Generation Z and the Workplace: Accommodating Tomorrow’s Workforce
Millennials. Over the past decade, few groups have attracted as much attention as the generation that came of age in an era defined by smartphones, 9/11 and social media. And while Millennials continue to be of great interest, there’s a new generation that is already capturing the attention of demographers and forward-thinking organizations around the world.
The oldest members of Generation Z, representing those born since 1995, are now creeping into their 20s and becoming the latest generation to enter the workforce. Corporate real estate leaders need to start preparing now for the arrival of these new employees, who, like the generations that preceded them, will present new workplace challenges and opportunities. Although national and cultural influences will impact how Generation Z behaves from region to region, this generation will also share many commonalities that can guide global CRE managers on how to incorporate them into the workforce. If done correctly and responsively, the result will be workplaces that are not only more efficient and inclusive but also healthier and calmer.
GENERATION Z AND THE CHANGING FACE OF TOMORROW’S WORKFORCE
Workplaces around the world will soon experience a demographic shift with the first wave of Generation Z joining the global workforce alongside Millennials (born between 1980 and 1995), Gen Xers (1965-1980) and the last of the Baby Boomers (1945-1965). Like the older generations of workers they’ll join, Gen Zers will bring to the workplace their own distinct skills, habits and needs.
To understand what these young employees will need and how they will interact with the workplace differently than their colleagues, let’s take a quick look at the traits of the three generations that preceded them and make up the bulk of employees:
- Baby Boomers, born in the decades following World War II, are often described as idealistic, competitive and optimistic. This generation tends to value personal growth and gratification. Boomers challenge authority and can be workaholics. They prefer face-to-face conversations with colleagues and value respect.
- Generation X employees tend to be more skeptical, entrepreneurial and self-reliant than Boomers. As children, many Gen Xers were the first “latchkey kids” whose parents divorced and whose mothers entered the workforce en masse. Unlike the generations before them, most Gen Xers don’t expect to work for one employer their whole career. They dislike being micromanaged in the workplace and value direct communication.
- Millennials, or Generation Y, are civic-minded, technologically fluent and practical. Forty percent of Millennials in the U.S. hold bachelor’s degrees, making them the most highly educated generation.[i] In the workplace, they prefer to be coached rather than managed, and they value challenging work more than a high salary or job security.
As the first true digital natives, Gen Z will expect employers to provide the latest technology and will be viewed as the technology experts within the workplace. This generation has also come of age during the rise of the coworking model of shared and communal workspaces made possible by advances in digital connectivity that enable workers to untether from desks and 9-5 schedules.
Gen Z can be expected to favor collaboration and open work spaces more than their coworkers, particularly compared to Baby Boomers and Gen Xers, who are more reserved in their collaboration efforts. According to one recent survey, 56 percent of Millennials and Gen Zers believe their colleagues enable them to do their best work.[ii]
Despite their collaborative nature, many Gen Zers have difficulty interacting with peers and superiors due to low emotional intelligence, i.e., the ability to identify and manage one’s emotions and perceive the emotions of others. This EQ void, which is a condition of communicating via technology where voice intonation and eye contact are lost, may become Gen Z’s biggest career challenge.[iii] Today an estimated eight million adults are diagnosed with Attention Deficit Hyperactivity Disorder, with a high percentage of Gen Z in this category as the number of adolescents and teens diagnosed with ADHD continues to rise. Though many of those affected by the disorder have been accommodated in school, most employers do not address accommodations for learning disabilities. For this distracted generation, providing clarity—spaces with clear uses and purpose that are easy to navigate—will be critical.
Gen Z is extremely entrepreneurial, with some 37 percent aspiring to be the leader of a company they start on their own.[iv] As such, they’ll require a balance of space for collaborative and individual work.
Designing for wellness, too, should continue to grow in importance within the workplace. Of 100 Gen Z kids, 47 are expected to be obese by the time they reach adulthood.[v]
Gen Z has observed Millennials struggle with financial stability and debt and is more careful in choosing education and career paths. A lack of job and financial security has caused Millennials to delay life events such as purchasing homes and starting families. This trend will likely continue with Gen Z.
Gen Z employees can also expect to stay in the workforce longer than previous generations as life expectancy continues to go up along with the official age of retirement, which has already risen to age 67 and will edge higher in coming decades, according to the National Academy of Social Insurance. Gen Z’s longer time in the workforce, coupled with job insecurity and opportunities, will have this generation working for many employers over their careers. In fact, Gen Zers expect to work for at least four employers during their career.[vi] With so many people switching jobs and reinventing their careers, there will be a need to bolster employee training and to accommodate older adults in their efforts to advance their higher education. Acknowledging generational learning styles and information gathering techniques will be important in addressing knowledge transfer across generations. The rise in self-employment, especially among the Millennials and Gen Z, will further alter the social contract between employers and employees, creating new ways of working and benefits for working.
ACCOMMODATING WORKPLACE DIVERSITY
Given what we know about Gen Z, how can corporate real estate leaders across the world prepare a workplace that best responds to the needs of these new employees? The answer isn’t a simple one—especially when it comes to global firms that must account for multigenerational differences among employees as well as regional and cultural differences across international offices.
As recently as the mid-2000s, most corporate real estate groups followed a decentralized model that allowed workplace decisions to be made regionally. Some regions used private offices to reward individuals, while others chose to maintain open environments that were uniform and equitable. European and Asian locations generally leaned toward more open, dense environments, while North American locations allotted more room per person and offered additional private, enclosed spaces.
Today most companies want a clear, simple answer when it comes to their corporate real estate portfolio. They are seeking to optimize capital and operations spending on facilities while creating nimble work environments that align with their industry, corporate initiatives, culture and brand.
Some of the benefits to introducing workplace standards include portfolio optimization, efficient procurement practices and an international real estate platform for ease of expansion and contraction around the world. This, in turn, can provide opportunities to create global partnerships with vendors, suppliers and real estate teams with consistency and efficiency in all locations. Finding the balance between standardization and customization in this type of workplace is challenging—especially considering that corporate real estate must respond to more than just multicultural and multigenerational employees. It also must address the needs and preferences of C-suite executives, corporate security, HR and others.
For this reason, many companies are beginning to employ guidelines—instead of standards—to shape their international portfolios. These guidelines offer a deeper understanding of the cultural and generational nuances of a region in order to create more accommodating, productive workplaces. Effective workplace guidelines take into account how factors such as a hierarchical structure, which may be embedded within the culture, also permeate the business environment and impact the workplace.
Spending on employee salaries and benefits now makes up 80 percent of expenses for the average company, making it crucial that this workforce be engaged and productive. Yet according to Gallup’s annual engagement survey, only 33 percent of the U.S. workforce is engaged. Globally the number is even worse, with just 15 percent of employees actively involved at work.[vii] Six factors tend to be most important in engaging knowledge workers and boosting their productivity in the workplace. They are:
- Social cohesion
- Perceived supervisory support
- Information sharing
- Common vision, goals and purpose
- External communication
Without these attributes in the workplace, employee engagement and productivity will suffer. Yet a workplace designed to reflect a company’s organizational DNA can be a powerful tool for encouraging social connections, sharing information, and enabling communication and trust. Offering workers a choice about their surroundings and work settings can also elevate their satisfaction.
This is already the case in Europe and Australia, where activity-based working (ABW) is common. In these regions, many companies are leaving workspaces unassigned, allowing employees to move freely to a variety of settings and select those that match their work style for the task at hand. A similar approach to the workplace elsewhere would allow Millennials and Gen Z to interact with older generations of employees and enable the type of social cohesion, information sharing, trust and common vision that are key to fostering organizational DNA.
WORKPLACE AS A RECRUITMENT AND RETENTION TOOL
Large companies today are facing more dynamic markets than at any time in history. Today the typical lifespan of companies listed in the S&P 500 is fewer than 20 years.[viii] In the 1920s the average lifespan for similar firms was 69 years. This “speed of business,” catapulted by advances in technology and globalization, is requiring organizations to be more flexible and agile to manage the demands of the market and future unknowns. This mandates that corporate real estate teams provide space that is more responsive than ever, with an emphasis on business agility. At the same time, corporate real estate is a key component in the “war for talent” to attract and retain the best employees.
To respond to these market forces, many organizations are using the TARPE (Talent Attraction, Retention, Productivity and Engagement) framework to understand which amenities are important to employees. According to a recent study, workplace satisfaction is linked to the amenities provided to employees. But as a workplace’s demographics shift, so do the amenities offered to cater to different life stages and styles. In the near future, amenities will focus more on well-being, relaxation and recreation, with companies providing meditation spaces (growth of 26%), game rooms (growth of 19%), and outdoor work and recreation spaces (growth of 18%).[ix] These amenities accommodate the needs of all generations, but particularly appeal to the Millennials and Gen Z who are concerned with wellness and work-life balance. Childcare will become an important addition as Millennials are delaying starting families and many have two parents working.
In lieu of offering expanded amenities, some companies are moving their suburban campuses to urban areas. These vertical campuses use the city itself as a key amenity. The specific amenities provided by vertical campuses are usually shared among different tenants (rather than just belonging to one) and can range from food services and coworking spaces to fitness and health offerings. Companies in urban areas can also draw from the area’s amenities and offer employees memberships or allow employees to take advantage of eating options surrounding the campus. Millennials and Gen Z are drawn to urban environments and prioritize working where they live just as Baby Boomers were once drawn to the idyllic, collegiate feel of the suburban corporate campuses of the 1950s.
One in three members of Gen Z say they would rule out jobs with more than a 30-minute commute and just one in five would be willing to travel longer than an hour to work.[x] Moving campuses to urban areas creates a high concentration of knowledge workers, which is good for attraction of talent and also creates competition for these knowledge workers.
WORKPLACE CLARITY THROUGH MINDFULNESS
Gen Z’s desire to be constantly connected and plugged in is already leading to anxiety and emotional detachment and will likely result in interpersonal difficulties within the workplace. Physical inactivity and sleep disturbances due to excessive screen time and connectivity are also weighing heavily on this generation. If left unchecked, the World Health Organization predicts that “techno-stress”—the feeling that you need to be connected 24/7—will be a major health epidemic over the next decade.[xi]
Employers that want to help these distracted, next-gen workers maintain focus must create workspaces that help the Gen Zs dial down, not amp up. Companies including Google, Apple, Procter & Gamble, General Mills and Deutsche Bank recently have responded to this trend by implementing mindfulness programs into their workplaces.
Spaces that promote mindfulness, in which employees are calm and present in the moment, could prove particularly beneficial to companies attempting to help Gen Z improve its emotional intelligence, self-awareness and capacity to manage distressing emotions. Practicing mindfulness also reduces stress, lowers blood pressure, improves memory and lessens the chances of depression and anxiety.
Workplace design can promote positive mental and emotional health by creating quiet areas, technology-free zones and meditation rooms. Not only can these spaces result in more focused and healthier employees, they can also have an impact on a company’s bottom line. Aetna, for example, estimates that since launching its mindfulness program, it has saved about $2,000 per employee in healthcare costs and increased productivity by $3,000 per employee.[xii]
Quiet areas and meditation rooms can aid in creating a sense of place for employees, particularly within a large and diverse organization. These tech-free areas allow people to connect with each other and their surroundings—visually, culturally, socially and environmentally—and are key to creating a sense of place within the workplace. Studies have shown that belonging to something improves people’s motivation, health and happiness.[xiii]
The challenge for corporate real estate executives can be in convincing skeptical CFOs that incorporating wellness programming and design into the workplace justifies the costs. Yet an increasing number of case studies suggest that it does. From the World Green Business Council’s 2016 report, “Building the Business Case: Health, Wellbeing and Productivity in Green Offices:”
- Skanska reduced sick days by two thirds at its office in Doncaster, UK, after it improved layout and noise, indoor air quality, and lighting—helping the firm save $36,000 in staff costs.
- Heerema Marine Contractors sees a net present value of $47 million over 20 years in improved productivity, staff retention and reduced absenteeism due to better air quality, thermal comfort and daylighting in its new Amsterdam office.
- Saint-Gobain’s doubled the productivity of its call center staff after moving into its new North American headquarters, which includes a fitness center, 1.3 miles of walking trails, more than 100 collaborative workspaces and outdoor views from 92 percent of its offices.
Mindful of Employee Needs – a Case Study
One media organization wanted to use its New York office to promote its global presence and create an energizing environment that encourages its clients to spend time within the workspace. The company also wanted to support a flexible, nimble and faster delivery process with a more energetic, inspiring workplace.
Pin-up spaces and casual meeting rooms promote brainstorming and collaboration.
With an open plan design and unassigned seating for most, a neighborhood concept offered a sense of belonging for staff while maintaining flexibility for project teams to grow and connect with business changes. Several different space types were introduced to support the variety of work-setting preferences generally seen in a multigenerational work force. Innovation labs to develop and test content, upgraded studios and editing suites—including the addition of a photo studio and a digital library—support content generation and fuel creativity.
Designing for and providing a balance of space types to support both focused work and collaboration is important across generations. Giving people the opportunity to choose also encourages more productive collaboration across generations.
Focus booths (top right) provide space for concentrated work and reflection while community spaces and pantries foster interaction across departments and generations.
For example, focus booths within this space provide uninterrupted time for concentrative work while the “dream rooms” encourage team collaboration. White boards, pin-up space and touchscreen technology support the communication of ideas across all levels of technological preferences, which can vary across generations.
Creating spaces and opportunities to make informal meetings easier led to the creation of connection points throughout the new workplace. Meeting spaces were outfitted with easy-to-use, touchscreen technology and strategically located to promote movement. Amenities and the placement of pantries within the environment encouraged the spontaneous interactions the client sought.
A KIT-OF-PARTS APPROACH TO SENSE OF PLACE
A common strategy for helping companies address the needs of all generations and creating a sense of place is to provide employees a choice of work settings. Sustainability, real estate costs, technological innovation, globalization and management culture are important drivers of this change.
Open plan offices encourage younger and older generations to approach each other with issues and questions. The ability to collaborate and hear what others are working on also helps in the transfer of knowledge and natural mentoring.
Informal areas with soft seating that provide acoustic and visual privacy and the ability to connect to technology provide spaces for mentoring and meetings that help employees build networks organically. Formal spaces for training, such as training or learning centers with ample break-out and collaboration areas accommodate different types and styles of learning and can be easily transformed into “innovation spaces” for brainstorming and idea generation. Amenities such as cafes, coffee bars and fitness centers allow employees to interact in informal ways which creates transparency and breaks down hierarchical barriers that hinder knowledge transfer.
Instead of giving everyone a desk, many of which may go unused for the majority of the day, alternative choices offer a hybrid environment that provides people with shared spaces and amenities. Offering this “kit-of-parts” gives employees a choice about how, when and where they work, with each setting designed for different tasks. It essentially focuses on streamlining the worker’s experience in the office environment and transitioning staff from a ‘me’ to a ‘we’ mindset.
Regardless of which method is better suited to an organization’s needs, a kit-of-parts approach can be especially useful in terms of regional application and scalability to support a global strategy. While the workplace program is often owned by a global team, local implementation teams should be leveraged to build each rollout plan, using pieces from the kit that are culturally appropriate.
Encouraging innovative ideas from the local team may increase the probability of success, as they have inherent insight into the local office culture and understand how to best communicate the message to their teams. As part of the strategy and kit-of-parts definition, program teams must define which items are non-negotiable and which are open to interpretation.
The new generation of workers has a drastically different perspective on what they expect from their employer and office environment. Now more than ever, people want to be who they are, and the work environment can serve as a tool for self-actualization.
Focusing more on flexibility and less on uniformity provides workers with more alternatives that improve work/life balance, enhance job satisfaction and reduce sick time. Using universal parameters to set boundaries instead of mandating one-size-fits-all uniformity can accomplish both by giving employees more discretion in customizing their workplace.
The following workplace features reinforce a sense of place and help retain and recruit employees:
- Culturally rich
- Accessible to public transportation
- Space and time for social and professional experiences
Additional elements that add to sense of place but can vary according to regional preferences include:
- Variety in workspaces: This strategy seeks a balance in closed and open, formal and informal spaces to accommodate all work styles. An example of this activity-based working (ABW) creates specific neighborhoods within the workspace. Some might promote collaboration or socialization, while others support heads-down work or quiet one-on-one meetings.
- Sustainability: In addition to looking for value and return on investment and complying with government regulations, many companies now are pursuing LEED and other sustainability certifications to create a more appealing workplace for next-gen employees.
- Health and well-being: While LEED largely focuses on the health of the planet, initiatives such as the WELL Building Standard targets the health and well-being of building occupants. More and more studies show that workspaces with abundant natural light, clean air and layouts that encourage movement lead to more productive, healthier and happier employees.
- Flexibility for technology: Ever-changing technology is one of the strongest drivers and success factors for workplace change. Flexibility and options for ease of future modifications due to growth, churn and advancements in technology routinely play a large role in the design for most global firms.
- Security and safety: It’s one of the first stages of Maslow’s hierarchy of needs, and it’s just as applicable in the workplace as the home. Safe workplaces educate and protect workers against internal threats such as harassment and intimidation, as well as external concerns, be they virtual or real.
Prioritizing these initiatives can be difficult, and each provides a different return on investment. To begin developing a kit-of-parts suitable for a global portfolio, a business must look at its overall objectives and develop guiding principles that align these initiatives with its overall goals.
Kit-of-Parts in Practice – a Case Study
A study of the workplace and its impact on performance, prompted this company to reduce the size of private offices and increase the amount of space for focused and collaborative work.
Recently a global information services corporation set about to both modernize its work environment and reduce capital costs.
The company’s workplace, which accommodates many specialized engineering roles, needed to enhance organizational agility by fostering knowledge transfer across multiple generations of staff. The company’s new president and CEO also desired a significant workplace change to help attract and retain talent. While the company’s physical workplace conditions were substandard, a bigger issue was that the type and quantity of workspaces didn’t align with the needs of employees.
The design team’s response was to develop a workplace effectiveness strategy that aligned space standards with best practices. The strategy reduced the proportion of private offices, providing a variety of focused and collaborative work settings for all employees. The design team also developed a change management framework and partnered with the client’s HR and facilities teams to embed those capabilities across the company. This solution maximized performance, facilitated collaboration and fostered innovation while supporting the principles of urgency, ownership and openness.
Like the generations they’ve followed, Generation Z will—in time—adapt to and thrive within the workplace. The practices discussed in this article are put forth in an effort to hasten that success and encourage inter-generational collaboration within the workplace. Corporate real estate managers should also consider national and cultural influences before implementing guidelines or standards across workplace portfolios, as those factors will impact Gen Z behavior and attitudes on a region-by-region basis. Moreover, multigenerational interaction may not be a priority for some businesses. Workplace managers will want to weigh how a change to the workplace layout and design could negatively impact older generations, particularly Baby Boomers and Generation X, who don’t necessarily share the same work habits as younger generations.
It could be, too, that Generation Z’s tendencies and habits will change over time. A generation that now favors collaboration and open workspaces may eventually desire private offices and more formalized workspaces. Yet the main ideas presented here—mindfulness, wellness and sense of place—are concepts that transcend the workplace and are becoming an ever-larger part of society. Increasingly our tech-addled minds need the time and space to disconnect and focus. At the same time, people today are accustomed to greater choice and seek out spaces where they can share their interests and be themselves. Workplaces that can cater to these growing needs are the ones most likely to assist in the recruitment and retention of tomorrow’s workforce and ensure that it remains both satisfied and engaged.
This report originally appeared in Corporate Real Estate Journal, Volume 7 Number 2, published by Henry Stewart Publications.
About the Authors
Sarah Moellenkamp, LEED AP, WELL AP, is a consultant in HOK’s Chicago office. Sarah brings integrated solutions to workplace challenges for corporate and institutional clients. She also works with real estate developers to ensure buildings contain the right mix of amenities to attract their target market. A member of Commercial Real Estate Women (CREW), Sarah has degrees in both design and business and has been a frequent speaker on designing a multi-generational workplace.
Christine Weber is the senior consultant at HOK’s Toronto office. Christine specializes in advising clients on how workplace strategy can support and influence an organization’s goals. She has more than 20 years of experience in the design industry and is currently a CoreNet MCR.w candidate.
Curtis A. Knapp is the director of HOK’s global consulting group, which helps organizations achieve their business goals by optimizing real estate and facilities to support evolving workplace requirements. Based in HOK’s Dallas office, Curtis has nearly three decades of strategic planning and workplace experience. He is a longtime member of CoreNet Global and a frequent speaker and author on topics related to strategic portfolio, occupancy and workplace planning.
[i] Graff, Nikki (2017) “Today’s Young Workers Are More Likely Than Ever to Have a Bachelor’s Degree” Pew Research Center
[ii] Randstad (2016) “Gen Z and Millennials Collide at Work Report” Retrieved from: https://www.randstadusa.com/workforce360/managing-gen-y-z/
[iii] Yesnick, Julie (July 2016) “Emotional Intelligence: Our Responsibility to Gen Y and Z” Multihousing Professional Magazine
[iv] Randstad, ref. 2 above
[v] Institute for Emerging Issues “Generation Z Challenges,” North Carolina State University
[vi] Robert Half (2015) “Get Ready for Generation Z” Retrieved from: https://www.roberthalf.com/workplace-research/get-ready-for-generation-z
[vii] Gallup 2017 State of the American Workplace http://www.gallup.com/reports/199961/state-american-workplace-report-2017.aspx
[viii] Anthony, S., Viguerie, P., Waldeck, A. (2016) “Corporate Longevity: Turbulence Ahead for Large Organizations” Retrieved from: https://www.innosight.com/wp-content/uploads/2016/08/Corporate-Longevity-2016-Final.pdf
[ix] Knoll Workplace Research (2016) “From Research to Realization: An Experience-based Workplace” Retrieved from: https://www.knoll.com/document/1353022081997/Immersive-Planning_wp.pdf
[x] Randstad, ref. 2 above
[xi] Kozlowski, Lori (January 2013) “Getting America To Check In With Itself” Forbes Magazine
[xii] Pinsker, Joe (March 2015) “Corporations’ Newest Productivity Hack: Meditation” The Atlantic
[xiii] O’Hare, Ryan (May 2016) “A Sense of Belonging Makes You Happier” Daily Mail