Report

Working Better Together

Understanding the experiences and needs of a multigenerational workforce
By Heartbeat

How do you manage a multigenerational workforce with different needs, beliefs, backgrounds, and ways of working?

We now find ourselves with five different generations in the workforce. Digital natives who had a Facebook profile long before they had a job are working alongside veteran colleagues who remember when fax machines and floppy disks were revolutionary technology. As a result, many myths have surfaced about the different generations in the workplace, and about what sets them apart—leading to lingering and often unhelpful stereotypes.

In this report, Heartbeat shines a light on how the attitudes and experiences of each generation in the workplace differ, in order to help organisations better cater to the needs of their workforce.

00.

Defining generations and understanding biases

Before we begin our analysis, we must first define the generations. The exact point of transition from one generation to another is often open to debate, but for the purpose of this report, we’ve chosen to use the parameters defined by the Pew Research Center.

The Baby Boomer generation is the largest in terms of time, spanning 18 years from 1946 to 1964. Generation X follows the Boomers for 15 years until 1980, and Millennials, soon to be the largest generation represented in the workplace, span from 1981 until 1996.

The current global workforce only includes the tail end of the Silent generation, and the very first members of Gen Z. As such, the amount of data available to us on these groups is much less than that of other generations. In any analysis, it is better to have groups of similar size, therefore we chose to focus on the three demographics that make up the majority of our dataset: Baby Boomers, Generation X, and Millennials.

Accounting for biases

Before we begin to look for differences in generational experiences and attitudes, and draw conclusions from our dataset, it’s important for us to take into account potential factors that may bias our conclusions. For example, certain generations may have greater representation in certain industries.

Since Millennials are more likely to work in the tech sector than other generations, the conclusions we reach about Millennials may actually be due to the influence of the tech industry instead. Similarly, Baby Boomers are more likely to have been in their organisation for longer, and the findings we uncover may be a reflection of leadership experiences rather than a generational mindset.

Fortunately, these biases can be modelled, quantified and accounted for. We have taken this into account in our analysis using True Benchmark® technology, so we can be sure to tap into the generational effects. To understand more about how different employee demographic factors—such as age, tenure, region, department and seniority—affect employee engagement, refer to our True Benchmark® calculator.

01.

Baby Boomers are the most engaged generation

The difference in employee engagement between the generations is perhaps the most significant concept to investigate. Engaged employees are invested in their work and in their company, and are more likely to apply discretionary effort to go the extra mile. They are also more likely to stay with a business, decreasing hiring costs and reducing attrition.

The most widely used method to quantify employee engagement is the Employee Net Promoter Score, or eNPS. Based on the NPS®️ methodology devised by Bain & Company, and used by hundreds of companies around the world to measure customer loyalty and satisfaction, the score is calculated based on employee responses to the question:

“How likely is it you would recommend [Company Name] as a place to work?”

This question encourages people to reflect on all aspects of their workplace experience at once—from company culture to work environment to career prospects. A recommendation is also a form of identity capital. Similar to when someone recommends a brand or product to a friend, an employee’s willingness to recommend their company suggests they’re aligned with their work on a deeper, more personal level.

Our data shows that employees across the generations are similarly engaged in the early days of their tenure. In the first three months—which we term the honeymoon period—employee engagement scores tend to be much higher than at any other time during employment. Since the effects of tenure have been corrected for in our analysis, the engagement peak that you would expect to see at this time has been normalised around a baseline “expected engagement score”.

The expected engagement score gives us a baseline for how we would expect an employee to answer based on their industry, gender, tenure, and country. It then allows us to estimate, for example, how the engagement of a female employee in the United States, 1 year into her role in the healthcare industry would differ depending on whether she was a Millennial, Gen X, or a Baby Boomer.

We can see that during the onboarding period, Baby Boomers score lower than expected compared to their younger peers, suggesting that they are less swayed by the excitement of a new job. As this onboarding effect wears off, the generational influence on employee engagement levels becomes clearer. Baby Boomers emerge as the most engaged demographic after three years of tenure, with Millennials consistently less engaged than both Boomers and Gen X.

We see this Boomer trend emerge to a greater degree when employees are directly asked about the expected outcomes of employee engagement: loyalty and satisfaction.

After 3 years, Baby Boomers score 0.5 points higher (on a 0-10 scale) when asked about their intention to stay with their organisation. This is likely driven by their higher employee engagement levels, and also influenced by the fact they are nearing retirement and less likely to want a role change.

The generational differences are significantly highlighted when employees are asked about job satisfaction. After two years, Boomers report far higher levels of satisfaction than their younger colleagues, peaking at 5 years with a difference of 0.7.

Looking at previous academic research, there may be a few reasons why Baby Boomers display higher engagement and job satisfaction than their younger counterparts. For one, they’re more experienced and likely feel more competent in their role. According to Deci & Ryan’s Self-Determination theory (1985), a sense of competence is one of the three fundamental psychological needs that drive our motivation. When we perceive ourselves as capable at a task, our motivation to complete it—and the satisfaction we receive from doing so—increases.

Boomers’ expectations are different too. As competition for top talent becomes more fierce, employers and their HR teams have become more focused on creating a positive “employee experience” than when the Boomers first entered the workforce. While Millennials may expect more flexibility to work from home, or better employee well-being offerings, Boomers remember a time when these perks and advantages weren’t the norm. Therefore, they likely appreciate them more, feel more valued by their employer, and their engagement levels are higher.

02.

Baby Boomers have the most faith in their organisation’s strategy

Research has shown that faith in an organisation’s strategy is one of the biggest contributors to employee engagement, so there is little surprise that Baby Boomers demonstrate a stronger belief in the strategy and goals set by leadership than Generation X or Millennial employees.

From the first year of their employment onwards, Boomers score more than 0.5 points (on a 0-10 scale) higher than their Millennial counterparts. A 2013 report for the Institute for the Study of Labor by Carpenter & Gong found that employees who believe in the mission of their organisation are 72% more productive than those who don’t.

The cause of this generational difference could be down to experience. With more time in the workplace, a clearer understanding of how businesses function—and better access to information—Boomers are more likely to grasp the strategic choices of their leaders, and see the long term progression towards the goal. Millennials, on the other hand, newer to the workforce, have had less exposure to different strategic approaches.

The cause may also lie with the methods and messaging used by businesses to communicate their strategies to their teams. Using communication channels that are better suited to all generations—rather than relying on traditional, infrequent comms that only Boomers are used to—would increase the chances that leadership decisions would resonate with younger generations.

Interestingly, Millennials—often described as a generation driven by passion and the pursuit of purpose—report being less inspired by the mission of their organisation than their peers. This is particularly concerning as, if this stereotype is true, Millennial employees are lacking motivation from a source that is especially important to them.

03.

Millennials find less meaning in their work

When asked, Millennials report finding significantly less meaning in their work than both Baby Boomers and Generation X, echoing the concerning finding that they lack inspiration from their company’s mission and purpose.

The importance of meaningful work is well covered in academic research, specifically in Hackman & Oldham’s Job Characteristics Model (1975) and William Kahn’s study on the psychological conditions required for employee engagement (1990). Both bodies of research explain that employees need to understand the value and impact their role has in order to fully engage with the tasks at hand.

It’s this genuine appreciation of making a contribution that motivates individuals to commit themselves fully to their role.

In order to feel as if they are making a meaningful contribution, employees need to believe that they are able to utilise the unique skills that they possess, and observe the impact that it is having on a scale larger than themselves—such as on their team, their organisation or on society as a whole.

In their pursuit of meaning, Millennials feel they have less opportunity to use their skill set than older generations. As they are in an earlier stage in their careers, Millennials may have not yet found a role that they feel suited to, or developed the confidence that the skills they possess are uniquely valuable to their organisation.

Interestingly, when we look at the impact that each generation feels they are able to make in their team, we see very similar responses among all respondents. Neither Millennials, Gen X or Baby Boomers report being more content with the difference they are able to make on a team-level than their counterparts.

This would imply that the lack of meaning for Millennial employees is tied less to the micro-level impact they are able to make within their organisation, and caused more by their perceived inability to make macro-scale contributions to their organisation or society in line with their personal passions and skills.

04.

Millennials are least satisfied with their pay

As we’ve already discussed, generational stereotypes suggest that Millennial workers are more driven by experiences and a sense of purpose than they are by financial rewards. However, our data clearly shows that Millennials are dissatisfied with their level of pay compared to their older peers, and the disparity between the generations is greater with reward than any other workplace factor.

According to behavioral psychologist John Stacy Adams, the key to understanding an employee’s satisfaction with reward is “fairness.” In 1963, Adams introduced Equity Theory. It states that while employees not only want to feel that their reward fairly reflects the effort they put it, they also want those rewards to be commensurate with what their peers receive. For example, a worker might be perfectly happy receiving a $50,000 salary—until they learn that a co-worker with the same responsibilities is paid twice as much.

If we consider the financial compensation of Millennials in a wider context, we can begin to appreciate why they may be less content than Boomers or Gen X.

Millennials, as a generation, face $1 trillion in student loan debt in the US (4Q 2018, Federal Reserve & New York Federal Reserve), and are increasingly priced out of the housing market with home values 1000% higher than they were in the 60s. Overall, Millennials are much less financially secure than their Baby Boomer parents.

While it cannot be expected that employers inflate wages in line with rising house prices and educational costs to provide parity, they do still have a duty to ensure that a wage is sufficient to live on. As organisational psychologist Fredrick Herzberg pointed out, excessive rewards will not motivate employees beyond a certain point—but offering insufficient rewards will cause large drops in motivation levels.

With a sufficient wage secure, employers should look towards the primary findings of this report to understand how they can better engage, not just Millennials, but all generations in their workforce—through making work meaningful, improving the communication of strategy, and providing everybody with the opportunity to do what they do best.

Understanding the multigenerational workforce

With this report, we sought to better understand the differing experiences of each generation in the workplace. Doing so is the first step in tailoring the workplace experience to the needs of employees, and supporting each generation to achieve their full potential.

Our data highlighted some interesting discrepancies between the experiences of older and younger generations in the workforce. Overall, Baby Boomers reported higher levels of employee engagement, a greater intent to stay at their organisation, as well as greater satisfaction with factors such as pay and the strategic direction of their company. According to the US Bureau of Labor Statistics, workers over 65 is the fastest growing age demographic in the US workforce. The value of this age group should not be overlooked.

On the contrary, Millennial employees scored consistently lower in all aspects of the workplace experience than their older colleagues. In 2017, Millennials became the largest generational demographic in the US workforce (source: Pew Research Center). As they become more established in the workplace, the need for businesses to understand, and correctly cater to the needs of younger generations will only increase. Some factors, such as financial incentives, are less realistic to remedy. However, organisations can rest assured that more subtle changes, such as improvements in communication, and a greater focus on the corporate mission, will in turn drive improvements in employee engagement and loyalty.

Wondering how we got this data?

Find out more about what we measured, why it matters, and how it’s calculated.

About Heartbeat

Brought to you by Peakon, the leading employee engagement platform. Heartbeat provides data-driven insights into the world of work, to help people and companies reach their full potential.
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