Understanding what motivates Millennials is an important challenge for the Asset Management industry. Millennials, classified as anyone born between 1981 and 1996 according to Pew Research, represent a step change in attitudes and technical capabilities.
By 2025, Millennials will make up 75% of the workforce. They will be in charge of their careers, as evidenced by Deloitte’s 2018 Millennial Survey. Loyalty is not a priority – 43% envision leaving their jobs within two years and only 28% seek to stay beyond five years. Failure to engage this technologically fluent generation will risk losing the best and brightest future talent to other industries or standalone FinTechs.
So how can the Asset Management industry continue to attract and sustain the best talent given the very different expectations and habits of this incoming generation? We explore the two ‘make or break‘ factors; motivation and technology.
Daniel Pink’s 2009 book “Drive” describes how the classical ‘carrot and stick’ approach to motivation is outdated. Two separate items of research (Harlow and Deci 1971, Ariely et al. 2017) show that rewards routinely fail to improve, and often even damage people’s engagement with tasks. The consistency of the results stands testament to the fact that whilst attitudes change, the nature of our motivation hasn’t. Pink argues that motivation can instead be derived from three main factors:
- Autonomy: the desire to be self-directed.
- Mastery: the urge to become better at things.
- Purpose: the aspiration to have an impact.
Applying these three factors to all areas of the workplace has never been more important for the future of the Asset Management Industry. Millennials require a working environment within which there are tangible short-term (as well as long-term) goals which are sufficiently challenging to invoke mastery, but doable enough to maintain autonomy. Purpose is more difficult to engineer as it encompasses a range of ideas which contribute to the aim of changing the world for the better. Encouraging diversity in recruitment is a good starting point but equal, if not greater effort should be channelled into sustaining such a varied community without alienating one part.
Establishing an evolving graduate programme that fulfils the above criteria is vital, and a good one will speak for itself. For a generation that expects instant access to price comparisons, product information and peer reviews when shopping, employee satisfaction surveys and recruitment buzzwords are old-hat, and real reviews via social media and stack exchange websites are the go-to source of insider information. One such community site, The Student Room, estimates that over 70% of all UK students visit the site every year. This kind of community can quickly build enviable or conversely negative reputations around industries or companies but can also be an opportunity in positive brand awareness and positioning for this vital cohort. Social media outlets such as Facebook and Twitter can have massive readership and one well-poised article can completely change the attractiveness of a company to potential future employees. Millennials are surrounded by more viable career paths than at any point in history. An eventual decision is as likely to be made based on online content found on web sites like Glassdoor, written by anonymous users with little to no industry experience, as it is to be influenced by advice from industry professionals, friends, family or careers services.
Millennials have grown up with computers in their homes and smartphones in their hands, so they’re well aware that the Fourth Industrial Revolution is upon us. The very nature of work is changing rapidly and industry 4.0 is characterised by the marriage of physical and digital technologies, such as analytics, artificial intelligence, cognitive computing and internet of things technology.
Asset Managers face a potentially significant drain on new talent at the heart of their businesses. In the context of Asset Management, being FinTech friendly is a big plus. Millennials see market-leading technology as something they both look for and expect in a company. Technology definitely counts in a big way towards the purpose factor in motivation if approached correctly. When it comes to mastery, about eight in 10 Millennials say that on-the-job training, continuous professional development and formal training led by employers will be important to help them perform their best. This engenders the loyalty and longevity which may go some way towards overriding Millennial autonomy.
FinTech, AI and other technological advances are gaining pace in the industry. Asset Management has the opportunity to be Millennial friendly and it must be to evolve and sustain itself.
It’s an exciting prospect to work in a firm which is changing the face of Asset Management as it presents an opportunity to change how the world works. However, Asset Management must first embrace the changing face of its workforce to attract the new generation of talent.