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Millennials are changing the rules for succession. Find out why you need to step up your succession planning game for our next-generation leaders.

Last summer, car company Audi launched its Summer of Audi: Promote Yourself commercial where a top-performing employee is recognized for her contributions, then promptly packs her boxes and leaves the company to start one of her own. Audi wanted to emphasize that “a promotion isn’t just about a salary bump or a fancy corner office. It’s bypassing a raise for a better opportunity elsewhere, or trading in that corner office to start a business in their living room.”

Off screen, we keep hearing that Millennials are turning down promotions, opting for lifestyle over salary. They’re leaving behind surprised and puzzled managers – and talent gaps in their organizations. What’s happening? Why is it happening now? What does this mean for your succession plans? Are you ready?

The New Work Contract

In the “olden” days, when Baby Boomers (born 1946-1964) were entering the workforce, the way to get ahead in life was to work. For somebody else. For years (or decades). At the time, employers looked out for their workers – offering generous pensions to carry them into and through retirement. One poll found that 40 percent of America’s Baby Boomers stayed with their employer for more than 20 years. And two-thirds of them had pensions.

These days, portable retirement savings accounts like 401(k)s have taken the place of the pension, making it easier for employees to move from one company to the next. Millennials (born 1980-1994), who watched their parents get laid off from large corporations, are motivated to avoid long-term employment ties.

Demands of the workplace have changed, as well. In our globally connected, tech-driven, rapidly evolving work world, employers and employees alike must acquire the skills and talents they need to compete. Which leads to a fine balance of developing the skills of existing employees and recruiting talented new professionals.

Still, many Baby Boomer managers are stymied by Millennials’ comfort with changing jobs and insistence on choosing where and how they work.

What Millennials (Really) Want

Low unemployment rates and a nomadic workforce means that employers need to work harder to attract and retain the employees and skills they need. As Baby Boomers retire and leave the workforce, there’s room for more leaders in government and commercial organizations. Millennials, now age 25 to 39 years old, have the experience they need to lead teams and departments. To engage Millennials as workforce leaders, you first have to know what makes them tick.

Widely considered the most-studied generation, we know quite a bit about Millennials. As a group, Millennials are confident multi-taskers who welcome feedback. They are tech experts who crave frequent learning opportunities. Unlike previous generations, they work to live, not live to work. “Work/life balance is more important to them than salary and they want to do work that improves society, putting emphasis on corporate social responsibility, sustainability and diversity.”

Making Succession Plans Work for Millennials (and You)

When it comes to succession planning, it used to be enough to map out the skills and competencies the company would need in three, five and 10 years from now. Then, find and groom select employees to step into management roles as needed. That plan doesn’t work anymore. Mostly because it’s built on the assumption that top performers will say “yes” to management – and all the traditional expectations that accompany a role with more responsibility. Longer hours. Higher salary.

Here’s the thing. We’re not saying no Millennial wants to be a manager. Or that Millennials make poor leaders. In fact, Millennials are turning out to be great managers. They just want and do things differently.

That means we need to re-think the traditional approach to succession planning. With Millennials in the mix, it’s a great time to be more collaborative. More inclusive. Talk to your top performers and find out what’s important to them – for their own careers and for your company. Can they imagine leading? What would that look like? What changes would they like to see to improve your organization?

When you engage in these conversations, you’ll discover a few things:

  • You’ll find the Millennials who are interested in leading. They’re out there! One American Express study found that 70 percent of Millennials say having a C-level executive job appeals to them.
  • You’ll hear about potential new (and better) ways of leading. Millennials are focused on employee well-being and employee development – with an emphasis on regular feedback for all employees. If you’re not putting employees first, your Millennial leaders are likely to have suggestions for change that will benefit everyone.
  • You’ll recommit to the company purpose. Millennials are purpose-driven and will want to elevate the purpose of your organization and keep it central to how and why people work there.
  • You’ll discover that diversity is the new status quo. Millennials naturally embrace diversity. They’ll help identify and tear down arbitrary barriers that may be getting in the way of your recruitment and performance goals. Leaving you with the many riches of a diverse workforce.

In the end, if you replace assumptions and the old way of doing business with open conversations and an openness to change, chances are good that you – and your up-and-coming Millennial leaders – will strengthen the company well beyond your current leadership team. The new faces of leadership will put your mission first, find ways to engage and develop employees, insist on work/life balance and, ultimately, help you become the place where Millennials want to work.

Ready to revisit your succession planning? Check out our Optimize your Workforce white paper to think through what you need from your next leader – and your workforce. Or contact us to align your succession plans with the skills of competencies you need for tomorrow.