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Are you ready for Generation Y?

Motivating & retaining Generation Y through managerial paradigm shift and the

adoption of Enterprise Social Media tools

<External Version – certain content/context excised for proprietary reasons>

Author: Prem Kumar, Operations Manager, Microsoft Corporation

premkum@microsoft.com

Date: 9/16/2009

Executive Summary

Motivating and retaining Generation Y college-hires requires a different set of tools and strategies than those currently used in today’s workplace. Cultural trends of the time and a surge of Gen Y Executives in the tech industry, leave this generation with a very unique mindset in regards to their employment and employer.

This paper shows current research supporting this assertion and introduces a new set of management practices and Social Media tools which are likely to prove effective in the retention of Generation Y employees. My goal is to familiarize the reader with Gen Y and the keys to Gen Y retention in hopes that People Managers at Microsoft will adapt these findings into their own unique work environments.

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Introduction

Research Hypothesis

Methodology

Key Findings

Motivation

Understanding Generation Y

Gen Y’s strength, weaknesses, influences and traits

Common Gen Y Personas at Microsoft

Motivating and Retaining the Gen Y worker

What Motivates the Gen Y Worker

Retaining young talent through managerial paradigm shift

Call to Action

How Organizations can use Social Media to retain Gen Y talent

o Shrinking the workplace

o Internal/External Tools and Projects

Call to Action

Conclusion

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Introduction

One of the biggest historical challenges in the tech workplace is effectively motivating and retaining top

young talent. If organizations can master this, they can accomplish absolutely anything they set their

minds to, and many things they don’t. HR plays a huge role in bringing this talent to Microsoft but

retaining and developing it is a responsibility we all share.

According to a Taleo study conducted in 2008, 43% of college graduates stayed in their first job less than

two years and 19% of 18-34 years olds wanted to quit their first job every day, compared to 3% of those

55 years and over (Taleo 2008). This trend was echoed throughout my correspondence with business

author and speaker, Alexandra Levit, and various Human Resources employees at Microsoft.

Attrition has mellowed in today’s economic climate. Microsoft’s three-year retention rate for entry-level

hires is at 78% in 2009 while entry-level hiring is down 58.4% from 2008 to 2009 (BusinessWeek 2009).

That being said, the retention of young talent is still a huge focus at Microsoft

This focus will become even more important when the economy turns. According to the Economist

“managers will have to make an extra effort to keep the “Net Generation” motivated in times of

economic downturn, to prevent an exodus of young talent once the economy improve”. This is

attributed to a capricious quality present in the latest generation of professionals, Generation Y (or the

“Net Generation”).

So how do we motivate our Generation Y talent at Microsoft and keep them at the company today,

tomorrow and the day after?

My research has shown that 401ks, salaries and other forms of monetary compensation are less

important to Generation Y retention than fruitful collaboration with peers, recognition of work,

opportunities for growth and the idea of “being a part of something”. These young employees are less

averse to change and will tirelessly seek environments that promote these activities, leaving those

that don’t.

This paper has two focuses; the first of which is to help the reader understand Generation Y and

secondly explore how Microsoft can use Enterprise Social Media and new management strategies to

satiate the needs of this demographic, reducing attrition and churn while improving productivity.

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Research Hypothesis

Methodology

The information in this paper is derived from three sources:

Two Focus Groups and fifteen interviews with employees of Microsoft, corporations of

30,000+ employees and start-up companies. All interviewees and focus group participants

recently completed their undergrad and were within the ages of 23 and 29 (see appendix A)

Discussions with contacts within Human Resources and other departments at Microsoft

External Research

Key Findings

Generation Y has very tangible differences from previous generations and assimilation

without understanding will hurt Microsoft ROI

In an unstable economy, retention numbers are inflated, but Gen Y retention is a future

problem that can be addressed now, with proper planning

Many of Gen Y’s communication technologies of choice were born in the “social space” and

are now being adapted for “productive” uses. Historically, major communications

innovations have been built for “productive” use first and then evolved to the “social

space”. This fact alone has interesting ramifications for management and retention best

practices for this demographic

Behavioral qualities, psychological needs and past experience of Gen Y employees allow

Enterprise Social Media to naturally lend itself to the retention and productivity of this

demographic

Motivation

After graduating from college in 2006, I have spent the last three years working at one of the biggest

companies in the world by day, and maintaining an active role in the Seattle start-up community by

night.

As well as further invigorating a dependency on coffee, this experience has contributed to an

understanding of what today’s young employee needs in order to be happy, successful and secure in a

large corporate setting. I’ve seen my peers leave companies on a whim again and again, and make

movement within companies at a pace that seemed unique to my Gen Y demographic.

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Over lunches, coffee dates and happy hour with my peers, the subject of their Next Big Adventure often

muffled discussion of their current job. When I went home to speak to my parents and their peers, the

current job was the main topic of interest. Why was that? Why did members of Gen Y seem to always

focus on the future first, and present second? In trying to answer these questions I’ve found that the

characteristics of this generation are unique. I’ve learned that behavioral tendencies and needs of Gen Y

are often mishandled, not only by folks outside of the Gen Y group, but by the constituency of Gen Ys

themselves. Generational gaps are often overlooked as “facts of life”.

A survey by Lee and Hecht Harrison tells us that “70% of older employees are dismissive of younger

workers’ abilities and nearly half of younger employees are dismissive of the abilities of their older co-

workers”. “In a new report from PricewaterhouseCoopers, 61% of chief executives say they have trouble

recruiting and integrating younger employees” (Armour 2005).

It’s important to address them head-on to win the battle of retention before we lose the battle of

innovation.

After addressing the issue of understanding Gen Y, we can begin to be more effective in taking the next

steps in reducing attrition and churn of college-grads which I will detail in the second half of this paper.

Understanding Generation Y

Gen Y’s influences, strengths, weaknesses and traits

Who are they?

“Their defenders say they are motivated, versatile workers who are just what companies need in these

difficult times. To others, however, the members of “Generation Y”…are spoiled, narcissistic layabouts

who cannot spell and waste too much time on instant messaging and Facebook. Ah, reply the Net

Geners, but all that messing around online proves that we are computer-literate multi-taskers who are

adept users of online collaborative tools, and natural team players. And, while you are on the subject of

me, I need a month’s sabbatical to recalibrate my personal goals” (Economist 2008).

Generation Y is a term used to describe the cohort following Generation X. Most commentators use

birth dates from the late 1970s to the early 1990s, inclusive. Members of Gen Y are often referred to as

“Millennials” and I will use both terms in this paper (Wikipedia 2009).

They are said to differ more from their respective previous generation than any other past generation.

The reasons: technology and communication methods, as well as various other cultural influences. Each

one has multiple lives (professional and social) and an average of three to five online personas that

represent these lives. The average second interaction after meeting someone is no longer a phone call

or a letter; it’s an invitation to join their world via a Facebook friend request.

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One interesting Gen Y influence is the unusual public success of their peers which has led to unique

traits around their need for recognition and desire to achieve. They’ve seen other Gen Ys start

companies like Google, Facebook and Twitter and they work for companies such as Microsoft that were

founded by folks whom were their age at the time. The tech revolution and web 2.0 have made these

experiences fairly unique to Gen Y.

Here is a quote from one of my interviews:

“After college, I felt a like I had a sense of entitlement, that I was special. I wanted to change the world.

I found that if my job wouldn’t allow me to do this, I’d seek out opportunities outside of work. If I felt

empowered at work to “change the world” I would be much more productive in my job.”

This perspective is one that all my interviewees shared, and my research backs up. It’s said to be based

on the parental and cultural messaging that Millennials have soaked in. We need to harness that

motivation.

As with most generations, Millennials are a product of their environment to a great degree. To understand the Gen Y worker it’s important to understand how the events and cultural trends of their time have shaped them. Molded by these influences, Millennials tend to exhibit the below traits and maintain the below strengths and weaknesses

Gen Y Influences and Traits (Raines 2002)

Pillars of the Era

• Focus on children and family

• Scheduled, structures lives

• Multiculturalism

• Terrorism

• Heroism

• Patriotism

• Parent Advocacy

• Globalism

Cultural Messaging

• Be smart – you are special

• Leave no one behind

• Connect 24/7

• Achieve now!

• Serve your community

Common Traits

• High expectations of self

• High expectation of employers

• Ongoing learning

• Immediate responsibility

• Goal oriented

• Change, Change, Change mentality

• Inclusive

• Hopeful

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Gen Y Strengths and Weaknesses (Raines 2002)

Common Gen Y Personas at Microsoft

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Motivating and Retaining the Gen Y worker

What motivates the Gen Y worker?

Gen Y hires have very similar motivating factors in common; formal development programs do a great

job of empowering Gen Y hires to satisfy these factors, but this satisfaction can also be derived

elsewhere.

So what really motivates these folks to not only contribute now but continue to contribute

tomorrow? What can orgs without formal college-hire development programs do to win the retention

battle? What can orgs with these programs do to improve their retention numbers and motivation of

college-hires even more?

Of late there has been a lot of thinking floating around journals, newspapers and blogs on this topic, and

similar ones. Are these Gen Y folks good for business? How do we motivate them? Why aren’t they ever

Strengths

• Multi-tasking

• Goal Oriented

• Positive Attitude

• Technical Savvy

• Collaboration

Weaknesses

• Distaste for menial work

• Lack of skills for dealing with difficult people

• Impatience

• Over confidence

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satisfied? Do we need to shift our organization’s strategies to accommodate their needs, or do we need

to discipline them into accommodating ours?

I will use the remainder of the paper to address these questions.

My research shows that the top factors in a recent Gen Y hire’s job satisfaction are:

Recognition & growth opportunities

Being a part of something

Seeing the fruits of their labor

Opportunities to collaborate

A Gen Y hires “motivation quotient” and “retain-ability” is primarily based on these four attributes.

They seem to prefer excitement over stability and value flexibility, impact and constant communication.

Nail the four aforementioned attributes through effective management and Millennials will be happier

and more likely to contribute over the years. Of course there are employees, like the Ewing Persona

above, that will stay at Microsoft in their role regardless, and those like the Darrin persona that might

leave regardless but the focus should be on Sheila and Mohandar who value these factors as “make or

break” contributors to job satisfaction.

Other factors such as salary are important as well, but surprisingly not as important. Salary does play a

large role in recruitment, no matter the demographic, however continued bumps in pay play less of a

role in retention than the aforementioned factors in the Gen Y hire demographic. Think of this the same

way as a business attracting customers. The business can attract customers with their price point or

reputation, but to keep them the business needs to differentiate in a more substantial way.

How do we manage Gen Y employees while incorporating their unique needs?

Motivating and retaining young talent through managerial

paradigm shift

“The ability to manage and co-exist with Generation Y or Millennials is vital to how our future

workplaces will work. Each generation posing new complications and with Gen Y entering the workforce,

companies are looking for ways to manage this new group” (BusinessWeek 2009).

At the end of the day, a happy employee is a productive employee and one that applies rigor to his or

her work tasks year in and year out. Let’s look at the four factors in determining Gen Y job satisfaction

again: Recognition & growth opportunities, Being a part of something, Seeing the fruits of their labor,

Collaboration with peers.

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Not only do these things keep Millennials happy but they will lead to increased productivity. Career

Analyst Dan Pink, in a recent talk about “the surprising science of motivation”, even goes so far as to say

that factors such as these are more important than bonuses and other cash incentives in increasing

employee productivity (Pink 2009).

All Millennials that I interviewed agreed that their confidence in their direct management team was

directly correlated to their job satisfaction. All this being said, it is important that managers look at the

management of Millennials differently than they would a more seasoned employee and craft their

management tactics for Gen Y around the above four factors.

In her article, Managing Millennials, Claire Raines lists her top six principles for managing Millennials.

Upon examination, her top principles address each of the millennial satisfaction factors and provide a

solid, tailored foundation for the Gen Y worker. Here are her tips for People Managers:

1) You be the Leader – This generation has grown up with structure and supervision, with

parents who were role models. The “You be the parent” TV commercials are right on.

Millennials are looking for leaders with honesty and integrity. It’s not that they don’t want to

be leaders themselves; they’d just like some great role models first.

2) Challenge me – Millennials want learning opportunities, they want to be assigned to projects

they can learn from. A recent Randstad employee survey found that “trying new things” was

the most popular item. They’re looking for growth, development, a career path.

3) Let me work with friends – Millennials say they want to work with people they click with.

They like being friends with co-workers. Employers who provide the social aspects of work will

find those efforts well rewarded by this newest cohort. Some companies are even

interviewing and hiring groups of friends.

4) Let’s have fun – A little humor, a bit of silliness, even a little irreverence will make your work

environment more attractive.

5) Respect me – ‘Treat our ideas respectfully’, they ask, ‘even though we haven’t been around a

long time’

6) Be flexible – The busiest generation ever isn’t going to give up activities just because of jobs. A

rigid schedule is a sure-fire way to lose your Millennial employees.

How we can apply this to Microsoft – Call to Action Once People Managers are familiar with the needs of the Gen Y worker it’s is important to implement strategies to address them. We’ve discussed many contributing factors to productivity as well as things to account for. Here are some quick tips that People Managers at Microsoft can implement to address these. Start a Reverse Mentoring Program To utilize Millennials’ confidence, desire for growth, desire for being a part of something and technical skills, companies from Procter and Gamble to Siemens have set up tutoring for middle-aged executives,

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placing college-hires in the mentor role. The focus on the session was knowledge-transfer regarding tech skills. Despite the unorthodox nature of this approach, it has helped break down barriers in corporate interactions and left Millennials with an experience that addressed their needs versus suppressing them. GE matched 1,000 managers and 1,000 young employees. Even though the younger group had just joined GE, they tended to understand technologies better than GE’s, most seasoned employees (even those within IT). The program was viewed as a huge success by both groups (Raines 2002). At Microsoft most all employees have a pretty high tech IQ but giving Millennials the chance to meet once a quarter with executives to impart knowledge around social networking and new coding techniques or to simply chat about the state of the business could really help empower our young workers as well as help executives gain an understanding of Microsoft’s future leaders. Our Gen Y workers have grown up with Social Media and employed these tools on their own volition, versus formal training, gaining unparalleled insight. This would not, by any means, be a replacement for Microsoft’s formal mentoring program but could act as a supplement that could be scaled to any size organization within the company. Assign workspace with Millennials in close proximity This is great for sharing ideas and addresses Millennialss’ collaborative nature. They seem to love to be around each other. Feedback, Feedback, Feedback Though Millennials don’t like to be micro-managed, they love feedback. In order to meet their need for recognition and growth, it’s important that they receive constant feedback from their manager, as to how they are progressing, what they can improve on and what they should do more of. A good way to provide this is through regular, structured 1:1’s, informal reviews between MYCD and Annual Review, and through maintaining an open and honest relationship. There are also a variety of online tools that can be used to facilitate manager/employee feedback discussion. Incorporate informal recognition programs All my research points to “recognition” as a huge factor in Millennials’ job satisfaction and motivation. They’ve grown up in a system where they are recognized for their achievements, small and large and continuing that in the workplace can be fun and easy. Be creative.

How Organizations can use Social Media to motivate and retain

Gen Y talent “Watch the young people in your organization—particularly the ones who are fresh out of college. As this

generation moves into the workforce, they expect to continue using the devices they’ve grown up with.

Organizations that can’t meet this expectation will be at a sharp disadvantage as talented young people

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choose to work for companies that recognize the value of a new generation of communications

innovations” (Gates 2006).

I’ve learned that not only do young hires “expect to continue using the devices they’ve grown up with”,

as Billg notes, but incorporating these bleeding edge technologies into daily work rhythm can actually

fill gaps in Microsoft’s value prop as an employer of Gen Y talent.

Gen Y’s communication technologies of choice such as Facebook, Twitter, Digg and the various micro-

blogging apps were born in the “social space” first and are now being adapted for “productive” uses.

Historically, communications technologies (such as the phone and computer) were built for “productive”

uses and evolved to the “social space”.

Because of this, these new communications technologies have not been taught in the classroom and

Gen Y is fairly unique in their expertise. Not only can these tools add value to an enterprise from a

productivity standpoint, but because they are ingrained in Gen Y DNA, introducing them to the

enterprise can satisfy many of the retention and satisfaction needs of the Gen Y employee.

At the heart of the Enterprise Social Media phenomenon is the idea of “exchanging information over

time, space, knowing what people are thinking, reading, working on and always being connected. Few

can argue that this isn’t a benefit at work” (Margo 2009). The concept of instant access to information is

a benefit to any Information Worker, and the lack of tools that facilitate it often leads to frustrated Gen

Y employees among others. Given the breadth of solutions on the market, past concerns around the

protection of intellectual property and other similar concerns are quickly being quelled.

Aside from Millennials’ familiarity-induced addiction to Social Media, they have an affinity towards

community-based work. All through college and high school teamwork is stressed. The start-up scene

has taken off in places like Silicon Valley, New York and Seattle and has been fueled by Gen Y workers.

Though there are fundamental differences in a start-up company and a large company like Microsoft 12

of the 15 folks I interviewed said some of the top reasons their peers go to start-ups is due to factors

that scream of community-based work, such as collaboration, teamwork, getting to know their co-

workers and being a part of a bigger goal. I learned that many of the emotional and professional needs

that drive young people to start-ups can be fulfilled by larger companies, like Microsoft. By fulfilling

these needs Microsoft will also set itself apart from its larger competitors.

Let’s go back, one more time to the four top factors in Gen Y Job satisfaction.

Recognition & growth opportunities

Being a part of something

Seeing the fruits of their labor

Collaboration with peers

Each of these is easier to achieve in a community-based work environment than in an “every-man –for-

himself” type environment. How do we create communities for Gen Y workers within the company?

Shrinking the workplace – Community, Community, Community

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How do we “shrink the workplace” in orgs without these programs and create communities that

promote the four job satisfaction factors? I believe we can begin to accomplish this through Social

Media.

There are many Social Media solutions, both in-house and third-party, that can help shrink the

workplace and address the four fundamental needs of the Gen Y hire. The Economist tells us that the

idea of using Social Media to address these factors isn’t a new one, for example “the creators of a new,

web-based service called Rypple claim that it can satisfy Net Geners’” desire for frequent assessments

while easing the burden on their supervisors (Economist 2008).

The goal here is to get Millennial employees involved, active and motivated through interaction with

their peers. Social Media tools can not only help employees share information to reduce re-work and

Community via Social

Media

Recognition & Growth

Being a Part of Something

Collaboration with Peers

Seeing the Fruits of Your

Labor

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complete projects faster but it can also help utilize one of Gen Y’s greatest competitive advantages;

collaboration. Managers can take advantage of Millennials’ ability to effectively collaborate by way of

these tools to “crowdsource” team initiatives to large group of Millennials within their org. Companies

like Facebook are already doing this; “crowdsourcing”, to Millennials, the work of translating their

website into foreign languages and entering these foreign markets at a fraction of the cost. “The process

proves to be very efficient: Facebook launched a Spanish site in Feburary 2008, only a few weeks after

unveiling the app, and by June it had support for 16 more languages. It’s now up to over 60, including

right-to-left reading languages like Hebrew” (Kincaid 2009). The interesting thing here is that the

Millennials participating weren’t even Facebook employees, and did this for free; they seemed to like

doing it. This is just one example of how Gen Y’s strengths can be utilized by way of Social Media, while

providing them with experiences that fulfill their collaborative needs, among others.

I’ll offer up just a couple potential tech solutions, though ultimately I’d like to be product agnostic, as

the exact Social Media tools and implementation will vary based on setting. I invite you to go play with

them and find out how they can be best utilized in your org to empower Millennials as well as the

remaining balance of the workforce. As with all Social Media tools, their value will be proportional to

how many people adopt them.

Tools and Projects*

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How we can apply this to Microsoft – Call to Action Gen Y Advocates Are you a member of Gen Y? Share the technologies you use to be more productive, with your manager. Talk to your management chain about building adoption plans for Social Media tools. Are there tool in house we can use? If so, start playing with them and showing them to your team. If not, find out what LCA and management can do to help your team license these tools. Be proactive! My guess is that the “project” of driving the adoption of these tools will satisfy some of your Gen Y needs, in and of itself. SME Team Form a heterogeneous SME team in your org comprised of folks from different generations that can act as a resource for Social Media and its advocacy at Microsoft. Do Brown Bags to help evangelize Social Media solutions that have worked in your org. Go Play Go check out the Social Media technologies available to us and mess around with them. Determine how they can best fit the needs of your organization’s talent; both Generation Y and others. Support tools developed by our Products Groups and see how they stack up to what else is out there – if they don’t

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meet your needs, send your feedback to the PG. Top-down Adoption The large-scale success of any new tool will be based on adoption. All of the above methods will bring attention to new technologies but in the end it will come down to adoption at the user level. The key will be to get management buy-in that Social Media tools can help, and send the message from the top down. Ideally internal tools will scale to the company’s needs, but if they don’t we should consider licensing third-party Social Media tools. For this to work we need to embrace it, as we all know the success of any new technology is based on the scale and speed of its adoption; serendipity also plays a part, of course!

Conclusion

We have built an exciting brand and culture at Microsoft; one that attracts Gen Y Hires from all over the

world. It is each of our responsibility as Microsoft employees to understand this demographic and work

to provide an environment that allows them to thrive.

Enterprise Social Media and new management strategies offer us ways by which to cater to the unique

needs of the Gen Y demographic and can be very valuable as we fight attrition and churn, especially as

the economy turns and the economic slump subsides.

Thank you for reading!

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Appendix A

Note: All interviewees were between the ages of 23 and 29. Five Interviewees were self-selected but

effort was put in place to make this group as representative as possible. Remaining interviewees were

referred by first five.

Employment # Interviewed

Microsoft– Direct from College 3

Large Corporation (40K +) – Direct from College 4

Start-up company – Transfer from MS 4

Start-up – Direct from College 3