Generational investing: the world according to generation selfie (part 2)



Dr Paul Redmond, Director of Student Life at the University of Manchester in the UK, explains the key findings of his work on ‘generational theory’ and the implications in a fast changing world. In this, the second of a two part series, Dr Redmond explains the implications for global businesses of aligning themselves with the values of Generation Y. He explores the importance of ‘authentic’ experiences  and reveals the three key messages that businesses need to heed to attract and retain Generation Y.

Part 2: Attracting and retaining Generation Y


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An example of the disruptive impact of Generation Y on established business models has recently appeared in the high street in the form of a US hamburger franchise called ‘Five Guys’. Originally a family business, Five Guys is taking a bite from the burger business, which in the UK, as in other countries, remains heavily dominated by Baby Boomer and Generation X leviathans such as McDonalds and Burger King. With over 1,000 restaurants globally, Five Guys is based on core Generation Y values: there is a strong emphasis on providing an ‘authentic’ experience, a dependency on ‘flash-mob’ word of mouth and social media marketing campaigns, a strong focus on values, eg, eating healthy and wellbeing, an engagement with the local community and an obsession with getting the product right (this was the firm that refused to deliver hamburgers to the US Pentagon – arguing that running a delivery service would reduce the quality of the product). In applying this core Generation Y business model, suddenly the old and established ‘Boomerist’ market leaders look distinctly out of touch, corporately hidebound and dated. The fact that the big burger chains sell cheaper burgers barely registers. Businesses like Five Guys have demonstrated that markets aimed at Generation Y do not have to be primarily price-sensitive. Far more important is the authenticity of the experience and the capacity to live up to the brand values.

The success of firms such as Five Guys offer useful insights into how future businesses will need to compete if they are to attract and retain Generation Y consumers. Generation Y is almost naturally collaborative and places a strong emphasis on peer recommendations. Much of this is driven by social media, which now plays a powerful role in shaping Generation Y’s view of the world.

This is hardly surprising – the statistics alone are staggering. Generation Y owns more digital devices than any other generation. Studies show that globally, 94% of the cohort possesses a cell phone; 76% a smart phone; 70% a laptop; 69% an iPod/MP3 player; 63% a games console. Generation Y is the world’s first generation to have effectively digitised its leisure time.

Characteristics of Generation Y
Techno-savvyCivic minded
Connected … 24/7Anti-commitment
Bored by routineOpinionated
Lifestyle-centredGoal orientated

Source: Deloitte

Implications for organisations

For global businesses, the rise of Generation Y highlights a range of challenges. It is no surprise that many of today’s leading firms were built by Baby Boomers for Baby Boomers. As such, they reward traditional Boomer values such as loyalty, tradition, and top-down command and control models.

To attract and retain Generation Y – both as investors and employees – there are three key messages that all businesses need to heed:

1. New psychological contract

Unlike previous cohorts, Generation Y works ‘with’ organisations rather than ‘for’ them. This represents a major change in the traditional psychological contract between employers and employees. Where once employees would sell their time, often years in advance, in return for a regular pay check, Generation Y is motivated primarily by opportunities for career development and personal growth. Employers that can make the shift from the traditional to the new psychological contract will have a head start in recruiting and retaining Generation Y talent.

Generation Y – What they want from their careers:
Long-term career development and multiple experiences within a single organisation
Sense of purpose and meaning to the work
Access to mentors and other company champions
Work-life flexibility
Tech-savvy work environment
Primary loyalty is to networks before their employers

2. Living up to the value proposition

Generation Y is highly motivated by values and a sense of justice. Thanks to social media, organisations that fail to live up to their value proposition are at risk of being found out and publicly exposed. Walking the walk is a key Generation Y attribute that leading firms are quick to recognise and apply.

3. Managing social media

Globally, 90% of Generation Y employees have a social media profile. Facebook alone has over 1.4 billion monthly users and 930 million active daily users. For organisations, social media represents an opportunity and a threat – an opportunity, in that social media platforms provide an excellent opportunity for engaging with new online communities and by-passing traditional marketing barriers; a threat, in that unless businesses appoint social media managers, there is a danger that the business could find itself in one of the all too frequent social media firestorms that frequently light-up the Twittersphere. The message for business is simple: manage social media before it manages you.


These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

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