Understanding Generational Diversity: Why It's Important To The Future Workplace

Diversity: it is an important issue in today’s business landscape. More and more, HR departments are being called to handle issues related to diversity, and indeed entire departments have been formed to make sure that diversity, equity and inclusion are handled correctly and sensitively.

But while many of these programs primarily focus on issues such as racial or gender diversity, there is one type of diversity that is frequently overlooked: generational diversity. And while it may not be as newsworthy as other types of diversity, it is no less important to businesses. In fact, a 2018 Ranstad Wormonitor study showed that 86% of workers prefer to work on multi-generational teams (defined as those who are least 10-15 years apart in age).

Why? Surveys show age-diverse organizations come up with innovative ideas and creative solutions to challenges. But the benefits of generational diversity — and the dangers of ignoring it — run much deeper than that.

What is generational diversity?

Before we get into why generational diversity is so important, let’s pause to define a few terms.

Generational diversity is the concept of having a wide range of generations in the workforce. This is especially true today because people are retiring later. For perhaps the first time, we have five generations in the workforce: Gen Z, Millennials, Gen X, Boomers, and Traditionalists. Each generation grew up in a radically different time, which shapes how they see the world. (See chart at end for more details about each generation.)

According to Lindsey Pollak’s The Remix: How to Lead and Succeed in the Multigenerational Workplace, this generational change in the workplace is historically unique because it is happening at both ends of the work spectrum — for the first time in American history there are now more Americans over the age of 50 than under the age of 18. As of 2018, more than 250,000 Americans aged 85 years old and over were working — the highest number ever on record.

These oldest employees in the workforce are Traditionalists (born 1925-1942). Raised during the Great Depression, economic survival was top priority. They remember the effects of WWII, creating a generation of disciplined, patriotic, and conservative citizens.

After them are the Baby Boomers (born 1946-1964), born in the aftermath of the WWII when there was a “boom” in birthrates. They grew up in a time of optimism, economic growth, and space exploration.

Next are Gen X (born 1965-1980). Known as the latch-key generation, members of this group often grew up in households with divorced or two working parents. With the advent of personal computers and internet, they became tech-savvy and highly independent.

Millennials (born 1981-1996) came next. Born during a time of economic growth to optimistic parents, they were encouraged to take risks, collaborate, and become entrepreneurs in a tech-driven world.

Finally, Gen Z (born 1997-2013) are the newest members of the workforce. Born in the shadow of 9/11, they experienced economic insecurity during the Great Recession and the threat of violence from school shootings. They are also known as “digital natives.”

The best workforces often have a mix of people from these generations — and businesses that fail to employ a mix either do not know how to reach or keep people from one generation or another.

What are the benefits of generational diversity?

When done correctly, generational diversity offers a huge ROI. It decreases employee turnover expenses, increases potential client base, and improves succession planning for retirement.

One of the key benefits of generational diversity is knowledge sharing. A great example of this happened at Kimberly-Clark. At the consumer products multinational based in Irving, Texas, senior leadership was concerned that it did not have a global perspective on its top talent. To remedy that, the company instituted a reverse-mentoring program in which Millennials were teamed up with senior executives to help them understand what would best engage their younger employees.

That said, there is just as much benefit to be found from Boomers mentoring younger generations, as well. Over the next decade, the majority of Baby Boomers will retire from the workforce. Harvard Business Review reported that one organization predicted a wave of almost 700 retirements over ten years, resulting in a loss of over 27,000 years of experience. By hiring younger generations now and sharing their wealth of business expertise with them, Boomers can ensure that the business survives even after they retire.

Even Gen X leaders who are not retiring right away can take on mentoring roles. This can lead to happier, more productive workers, and a better sense of community.

Creating a multi-generational workforce will also impact sales. When a company’s staff reflects its target market, its better able to anticipate and respond to their demand; therefore, a multi-generational workforce can better appeal to a larger target market. This is more important than ever, as right now 83 million Millennials spend $200 billion per year. They have the most spending power of any generation. However, Baby Boomers have 70% of the discretionary spending power. In years to come, Boomers will outspend everyone in healthcare.

What are the consequences of not having generational diversity?

Without generational diversity, businesses will find it hard to hire, engage, and keep talent.

First, let us talk about hiring. Diversity in general is incredibly important to Millennials — according to a survey by Deloitte, 39% of Millennials feel businesses need to address age diversity. But creating a multi-generational workforce is not just important to them — any employee will be hesitant to join an organization where they don’t see themselves represented.

A lack of generational diversity can negatively impact an employee’s performance. They may feel as though they are not appreciated, communicated to effectively, or respected.

And this lack of respect can lead to a high turnover rate. The fact is, turnover is expensive. The Society for Human Resource Management (SHRM) reported that, on average, it costs a company six to nine months of an employee's salary to replace him or her. For an employee making $60,000 per year, that comes out to $30,000 - $45,000 in recruiting and training costs.

To avoid both these human and monetary tolls, diversity and HR departments need to focus on generational diversity.

Why is generational diversity a challenge?

One of the biggest hurdles to overcome when trying to encourage generational diversity is ageism. Also known as Age Discrimination, this is defined as stereotyping, prejudice, and discrimination against people on the basis of their age. According to workplace surveys conducted by Glassdoor, nearly half of employees (45%) report having experienced or witnessed ageism. However, the Equal Employment Opportunity Commission only states that is illegal to discriminate against anyone 40 years old or older. There are no laws about those under 40 experiencing ageism, even though according to Glassdoor younger employees (52% of ages 18-34) are more likely than older employees (39% of ages 55+) to have witnessed or experienced discrimination based on age.

In addition to age discrimination, communication between generations is a big challenge. According to scholar Amanda Grenier, writing for the Forbes Research Council, older and younger generations have different ways of speaking. This is due to having different social historical reference points and different culturally determined experiences.

Generational diversity is not going away. If we want to create long-lasting businesses, we need to tackle these challenges.

How can we overcome these challenges?

For as many differences as generations have, there are similarities, too. According to Scott Lesnick, President of Successful Business Solutions, there are seven values that matter most to workers of every age:

1. Feeling respected.

2. Being listened to.

3. Having opportunities for mentoring.

4. Understanding the big picture.

5. Receiving effective communication.

6. Receiving positive feedback.

7. Experiencing an exchange of ideas.

These are the values to keep in mind when creating a workplace culture that celebrates generational diversity.

The way you can create this culture is by educating employees. Make sure that they understand the differences in history and communication styles for each generation. Help them reject the stereotypes and misinformation about generations perpetuated by media while at the same time understanding that every generation has developed their worldview in relation to the world they grew up in.

How can we do this? Begin by having candid conversations with your teams about generational differences and similarities. Also, be sure to stop generational shaming — no more sarcastic comments about one generation or another.

From there, create multi-generational teams as often as possible, and intentionally find ways to have face-to-face interactions with members of different generations. Set up an employee resource group to address generational issues and make generational diversity a part of your ongoing initiatives.

Finally, set up a mentoring program. As discussed earlier, all generations can mentor each other. Each generation has a unique skillset that they can share with members of other generations. This will help them learn, first hand, how to communicate with each other, which is a skill that will serve them through the rest of their lives.

Closing Thoughts

Now that you understand the importance of generational diversity, ask yourself: What is the generational composition of your organization’s workforce? What will the composition of the workforce be in five years?

Your company’s future depends on your answers to these questions. Successful businesses have an emphasis on knowledge sharing, mentorship, and leadership training.

The Deloitte Global Human Capital Trends 2020 found that 70% of organizations believe that a multi-generational workforce will be important for their success over the next 12–18 months. However, few (only 6%) believe that their leaders are equipped to deal with a multi-generational workforce.

Generation IQ understands these concerns. That is why we have created programs that respect — and require — the exuberance of youth and the experience of age. Bringing the generations together, we invite connection in an open forum where the generations explore their differences, build empathy for each other, and most importantly, identify what they need from each other for the organization to succeed. We will guide your multiple generations and leaders to build strategies customized to your unique workplace culture that allows each generation to teach the other.

Connect with me to chat about how you can improve Generational Diversity at your workplace!