

In addition to the framework conditions, there are differences in the use of technology, espe­cially in terms of utilizing technology between this generation and the Generation X, who are their parents.50 Social media giants like Facebook since 2004, the beginning of the smartphone era through the launch of the iPhone in 2007, millions of users on Twitter and other platforms like Instagram and Pinterest have been an important part of a Z's life.51 For a Z “[...] communi­cating with someone halfway around the world may be easier than communicating with older relatives at the dinner table during a holiday meal.”52 This statement is supported by a 2017 youth study in which Generation Z was asked about their social media use. It is noticeable that 92% of young people use WhatsApp several times a day and Instagram and Snapchat about approx. 60% per day.53 “The need to be involved and informed with other people is the main rationale behind the use of online socializing by Gen Z.”54 They are considered to be the best informed generation since technological devices and social media are their daily companions. The internet enables very fast access to all information and is already integrated everywhere in everyday life.55

This generation is extremely fast in their way of thinking and obtaining information. However, this also applies to the relationship with the employer. In contrast to the Baby Boomers the Z's see no reason to commit to an employer in the long-term.56 A possible solution to this problem is addressed in the main section.

2.3 Expectations of Generation Z

After a basic understanding of Generation Z has been created, it is also necessary to identify the expectations to an employer. The overview of the individual generations has shown the different characteristics and peculiarities which employers must deal with. The following figure 3 summarises the most important expectations of Generation Z to an employer, according to dominant literary opinion. The legend in the chart shows the content subdivision in the current structure. The blue marked expectations correspond to the generation's independent condi­tions for a successful ER, as already described in detail in section 2.1. The expectations marked with a black arrow are explained in more detail in this section. The green marked expectations are applied in the main part based on companies and further recommendations.

Working environment

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Expectations of Generation Z to an employer57

The two categories could also be divided in soft- and hard facts. This should only serve as a guide to roughly differentiate these expectations. The left side of the figure describes expecta­tions that are difficult to touch, such as feelings, values or relationships. The right side of the figure in contrary describes the expected conditions of the working environment the young generation believes should exist in a company.

Starting with the personal side, it should first be noted that each employee is distinguished by different competences and characteristics and therefore differs from others.58 This insight is of great importance for the application of digital natives, as measures for employee retention should be individually developed. In practice, a differentiation can be made between the wa­tering can principle, in which all measures apply equally to all employees, and the individual commitment, in which individual measures are taken for each employee. Regarding to Gener­ation Z, it is important to take individual wishes into account. The young employees prefer free time, a sabbatical, or entertainment electronics in the break rooms instead of training opportu­nities, company cars or the possibility to operate at home.59 In this context, the personal rela­tionship to managers is also very important and underlines the desire for individual support and appreciation. In their daily work, it is important to them that colleagues and superiors com­municate face-to-face on a personal basis. Through the generational differences that have already been discussed, Gen Z tries to prevent possible misunderstandings through its ‘digital slang' with many abbreviations and foreign words towards colleagues and superiors.60 Gen­eration Z expects from managers that their daily tasks match their personal goals. This can only be achieved if the relationship between the two fronts works well. The relationship can be described as objectively, in contrast to the previous generation.61 Not only the importance of a personal relationship with the manager, but also the leadership style applied is among the primary expectations of Generation Z. According to Frankowski and Scholz, the transactional leadership style is very suitable for young people.62 In transactional leadership, interaction with the manager is purely functional. Tasks are delegated and remunerated through short-term rewards, usually of a material type.63 The manager only intervenes in emergencies, as the goal for the employee is clearly defined in advance.64 This leadership style gives Generation Z a feeling of security and prevents the fear of overwhelming challenges.65

The right side of the chart will be mostly discussed in the next chapter. Nevertheless, it is important to take a closer look at the desire for continuous positive feedback. In the world of a Z there is always and everywhere feedback. It doesn't matter if this is expected in the form of followers or likes in the social media world, or at the workplace from superiors or colleagues.66 As already indicated in regards to the leadership behaviour, the young employees expect feed­back after each task due to the objective communication in the context of the transactional leadership style. However, this should be positive, as otherwise the feedback will at best be noted and will not gain any significance. As a result, this generation loses the right to construc­tive criticism, especially in everyday working life compared to other generations. Employment references can therefore also trigger great dissatisfaction, because expectations about exclu­sively positive feedback cannot be realised at this point.67 The next chapter takes up further expectations and describes them with the help of two companies.

[...]


1 Cf. Mangelsdorf, M. (2015), pp. 9-10.

2 Human Capital forms part of the intellectual capital of a company (see Wolf, G. (2013), p. 28).

3 Cf. Mangelsdorf, M. (2015), p. 11.

4 Cf. N.U. (2012).

5 Cf. Dierig, C. (2019).

6 Cf. Scholz, C. (2015), p. 78.

7 Cf. N.U. (2019 a).

8 Cf. Mangelsdorf, M. (2015), p. 11.

9 Cf. Nink, M. (2018), p. 5.

10 Cf. Mangelsdorf, M. (2015), pp. 11-12.

11 Cf. Scholz, C. (2014), pp. 59-60.

12 Drucker, P. (2002), p. 108, own translation.

13 Cf. Wolf, G. (2013), pp. 16-18.

14 Own illustration based on Statista GmbH (2019).

15 Cf. Kneschke, R. (2019).

16 Cf. Hardenberg, C. (2018).

17 Cf. Pils, J. (2019).

18 Cf. Knoblauch, R. (2004), p. 123.

19 Cf. Herget, J./Strobl, H. (2018), p. 389.

20 Cf. Jöns, I./Bungard, W. (2018), pp. 4-5.

21 Cf. Michalk, S./Nieder, P. (2008), p. 111.

22 Cf. Schnetzer, R. (2014), p. 6.

23 Cf. Yavuz, D./Bröckermann, R. (2013), p. 76.

24 Cf. Novakovic, N. (2017).

25 Cf. Groll, T. (2015).

26 Cf. Frankowski, S. (2013), p. 51.

27 Own illustration based on Frankowski, S. (2013), p. 51.

28 Cf. Statistisches Bundesamt (2012).

29 Cf. GeilJler, C. (2005).

30 Cf. Ruthus, J. (2014), p. 10.

31 Cf. Meret, C. et al. (2018), p. 245.

32 Cf. Meret, C. et al. (2018), p. 247.

33 Cf. Scholz, C. (2014), pp. 81-82.

34 Cf. Appel, W./Michel-Dittgen, B. (2013), p. 4.

35 Cf. Bruch, H. et al. (2010), pp. 105-106.

36 Cf. Oertel, J. (2008), p. 168.

37 Cf. Steckl, M./Simshauser, U./Niederberger, M. (2019), p. 2.

38 Cf. Ruthus, J. (2014), p. 8.

39 Cf. Frankowski, S. (2013), p. 54.

40 Cf. Meret C. et al (2018), p. 247.

41 Baysal, S. (2014), p. 222.

42 Cf. Bruch, H. et al. (2010), pp. 108-109; Parment, A. (2009), pp. 16-17.

43 Cf. Meister, J./Willyerd, K. (2010), p. 4.

44 Cf. Ruthus, J. (2014), pp. 7-13.

45 Cf. Neef, A./Schroll, W./ Theis, B. (2009).

46 Cf. Scholz, C. (2015), p. 79.

47 Cf. Scholz, C. (2015), p. 78.

48 Cf. Klaffke, M. (2014), p. 71.

49 Cf. Steuer, H. et al. (2019).

50 Cf. Baysal, S. (2014), p. 223.

51 Cf. Baysal, S. (2014), p. 224.

52 Miller, J. (2018), p. 54.

53 Cf. Statista GmbH (2018).

54 PrakashYadav, G./Rai, J. (2017), p. 111.

55 Cf. Miller, J. (2018), p. 56; Meret, C. et al (2018), p. 248.

56 Cf. Scholz, C. (2014), p. 59.

57 Own illustration based on Scholz, C. (2014), pp. 100-190; Erle, C. (2016); Mörstedt, A. (2018); Alam, M. (2018); Domeyer, D. (2016); Rodrigues, F. (2018).

58 Cf. Gabor, M. (2011), p. 69.

59 Cf. Wolking, S. (2017).

60 Cf. Wells, M. (2019).

61 Cf. Scholz, C. (2014), p. 175.

62 Cf. Frankowski, S. (2013), p. 68; Scholz, C. (2014), p. 177.

63 Cf. Frankowski, S. (2013), p. 71.

64 Cf. Hentze, J. et al. (2005), p.341.

65 Cf. Scholz, C. (2014), p. 177.

66 Cf. Scholz, C. (2014), p. 172.

67 Cf. Scholz, C. (2014), pp. 172-174.

Excerpt out of 26 pages

Details

Title
Successful retention management of Generation Z
Subtitle
Theory and first best practice examples
College
Albstadt-Sigmaringen University
Grade
1,0
Year
2019
Pages
26
Catalog Number
V900822
ISBN (eBook)
9783346226310
ISBN (Book)
9783346226327
Language
English
Tags
Generation Z, Bindung, retention, retention management, Mitarbeiterbindung
Quote paper
Anonymous, 2019, Successful retention management of Generation Z, Munich, GRIN Verlag, https://www.grin.com/document/900822

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