Generations in Flux
Ready or not, Millennials will soon be in charge.
Handing over the reins to the next generation can be an exciting and honored experience. It can also be fraught with anxiety and uncertainty. Transferring decades of knowledge, experience, and culture doesn’t happen overnight or even over several months. It takes a strategic and concerted effort. It is an undertaking that must be baked into the daily operations of an organization and embraced at all levels. Today, with the generational makeup of the workforce at the forefront of monumental flux, organizations must embrace this intensive transfer of institutional knowledge and culture as a key component of their corporate strategy.
While Millennials can now lay claim to being the largest group in the labor force, most of our recent clients have had a disproportionately high percentage of Baby Boomers. Over the coming years there will likely be a wave of departures of experienced staff resulting in possible institutional knowledge loss. For example, in the Legal industry, a recent report in The American Lawyer shows that Boomers currently comprise roughly 50% of The AM Law 200, with 16% of current partners slated to retire in the next five years and 38% in the next decade (1). Across all industries, 10,000 Boomers will retire every day for the next 19 years. There is significant risk to the future success of organizations when the bulk of an organization’s knowledge and culture are centralized in a singular group of people.
Law firms and other professional services organizations have demographics that tend to skew older because of the higher educational requirements for many of the positions. This over-representation of Boomers has been exacerbated by slow growth and a reduction in hiring during and following the Great (New) Recession. Moving forward, these organizations will need to address institutional knowledge loss, attracting and retaining new talent, a shift in space-use needs, and evolving attitudes towards work processes and culture.
Spaces to Learn
In the years to come, particular attention will need to be paid to how knowledge and culture are transferred between senior and junior employees. Partly for this reason, “collaboration and interaction” and “attraction and retention of talent” have arisen as important topics with our clients. There is a range of approaches that can address these issues, from space design and technology, to organizational design, policy and process changes.
Our engagements with a range of clients and industry research shows a disconnect between the currently available spaces and the types of spaces that are required to support the levels of collaboration that organizations desperately need to promote. A Steelcase/Corenet Global Survey (2) of more than 200 corporate real estate practitioners revealed that currently, 41% of organizations report that their overall space supports a mix of 80% individual work and 20% collaborative work. An additional 24% of organizations report that their overall space supports a mix of 60% individual and 40% collaborative work. Of these organizations, 37% report that their work processes consist of 40% individual and 60% collaborative work. This ratio is likely to shift further towards collaborative work in the future. The appropriate types and ratios of spaces can help employees collaborate more effectively and can support the formation of the informal networks critical for the transfer of institutional culture.
In terms of space design, there are several solutions that can promote this type of learning and knowledge transfer. Centralized coffee bars or pantries with integrated seating or adjacent break-out areas can encourage impromptu interaction and collaboration. Placing these centralized gathering spaces around an open stair or at the intersection of circulation routes can encourage employees from different departments to cross paths serendipitously. Promoting this type of interaction can foster more informal culture transfer. An organization’s space design should also reflect and reinforce its culture, brand, and identity. Employees at all levels of an organization can benefit from the physical reinforcement of the culture and values that underpin their work
An abundance of team meeting spaces, both enclosed and more informal open spaces can also facilitate the type of collaboration necessary for the type of interaction that can lead to institutional knowledge transfer. Additionally, mentorship programs can be an effective way for younger generations to learn from more senior employees and informal meeting spaces can help facilitate a variety of mentorship activities.
Breaking down hierarchy can create a less segmented division of labor and foster an environment that encourages learning and transparency. The Cultural Assessments we administer to our clients have shown a significant gap between the current and preferred levels of organizational hierarchy. Our assessments, which have been supported by our Survey and Focus Group findings, show currently high levels of hierarchy and a preferred future state with a flatter structure. Moreover, managers and senior-level employees perceive there to be less hierarchy than do younger employees. Space design can facilitate this flattening of hierarchy through features such as glass-fronted offices and open workstations. Senior employees become more accessible to junior staff, making the workings of the organization, both literally and symbolically, more evident. Other features such as open pantries and lounges and the aforementioned abundance of team meeting spaces can promote this flattening of hierarchy. In addition to space design solutions, transparency in policies, more open communication, and change management initiatives can work to flatten organizational hierarchy.
Attracting and Retaining Talent
As senior level employees retire over the next decade, organizations will need to fill the void left by a disproportionately large group of employees. For many organizations, there may not be a sufficient population of millennials to fill the vacuum left by Gen Xers moving up to take over from Boomers. It will become even more important to attract new employees and keep existing employees by designing for the needs of millennials and anticipating the needs of Gen Z (those born in the mid-90’s to early ‘00’s), who are not far behind. It will be important for organizations to understand their demographic makeup and how that makeup may change in the future. For instance, a disproportionately large percentage of Gen X’ers may lead to career stagnation, title inflation, and possible increases in employee turnover.
With these shifting demographics, there will be a triple-headed impact on organizations’ physical footprint requirements. Shifting attitudes towards personal space allocation have meant a move away from large individual spaces towards more shared, collaborative spaces. Millennials and generations to come may be less concerned with the traditional private office and more accepting of open or shared workspaces, which can ultimately help decrease the square foot per employee requirements for organizations.
As organizations introduce more comprehensive remote work policies to adjust to younger generations’ expectations for greater work-life balance, space use needs will also decrease. Additionally, potentially decreasing staff counts will drive down organizations’ space needs. The booming co-working trend has been one response to decreasing space needs, shifting attitudes about work, and the de-centralization of the workforce. Organizations have been able to assume less risk, lease less space, and remain more agile.
Preparing for the Shift
A momentous demographic shift lies ahead. Organizations will need to employ all the tools at their disposal, from physical, space-based solutions, to policy, work-process, and technological solutions. Organizations will need to dedicate time and resources towards understanding how their younger employees work and learn, while also ensuring there is an efficient and successful transfer of knowledge and culture. Organizations with the ability to adapt to this rapid demographic and cultural transformation will stand to come out ahead, with a stronger operating environment and a more dedicated and happy workforce.
(1) Triedman, Julie. Retiring Boomers Pose Big Challenges for Firms. The American Lawyer. August 2016. http://www.americanlawyer.com/id=1202765209388/Retiring-Boomers-Pose-Big-Challenges-for-Firms?slreturn=20161109170408
(2) Steelcase Whitepaper. How Place Fosters Innovation. 2013. https://www.steelcase.com/insights/white-papers/how-place-fosters-innovation/