A Revolution at the Organisation’s Core: Millennials


By Guido Stein and Miguel Martín

How do organisations strategise to create a sound and functional workforce? In this article, the authors present how various companies and businesses restructured the workplace and devise new methods and work culture to keep up with the demands of the new generations. 

While millennials account for 34% of the workforce in the United States (see Figure 1) – and that percentage is on the rise – current workplace structures are tailored to previous generations, which leads to generational conflict and the loss of motivation among millennials. This article is focused on examining that dispute, as well as how such structures can be adapted to make them compatible with the preferences of new generations.


Figure 1. Generations in the Workforce
Source: Deborah Hopen and James J. Rooney, “Do Generational Differences Affect Project Success?,” Six Sigma Forum Magazine 15, no. 3 (May 2016)


Ambidextrous or Versatile

It is not on the market where an organisation starts to become competitive, by offering different products and services to end consumers, but during recruitment of the talent.

Some authors argue that the ability to compete in new markets begins with the strategies and priorities that are responsible for the very nature of innovation capabilities. It is not on the market where an organisation starts to become competitive, by offering different products and services to end consumers, but during recruitment of the talent that will design and develop such products and services to be placed on the market. Thus, the innovation process within organisations should start from the human resource (HR) department, with new talent-recruitment policies adapted to a generation with different traits and wishes. Employers need to transition “from a ‘boomer-centric’ workplace to a ‘millennial-centric’ workplace”.

Birkinshaw and Gibson identified a strong positive correlation between business performance and ambidextrous organisations. If we apply this to the HR department, we could argue that a company that focuses its talent-recruitment and retention policies on current and future employees will achieve better business performance, as well as better financial results. Nowadays, many companies still have policies designed for baby boomers and Generation Xers and have not yet modified them for those just starting out in the business world – those are, millennials and postmillennials. Since they will be the ones holding job positions in the future, those in charge of designing and applying said policies should pay attention to their demands and wishes, with the goal of achieving a more ambidextrous organisation.

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The need for knowledge transfer between generations has become bidirectional, such that establishing reverse mentoring programs can be useful.

With new generations comes the energy of those first entering the workforce, marked by a desire to get work done and prove their worth in the short term but also by inexperience regarding the business world and the internal history of the company. However, they possess almost innate technological knowledge and can operate technologies with enviable ease. Therefore, the need for knowledge transfer between generations has become bidirectional, such that establishing reverse mentoring programmes can be useful. This need within organisations for employees to share their knowledge is complemented by millennials’ wish to receive constant feedback. In a survey conducted at IESE, 65% of students reported having asked for feedback and explained that they did so to understand where they were making mistakes and how to improve and make important decisions. Parents, professors, and friends are crucially important in providing this feedback (see Figure 2). When these students take on job positions, their bosses will take on the role of their professors.

To adapt to new generations, business leaders are modernising their policies with flexible work schedules, whereby employees work 24/7 without having to go to the office. This results in the intertwining of their personal and professional lives. Promotion policies, feedback, and the implementation of reverse mentoring programmes are also changing to adapt to new generations. A good first step for many organisations that aim to become more innovative would be to build a model with a strong emphasis on promoting knowledge transfer while producing a generational replacement.


Figure 2. From Whom Do You Usually Ask for Feedback?
Source: Prepared by the authors using data from the survey of students of the University of Navarra’s Faculty of Economics who were studying on the 2017 IESE Program


The Organisation

An organisation can have one of three types of structure: functional, divisional, and matrix. In the first case, the division of labour, the roles and the hierarchies are structured in terms of the activities or primary functions that the organisation must perform when carrying out its business activity (production, sales, engineering, finances, etc.). This type of structure is very clear and maximises individual functions. However, in doing so, it can hinder the maximisation of the organisation’s overall outcome. The second type of structure rests upon the things produced, geographic markets or customers. It is suitable for highly uncertain settings in which the goal is to coordinate innovation, satisfy customers, and retain a market segment.

As for the matrix structure, it attempts to combine the features of the previous two structures, thus benefiting from their positive aspects while seeking to avoid their drawbacks. In this structure, two or more dimensions are defined through the implementation of a dual management system with responsibilities assigned to functional departments, in which division and functional managers have the same authority within the company and employees depend hierarchically on both. This structure is especially recommended when a company must respond to two sectors simultaneously, operates in very uncertain and complex settings, needs to innovate or has to cope with tough restrictions on human and financial resources by making use of economies of scale.

Regardless of the organisation’s structure, and given the differences that exist among millennials with regard to their behaviour, it would seem they need help understanding and adapting to company rules. Moreover, their need for achievement and instant gratification makes reviewing and monitoring their expectations vital in many companies. Their motivation to understand how companies operate along with companies’ interest in paying them due attention mean that dual management – through two supervisors – might promote their integration and company retention.


Corporate Culture 

When it comes to running a company, either a hard or soft power culture of corporate governance can be established. The first option entails strict rules, whereas soft power alludes to the subtle mechanisms of culture as effective instruments for changing organisations. As we shall see, soft power allows managers to make the necessary changes while causing as little friction as possible, avoiding collateral damage and earning the cooperation and consent of the other members of the company. In short, it creates a viral effect in their governance programme. Low-intensity norms are a useful instrument for cultural transformation because of their flexibility and their ease of implementation.

However, at times, the urgency of business activity or the existence of a strong culture makes it hard to implement long-term changes, forcing executives to make quick decisions with immediate effect. Strong cultures, which can be modified only through reactive changes, also have some advantages, such as increased motivation, coordination, and control. Moreover, they put companies in a better position to respond to investment opportunities and generally speaking, help to consolidate competitive advantages. Nevertheless, their rigidity often makes it harder to implement soft changes. 


Culture Focused on Innovation

Compared to Generation Xers, a significantly greater number of millennials prefer to work at organisations with centralised decision making and clearly defined responsibilities and official rules and processes. In line with this data, millennials opt for an organisational culture with few rules and regulations. Moreover, millennials require a more structured organisation in which they are told what to do and when to do it. Based on these studies, we can conclude that millennials prefer fewer but clearly defined rules.

Innovation is becoming increasingly more important to the success of organisations, given the technological changes occurring in all sectors of the economy. Organisational cultures that promote creativity and passion and value their employees will become leaders in innovation. Similarly, to build a successful culture of innovation, workers must be encouraged to learn and leaders must commit to examining how they are improving products. Millennials highlight continuous training and learning as fundamental requirements for staying at a job or deciding to take a different one. 25% of millennials surveyed cite learning as their main reason for working, while another 22% refer to personal development – which, of course, cannot exist without learning. Therefore, offering continuous training should be among companies’ main concerns.

A culture of innovation is based on task autonomy or, rather, on the ability of the workers in charge of creating innovative ideas to choose how they complete their tasks and, in doing so, to feel supported in their decisions. This study would support the idea that companies that want to adapt to market currents and new generations should establish few rules and give their employees a certain degree of autonomy, with the goal of structuring their work and generating innovation. In this sense, support for their decisions and ideas is a necessary feature of the organisation’s new models since another important trait of millennials is their need to feel supported and valued within their company. In this regard, millennials require companies to be open to receiving and listening to comments and criticism.

In this new order of relationships in the organisation, the preestablished hierarchic rigidity is pushed aside, making way for atmospheres in which open dialogue can flourish. 


Work and the Importance of Corporate Social Responsibility (CSR)

New generations give increasingly greater importance to the content of their work. In fact, money now ranks fifth as the main reason why millennials choose a job, behind metrics such as “to learn”, “to influence and/or contribute to society”, “development”, and “to have fun” (see Figure 3). However, money still occupies a position of capital importance since almost 90% of survey participants report it as one of their four main reasons for working, while less than 80% are interested in personal development. Our survey obtained results that confirm that millennials prefer challenging jobs that can help them advance in their careers. Therefore, it comes as no surprise that many of them opt for jobs at the smallest companies, where they believe they will be able to perform a more practical role and have a greater impact.


Figure 3.  Why Do You Want to Work?
Source: Prepared by the authors using data from the survey of students of the University of Navarra’s Faculty of Economics who were studying on the 2017 IESE Program


Companies have not given much consideration to this aspect of work until now, which is why the incorporation of millennials into the workforce may lead to an increase in employee turnover, as millennials find they do not feel passionate about their job or stimulated by it. A reason for the high turnover of millennials is the fact that because of the economic recession, this generation’s sense of job security has declined.

Likewise, millennials seek out teamwork and stay in close contact and communication with their supervisors, from whom they demand intense feedback. Accustomed to playing team sports and working on group projects at school, it is no surprise that they opt for this type of organisation in their professional lives rather than individual work. Their supervisors need to be in constant contact with them, not just because millennials demand it but also because through fluid communication with them, it is possible to gather significant information about how to manage and motivate them and keep them at the company.



Good relationships with colleagues and supervisors are very important to millennials, as 50% of survey participants cite poor relationships with colleagues as one of the three main reasons for changing jobs.

Millennials have developed the capacity for working in groups and they place greater value on teamwork. This is primarily due to a shift in teaching methods, whereby students’ progress are no longer evaluated by a final exam but through continuous work carried out in groups. Social networks also play a role in millennials placing greater value on teamwork rather than individual work. 

Good relationships with colleagues and supervisors are very important to millennials, as 50% of survey participants cite poor relationships with colleagues as one of the three main reasons for changing jobs and more than 40% include a poor relationship with their boss among those reasons (see Figure 4).

Millennials will know how to interpret their colleagues’ opinions and will make an effort to show their true value. In the interviews conducted, millennials mention they want to work with people who are “friends, who are not very competitive, from whom you can ask for advice and with whom it is easy and pleasant to work”. They also hope for “a collaborative and friendly environment in addition to a working relationship” and “a great deal of camaraderie” and they want “some colleagues to become friends” and “everyone to help each other mutually”.


Figure 4. What Would Incite You to Change Job?
Source: Prepared by the authors using data from the survey of students of the University of Navarra’s Faculty of Economics who were studying on the 2017 IESE Program



The generations preceding the millennials experienced a childhood in which affection and education were wrapped in an iron fist both at home and at school, where they listened and obeyed without complaint. Nowadays, this style of education has given way to a more lenient authority. This difference in the educational development of millennials means that management of them at organisations should be different. Millennials’ preference for an interpersonal relationship with their supervisors, in which they know their managers are concerned about them is a fact. Likewise, she highlights that, while ambition is the most highly valued characteristic of baby boomers and Generation Xers, millennials prefer a boss who will look out for them.

Our survey participants did not hesitate when defining the type of relationship they hope to have with their superiors: “A relaxed relationship with a lot of learning, where I feel like they want to teach me”; “In addition to giving me work and responsibilities, I want my boss to guide me and offer mentoring and feedback”; “A bit informal, where my supervisor truly wants to teach me and makes an effort so that I learn. I would like my boss not just to tell me where I make mistakes but to recognise my achievements”; “A close, trusting relationship, so I can tell the boss my concerns and for the boss to be proud of my work”; “Mutual trust, with respect, not a buddy relationship, but for them to be concerned about me and ensure I learn, for them to challenge me.”

The relationship with immediate supervisors might be a key in order to benefit from, motivate, and retain millennials.

Adaptation must be bidirectional, in which millennials and organisations work together to meet the needs of both parties. Managers should be responsible for ensuring the success of this process, insisting that millennials meet the company’s standards while, at the same time, making sure the company fulfills their desires.

The relationship with immediate supervisors might be a key in order to benefit from, motivate, and retain millennials. They are the ones who accompany them during their daily activities, which puts them in charge of picking up on their worries and keeping them active while balancing their dreams and expectations with reality. For a generation willing to change jobs, the soft skills and empathy of managers are becoming more and more important.


Leadership: From Boss to Mentor

The literature distinguishes between two main styles of leadership: transactional and transformational. The former is based on bureaucratic authority and the legitimate power of the organisation. Leaders of this type focus on assigning tasks and following rules and they use rewards and punishments to influence employees. In contrast, the latter consists of a process that motivates employees by appealing to ideals and moral values. Leaders who follow this model are able to create a vision for their company and inspire others. Most structures are prepared for transactional leadership, in which the superior gives an order and the subordinate carries it out. However, millennials demand and need leadership that is centred on people, where the reason for their activities and responsibilities is explained clearly.

The current mix of generations within organisations makes leadership more complex than in previous years. Therefore, given this difference between millennials and previous generations, the traditional focus is not successful. Millennials want leadership focused on feedback and achieving goals, in which special importance is given to the transformational style and coaching.

Regarding this type of leadership, it might be a good idea to leave behind the role of the boss and replace it with that of the mentor. Millennials have as much to teach as they have to learn. Therefore, many studies highlight the importance of reverse mentoring as a way of getting them involved in their new workplace. 

Likewise, we want to stress the benefits for both parties involved in reverse mentoring. While millennials benefit from greater access to information, professional respect and appreciation, as well as personal achievement and satisfaction, members of previous generations gain greater technological expertise and dynamism. In fact, the process of reverse mentoring can improve work relationships and increase commitment from both parties, as well as generate new projects, processes, and products that will benefit the organisation. 

Other researches also suggest that informal and formal knowledge transfer in classrooms or learning communities, in which employees are grouped by area of interest or experience, can be effective. In this regard, new technologies enhance the training of these communities and so, quite simply, those in charge of these policies could promote their use and development within the organisation.


Organisational Structure for Millennials 

According to Myers and Sadaghiani, millennials have three significant preferences regarding the organisation and development of work relationships, all of which summarise and concur with everything previously mentioned. Firstly, millennials hope for a good relationship with their supervisors and continuous feedback. Secondly, they want open communication in the company, in addition to being responsible for matters typically left solely to those in high positions. Thirdly, they generally prefer to work in teams. 

These three aspects confirm that a matrix organisation is the type of structure in which they feel most comfortable and work best. Regarding the first point (a good relationship with supervisors and continuous feedback). One advantage to this management system is that “it stimulates interdisciplinary and interdepartmental cooperation, getting the staff involved and motivating them. It provides employees with the opportunity to acquire functional or general management skills and it promotes a culture characterised by relationships of authority, responsibility, and account management”. Moreover, controls and dual evaluation systems are two of the keys to success for a matrix organisation. Dual evaluation systems would enhance the reverse mentoring process mentioned in the previous section. 

A matrix would make it easier to meet millennials’ needs, such as feedback and regular evaluation of work performance. However, millennials’ preference for evaluation translates to a continuous need for somebody to tell them what to do, how to do it and whether or not they are doing it well. In this sense, it is important to note that, while this structure favours supervision, excessive use of it may be a problem since it might result in decision making being strangled.

A matrix organisation also responds better to the second point (open communication and taking control of matters often left to those in high positions) since it provides greater versatility, by promoting greater flexibility and balance in the decision-making process. The matrix is supported by an organisation that promotes conflict negotiation and the balance of power between its members and departments and features dual decision making, all of which make it the best structure to meet millennials’ demands. 

The third aspect (millennials’ preference for teamwork) is likewise possible in a matrix organisation. Teamwork is not only preferred but required in a structure of this type, as maintained by Lavezzolo and Rodríguez-Lluesma: ”A matrix organisation requires extremely effective links both vertically and horizontally. Therefore, it is crucial to achieving coherence between different parts of the organisation.” It requires interaction beyond the limits of projects and department teams, it would seem that, in the end, a matrix is nothing more than group decision making. While millennials might be much more comfortable with something, it might be a problem for the company due to “excessive democracy”. 

In addition to these three aspects, and since the matrix organisation is especially recommended when companies must innovate, the matrix will be useful when adjusting to the changes that companies must make due to the historic moment in which millennials are living. As previously argued, while millennials have a culture focused on innovation, this characteristic, together with new technology, defines not just their way of being but the era in which they live as well. Therefore, an organisational structure adapted to the needs of the 4.0 world is required. A matrix offers adaptation capacity and innovative strength, thus facilitating changes in automation, digitisation and generational turnover that companies of the 21st century are forced to make. It also promotes creativity and provides the autonomy that millennials demand. 

Millennials want to make decisions as part of a team because this allows them to feel confident about their actions but, at the same time, they want their bosses to make decisions independently.

In contrast, as previously mentioned, millennials prefer to work at companies with centralised decision making, which is more characteristic of functional and divisional structures and thus provides arguments against the idea of a matrix organisation for this generation. Millennials want to make decisions as part of a team because this allows them to feel confident about their actions but, at the same time, they want their bosses to make decisions independently. That is, they value teamwork but they want their supervisors to work separately because they feel more confident that way. 


Recruitment and Retention: The Importance of a “Professional Career”

A study by PwC, the University of Southern California and London Business School (2013) shows that the reasons for staying with or leaving a company are practically the same for all generations, although the reasons’ order of importance in their final decision varies. According to the study, millennials have greater expectations of being supported and appreciated in exchange for their contribution and for forming part of a team. Therefore, it is necessary to review the characteristic traits of each generation to establish work motivation policies. In fact, research shows that, compared to Generation Xers and baby boomers, millennials place greater importance on being challenged at the workplace and on mentoring and continuous training. 

To explain the changes occurring within companies when it comes to seeking, recruiting, and retaining talent from new generations, Rexrode mentions Citigroup’s plans. “I want people to have family lives, personal lives,” said the CEO of Citigroup, while his company announced quicker paths to promotion, opportunities for charity work, and the possibility of working on microfinance projects in Kenya for four weeks, as part of its plan to recruit and motivate the youngest employees in the organisation. Likewise, Rexrode points out that entities such as Goldman Sachs, Bank of America, and JPMorgan Chase & Co. are planning similar changes in order to recruit millennials through more interesting job tasks, charity activities, and quicker promotions.

In light of all this, it can be argued that corporate culture (for the millennial generation) should be defined as an anthropological model in which the hierarchy of motivations gives priority first to intrinsic, then transcendental and, lastly, extrinsic motivations.


Career Plan

One has to distinguish between several periods of professional careers. The first is considered a stage of exploration, which is the phase millennials are going through. Individuals make choices for their careers through trial and error and if they are not pleased with their choices, they undertake new explorations or adjustments. Once satisfied, individuals begin to find stability and the efforts previously aimed at exploration are now spent on personal development within the chosen field. The problem that organisations are facing is that millennials have concerns and expectations in their explorations that are often difficult to meet. Therefore, they are considered to be a generation more prone to change and job turnover. In this regard, companies that wish to retain talent could consider rotation programs, in which millennials would take on the problems, challenges, and activities of the different departments. 


Day-to-Day Experience: Real Policies of Organisations

To prepare this section, we have researched the selection processes of several companies and collected information about human resource goals and policies from the annual reports of large companies. 

The selection processes of companies interested in recruiting young talent are evolving. Gamification plays a significant role in this change and many companies are considering contests in which the winner receives a grant or internship. This allows companies to hire talent they have previously appraised through the simulation of work experience and the resolution of problems similar to those that people must face at the organisation on a daily basis.

With the goal of developing new employees quickly and making them feel appreciated within the company, many organisations have implemented graduate programmes. Most of these programmes consist of a period of between one and three years of rotation through the different departments or positions within departments. 

Figure 5 demonstrates the main human resource policies of large companies such as Google, Facebook, LinkedIn, Yahoo, and Amazon. It is worth noting that some general principles are shared by most companies, such as alignment with the business strategy, pay for performance, recruitment and retention of the best talent, as well as external competitiveness.


Figure 5.  General Principles of Human Resource Departments
Source: Prepared by the authors based on the companies’ annual reports or proxy statements


About the Authors

Guido Stein is Academic Director of the Executive MBA of Madrid, Professor at IESE Business School in the Department of Managing People in Organisations and Director of Negotiation Unit. He is partner of Inicia Corporate (M&A and Corporate Finance).

Miguel Martín is a Business Consultant in strategic and development projects for national and international companies. He obtained the Business and Administration degree at the University of Navarra, and the Masters degree in Finance at the CIFF Business School in 2017. He joined Moebius Consulting after 3 years working at IESE as a Research Assistant, where he still collaborates in the publication of several books, business cases and technical notes.


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