Serving as a wake-up call for countless organizations, the COVID-19 pandemic signaled the importance of being prepared for the unexpected. Although companies can’t predict when such a personal or global crisis will occur next, thoughtful planning is a business’s best ally to ensure that any path forward is efficient and effective. But even before the pandemic, corporate America was already in the midst of a critical shift: the transfer of wealth and power from Baby Boomers to younger generations.
To effectively promote a seamless transition, it is in a company’s best interest to have succession plans readily in place. But with fundamental cultural differences between each generation, what will corporate America resemble once all Baby Boomers retire and are succeeded by Gen X’ers and Millennials?
Before All Else, You Must Plan
By 2030, all Baby Boomers will be 65 or older, with many already over the retirement age threshold. To ensure business operations run smoothly in the event of an unexpected executive absence, organizations have ideally already begun some form of succession planning. In short, succession planning is the process of selecting and developing the leaders of tomorrow that will replace those currently in charge.
With a generational change imminent throughout corporate America, it is the responsibility of current leaders to implement processes that promote effective transitions. These generational transitions will drive companies forward, but the question stands: what will these transitions mean for companies regarding culture and business operations? As we’ve seen, a business model that works well presently can be easily disrupted a year down the line.
An Overview of Baby Boomers: Retirement and Their Work Ethic
Baby Boomers run nearly 75% of all S&P 500 companies and control 53% of the U.S. wealth. Currently, Boomers are by far the most wealthy and the most influential generation. However, it is critical to note that such power in the hands of a retiring generation doesn’t represent our future well.
According to a Pew Research Center study, millions of Baby Boomers—those born between 1946 and 1964—retire from the U.S. labor force each year, with some 10,000 Boomers retiring daily. Throughout 2020, Baby Boomers handed in resignations at record rates. During Q3 of 2020, the total number of retired Baby Boomers reached 26.6 million. The generational transition is well underway, and the effects will be staggering.
Baby Boomers have played an integral role in defining and shaping much of our current U.S. workforce practices. Thus, it is no surprise that their wealth of experience has allowed them to hold most managerial and c-level roles. Raised on a brick-and-mortar productivity philosophy, Baby Boomers are characterized as workaholics who aren’t afraid to put in long hours to beat the competition. Additionally, they tend to believe in tried and true methods such as a traditional work week with staff in the office, face-to-face, every day.
When executive Baby Boomers retire, they will leave behind the business practices that they created. However, with an incoming generation that prioritizes work-life balance, we can expect to see cultural shifts regarding how future leaders will choose to run their organizations.
Cultural Differences of the Ascending Generation
Undoubtedly, Millennials tend to be more flexible regarding where they work, how they work, and how they view themselves within an organization. More than prior generations, Millennials also value continued education, upward mobility, and progressive communication. In addition, being highly tech-savvy, they rely on technology to support their mobile lives. With such a distinct contrast to Baby Boomers, the incoming generation of leaders will have tremendous influence over how corporate America operates.
The Millennial generation now makes up roughly a third of the U.S. labor force. With the oldest Millennial turning 40 in 2021, they are already industry veterans that are in the running to lead some of the world’s largest corporations within the coming decade. So with Millennials in charge, what changes can we expect? For one, work-life balance will be a central focus point.
Work To Live, Not Live To Work
Work-life has changed drastically these past two years. Although the pandemic may have acted as a catalyst for changes such as a hybrid work schedule, these progressive workweek ideals were not solely introduced by COVID-19. In a Youth Pulse Inc. 2019 survey, the year before the pandemic, 82% of Millennials surveyed noted that flexible schedules and remote work flexibility were critical factors in their career planning.
For the ascending generation, work isn’t necessarily a place but rather a thing that they can do anywhere—an office, coffee shop, or kitchen table are all the same as long as they’re connected online. As more Millenials replace Baby Boomers, we can expect to see this shift in workplace expectations and what we consider to be a “normal workweek.”
During March of 2020, Millennials were the majority of remote workers at 52% versus 29% of Gen X’ers and 17% of Baby Boomers, according to a Gallup survey. Though the pandemic forced many workers into an environment that no one prepared for, Millennials flourished due to remote work providing the work-life balance they desired. According to CEO of Upwork Stephane Kasriel, the traditional 9-to-5 office job doesn’t support the lives Millennials want to live. “As [the] majority of younger generations ascend into the workforce and become the majority of leaders in corporate America, they’ll reshape work as we know it,” Kasriel said.
Millennials work to live—they don’t live to work. So when Baby Boomers retire and are replaced by younger generations, a greater focus will be placed on providing employees with the opportunity to improve their work-life balance. We will see this through companies offering greater remote work options that will further integrate an employee’s work and home lives, a complete shift from the traditional nine to five work schedule.
Corporate Social Responsibility
The changes the incoming generation will implement go beyond simply offering hybrid work schedules. Often referred to as the “Giving Generation,” today’s Millennials place a great deal of importance on working for organizations that operate ethically, sustainably and that are committed to combating major societal issues.
For any business, turning a profit is essential. Still, as we see the younger generation move into executive roles, we can expect to see enterprises operate more consciously regarding employee compensation, benefits, and their effects on their communities.
With Millennials having a greater desire for implementing progressive changes, they will need the work they do to matter. This younger generation has played a significant role in changing the way brands operate, forcing many to become more transparent and open with the communities that they work with. We believe we will continue to see companies become more transparent as the coming generation fills in the roles of retiring Baby Boomers.
Even if a company isn’t directly tied to helping others, Millennials know each company can do its part to help. Whether it’s fundraising during the holiday season, offering volunteer time off, or organizing events to better connect with their community, Millennials understand that every organization has the resources required to provide aid to those in need.
Millennials are by far the most technologically savvy generation yet, and each coming generation will only continue to become more and more comfortable with technology. Because of this, the younger generation of corporate leaders is less likely to put up with laborious, manual processes just because that’s “business as usual.”
The incoming generation will disrupt business operations to leverage new technology solutions to improve efficiency and speed. Millennials emphasize working smarter, not harder, and will discover new methods for completing tasks, automating redundancies, and driving innovation.
According to a U.S Chambers of Commerce study, this younger generation is 2.5 times more likely to be early adopters of the latest technology than older generations. As they ascend to leadership positions, we expect to see a willingness to explore technological advancements continuously. Much of our current marketplace already requires companies to keep pace with technology, meaning that rising Millennials—who grew up during the digital boom—are the ideal generation to continue revolutionizing how corporations interact and use technology.
By 2025, Millennials will make up 75% of the working population. As they continue to advance up the corporate ladder and replace Baby Boomers, we will see their influence grow, and business culture will change as a result. With Millennials holding fundamental differences regarding what a business should look like, we are beginning a new corporate era. This new corporate era will be defined by technology, will prioritize work-life balance through work flexibility, and will emphasize corporate social responsibility.
Although essential, the complexity of succession is hard to ignore, which is why Executives Unlimited has dedicated its years of service to helping organizations find and recruit elite C-level, V.P., and Director executive talent. With a client list of more than 700 companies worldwide, Executives Unlimited has been at the center of this generational transfer of wealth and will continue to monitor the changing landscape.