SHRM-SIOP Science of HR White Paper Series

George Graen
Center for Advance Study
University Of Illinois, C-U (Ret.)
10819 Gram B Circle
Lowell, AR 72745
Miriam Grace
Senior Technical Design Fellow
The Boeing Company
6116 South 296th Court
Auburn, WA 98001
425-306-1606 (Cell)

Illustrations by Michael Erickson, The Boeing Company
Copyright George B. Graen, 2014


In reaction to the dramatic changes the millennial culture is bringing to the workplace and the co-incidence of dramatic business disruptions that are driving the need for more innovative employees, Human Resources Departments are changing their existing approaches to talent acquisition and retention based on the new strategic realities.  These new realities were revealed by researchers contracted by Price-Waterhouse-Cooper, Ltd. to identify the reasons their under 30s employees globally were resigning from high paying professional positions before two years of employment.  These positions in the past were held by the same employees for 40 plus years.  In addition, the recent competition for the best talent worldwide has favored the new global technology companies.  These “Google-like” organizations treat their employees as important as their customers.  Their new talent strategies are attracting and retaining the best innovators.  This White Paper will introduce several new approaches existing firms may employ to compete for the best talent in a changing world of work.  The recommendation is that human resource practitioners begin training for their many new career opportunities.

“Nothing is more important that the quality of hiring.”
Eric Schmidt, Chairman of Google
(Schmidt & Rosenberg, 2014)

According to The 2014 Annual Global CEO Survey, companies are preparing to implement new talent strategies for their firms (PwC, 2014).  In sharp contrast to their existing talent strategies, the new ones focus on hiring and retaining employees whose new product and service innovations will sustain their firms.  Questions these data raise are: (1) What new developments in business strategy are fueling this change? (2) What developments in talent strategy realities are influencers? (3) What are the implications for Human Resource professionals? 

Taking a global perspective for understanding new developments in business strategy, we can refer to the work of the UK Department of Business Innovation and publications of that department’s Design Council that point to “governments across the globe who are investing heavily in sponsoring and promoting design[1] as a key route to stimulating innovation, jobs and exports and as a means to systematically address challenges. China’s Premier Minister, Wen Jiabao stated a desire to move from ‘Made in China’ to ‘Designed in China.’ Over recent years China has driven national and regional design policy, with investment in education and national promotions. Other Asian governments are vigorously committed to the promotion of design, notably those in Singapore, Korea and Malaysia” (Temple, 2010, p. 1).

The discipline of design has been positioned between the sciences and the humanities (Banathy, 1996), where the domain of science represents the knowing of the natural world and the humanities represent the knowing of the human experience. Design represents the knowing of the man-made world. Design capabilities draw from multiple disciplines, perhaps most heavily from psychology. Emergent design practice is founded on Industrial Psychology, Industrial Design, and Human Factors or what has been standardized by the American National Standards Institute (ANSI) (2010) as Human-Centered Design. In the U.S., the “d-school” at Stanford in its partnership with the industrial design firm, IDEO, have popularized the term “Design Thinking” (Kelley and Kelley, 2013) as a “how-to-guide” for innovation and created a highly teachable set of methods and tools for doing end-to-end design work. Pertinent to our discussion here, these methods and tools can be adopted for any design context, including talent management, and we recommend that you explore this knowledge base to inform your talent management strategy within your unique business environment.  

Because of the ubiquity of the internet, a wide variety of new markets have emerged and companies with the best talent have become the new “Wall Street stars.”  The good news is Human Resource Departments within the new “star companies”, organizations that recruited and retained the best innovators, have exploded in influence and status.  New organizational structures are being designed to facilitate and institutionalize innovative behavior across whole employee populations in order to maximize business value yield. Clearly, a new world of opportunities has appeared for professionals in what Google-like companies call “People Operations” departments.  This new organizational structure is charged with concentrating on attracting, processing (placing), educating (in design), empowering (sharing team leadership), engaging (making a difference) and retaining the best innovators, many of whom are millennials.  This is driving not just a re-labeling, but a profound re-structuring of the job of HR professionals. It follows that professional members of SHRM need to be prepared for more powerful talent-centric approaches as a part of emergent business strategies and to become very familiar with the attributes of workplace culture that appeal to those professionals (many of whom are millennials) who can strengthen the innovative core of businesses. 

The purposes of this paper are to present a brief overview of the problem of talent acquisition and retention, especially of the millennial workforce, discuss research related to the challenges faced, and to provide practical tips for implementing change. Highlights of the paper include the results of benchmark studies conducted at Price-Waterhouse-Cooper and Google that set the bar for talent acquisition, retention and promising approaches for HR research and practice. The paper concludes that Human Resources practitioners must develop new talent acquisition and retention strategies that match the workplace culture talented employees are demanding.

Recent big data studies (“big data” being a collection of large and complex data sets) in the Human Resources domain show that the under 30s (millennials) are rejecting the prevailing definitions of “professional careers,” “work” and “peer-like collaborative communities.”  In what Price-Waterhouse-Cooper (PwC) claim is “the largest global generational study ever conducted”, Price-Waterhouse-Cooper (PwC) turned to researchers at the University of Southern California and the London Business School to identify the critical expectations and preferences of the their employees with regard to continued employment (PwC, 2013a).  Resulting from this research, PwC is proactively redesigning its talent strategy to match the identified under 30s’ reality.  In addition, PwC’s 16th Annual Global CEO Survey showed that 77 percent of CEOs were redesigning their talent strategies for the next year (PwC, 2013b).  The above two-year global investigation of PwC employees should help clarify the argument regarding the significance of generational differences for talent strategies.  Millennials are being hired into critical organizational roles more every day, but they are resigning at a much more alarming rate compared to previous generations. This could be due, in part, to talent strategies that were designed for baby boomers who had different priorities and different expectations of an employer. This recent phenomena of the revolving door for new (especially millennial) hires is occurring across industries in disturbing numbers, and the majority of those employees are leaving before two years on the job.  This disconnect of between expectations of young workers and traditional business work cultures is threatening the availability of talent and will impact the survival of corporations which do not adapt to the new reality.

What Price-Waterhouse-Cooper found
The PwC study involved 18 global territories, 44,000 web-based surveys, 1,000 millennials and 45 managers in online “jam” sessions, 300 interviews and 30 focus groups (PwC, 2013a).  This massive effort was in response to the observation that under-30 hires were showing a lack of interest in traditional professional services career paths and were resigning before they reached their second year of employment.  PwC employs 180,529 people in 158 countries and its study has global implications.  By 2016, almost 80% of the PwC workforce will be millennials.  An intergeneration analysis of (a) 9,120 millennials and (b) 4,030 baby boomer senior associates and managers was compared at the entry years in 2011 and 2012.  This study found:

More millennials reject the traditional work/life balance accepted by baby boomers
Both cohorts seek greater flexibility at work
Millennials seek more collaborative team-oriented work settings
Both cohorts are equally committed to their work
Millennials from the US/Canada and Western Europe were similar
Millennials place greater importance on mutual trust, respect, support and positive feedback.

The new talent strategy components recommended are shown in Table 1.

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What is Google doing?
Lazlo Bock (2011), Senior Vice President of Google’s “People Operations Program” (POP) operates his organization as a component of the top strategy team of the Google Company. Talent acquisition and retention at Google are considered strategic and mission critical; the organizational culture that enhances the Google brand is based on design principles increasingly being recognized as enablers of employee innovation (Kelley and Kelley, 2013).  The new collaborative design environment that seems to work well with Google’s strategic trajectory was described by Steiber (2011):

An innovative and flexible culture and management system that replaces rules with guidelines, and commands with peer-oriented negotiating among associates across pay levels.

A company strategy that values employees and customers equally and demonstrates that belief by selecting the best and treating those employees as main contributors by providing proper career opportunities and rewards, and trusting them with inside information.

Encouraging and training managers at all levels to work with individuals in appropriate ways by tailoring mentoring and coaching activities and clearing away impediments.

Balancing the emphasis on innovation and operational excellence by fostering the development of subcultures that are equally valued.

Extending strategic networks for externally developed technical innovations, forming cooperative alliances with leading universities/researchers, and investing in new technologies and ventures.

Designing collaborative communities of professional peers learning from each other.

Overall emphasis on having fun while serving the greater good.

The concept of a collaborative design culture and its increasing importance to global business may be unfamiliar to you; however, the popularity of design as an innovation method (Grace & Graen, 2014) is driving change in organizations and, therefore, deserves the attention of SHRM members.  Organizations across the globe are shifting their focus from their output (products and the metrics associated with a product-focused culture) to the front end of their value streams where customer knowledge increases in importance. In the new reality, innovation methods are increasingly top-of-the-mind of executives, like Bock. Human Resource executives are increasingly focused on technology enablers such as advanced analytics (the discovery and communication of meaningful patterns in research data to enable critical decision making), and, as a result, significant challenges exist for HR professionals in getting up-to-speed with these new tools and with regards to acquiring and retaining the talent needed for this dynamic new work space.

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Clearly, the talent strategies suggested by PwC and Google require a multi-level approach with collaborative organizational design at the strategic and operational levels.  Teams of professional managers and designers are needed to collaborate, identify what works, what to build, and what to live with.  The advent of big data analytical techniques has made it possible to consolidate data pools across various data streams not previously accessible to many organizations. This disruptive technology now allows employees to create new intelligence for decision making, so what is assumed to be fact in one company can be benchmarked against others with similar business models or industry reference. In fact, many of the most critical questions that companies are beginning to ask about their talent strategies can't be fully answered without external perspectives. External talent data benchmarking lends context to internal talent data and provides insight into how talent strategies must evolve to support an organization’s strategic agenda. Increasingly, HR professionals will need to understand how to query talent analytics tools and use the available human capital data to predict the next generation of people strategies.

In the next section, we summarize alternative talent management approaches and discuss their applicability to the challenge of attracting and retaining millennials and mid-career professionals who are looking to refresh their skills and potentially transition their careers to adjacent or different opportunities. Throughout, we make recommendations for action you can take to enhance retention of talented individuals in your organization.

Unfolding approach
Talent strategies have two basic functions: (1) to attract, process, educate, empower, engage and retain valued employees and (2) to enable optimal team performance.  Today’s reality (as revealed by the PwC study) is that millennial employees are saying “I quit” to their first career jobs within the first two years of employment.  This voluntary turnover may be healthy or unhealthy and if unhealthy avoidable or unavoidable.  In the case of millennials, the disconnect appears to be unhealthy for the companies and the question of avoidability is yet to be determined.  What is clearly established by turnover research is that one size does not fit all (Allen, 2010).

Turnover research was advanced significantly by the development of the “unfolding model” (Allen, 2010).  Unfolding assumes four different paths to quitting a job: (1) Dissatisfaction, (2) Better alternatives, (3) Following a plan and (4) Having no plan.  It is a comprehensive approach that offers ways to detect which paths are pertinent for your unique workplace situation and recommends retention strategies. In the case of the two studies cited in this paper, millennial employees are placed on path four (quitting their selected career jobs before their second year and having no plan).  Research suggests that as they understand their role within their workplace clearly, yet they are finding a disconnect between their experience and their personal vision for their career: they do not see their position as a path to a future they seek.  Unfolding theory suggests ways HR professionals can redesign retention strategies to address this disconnect and enable young employees to see an attractive path in their future with their current employers.  For example Human Resource professionals should begin to assess the particular career paths available in their company for these target groups and communicate these paths in a systemic manner. 

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New innovation team approach
Today most organizations have some form of assigning groups of people to work together toward common goals (Hills, 2007; Kozlowski & Bell, 2003; Lawler, Mohrman, & Ledford, 1995; Morgenson, DeRue & Karam, 2010).  Unfortunately, most teams fail to achieve their full potential due to the incomplete use of leadership sharing (Graen, 2013; Hogan & Ahmad, 2010).  In contrast, innovation teams are expected to encourage the individual expression of both intellect and personality in a millennial friendly culture of collaborating peers on a common mission (Graen & Schiemann, 2013).  In a sense, the innovation team culture is designed to become a safe haven to try new ideas and have fun in the process of experiential learning and helping the team succeed.  Teams may achieve their full potential by engaging each other in "leadership sharing." Leadership sharing involves building partnerships of respect and trust with other team members who agree to exchange acts of leadership.  Leadership sharing actions have been cataloged for ready reference (Morgenson, DeRue & Karam, 2010).  As the example in Table 2 shows, the authors list actions expected to move the team forward.

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The sharing of leadership can be infectious in teams and enables them to reach their full potential.  However, a transformation of teams into cultures attractive to millennials may not happen without the proper intervention of HR professionals (Kaiser, Hogan & Craig, 2008).  First, people joining a team need to become team players who are likely to respect the competence and trust the ideas of each other.  Competence alone is not adequate for admission.  Second, teams need to be trained together in leadership sharing methods and goals.  Teams may be taught by an HR instructor with a respected executive to clarify and validate the company’s expectations of leadership sharing.  Training includes simulations which demonstrate how partnerships may move the team forward.  Third, teams need to be coached during their missions to fine-tune their operations and sustain team focus.  Finally, teams need to be recognized formally for their accomplishments in both procedures and performance.  Several teams may be coordinated by a person trained in supporting innovation teams.

These interventions need to be monitored by their coach for effectiveness at the proper times.  Periodic interviews with team members individually may be useful to successively approximate full potential.  For example, to assess partnership quality, one set of progress questions asks all team members about six characteristics of each of their potential partners (Graen & Schiemann, 2013).  This "LMX Team" [2]measure asks pairs of teammates about:

Having confidence in one another’s ideas
Helping one another cooperatively toward common goals
Having respect for one another’s capabilities
Having trust in one another’s dependability
Having an excellent working relationship
Having confidence in one another’s work.

The higher the agreement with these six characteristics of partnership, the more leadership sharing can be expected.  Teams with higher proportions of pairs sharing leadership are the goal of training.  Big data research finds that those fortunate enough to share leadership most completely achieve the most opportunities to tailor their personal contributions and rewards (Dulebohn, Bommer, Liden, Brouer, & Ferris, 2012; Gerstner & Day, 1997; Ilies, Nahgong, & Morgeson, 2007; Rockstuhl, Dulebohn, Ang & Shore, 2012).  Fortunately, these opportunities seem to be those most valued by the under 30 professionals.  This use of innovation teams may be a first step in modifying the culture of the entire organization to value employees as highly as customers.

In summary, the building of a comprehensive set of innovation teams with complete sharing of leadership may be useful in transforming companies using unfolding tools to become more likely to hire and retain the best.  Finally, a more long-term program of successive, more inclusive innovation teams may be tailored for career growth and continued retainment of the best talent.  We foresee new career opportunities for HR practitioners in this transformation.

An integrated approach: Collaborative design
The development of the innovation team approach lays the foundations for the next level of collaborative design (Grace & Graen, 2014), which is focused on creating a workplace culture that deeply engages employees in the most challenging problems faced by business today – how to differentiate their company in the marketplace.  “The discipline of design, which instructs on the purposeful creation of things, and the mind-set of design thinking, both a paradigm and a rich set of methods and tools, have proven to be competitive differentiators.  Over the last several decades, design has moved up the business value chain from enhancing the aesthetic appeal and style of products, to taking center stage in new-product development, and within the last decade, to proving its worth to corporate innovation initiatives” (Grace, 2014, pp 3-4).

Today, we know that the design of the new team-based organizations must begin with primary intentions to build a flexible organization that is able to adapt and innovate more quickly in the rapidly changing market conditions of the present. Tailoring jobs and habitats for the new innovators as they advance through an organization is a function of this new strategy.  Executives too often can’t foresee what is over the horizon, and so they stay the course until it is too late to change.  This may be fatal for their company.  But a Human Resources-inspired organizational culture of collaborative designing and workforce planning can shift the strategy from quickly patching-up the old design to building a new one for the future.  A collaborative design focus can create an innovative and flexible management system that can then be tuned to balancing innovation and operational excellence.  The whole system is thus continuously seeded through a commitment to searching for opportunities everywhere, while leveraging alliances with universities, consultants, peer companies, customers and suppliers, and investing in new technology and ventures (adapted from Steiber, 2011).  The basic principles of collaborative design for career attraction, processing, education, empowerment, engagement and retention according to recent research can be seen in Table 3.

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The collaborative design method, much like a good story, engages people around the development of empathy for the stakeholders involved in a particular context (for example, a specific problem situation) and provides easy-to-learn tools and techniques that generate insights about the behavior of the target individuals, looked at from multiple perspectives, and instructs on how to reach a shared point of view for effective change. This shared point of view combines quantitative and qualitative analysis to enable more evidence-based, business decision making.

Exploring and then implementing the following steps toward the creation of a collaborative design capability in your organization is where you can start. The typical phases of the design method, tailored for a talent management context, thus would include the following.

Forming an innovation design team focused on a small but important talent management problem (team composition is important (see Grace, 2009 and Graen and Schiemann, 2013).

Getting to know the people involved in and deeply understanding the specific context of the problem space (qualitative analysis).

Considering investing in and becoming proficient with HR analytics tools to enrich insights (quantitative analysis)

Discovering aspects of common dysfunctions in present talent strategies.

Trying out different talent strategies in small, iterative in-house experiments to inform the team.

Designing new talent strategies based on this work.

Implementing the new strategies with a small scope and continuously improving on them.

Throughout the process, the team continuously re-aligns to retain a shared point of view relative to the goals, ensuring that they are solving the right problem, and continuously asking “Why?” with regard to their assumptions, so that the end result hits the mark. People professionals, like you, play critical roles in this design process.  Your knowledge of the particular context in your workplace enables you to assist in accurate problem finding, solution analysis and implementation at appropriate levels.

Based on the analysis on the engagement of millennials cited in this paper and available from other sources, you should accelerate any current efforts in your organization to match talent strategies to the new workforce realities for professionals.  Leverage the latest technology in collaborative design to find and build the most promising talent strategies for various talent categories within industrial classifications (Grace & Graen, 2014). Actions that you can take now to get up to speed are presented in Table 4.

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You should prepare now for the emergence of more challenging and responsible “people operations” positions than exist today.  Make it a habit to study leading-edge companies and watch them as they change their organizational and talent strategy designs.  Today information age companies are turning this trend on its head.  The new marching orders to HR professionals are to attract, process, educate, empower, engage and retain the best talent.  With this direction, ask yourself the questions in Table 5.  Your answers will inform you as to where you need to place your professional development emphasis over the next several years. Ask your peers to answer these same questions and compare results. Your collective responses will suggest where to put your organizational emphasis and potentially highlight a problem area to explore using the design process outlined above.

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This white paper has described some of the most promising research and practice approaches that enable the matching of talent strategies to the new workforce realities.

We have looked at the Price-Waterhouse-Cooper and Google studies and found that leveraging HR analytics offers tremendous opportunities to study and understand workplace trends and inform strategic decision making.

We have looked at alternative approaches to change and found that an integrative model that leverages the latest thinking in collaborative design offers a holistic method that addresses talent acquisition, engagement, and retention.

We have looked at the dynamics and complexities HR professionals face in the transition from the traditional approaches that worked for the baby-boomer generation to the requirements of millennials.

We have looked at recommendations for future action and presented several promising areas for future action.

Roger Martin, Dean of the Rotman School of Management at the University of Toronto, summed up the business challenge of the 21st century: “Now it’s no longer enough to get better; you have to ‘get different’ (Martin, 2004). Getting different means learning how to turn our information into knowledge, attracting young people to our businesses, having a vigorous and innovative workplace culture, and maintaining dynamic and creative design processes. Human Resource research and practice has a growing array of promising approaches that may enable it to more effectively match talent acquisition and retention strategies with the unrelenting new workforce realities. This growing array of promising approaches to the matching of millennial employee workplace needs with workplace realities offers HR professionals an excellent opportunity. The time is now to seize this new interpretation of the HR function and concentrate on attracting, processing, educating, empowering, engaging and retaining the best millennial innovators available. Efforts to match talent strategies applied to the new workforce realities for professionals should be accelerated.  SHRM members need to step-up and lead their colleagues with talent-related innovations and by proactively preparing for more talent-centric approaches. This paper recognizes the important role that organizations such as SHRM play in developing out-of-the-box thinking throughout their membership.

"CEOs who are able to come up with their twist on ‘Googleyness’– whether through internships, training programs, flexible hiring processes or transparency with employees – will probably have an easier time attracting rock stars.”  (Lev-Ram, 2014, p. 101).

Note.—We thank Joan Graen for her managing of this project and her great editing.  We thank Michael Erickson for his excellent, informative graphics.  Finally, we thank James Kurtessis for his help throughout the project and his reviewers, Karen Wessels, Michael Tonowski, Ben Porr and Cole Napper.

Allen, D. G. (2010).  The five misconceptions of employee turnover.  Academy of Management Perspective, 2, 24.

American National Standards Institute (ANSI) (2010). Ergonomics of Human-System Interactions: Part 210: Human-Centered Design for Interactive Systems. ISO 9241-210:2010.

Banathy, B. (1996). Designing Social Systems in a Changing World. New York: Plenum Press.

Bock, L. (2011).  Passion, not perks.  Think-Insights-Google.  Think Quarterly: The People Issue.  Google Incorporated.

Dugan, B. A. & O’Shea, P. G. (2014).  Leadership development: Growing talent strategically.  SHRM-SIOP Science of HR White Paper Series.

Dulebohn, J. H., Bommer, W. H., Liden, R. C., Brouer, R., & Ferris, G. R. (2012). A meta-analysis of the antecedents and consequences of leader-member exchange: Integrating the past with an eye toward the future. Journal of Management, 38, 1715-1759.

Gerstner, C. R., & Day, D. V. (1997).  Meta analytic review of leader-member exchange theory: Correlates and construct ideas.  Journal of Applied Psychology, 82, 827-844. 

Grace, M. (2009).  What is a game-changing design?  In G. Graen & J. Graen (Eds.) Predator’s game-changing designs: Research-based tools (pp. 1-18).  Charlotte, NC: Information Age Publishing.

Grace, M. (2014).  Welcome to the future: Design, analytics, innovation.  In Grace, M. & Graen, G. B. (2014). Millennial Spring: Designing the Future of Organizations (pp. 15-40).  Charlotte, NC: Information Age Publishing.

Grace, M. & Graen, G. B. (2014). Millennial Spring: Designing the Future of Organizations.  Charlotte, NC: Information Age Publishing.

Graen, G. B.  (2013).  The missing link in network dynamics.  The Oxford Handbook of Leadership, M. Rumsey (Ed.), (pp. 359-375). Oxford, UK: Oxford University Press,

Graen, G. B. & Schiemann, W. (2013).  Leadership-Motivated Excellence Theory: An Extension of LMX.  Journal of Managerial Psychology, 28, 5, 452-469.

Hewer, S. (2014).  Google scientist searches the workplace.  APS Observer, 27, 7, p. 21.

Hills, H. (2007).  Team-Based Learning.  Burlington, VT: Gower.

Hogan, R., & Ahmad, G. (2010).  Leadership.  In A. Furnham, & S. VonStumm (Eds.).  Handbook of Individual Differences.  pp 408-426.  London, Wiley-Blackwell.

Ilies, R., Nahgong, J. D., & Morgeson, F. P. (2007).  Leader-member exchange and citizenship behavior: A meta-analysis.  Journal of Applied Psychology, 92, 269-277.

Kaiser, R. B., Hogan, R. & Craig, S. B. (2008).  Leadership and the fate of organizations.  American Psychologist, 63, 96-110.

Kelley, T. & Kelley, D. (2013). Creative confidence: Unleashing the creative potential within us all. New York: Crown Publishing

Kozlowski, S. J., & Bell, B. S. (2003). Work groups and teams in organizations. In W. C. Borman, D. R. Ilgen, & R. J. Klimoski, Handbook of psychology (Vol. 12): Industrial and organizational psychology (pp. 333-375). New York: Wiley.

Lawler, E. E., Mohrman, S. A., & Ledford, G. E. (1995).  Creating high performance organizations:  Practices and results of employee involvement and total quality management in Fortune 1000 companies.  San Francisco, Jossey-Bass.

Lev-Ram, M. (2014).  Fortune Magazine, September 22, 2014. 

Martin, R. (2004). "The design of business," Rotman Management, 5(1), pp. 6-10, Toronto: Rotman University Press.

Morgeson, E. P., DeRue, D. S. & Karam, E. P. (2010).  Leadership in teams: A functional approach to understanding leadership structure and processes.  Journal of Management, 36, 1, 5-39.

Nelson, H. & Stolterman, E. (2003).  The Design Way: Foundations and Fundamentals of Design Competence, New Jersey: Educational Technology Publications, p. 10.

PwC. (2013a).  PwC’s next generation: A global generational study.

PwC. (2013b). 16th Annual CEO Survey.

PwC. (2014).  Annual Global CEO Survey (2013).

Rockstuhl T., Dulebohn J. H., Ang S, & Shore L. M. (2012)  Leader-member exchange (LMX) and culture: a meta-analysis of correlates of LMX across 23 countries.  Journal of Applied Psychology, 97, 1097-1130

Schmidt, E. & Rosenberg, J. (2014).  How Google works.  San Francisco, CA: Grand Central Publishing.

Steiber, A. (2011).  Research report on Managerial Leadership Needs.  Society for Human Research Management.  .  New York: SHRM.

Temple, M. (2010). The Design Council Review. Department for Business Innovation and Skills, London: Crown. Retrieved from 10/1178.

Table 1
The PwC Study Recommends
A flexible work culture based on unique talent and engagement
Access to the best tools for collaboration and operation
Transparent performance and reward decisions
Building workplace culture maintained by unit (team) managers
Greater opportunities as expats
Improving the impact of millennials as contingency workers
Connecting and staying connected with all employees
On size does not fit all

Table 2
Examples of Leadership Sharing in Teams
Alert team to flaws in team procedures or output
Explain team's actions to concerned stakeholders
Suggest new ways of doing things
"Pitch in" and help team members
Participate in problem solving with the team
Help team acquire needed resources
Encourage team to take care of its own problems
Go beyond own interests for the team

Table 3
Collaborative Design Principles
Employees are as valuable as customers
Employees need periodic changes in different aspects of their jobs over the life of their careers
Talent strategies must be explored continuously and changed to match workforce realities
Big data on workforce realities are as valuable as those on customer realities
Policies and practices need to be consistent with talent strategies
Organizational talent strategies change slowly and require consistent executive and managerial action until achieved company wide
(Grace & Graen, 2014)

Table 4
Getting Up to Speed
Alert colleagues and collaborate as peers
Generate interest in new opportunities
Gather information available in your company
Seek new information by communicating with colleagues
Search the internet including social media to stay informed
Talk to those in university placement roles
Reach outside to HR professionals
Discover what your competition is doing
Brief management and continuously update

Table 5
Self-Evaluation Questions
Foundation             Do I grasp the huge changes needed?
                                 Do I see the significance of a People Operations Department?
                                 Can I develop partnerships with coworkers in other departments?
Growth                    Have I taken steps to learn new skills and learn new areas?
                                 Have I kept up with the new wave?
                                 Have I become enthused about the emerging career opportunities?
Evaluation              How are the goals and expectations of the talent strategy changing?
                                 How do I expect to design new homes for innovation teams?
                                 How quickly do I expect change to occur?
                                 How will the changes affect my career?
                                 Am I preparing for my future?
Adapted from Dugan and O’Shea, 2014 p. 8

Box 1
HR design for a good manager
Continuous education concerning
Clear vision and strategy
Good coaching and communications
One-on-one discussions about expectations
Action for employee’s well being
Assessment by employees
Jennifer Kurkoski
Director, People Innovations
Google (Hewer, 2014)

Box 2
HR analytics are becoming more mainstream. Companies are using models to identify the optimal employee profile for recruiting and hiring and can identify attrition risks for proactive employee engagement, training and retention activities.  Two of these are IBM’s Smarter Workforce and Google’s Big Query.

George Graen
George Graen received his Organizational Psychology Ph.D. from the University of Minnesota and was honored early as an American Psychological Association Distinguished Research Fellow (1976).  George is well-known internationally for discovering, refining and validating the new Leadership Making Exchange (LMX) Theory of Career Development using Leadership sharing in a progression of innovation teams.  After a career of teaching beginning at the University of Illinois, Champaign-Urbana, he turned to communicating to practitioners his research findings on the new wave of peer collaborations in firms.  He has been prolific in research publications and his ninth book in his leadership series is Millennial Spring (2014).  George’s career has been devoted to coaching students and executives on the art and science of leadership sharing throughout their organizations.  Finally, George’s driving value reads: “Employees need to be valued for their career contributions as much as customers for their coin.”

Please direct all correspondence to and view

Miriam Grace
Miriam Grace, Ph.D. is the Chief Architect for Sales, Business Development, and Marketing across The Boeing Company where she focuses on business/technology strategy. Miriam is a thought leader in the implementation of collaborative and holistic design principles and practices across Boeing and in the architecture profession. She serves the global community of architects as the Chair of the Curriculum Committee for Iasa Global, a learning and certification authority for the business and IT architecture profession. Miriam is a published author, writing on whole systems design, innovation and creativity, architecture, technical leadership, and mentoring in both books and peer reviewed journals.

[1] "the ability to imagine that which does not yet exist, to make it appear in concrete form as a new, purposeful addition to the real world" (Nelson & Stolterman, 2004).

[2] LMX-Team is a diagnostic device validated to identify problem areas in the development of team partners.



George Graen
Center for Advance Study
University Of Illinois, C-U (Ret.)
10819 Gram B Circle
Lowell, AR 72745


Miriam Grace
Senior Technical Design Fellow
The Boeing Company
6116 South 296th Court
Auburn, WA 98001
425-306-1606 (Cell)

The purpose of this rebuttal to Costanza and Finkelstein (2015) is (1) to examine findings surrounding the new generations at work, (2) to suggest the risks of not responding to change in generations with new talent strategies, and (3) to propose a new theory about the development of new millennial culture and how practitioners and researchers may capitalize on the promise of a more positive and joyful workplace culture.  We propose to accomplish these points by (1) citing recent global findings showing the new culture that millennial professionals (1980-present) find incompatible with existing company culture, (2) presenting a theory of the development of a new millennial culture that is based on positive industrial and organizational psychology, and (3) recommending that the method of innovation design teams be used to render workplaces compatible with the emerging culture.

The new culture of millennial professionals (1980-present) has met that of the existing workplace, and people from both cultures were disappointed and hurt (Graen & Grace, 2015).  Millennial professionals happily accepted well-paying career positions with top firms, but after discovering the existing culture left the field before two years.  Managers from their parents' generation (1950-1980) dismissed the work requests of their young employees with complaints and stereotypes.  When leading companies discovered that they were losing their future leaders, they had the issues researched by professionals.  Results of these studied concluded that the existing talent strategy was incompatible with that of the millennial professionals and recommended designing one more compatible with the culture of the millennial professional (PwC,2013; 2014; 2015).  These are the big data facts.  The questions this series of events raises are: (1) What were the driving trends that permitted such an innovative culture to develop and take hold of those born after about 1980? (2) What are the identifying characteristics of this new culture? (3) How may a more compatible talent strategy be designed and implemented? (4) How will this new culture change as the driving trends continue to transform our youth?


Millennial professionals (1980-present) have identified their acceptable company cultures after quitting their high paying career positions designed for their parents before two years (Grace & Graen, 2014; Graen & Schiemann, 2013).  However, it was not until 2013 that big data studies were completed by the University of California and the London School of Business focusing on Price-Waterhouse-Cooper's critical generational problem (PwC, 2013).  These investigations over two years concluded that their existing talent strategy needed to be replaced immediately with one compatible with young hires (millennial professionals).  In addition, large studies by Delloite, (Brooks, 2015; Brown, 2013) Johnson Controls (Johnson, 2010), Clark (Schutte, 2014) and Duke University (Graham, 2014) and others supported the conclusions of these studies (Graen, Grace & Canedo, 2015).  Moreover, studies of Google's company culture further tested and supported the talent strategies designed to attract and retain the best young people (Graen & Grace, 2015).  Although the new talent strategies remain works-in-progress, their results globally have been encouraging (PwC, 2014).  In sum, this movement to new talent strategies is likely to define the leading firms in the near future (Grace & Graen, 2014).

Place Table 1 about here

The big data studies are impressive for both their scope and depth.  For example, the studies of Price-Waterhouse-Cooper claimed to be the largest generational investigation ever conducted.  This investigation involved 20 global territories, 44,000 web-based surveys, 1,000 millennial professionals and 45 managers in on-line "jam" sessions, 300 interviews and 30 focus groups (PwC, 2013).  Resulting recommended features of new talent strategies for their subsidiaries around the world are shown in Table 1.  In agreement with these recommended features, the results of a year-long, embedded study of Google showed how they attract and retain the best young innovators (Steiber, 2011).

An innovative and flexible culture and management system that replaces rules with guidelines, and commands with peer-oriented negotiating among associates across pay levels.
A company strategy that values employees and customers equally and demonstrates that belief by selecting the best and treating those employees as main contributors by providing proper career opportunities and rewards, and trusting them with inside information.
Encouraging and training managers at all levels to work with individuals in appropriate ways by tailoring, mentoring and coaching activities and clearing away impediments.
Balancing the emphasis on innovation and operational excellence by fostering the development of subcultures that are equally valued.
Extending strategic networks for externally developed technical innovations, forming cooperative alliances with leading universities/researchers, and investing in new technologies and ventures.
Designing collaborative communities of professional peers learning from each other.
Overall emphasis on having fun while serving the greater good.

Positive psychology movement
The authors of the lead paper suggest that no theory is feasible for explaining the millennials' reaction to the existing workplace culture.  We respectfully disagree.  We studied the defining events that happened during the formative years of those born since 1980 and found three powerful movements changing the culture.  First, the positive psychology movement took hold globally about 1980.  Parents and all adults were to treat children as "special" individuals and prioritize praise for participation (Drew, 2015).  This movement encouraged adults to treat children as peers and to protect children from damaging their positive self-concepts in interactions.  Not only were child-rearing practices changed dramatically, but schools, churches, social activities and finally the universities were changed. (Graen & Grace, 2015) 

Based on published research, the new culture concerned the development of the self-concept knowledge and positive feelings (Craig, 2006).  It has been described as a positive psychology of growth.  One objective is to protect the individual's feelings of respect for one's self.  It prescribes that participation should be given priority over defeat.  Individuals should not experience failures that may lead to a loss to one's self concept.  Thus, adults and peers are instructed to treat children as peers by engaging in rational discourse at the proper level.  Children also need to be encouraged to be entrepreneurial and function as independent contractors not employees.  Their work should be done in flexible teams of peers who learn from each other (often by virtual communications).  They should be given the latest information technology tools and treated as resident experts who have the world knowledge at their thumbs (iPhones).  They should be encouraged and rewarded for innovative thinking and having fun at work.  Teachers, ministers, social instructors and business managers should respect them as peers and never subordinate them.  They should be educated to understand individual and cultural differences.  Finally, they should strive to make a better world.

In spite of published research showing negative or null relationships, the positive psychology movement has grown into a global force in industrialized nations.  It has established the rules for proper education of children.  It began in the late 1960s with the publications of professor of psychology Stanley Coopersmith from California, and John Vasconcellos, state assemblyman, persuading the California Governor to establish a self-esteem taskforce which resulted in legislation.  Today, the positive psychology of development and maintenance is taught in schools, churches, social programs, government organizations and universities globally.  Academic research finds that the millennial generation has shown higher self-esteem ratings and beliefs than did their parents at the same time in college (Twenge, 2006).  As Craig (2006) states the real question is "about how relevant self-esteem issues are across different domains such as education and work".  Twenge's big data research showed that in a sample of 40,000 children the Coopersmith Self-Esteem Inventor (SEI) decreased between 1965 and 1979 and then increased from 1980 to 1993 (Campbell, 1993).  Moreover, this trend was only shown for children but not college students.  This seems reasonable in view of facts that the self-esteem movement became a fixture of the educational systems about 1980 and the children's self-esteem innovators (SEI) considers specific areas, including family, peers and school.  When correlations are found between social indicators and self-esteem, Campbell finds it involves children and not adults. 

One basic premise of the theory is that humans are an adaptable species.  Humans have adapted their cultures to chronic opportunities and threats repeatedly according to their own history books.  Many of the culture changing movements were driven by theories, e.g., religious, political, economic, psychological and so forth.  In the case of millennials, (1980-present) three movements became popular about 1980 and complemented each other.  One movement (positive psychology) was supported by almost no research evidence despite numerous attempts to find related outcomes (Trzesniewski & Donnellan, 2010; Twenge, Campbell, Hoffman & Lance 2010).  Such was the case before the publication of the series of generational investigations seeking to identify the reasons college graduates born after 1980 who achieved well-paid career positions with a leading firm (Price-Waterhouse-Cooper, Ltd.) were quitting before two years (PwC, 2013).  The movement (Craig, 2006) was accepted as a theory in action by these professionals who taught it, practiced it and proselytized it broadly.  It was accepted because it "felt good". 

Positive psychology has two concepts, namely, the idea of feeling good and doing well.  The general idea is that positive reinforcement of each other's self-concepts will lead to psychologically stronger people who experience feelings of joy and efficacy.  The objective is to teach the children from birth to maturity to respect and treat others with ego boosting opportunities.  Available institutions of socialization, namely, schools, churches, social groups, health organizations and other agencies were employed to educate parents and children.  They aimed to create a kinder and gentler culture.  One in which everyone is valued and expects to be positively reinforced for participating and there by contributing something positive no matter how small (Seligman, 2006).  During the same period, the middle class grew and further provided a sense of self-confidence and economic security.  Finally, children were told that they were the promise of a far better world. 

Information technology movement
Complementing this, the computer and internet applications exploded in the 1980s and thereafter with ever increasingly powerful products.  Considering only the inventions of Steve Jobs since 1980, the list includes: Apple III, MacG3, USA Mouse, iPod, MHCG4, iPod GUI, Power Adapter, iPhone, Magic Mouse, iPod Shuffle, iPhone 4 and iPad (Grace & Graen, 2014).  By 1980, computers were in the home, the school and organizations of many kinds.  Children born during 1980 and thereafter grew up with the computer as a virtual best friend and companion.  The rapid improvement in computer applications frustrated their parents' generation and many refused to learn how to operate yet another application language.  In contrast, the young people were attracted to these tools and integrated them into their social lives 24 hours a day and 7 days a week.  One side-effect of this was that children earned higher status because they were more tech savvy than their parent's generation and could help adults with the ever-changing products.  Gradually, social customs evolved making the computer applications necessary for nearly all social activities.  The hardwired appliances were rendered obsolete.  New social rules and norms were invented to routinize the new cultures.  These changes were gradually more accepted as the reality of the millennial culture.

Innovation movement
The final piece of the theory of the making of the (1980-present) millennial professionals is the movement to innovation as the business strategy of the future.  Given the outstanding success in the market of the Goggle-like companies based on innovative products and services, business strategies changed with the decline from the "lean movement" to that of the exploding innovation movement (Brooks, 2015).  New ideas were valued in nearly every area.  Innovations were the ideas that the internet sent worldwide.  Clearly, it was not a single event, but movements that caught on and changed everyday life.  The evidence for the innovation movement was presented in the publication of the UK Department of Business Innovation's Design Council.  These publications point to "governments investing heavily in sponsoring and promoting design as a key to stimulating innovation, jobs and exports as a means to systematically address challenges".  Their publication cites that "China's Prime Minister, Wen Jiabao stated a desire to move from 'made in China' to 'designed in China'.  Over recent years, China has driven national and regional design policy, with investments in education and national promotion.  Other Asian governments are vigorously committed to promotion of design, notably those in Singapore, Korea and Malaysia" (Temple, 2010 p. 1).

Based on these movements, our theory of the making of millennial professionals  follows.  The outcomes of these events produced a new culture for millennial professionals.  This new culture was described above based on recent trustworthy studies.  This culture is what millennials accept as normal life.  They seek to continue this culture during their careers.  Unfortunately, existing talent strategies violated their culture and once they realized that this incompatible world of an employee would not change, they left the company (many simply went home) (PwC, 2013).

Judging from the reasons for quitting one's dream career employer and the identified characteristics of the corporate culture that would encourage them to join and stay, those who resigned prematurely were suffering from a culture shock.  They were socialized from infants to college graduates under a positive psychology –tech savvy-innovation culture and were transported to a foreign culture.  They were shocked at the treatment by their bosses and coworkers who disrespected their inflexible demands and played "dirty tricks".  They were given no time for innovation or fun.  The lack of balance between work and fun left them feeling that they had no private life.  The lack of teams of peers learning from each other left empty feelings.  Finally, they spread the word of their cultures incompatibility with their parents work culture by quitting their career jobs and going home to welcoming families.

In concluding, we argue that (1) because the lead authors failed to find available and well-known research on generational differences in the workplace, their affirmation of the null hypothesis is not recommended practice, and of employing myths and stereotypes in the case of millennials is unfounded, (2) millennials have been found to demand a different talent strategy than those designed for baby boomers, (3) leading companies globally are changing their talent strategies to become more compatible with the millennial culture and (4) we recommend an innovation design team approach to make needed changes in constructing new talent strategies (Graen & Grace, 2015), (5) finally, we propose a new theory of three game changing movements (positive psychology, information product improvements and the innovation search).  These three continuing drivers produced a new culture for millennials which was normatively different from their parents' culture.  Our theory summarizes existing research finding in the workplace and hypothesizes new relationships.  A few of these hypotheses are as follows. 

H1      The new "Leadership-Motivating Excellence" (LMX) Team practices will be more effective with members of the millennial generation than traditional command and control management practices (Graen & Schiemann, 2013).
Millennial professionals demand from their company culture more than the preceding professional in terms of the following:

H2.     Flexibility based on unique talent and engagement.
H3.     Access to the best tools for collaboration and operation.
H4.     Transparent performance and reward decisions.
H5.     A workplace of peers learning from each other.
H6.     Opportunities and rewards for expatriates.
H7.     Opportunities as contingency workers.
H8.    Connecting and staying connected with all coworkers.
H9.     Continuous improvement.

Our first hypothesis was stated as referenced in 2013.  The remaining hypotheses are stated herein.  The first hypothesis is that LMX-Team practices are compatible with the new millennial culture.  Hypotheses two to nine were based on empirical research findings reviewed above.

One question remains to be understood, namely, how is it that the lead authors did not find the many studies reviewed herein?  We speculate the following.  The lead article was based partly on the junior author's doctoral dissertation with the senior author as chair of her committee.  Academic doctoral committees tend to be extremely questioning about any research citations not published in a proper referred academic outlet.  All of the lead paper's research citations were in such publications, whereas, ours are not.  Our references are the result of company sponsored consulting research found on the internet under "millennials at work", "millennials quitting employment" and the like key words.  We also employed relevant academic literature in our research review.  By checking the references of both papers, the results are supportive of our speculation.  The lesson we take from this disagreement is that we should review both academic referred journals and company sponsored internet research before we publish conclusions that contradict the weight of the research evidence.

Our theory about the development of a new culture may be fruitful in designing innovative structures to render the dysfunctional existing talent strategy obsolete and replacing it  by a more appropriate one for the new game changers (Graen & Grace, 2015).

Brooks, C. (2015).  The corporate values that attract millennial employees.  Business New Daily, January 15, 2015.

Brown, M. (2013).  Business needs to reset its purpose to attract Millennials, according to Deloitte’s annual survey, January 14, 2015, 

Campbell, W. K. (1993).  Self-esteem of college students increased substantially over 25-year period. 

Costanza, D. P., & Finkelstein, L. M. (2015).  Generationally based differences in the workplace: Is there a there there?  Industrial and Organizational Psychology: Perspectives on Science and Practice. 

Craig, C. (2006).  A short history of self-esteem. 

Drew, A. (2015).  Talkin' about you generation.  Observer, 28, 1.

Grace, M. & Graen, G. B. (2014).  Millennial Spring: Designing The Future Of Organizations.  LMX Leadership: The Series Vol IX.  Charlotte, NC: Information Age Publishing.

Graen, G. B. & Grace, M. (2015).  New talent strategy.  SHRM-SIOP – White Paper. 

Graen, G. B. Grace, M. & Canedo, J. (2015).  A New Approach to Integrating Information Technology and Human Resource Science within the Evolving Design Movement:  Training Teams and Professional Coaches in Implementing Proper Information Applications and Team Leadership in Innovation Design Teams.  IT and HR Journal, in press.

Graen, G. B. & Schiemann, W. (2013).  Leadership-Motivated Excellence Theory: An Extension of LMX.  Journal of Managerial Psychology, 28, 5, 452-469.

Graham, J. (2014).  Duke University, CFO Survey.

Johnson, C. (2010).  Generation Y and the workplace Global Workplace Innovations,

PwC. (2013).  PwC’s Next Generation: A Global Generational Study.

PwC. (2014).  Annual Global CEO Survey (2013).

PwC. (2015).  Annual Global CEO Survey (2014).

Schutte, B. (2014).  New poll:  Reality may bit 30 something's stay wildly optimistic.  The Washington Post.  October 2014.

Seligman, M. E. P. (2006).  Learned Optimism: How to change your mind and your life.  New York: Vintage.

Steiber, A. (2011).  Research report on Managerial Leadership Needs.  Society for Human Research Management.  .  New York: SHRM.

Temple, M. (2010). The Design Council Review. Department for Business Innovation.

Trzesniewski, J. M., & Donnellan, M. B. (2010).  Rethinking "Generation Me": A study of cohort effects from 1976-2006.  Perspectives on Psychological Science, 5(1), 58-75.  DOI: 10.1177/1745691609356789.

Twenge, J. M. (2000).  The age of anxiety?  Birth cohort change in anxiety and neuroticism, 1952-1993.  Journal of Personality and Social Psychology, 79(6), 1007-1021.  DOI: 10.1037/0022-3514.79.6.1007.

Twenge, J. M., Campbell, S. M., Hoffman, B. J., & Lance, C. E. (2010).  Generational differences in work values: Leisure and extrinsic values increasing, social and intrinsic values decreasing.  Journal of Management, 36, 1117-1142. DOI: 10.1177/0149206309352246.

Table 1

The PwC Study Recommends
A flexible work culture based on unique talent and engagement
Access to the best tools for collaboration and operation
Transparent performance and reward decisions
Building workplace culture maintained by unit (team) managers
Greater opportunities as expats
Improving the impact of millennials as contingency workers
Connecting and staying connected with all employees
On size does not fit all
From Graen & Grace, 2015

George B. Graen, Ph.D.