Proud to be | Y | our future leader

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Proud to be | Y | our future leader

„Generational differences and the demands of

organizations for future leadership characteristics'

MSc Organizational and Management Control Faculty of Economics and Business

University of Groningen

Internship Boer & Croon Young Executive Management

Name: Leonie Verwer

Address: Vinkenstraat 59-3 1013 JM Amsterdam Telephone number: 06 41930603

Email address: leonieverwer@hotmail.com Student number: 1540947

Date: March 2011

Coordinator: Dr. B. Crom

Supervisor RUG: Mr. M.M. Bergervoet Co-supervisor RUG: Dr. B.J.W. Pennink

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Preface

This thesis is the last part of my master program Organizational and Management Control. The final assignment was carried out during an internship on the authority of the Boer & Croon organization. Inspired by the research subjects, generation Y and future leadership, as well as the Boer & Croon thinking on talent development and leadership, I started the internship. As a member of generation Y, I was really curious to what extent my own „generational‟ thoughts should be in line with the literature facts as well as organizational demands.

During my research project, a new weekly documentary of future leadership started on television. The first week of December, I scheduled an appointment with the presenter of the documentary, research journalist Jeroen Smit. Since a generation related episode was missing in the documentary, I intended to debate on that issue. Together we outlined different future scenarios and went over topics like radical transparency, potential generational conflicts as well as the importance of the context. The meeting was really inspiring for both of us and the conversation made me realize (again) the interest and importance of my research subject, for which I want to thank Mr. Smit.

Further, I would like to thank some people for their support during the process of conducting my master thesis. First, I would like to thank my supervisor from university Mr. Marcel Bergervoet for his time, useful advice and his patience during the research process. I also want to mention the critical comments of the co-supervisor Mr. Bartjan Pennink. Next, I would like to thank the Boer & Croon organization for the opportunity to get an inside view of the organization as well as their guidance and openness. Special thanks to Mirjam Speelmans and Boudijn Driesen for their support, trust and advice during my internship.

Playtime is over now; it is time to step into the „real world‟. Organizations, be prepared; another member of generation Y is entering workforce. And I am proud to be part of this generation.

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Abstract

The present master thesis seeks to develop a better understanding of generational differences and the demands of organizations about future leadership characteristics. This research provides a starting point for organizations for investing in generational differences as well as adapting their leadership development programs to the specific requirements of different generations.

Human capital has emerged as a key differentiator and major competitive advantage. The changing business environment has placed increasing emphasis on understanding and managing the expectations of different generational groups. Generation Y is currently entering the labor market with a completely new approach, which exert pressure on organizational leaders. Next to that, it will be these talents who will be our leaders of tomorrow. Therefore, the aim of this research is to gain more knowledge on generation Y and future leadership. Given that this research is commissioned by the Boer & Croon organization, the practical relevance is to create more and better input on the subjects generation Y and future leadership in favor of the propositions talent development as well as leadership of this company.

The research contains a literature study in which all relevant subjects according to this examination are discussed. Furthermore, an empirical research is conducted in order to create a database to assess the demands of organizational leaders. The sample included 280 HR-related seniors from a variety of organizations, all from the Boer & Croon network. A total of 121 questionnaires were returned.

The outcomes suggest that organizational demands for future leadership characteristics are for the greater part in line with literature findings. However, results also show a lack of understanding of generational differences by organizational leaders. Further, organizational leaders seem familiar with the characteristics of generation Y. Although this, significant differences are found on the knowledge of generation Y characteristics between generational cohorts as well as among leaders working in different sectors. Nevertheless, it appears that generational differences are part of organizational thinking in searching and developing talents.

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Introduction

‘Talent is the engine of the modern organization, and engagement is the mystery ingredient that can transform the engine’s output’ (Cheese, Thomas and Craig, 2008)

The world is changing. Over the last twenty years, an economic revolution in the developed world has occurred. Simultaneously, new markets like China and India opened. All together has forced changes in work methods, the nature of production, value creation as well as leadership. The primary engine of this fundamental shift is the growth of services and knowledge (Cheese et al., 2008).

Under industrial capitalism, analytics, resources and financial capital were essential. However, we are leaving this rational, industrial era now. Jensen (1999) names the next period „a dream society where organizations and products have emotions and feelings‟. Regarding the fact that this shift is happening right now, it is an important moment to talk about succession planning. Organizations need to break into these changes right now.

We are entering an era which is focused everywhere in the direction of talent, resources, markets and networks. There are no longer any boundaries; the world is flat and careers are boundary less (Friedman, 2005; Arthus and Rousseau, 1996). An era which is about working everywhere, going where the talent is, where the resources are, and where the markets are, connecting up people and processes globally and breaking down traditional barriers (Cheese et al., 2008). The human capital has emerged as a key differentiator and major competitive advantage. The importance of human capital is substantiated by Bauman (2004) by the idea of 'liquid modernity'. He stated that 'we have moved from a solid to a fluid phase of modernity, in which nothing keeps its shape, and social forms are constantly changing at great speed, radically transforming the experience of being human'.

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7 All these trends caused a shift balance of power from the company towards talented people (Micheals et al., 2001). The focus is on generation Y now. This generation was born in the eighties of last century and their arrival into organizations has already started. Their demands are about more learning opportunities and responsible ownership, direct feedback, greater work-life balance and stronger workplace relationships. In line with the 'liquid modernity' theory of Bauman (2004), the personal identities of generation Y are real loose and temporary and are subject to constant change and renegotiation. This completely new approach to labor market makes them a real challenge to manage for organizations.

Boer & Croon stands for high quality service provision in the areas of consultancy, corporate finance and management. Through this unique combination, the company can provide board room-level services in both advisory and interim management. The core activities comprise the whole package; from inspiration to realization. The group is an agency of remarkable individuals that inspire each other and the client to achieve a competitive advantage, shareholder value, and social value.

The organization consists of a number of independent subsidiaries, of which one is Boer & Croon Young Executive Management. This subsidiary helps clients to solve management problems by using young professionals to strengthen an organization on a temporary basis. An offering and competence of Boer & Croon Young Executive Management is their Talent Development program with which Boer & Croon offers two different solutions for their clients. On the one hand through temporary deployment of their young professionals within the organizations of their clients with the task to solve different organizational and management issues on a project basis. On the other hand via their talent management services that can help their clients in identifying, developing, deploying and maintaining potential and ambitious talent.

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1 Research design

1.1 Introduction

The talent development and the leadership theme are important issues for Boer & Croon, in order to serve their clients best. The process of gaining more knowledge about these issues will contribute this organization in becoming an expert in their market field. In this chapter the research design is described. First, the problem relevance is explained which includes the type and size of the research. After that, the objective of the research, the research question and sub-questions are formulated. Also the most important used definitions are stated followed by the description of both the positioning of the paper and the methodology. Finally, the structure of the thesis is described.

1.2 Problem relevance

While in the past the labor market faced the problem of job scarcity, organizations nowadays are dealing with the issue of talent scarcity (D‟Amato and Herzfeldt, 2008). The task of attracting and retaining talented employees has become more complex than ever before. Superior talent is increasingly recognized as the primary source of competitive advantage in organizations. Underlying this trend is the changing business environment, which demands a new set of leadership skills (Chambers et al., 1998; O‟Brien and Robertson, 2009).

In recent times, the labor market has turned because of a shortage of labor. This is caused by the ageing of the population and a decrease in the number of younger people (Van der Sluis, 2009). Numbers show that between 2010 and 2015, the estimated outflow is 775.000 people, mainly from the babyboom generation, against an inflow of only 420.000 youngsters (CBS, 2009). Appendix A shows the population age structures of the Netherlands of 1960, 2000, and 2040. Taken this together with the talent scarcity, the competition for professional organizations is fierce. As a consequence, organizations need to do more than just being successful in their businesses; they have to pay special attention to the changes in labor market.

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10 Herzfeldt, 2008). The engagement example is about attitudinal differences. One way of explaining the shift in attitudes between people is by generation.

The meaning of generations historically is ambiguous and frequently includes the concept of family generation; the set of all children „brought into being‟ by a father or mother (Strauss and Howe, 1991). Nowadays, most studies focus on the concept of a generational cohort. Cohort theory argues that growing up at about the same time and experiencing these events at about the same point in their development leads to similar values, opinions, and life experiences of people within each cohort (Kupperschmidt, 2000; Mannheim, 1972; Smola and Sutton, 2002). Currently, different generational cohorts are in workforce, which involves generational interaction.

Understanding the shift in attitudes across generations is really important in the process how to manage and attract different generations (Cheese et al., 2008). For example, in recent times, the role of Internet has become increasingly important. These developments have had an enormous impact during the education of future generations. It is important that organizations keep in mind these differences when they are dealing with their employees.

Generation Y has a completely new approach to workforce with different demands. Due to low birth rates and slowly adapting education systems, the European generation Y consists of fewer younger people with a desired background and skills demanded by business. Data across Europe shows that the number of available employees is decreasing (Eurostat, 2006). For example, in the Netherlands, the potential workforce is forecasted to shrink by 220.000 people by 2013 (Research Centre for Education and the Labor Market, 2009). Generation Y have entered workforce recently which makes it of interest to see future studies for this generation (Jennings, 2000; Smola and Sutton, 2002). To come near this interest, this study will research the most important characteristics of generation Y.

All these trends have brought with them a mix of new opportunities and challenges for organizations that must be met with „new thinking‟ (Cheese et al., 2008). However, most leadership theories are actually part of the industrial era, in which rational, analytical instruments were important. Times have changed now and most (western) businesses are not industrial anymore. It may be clear that the one-size-fits-all approach does not fit anymore. This approach may have worked for earlier generations who understand structure, hierarchy, and corporate loyalty. Those days are, however, long gone (Allen, 2004).

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11 As Kets-de Vries (2007) state: „When you are riding on a dead horse the best thing is to dismount. Many people try to keep on riding the dead horse, but you have to do something different.‟

This makes clear that managing the different work approaches of generations as well as the changing business environment are major change issues for organizations. Generation Y is intending to impact the workforce in a powerful way; with a fundamentally different work style and belief system (O‟Reilly and Vella-Zarb, 2000). Simultaneously, society has become „liquid‟ (Bauman, 2004). 'Generation Y have grown up in a society which promised constant and exciting forms of work, as well as readily available credit for the diverse desires the wages from work could not (yet) satisfy. With the credit crunch bringing both of these to an end, generation Y faces its own pressing questions' (Bauman, 2010). He emphasizes the importance of questioning by society, as seen as one of the major problems of 'liquid' modernity. Organizations are faced with a scarcity issue and have begun thinking carefully about how to retain and develop their employees. And these employees will be the leaders of the future. The „war for talent‟ has brought retention to the forefront as in increasingly critical issue (Chambers et al., 1998). We all know that we can‟t predict the future; however we have to be alert. Every signal counts. So the message for organizations sounds: Get ready!

1.3 Research objective and research questions

1.3.1 Research objective

Given the strategic importance of talent and the ability to attract, retain and motivate those, developing talent has to become everyone‟s responsibility in every organization. Over the last twenty years, the business environment has changed rapidly. A movement from a solid to a fluid phase of modernity has occurred (Bauman, 2004). Fundamental changes in the methods of work, nature of production and value creation together with changes in composition and shape of organizational workforces have placed increasing emphasis on understanding and managing the expectations of different generational groups. The survival of organizations in the „war for talent‟ depends on the ability to define, discover, develop and especially engage talent of every kind (Van der Sluis, 2009). They can win the war, but first they must elevate talent management to a corporate priority (Chambers et al., 1998).

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12 The aim of this research is to gain more knowledge on generation Y as well as of future leadership. In order to reach this aim, we will look for possible gaps. This research will lead to more and better input on the issues generation Y and future leadership in favor of the propositions talent development and future leadership of Boer & Croon.

1.3.2 Research questions

The central objective of this paper is to answer the following research questions:

To what extent is there a match between the characteristics of the future leader mentioned in literature and the demands of professional organizations about the characteristics of future leadership?

The future leader defined as a high-educated talent from generation Y who will become a senior executive on or after the year 2020. This makes that the second main research question sounds:

To what extent do the characteristics of generation Y match with the demands of professional organizations about future leadership characteristics?

To get insight in the necessary knowledge in order to reach the objective, a conceptual model is generated. The model has been split up into a theoretical part and an empirical part. The theoretical part is about developments within generations and future leadership. It explains, from a theoretical perspective, the differences between generations and in special the characteristics of generation Y. Next to that, literature on future leadership is provided. The future leadership characteristics from literature are well explained in this part. Finally, our expectations for the empirical research are outlined.

The empirical part measures the thoughts of organizations about the characteristics of generation Y as well as the characteristics of future leadership. Organizations were asked about their demands of characteristics for future leadership. The definition of the future leader emphasizes the fact that generation and organization are mutually dependent. This makes the extent to which the reasoning of organizations behind their thoughts for future leadership characteristics also of interest.

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13 Developments in generations Characteristics of Generation Y Characteristics of the future leader

Organizational demands for future leadership characteristics GAP I GAP II II Generation Y

Figure 1 Conceptual model

To find clear answers to the research questions, sub-questions are formulated. These questions are derived from the conceptual model.

Theoretical part

1. What developments are there within generations? a. Who is generation Y?

b. What are the main characteristics of generation Y? c. What differentiates generation Y from other generations? 2. What does future leadership mean?

a. What are the main characteristics of the current leader? b. What are the main characteristics of the future leader?

3. What is the relationship between the developments within generations and future leadership?

Empirical part

1. What are the differences between the characteristics of the current leader and the characteristics of the future leader according to organizational leaders?

2. Is there a potential relationship between the degree to which people recognize potential differences of leadership characteristics and their age category?

3. To what extent are organizational leaders familiar with the characteristics of generation Y? 4. What is the difference in the degree of recognition of the characteristics of generation Y

between:

a. Older and younger leaders?

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1.3.3 Definition of terms

In order to avoid confusion and to make clear some limitations, the most important terms used in this study are defined. These definitions will be used during the whole research. For the purposes of this study, the following definitions are used:

Generational cohort (or cohort): 'identifiable group that shares birth years, age location, and significant life events at critical developmental stages' (Kupperschmidt, 2000)

The generational cohorts used in this study are in line with the research of Jolink, Korten and Verhiel (2009). The cohorts are identified by birth years as follows:

Baby boomers: 1945 – 1960 Generation X: 1960 – 1975 Generation Y: 1975 – 1990

Future leader: 'A high educated talent from generation Y who will become a senior executive on or after the year 2020' (Boer & Croon, 2010)

Talent: 'Those individuals who can make a difference to organizational performance, either through their immediate contribution or in the long-term by demonstrating the highest levels of potential. In this research, the focus is on high educated talent who is working on operational level' (CIPD, 2007)

Organizations continuously need to prove that they are able to resume, to improve and also to change. Regarding the fact that organizations have to deal with a rapid changing environment, which is complex, dynamic and based on an excellent knowledge level, the need for high-educated talents is explained (Jolink et al., 2009).

Professional organization: 'Profit and non-profit organizations in the Netherlands' (Boer & Croon, 2010)

1.4 Positioning

The underlying assumptions behind any piece of work should be recognized and assessed by researchers to ensure that they are consistent with their personal beliefs. In other words, researchers into the management sciences should consider their own values and beliefs concerning the nature of society and the social sciences (Hopper and Powell, 1985). In order to justify the positioning of this paper, the Burrell and Morgan framework (1979) was used. This research can be stated as an exploratory study; it aims at developing assumptions about possible relations among subjects in the

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1.5 Methodology

This study is a foresight orientation to identify leadership skills necessary for success in the near future. The type of research is an exploratory study, which means looking for new ideas to address a proposition or hypothesis (Burrell and Morgan, 1979). Based on in-depth analysis of generational differences, societal trends and leadership developments, different key characteristics of generation Y and key future leadership characteristics were identified. An empirical study was then conducted to assess the current knowledge level of future leadership capability in a sample of current HR-leaders from a variety of organizations in the Netherlands. This paragraph describes the way in which the research is conducted and presents the research process.

1.5.1 Data collection

This research consists of several stages. Given that Boer & Croon already defined the broad research topic, the research started with a preliminary stage. The second phase involved the scanning and analysis of primary and secondary data sources to identify the trends impacting the future business. This desk research was used as a reference needed in the actual study. The actual field research provided the actual data that are needed to analyze and elaborate the results.

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Figure 2 Research process

1.5.2 Analyses and Processing

The empirical research is conducted to assess the thoughts and demands of organizations about future leadership including the knowledge of generation Y characteristics. This part is based on the implications identified during the literature study. A questionnaire is created in order to gain knowledge of the demands of organizations for future leadership characteristics. The demands mentioned by organizations will be compared with the characteristics of generation Y. The results will be two possible gaps or arrangements. The first is between the characteristics of future leadership from literature and the thoughts of organizations about these characteristics. The second gap is between the characteristics of generation Y from literature and the awareness of organizations about the characteristics of generation Y. The research will end with a conclusion. The empirical part of the study is more explained in chapter three.

1.6 Thesis structure

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2 Theoretical framework

In recent years there has been discussion in literature on generational differences. However, much of the discussion appears to be based on observation and popular management literature, rather than large empirical work. Giancola (2006) even suggests that „the generational approach may be more popular culture than social science‟.

Upcoming years, talents will become the primary source of competitive advantage. Generation Y can have an enormous impact on business results with their different values, attitudes, and ambitions (Martin and Schmidt, 2010; Arsenault, 2004). Capitalizing on the strengths of generational differences will be an important aspect in becoming the winner of the „war for talent‟. The changing world will bring new demands and expectations with it, which will also affect leadership. This prompts the question if we still can rely on leadership competencies rooted in the past? Or do we need a new set of leadership characteristics?

As stated in the previous chapter, essential in this study are the characteristics of generation Y and the demands of organizations for future leadership characteristics. This chapter contains the theoretical framework of the research. First, the process of developments in generations will be described, with a special focus on the characteristics of generation Y. Given that the members of this generation Y will be the leaders of 2020, the second concept is future leadership. The theoretical framework will end with a reflection of the presented theory with expectations for the empirical part.

2.2 Generational categories

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18 Appendix B shows these discrepancies. Regarding waves in historical revolutions and the influence of lifecycles, we believe that a cohort includes people born in a period between fifteen and twenty years (Jolink et al., 2009). Paragraph 1.3.3 shows the cohorts (including birth years) used in this study. The importance of generational differences will be outlined in the next paragraph.

2.3 Generational differences

Arsenault (2004) defined generational differences as 'a lifelong shared tradition and culture by a group of people'. One explanation for the importance of these differences is that generations originate from different values, attitudes, ambitions and mind-sets of people (Zemke et al., 2000). In current century, generations are working together more than ever before. Arsenault (2004) stated that instead of making use of the strengths of generational differences, a general lack of understanding has prevented organizations from capitalizing. While forward-looking organizations do realize the potential of diversity, they often misunderstand or even ignore the difference in generations. The main reason is a lack of research to validate the significance of generational differences. In answer to this literature gap, Arsenault (2004) did an extensive study to validate generational differences. The conclusion of that research shows generational differences as „a legitimate diversity issue that needs to be recognized and understand by organizations as well as an issue that needs to be tackled in developing current and future leaders.‟

The traditional belief that people change their values, attitudes, and preferences as a function of age predominate in current business environment is stated by Arsenault (2004). This traditional belief seems also be the case in marketing. Rentz and Reynolds (1991) explained the typical marketing approach to forecasting the effects of a changing age distribution. The approach examines current consumption rates by age class and projects those rates to future age classes. This means that if young people are currently the heaviest users of a product, the assumption is made that the same young people will be the heaviest users in the future. According to demographics, the number of young people in population is decreasing, so consumption will decline. However, cross-sectional age differences in consumption have an alternative interpretation. This method relates members of different age classes to different birth cohorts. These cohorts become differentiated in a variety of attitudes, opinions, and behaviors and coming generations may consume differently than current generations (Riley, 1973; Ryder, 1965).

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19 current babyboom or generation X leaders could have been influenced by status, power and politics during their so-called „mid career‟. However, he added, „in today‟s complex world, with a growing knowledge intensity and nearly complete transparency, this route is no alternative anymore‟.

This study emphasizes the importance of generational differences. And with Arsenault (2004), we believe that generational values and preferences are life-long effects, which remain stable over time and are resistant to change, despite social and cultural progress. Moreover, change in work environment and leadership style is interpreted and understood through the unique values that are hold by each generational cohort. To get a better understanding of the different cohorts in workforce at this moment, the different generations and the major influences in their environment are described below.

2.3.1 The babyboomers

Named after the post-war boom in birth rates, babyboomers grew up in optimistic and positive times (Kupperschmidt, 2000). Babyboomers had a strong focus on hard work and achievement. This may mean that this group values status and extrinsic rewards as recognition for loyalty and commitment and may have difficulty balancing work and family (Collins, 1998; Lancaster and Stillman, 2002; Smola and Sutton, 2002; Zemke et al., 2000). Supervisor relationships and interactions with co-workers have also been found to be important. Babyboomers are often portrayed as radical individualists who advocate individual rights over family needs and the rights of the team or organization (Kupperschmidt, 2000). They have competed for everything throughout their lives; from places in high school sports teams to college admissions, jobs, and promotions. Winning, for Boomers, is a very big deal (Erickson, 2010).

2.3.2 Generation X

Generation X grew up in times of rapid technological and social change. These changes created a lot of insecurities. Financial insecurity as well as family and social uncertainties were normal things to deal with. This generation has entered the workforce without expecting job security. The overall portrait of generation X is often negative but what may be viewed as „selfishness‟ can also be seen as independence and autonomy (Jurkiewicz, 2000). An important aspect of generation X is the facts that they may have more commitment to their own careers than toward their employers (Lyons, 2004; Miller and Yu, 2003). More than once, organizations saw them as expendable. That‟s why they did not want to be seen as someone who is specialized into one area. Generation X particularly prizes options (Erickson, 2010).

2.3.3 Generation Y

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20 hours a day (Ryan, 2000). Next to that, they voice their opinions. Meister and Willyerd (2010) state that „you can think of generation Y as pushing for change that all generation want to see happen‟. They feel enthusiasm for work; it is important in their lives. However, only work that is personally fulfilling (Meister and Willyerd, 2010). For that reason, they place a strong emphasis on finding work where they can express themselves. They want a constant and direct stream of feedback and are in a hurry for success. This generation values intrinsic aspects of work such as mentoring and training in order to remain marketable (Loughlin and Barling, 2001; Lyons, 2004). They have serious thoughts about the world; they are continuous looking for possibilities to contribute to society, share their knowledge with other people, and think in solutions instead of problems. The credo of this generation is stated as „let‟s make this world a better place‟ (Dries, Pepermans and de Kerpel, 2008).

2.4 The characteristics of generation Y

The structure of global workforce is undergoing an important shift. The work style and belief system of generation Y is regarded as fundamentally different from any other group of young people in the last fifty years (O‟Reilly and Vella-Zarb, 2000). The five most important characteristics of generation Y from literature are outlined in this paragraph.

2.4.1 Personal development

Cole (1999) suggests that providing development opportunities is one of the key factors to attract and retain younger employees for organizations. Generation Y requires challenging work, opportunities for improvement and training as well as lifelong learning (Cetron and Davies, 2003). This generation is willing to develop themselves and value tools for personal development more than other generations. Next to that, due to the complexity and instability of current job market, they are constant busy with preparing themselves for the next step of their career (D‟Amato and Herzfeldt, 2008). Following the Nobiles generation Y research (2010), 64 percent of the respondents want to make a notable career move in the first five years of their working life. They do not count on organizations that offer security and stability in their career. They tend to search for employers that offer challenging jobs and sufficient training in order to gain „employable‟ in the job market. It is clear that generation Y is searching for career security instead of job security (Kupperschmidt, 2000).

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2.4.2 Work-life balance

Generation Y does not want to make the same mistakes their parents made in terms of working long hours and neglecting family and friends. The role of money in the lives of this generation is important, however, not more than living a work-life balance. Making a good salary is not as important as what they actually do with their lives. Managing that balance is what drives generation Y (Allen, 2003). Their contribution to society and their determination to enjoy a full and satisfying personal life are more important considerations (Lancaster, 2005).

While talent is more directed by personal ambitions and aspirations these days, the youngsters still have an incredible desire to connect to others. Generation Y is stated as the most socially conscious generation since the 1960s (Meister and Willyerd, 2010). The social network of these talents is a primary resource in the delivery of extraordinary performance. Generation Y have knowledge of the newest digital technologies and have always been able to access information immediately and directly at any time of the day of night.

As a consequence of the connectivity of generation Y, the real differences between work and life will fade in time. This brings new expectations, for example about flexible work schedules in order to combine work with the rest of their lives (Meister and Willyerd, 2010). This generation aims for their most suitable work-life balance while listening to their own values (Lloyd, 2007).

2.4.3 Social responsibility

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2.4.4 Engagement

Employee retention is a critical challenge for organizations in dealing with generation Y (Yu and Miller, 2005). Generation Y will take responsibility for their own careers, and they are prepared to make quick career moves as well as taking advantage of unexpected learning opportunities (Klein et al., 2006). The Nobiles research (2010) suggests that starters expect to make their next career move at another employer. Hence, twelve percent of the high potentials studied by Martin and Schmidt (2010) said they were actively searching for a new job. They are much more confident than earlier generations about their ability to find new jobs and less passive about searching for new opportunities. Organizational commitment can be conceptualized as an individual‟s identification with and involvement in a particular organization. Generation Y seems really conscious of the values and attitudes of organizations. In order to create a fit with generation Y, it is important for organizations to communicate their identity as well as act in accordance with their mission, vision and objectives. Organizations need to inspire their employees. In case of a fit, the attractiveness of the organization to potential employees will grow (Assink, 2005). However, a lack in agreement on the generation-organization values may lead to reduced job satisfaction and commitment and increased leaving intentions (Cennamo and Gardner, 2008).

Van der Sluis (2009) suggested that „if talent does not consider loyalty as the most important aspect of the employer-employee relationship anymore, attracting and retaining talent much more relies on being able to fulfill a certain promise‟. In other words, the loyalty of generation Y is not corporate loyalty: it is personal loyalty.

2.4.5 Self control

Generation Y is known to place high importance on autonomy (Smola and Sutton, 2002; Zemke et al., 2000). They are self-confident; they want to become professionals with own controls. Busch et al. (2008) suggest that this generation is less concerned with power and status than earlier generations, however, much more interested in formal recognition for them as well as for their co-workers. They want to work in a collaborative way and prefer a network culture instead of a hierarchical organization.

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23 honest, timely, direct and useful coaching will benefit. It will make their people aware of their own functioning.

To summarize, it seems clear now that organizations need to start interacting in order to create a fit with the values of generation Y. Personal development, work-life balance, engagement, social responsibility and self-control have been outlined now as the most important characteristics of generation Y. Regarding Arsenault (2004), these are life-long effects, which remain stable over time and are resistant to change, despite social and cultural progress. This should mean that the characteristics of the future leader are in line with the characteristics of generation Y. The next paragraph describes the most important characteristics of the future leader from literature.

2.5 Future leadership

With the changed values of today's generations, the pressure on leaders has increased. In current world, the senior's job is no longer to command and control but to cultivate and coordinate the actions of others at all levels of the organization (Ancora et al., 2007). Leaders are expected to balance conflicting demands, to connect and empower those around them. At the same time, employee expectations are demanding leaders to develop a more playful and meaningful workplace, while simultaneously balancing autonomy and direction. And society is also placing new expectations on organizational leaders, as it increasingly demands transparency, corporate social responsibility, and shared contribution. This suggests that current emerging business environment demands a new set of leadership characteristics that are aligned to future requirements (O‟Brien and Robertson, 2009). Hence, the question is what new characteristics will leaders need to succeed in a global world that is increasingly complex, interdependent and connected?

In this research, the future leader is defined as a high-educated talent from generation Y who will become a senior executive on or after the year 2020. Generation Y has already started to hit the labor market with its own set of values, view of authority, work and communication style, and expectation of leadership and work environment (Allen, 2004). The tone has changed from „What can you do for me?‟ to „Here is what I can do for you‟ (The Economist, 2009). Talent shows like X- factor and Idols as well as social media channels as Facebook are perfect examples for this trend. „People want to show the world their capabilities and what they are doing right now‟ (Jensen, 2010). O‟Brien and Robertson (2009) suggest in their research implications that organizations must adapt their leadership development programs to the specific requirements of different generations. Especially because it will be the youngsters of generation Y will be the leaders of tomorrow‟s economy.

2.5.1 New-genre leadership

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24 recent theoretical and empirical developments in leadership literature. Traditional leadership theories are stated as predominantly based on transactional models. The focus of this model is on efficiency, controlling, setting targets and providing direction and support (Bass, 1985; Doeleman et al., 2010). However, the transactional style is shifting towards a more transformational, charismatic style. The transformational leadership theory suggests the identification of followers with their leader and his or her vision. The new leadership models emphasize symbolic leader behavior; visionary, inspirational messages; emotional feelings; ideological and moral values; individualized attention; and intellectual stimulation (Avolio et al, 2009). Based on the transformational shift as well as other leadership trends in literature, the future leader characteristics will be outlined in the next paragraph.

2.6 Future leadership characteristics

As previously described, generational values and preferences are life-long effects. They are resistant to change and remain stable over time (Arsenault, 2004). The characteristics of generation Y, as the need for personal development, a work-life balance fit, a corporate social responsible work environment, personal engagement and self control, can be regarded as fundamental different than the characteristics of earlier generations. O‟Brien and Robertson (2009) argued that reliance on leadership characteristics rooted in the past will no longer be successful. Their explorative research implicated that unless organizations begin to cultivate requisite skills for the future, they will inevitably lose their potential for the future. This paragraph provides the characteristics of the future leader from literature. This study is about individual characteristics of leaders. While leadership exists only in relation to others, leaders‟ characteristics assumed to affect how leadership is exercised (Hooijberg and DiTomaso, 1996).

2.6.1 Visionary

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25 with a clear vision of a desirable, energizing future. In order to create the launching of the process of identification of the subordinates with the vision, also an example of how to reach the vision is needed (Avolio et al., 1999; Bass, 1999).

2.6.2 Emotional feelings

Emotional intelligence is the ability to manage our relationships and ourselves effectively (Goleman, 2000). Already for a long time, people‟s intelligence quotient (IQ) is stated as important. This quotient is about thinking and is largely genetic (Goleman, 2000). However, last years, the emotional quotient (EQ) has become increasingly important. The emotional intelligence model of Goleman (1998) involves a wide array of competencies and skills that drive leadership performance. The model consists of four fundamental capabilities, namely self-awareness, self-management, social awareness, and social skill. Self-awareness is defined as the ability to read one‟s emotions and recognize their impact while using your intuition to guide decisions. Future leaders will have a strong believe in what they are doing. The second component, self management, covers attributes like emotional self control, transparency and is needed to control our feelings, emotions and thoughts as well as adapting to changing circumstances. You have to feel connected to yourself. Social awareness has to with the ability to recognize and understand the needs and demands of your employees as well as your customers and react on these. The last aspect, social skill, is about managing conflict while influencing and developing others. Emotional feelings has to do with intuition; it comes from inside. Instead of always being focused on results and money, the future leader need to be a more people oriented person.

2.6.3 Ideological and moral values

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2.6.4 Individualized attention

On the long term, the future leader needs a collaborative mindset. Erickson (2010) stated that there is no longer a single dominant voice: „No one individual will shape the best answers alone‟. There will be a constant focus on self-growth and the empowerment and development of others (O‟Brien and Robertson, 2009). In order to support the development of your talents, individual attention is becoming more important. Future leaders really need to feel responsible for their talents. When leaders attend to the developmental needs of each subordinate in order to develop them to their full potential, individualized consideration is demonstrated (Avolio et al., 1999; Bass, 1999). In the function of being a mentor, individualized attention creates an effective way for talents to get a better understanding of the business (Martin and Schmidt, 2010). The degree to which the leader acts as a (direct) mentor will contribute to the development of their followers. Leaders must know how to listen. Listening to the concerns and needs of their followers will create respect and trust. Heifetz (2007) argued that listening is fueled by curiosity and empathy. The ability to put you in someone else‟s shoes as well as having the knowledge what is really happening in the organization is essential. In a conversation, the tone of voice and intensity of argument gives direction. Future leaders have to find their own voice and inspire others to find their voice (Doeleman et al., 2010). Kok and Treffers (2010) state that future leaders need to obtain their position and their acceptation in an organization. Without the ability of being interested in other people, convincing your followers will be really hard. Future leaders need to be able to take responsibility for their feelings and behaviors and put their selves in the shoes‟ of their followers. All these personal development opportunities will make that the followers‟ contribution to the team, their collaborative capacity, will increase.

2.6.5 Intellectual stimulation

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27 can possibly lead towards mistakes and unexpected situations. However, those are seen as learning opportunities by generation Y.

2.6.6 Networking

The importance of inter-organizational and intra-organizational networks is increasing. It is possible now to bring lots of information towards many places through ever-increasing networks within and beyond organizations. According to the study of O‟Brien and Robertson (2009), relationships will outrank transactions. Also in this process, trust and transparency are critical. Sharing knowledge and results and search for solutions through dialogues, while using networks, seems essential for the future leader (Erickson, 2010). This leader needs to be aware of the problems that different societies and communities face on a day-to-day basis. Social media channels will be essential communication instruments. The rapid advances in technology, makes the world real collaborative and connected. To work effectively in the new, 'fluid' world, flexibility is required (Bauman, 2004). For example in Facebook, 'friends' are all 'fluid'. The future leader needs to be able to quickly shift attention and behavior to fit the changing environment, especially during times of uncertainty and change (O‟Brien and Robertson, 2009).

According to the literature, the characteristics of the future leader are in line with the transformational leadership style. It is clear that the characteristics are „softer‟ and more people oriented. The next paragraph will combine the concepts of generation developments and future leadership in order to see if there is a literature fit. Finally, the expectations for the empirical research are outlined.

2.7 Leadership and developments in generations

Today's workforce, altered by several demographic trends, is more diverse than ever. The distribution of global workforce is shifted towards a more balanced composition by an increasing mix of gender and ethnicity as well as a growing international labor character. Simultaneously, population is aging and birth rates are declining (Van der Sluis, 2009). Next to that, the business environment has rapidly changed over last twenty years. Nowadays, we live in an increasing unstable and more intangible society. Bauman (2004) argued that the world has shifted from a solid to a fluid phase of modernity, so-called „liquid modernity‟. This makes that human capital have become a key differentiator in modern world.

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28 research that organizations need to recognize and understand generational differences as a legitimate diversity issue as well as addressing the issue in developing future leaders.

The following table 1 shows an overview of the characteristics of generation Y as well as the characteristics of the future leader. Both were described in this theoretical framework. The next paragraph provides the expectations based on the theoretical part of the conceptual model.

Characteristics generation Y Characteristics future leader

Personal development Visionary

Work-life balance Emotional feelings

Social responsibility Ideological and moral values

Engagement Individualized attention

Self control Intellectual stimulation Networking

Table 1 Characteristics generation Y and characteristics future leader

2.7.1 Theoretical expectations

Figure 1 shows the different outlined concepts of the theoretical framework. Developments within generations means coping with work, future leadership and succession planning to provide candidates for future leadership positions. The theoretical framework will be used now to create possible relationships that will be studied in the empirical part of this research.

Figure 1 Theoretical part of the conceptual model

Different theories of generational categories were found in literature. The most important observation is the inconsistency of the labels and encompassing years for generational cohorts (appendix B). Next, the issue of generational differences seems often misunderstood or even ignored. The principal reason for the misunderstanding and lack of support is the scarcity of empirical research to validate these differences (Arsenault, 2004). However, the increasingly generational mix in workforce as well as the „war for talent‟ will make knowledge about generational differences essential.

Developments in generations

Characteristics of generation Y

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29 The concepts of generation management as well as the diversity issue are well understood and outlined in literature, however, the concept of generational differences seems still neglected. This underlines our expectation of a knowledge lack on generational differences, especially on generational characteristics, for organizations.

Second, generation Y has been studied. First, a general generation description was given, including the major influences in the environment of generation Y. Regarding the fact that generation Y is the most recent generation in workforce, an overview of their most important characteristics was provided. As stated, human capital will probably become a key differentiator for organizations in winning the „war for talent‟. In recent years there has been discussion in literature on generation Y. However, the exact extent to which organizations understand the possible impact of this generation on business results is unknown. However, our expectation is primary based on the awareness of organizations of the fact that human talents will become an important differentiator in competition. Also the fact that a lot of information of generation Y has been outlined in popular media underlines our expectation. With this in mind, we believe that organizations at least have some knowledge of the characteristics of generation Y.

The last part of the theoretical framework presented the characteristics of future leadership. Generational differences' theory suggests that values and preferences of generations are life-long effects. This makes that the characteristics of generation Y are assumed to affect the characteristics of the future leader. The literature findings underline this assumption. However, literature suggests that organizations continuing to rely on leadership models built for success in the past. An urgently start to address the challenges of the emerging environment is recommended towards organizations. Next to that, organizations must adapt their leadership development to the specific requirements of different generations (O'Brien and Robertson, 2009). The lack of knowledge of generational differences as well as the pressure of the environment to make a quick start makes the prospects of a complete fit insecure. However, different signals of change are expect to be recognized by organizations.

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3 Empirical research

This chapter provides the outline of the empirical part of the research. First, the questionnaire development is described as well as the sample characteristics. Next to that, the different data analyses used are outlined, which will be helpful in providing answers on the empirical research questions. These data analyses are part of the gap analyses.

3.2 Questionnaire development

In order to examine the demands of organizations for future leadership characteristics, a survey was conducted at the end of November 2010. The data was collected during a three-week period in November and December. Based on existing literature, a 33-item questionnaire evaluating knowledge of generation Y as well as future leadership characteristics was developed. Since it was decided to collect data only from organizations based in the Netherlands, the questionnaire language is Dutch. The chance of misinterpretation of questions is limited now. Items were selected on current literature measures and on basis of expert opinion. With help of the online service tool Survey Monkey, the online questionnaire was created. This questionnaire consists of three different parts, which are showed in appendix C. The survey starts with 23 statements that need to be answered via the 6-point Likert scale. In this research, an even number of ratings in the scale is preferred, because respondents have to commit now to either the positive or negative end of the scale. A neutral or ambivalent answer choice is impossible now. The second part contains open as well as closed-ended questions about future leadership characteristics. In order to determine the extent to which the results of the study can be generalized to other situation or settings, the representativeness, and to determine the influence of possible moderating variables, the last part consists of control questions. A pre-test was piloted in a small focus group of five executive leaders. After evaluation of the pre-test, the questionnaire was distributed to 280 HR-related seniors from the Boer & Croon network. A total of 121 questionnaires were returned.

3.2.1 Sample characteristics

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3.2.2 Missing values

To prevent unnecessary page errors, the questionnaire participants were forced to answer all questions on one page before proceeding to the next. However, there are some respondents (N=29) who did not accomplish their survey completely. Though, these respondents completed at least the introduction part as well as the 23 statements on the first page. So the not completed data is also included in the data analysis. Therefore, the N varies from 121 to 92.

3.3 GAP Analyses

A GAP analysis is the descriptive for a method used to help understand the relationship between what is perceived to be important and the derived difference between performance and expectations (Bailey, 2006). In this study, for each attribute the difference is measured between the current and expected situation. In the end, two possible gaps will be traced. The analysis of both gaps will be explained.

3.3.1 GAP 1: Literature future leadership characteristics versus demands of organizations for future

leadership characteristics

The first gap is about characteristics for future leadership. Literature suggests that the current emerging business environment demands a new set of leadership characteristics that are aligned to the requirements of the future (O‟Brien and Robertson, 2009). These „new‟ characteristics have been outlined in the theoretical framework in chapter 2. The question is of the organizational thoughts and demands for the leadership characteristics of the future are in line with the literature research. To create a picture of the demands of organizations, open-ended questions as well as a 2-item question have been used (table 2).

Component/ Scale Number of items (N)

Difference in current and future leadership characteristics 2-item 102

Reasoning previous question Open-ended 100

Top 3 ranking current leadership characteristics Open-ended 92 Top 3 ranking future leadership characteristics Open-ended 92

Table 2 Measurement variables and scale of gap 1

These questions will be classified with help of SPSS as well as Excel. All open-ended questions are organized in an excel worksheet with support of the pivot table tool. The 2-item question is calculated with SPSS in order to figure out any significant value.

3.3.2 GAP 2: Literature generation Y characteristics versus demands of organizations for future

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32 Generational differences were ignored for a long time. Instead of making use of the strengths of these differences, a lack of understanding has prevented organizations from capitalizing (Arsenault, 2004). Following this reasoning, this research explores the linkage between generation Y and future leadership. This possible gap is measured by a list of 23 statements based on a 6-point Likert scale. To be sure about the reliability of the variables, first the internal consistency is measured.

Cronbach‟s alpha is used to obtain measures of internal consistency. Regarding the fact that this coefficient will generally increase as the intercorrelations among test items increase, all items need to measure the same construct. However, a high alpha does not imply that the measure is one-dimensional. That is why an exploratory factor analysis is used to provide evidence that the used scales are one-dimensional. This indicates looking for a simple structure: each item has a high loading on one and only one factor. To make statistical testing possible, final scales have been created, which comprises combined variable items.

First, the reliability analysis of the five Y characteristics is conducted. Hereby, the engagement variable was reduced from five back to three items, because the reliability of the scale was negatively influenced by it. The results of the reliability test are shown in the table below.

Table 3 The internal consistency of the measured characteristics of generation Y

The cronbach‟s alpha uses different cut-off values. For studies in advanced phases, the cut-off value is stated as 0.70 and for studies in exploratory stages, alphas ranging from 0.50 to 0.60 are also considered adequate (Nunnaly, 1978; Van de Ven, 1979). Regarding the fact that this study is exploratory and all cronbach‟s alphas are around or above 0.60, the used variables for generation Y are stated as acceptable and reliable.

In addition to computing the alpha coefficient of reliability, the dimensionality of the scale was investigated. The results showed that the Eigen value for the first factors of personal development (2.39 vs. 0.88), engagement (1.69 vs. 0.71) and self control (2.35 vs. 1.10) are quite a bit larger than the Eigen values for the second factor. The Eigen value of the first and second factors of the characteristics social responsibility (1.83 vs. 0.94) and work-life balance (1.78 vs. 1.10) differ less from each other. Nevertheless, the overall reliabilities and the factor structures of the different components are acceptable but moderate. One possible reason for this is a skewed distribution of scores on the total generation Y characteristics. In this case a moderate cronbach‟s alpha means an underestimation of the reliability. That is why we can suggest that these scale items are one-dimensional.

Component/ Scale Number of items Alpha (α) Deleted items (N)

Personal development 5 α = 0.688 121

Work-life balance 5 α = 0.527 121

Engagement 3 α = 0.615 2 121

Social Responsibility 4 α = 0.606 121

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4 Results and discussion

This chapter provides the results of the data analyses. The analyses will help to get a better insight in the possible gaps, as outlined in chapter 3, and will be helpful in answering our expectations. In this chapter the results are mostly displayed by age group or by sector. Five different generational categories were distinguished in the questionnaire. However, only the respondents of the babyboom generation (N=56) as well as generation X (N=62) turned out to be representative. This is why only the data of these two generations are used (N=118). To improve the readability of the thesis, as from now the babyboomers are called 'older' leaders and the generation X leaders are called 'younger' leaders. For each gap, the results are described and discussed. The total results output can be found in appendix D and E.

4.2 Testing GAP 1

One research objective is to explore the demands and thoughts of organizations with regard to future leadership characteristics. As stated in chapter 3, this first gap is measured by open-ended questions as well as one SPSS calculated 2-item question.

First of all, results show that over 70 percent of the organizational leaders (N=102) expect a difference in leadership characteristics between current leadership and future leadership. Table 5 shows the crosstab results of organizational leaders sorted by age category. A Chi² test was conducted in order to determine any sign of significance. However, no significance (p = 0.189) was found between older and younger leaders of organizations in their expectations of potential difference between the characteristics of the current leader and the future leader (Chi² = 1.73; df = 1; p >0.05). This implicates that the choice for a potential difference in leadership characteristics is not dependent on generational cohorts.

Table 4 Crosstab of the choice for a potential difference between the characteristics of the current leader and future leader and age category

Next, the reasoning of the participants for potential differences in leadership characteristics is analyzed. First, the reasoning of the respondents (N=11) who expect no change is explored. Over half (N=6) of these respondents state leadership characteristics as universal characteristics that remain stable over time as well as in context. This is in real contrast with the meaning of generational

Cross tabulation

Older leaders Younger leaders Total

Potential difference in leadership characteristics

Yes 37 46 83

No 10 6 16

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34 differences. Theory state that generational values and preferences are life-long effects, which remain stable over time and are resistant to change, despite social and cultural progress (Arsenault, 2004). Table 6 shows the five most mentioned explanations by respondents who expect a difference in characteristics between the current leader and future leader. It is notable that the grey marked rows together represent nearly one-third of total respondents (N=81). In line with research, the first ranked reason is generation oriented. These respondents (N=14) all answered something related toward generation Y in workforce with new characteristics. Hence, also the reasons ranked on third and fifth place can (indirectly) be associated with the characteristics of generation Y. However, the direct „generation linkage‟ is missing. In contrast, the second ranked argument has more to do with the organizational structure instead of the human (generational) factor. Next, the reason of the changing world is a more general motivation without specific direction. However, overall, three out of the five most mentioned reasons seems in line with the specific demands of generation Y (N=29). This indicates that the greater part of organizations is dealing with their talents in an active way.

Rank Reasoning difference in leadership characteristics

Count (Total N=81)

1 Generation oriented 14 2 Less hierarchical control 12 3 More people oriented 8 4 Changing world 8 5 Emotional feelings more important 7

Table 5 Most mentioned explanations for differences in characteristics between current leader and future leader

Proud to be | Y | our future leader