Companies with More Millennials in Leadership Roles Perform Better, Study Finds

Don Tennant
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Last week, I wrote about a new study that showed that companies with a higher percentage of women in leadership roles perform better. Interestingly enough, the same study also found that the more millennials a company has in leadership positions, the better it performs, as well.

I recently discussed the findings with one of the study’s co-authors, Evan Sinar, chief scientist at Development Dimensions International, a global talent management consulting firm based in Bridgeville, Pa. Sinar explained the findings with respect to millennials this way:

We looked at three different outcomes associated with organizational success. We looked at leader experience, which was how engaged leaders are, and how likely they are to be retained and to want to stay with the organization; we looked at leadership strength—what an organization’s current caliber of leaders is now, as well as what it will be for the next three years; and we looked at the financial metrics as another indicator of how well an organization is performing. We found that when organizations had a higher percentage of their leaders as millennials, they were more likely to end up in the upper range of each of those three categories.

The study methodology grouped technology and telecommunications into one industry, so I asked Sinar what stood out with respect to millennial leaders in that industry. His response:

One finding that was a bit surprising to us was that when you compare across industries, the percentage of millennials in leadership positions in the technology and telecommunications industry was about average. There were some industries, like retail and consumer business, that had a slightly higher percentage of millennial leaders. But for those organizations growing aggressively, and particularly growing aggressively organically, they tended to have a higher rate of millennial leaders.

We did find that in the technology and telecommunications industry, as well as others, millennial preferences generally mirror those of other generations—I think that was something that not everyone might expect. Millennial leaders want what most leaders want with respect to development—they want access to formal workshops, training courses, and well-crafted developmental assignments. There were some slight preferences for social and mobile methods of leadership development, but it wasn’t as large as one might expect. Our research found that those haven’t tended to displace more proven methods for leadership development, even for that newest generation.

We also found that the technology and telecommunications industry was more likely to have strongly-supported innovation programs in place than other industries were, in terms of what might attract and appeal to millennial leaders. That industry tended to have more of an emphasis on employee-driven innovation.

I found it interesting that according to the research, aggressive-growth companies, such as those in the high-tech sector, have a higher proportion of millennials in leadership positions (30 percent) than organizations with cautious growth (25 percent) or no to low growth (21 percent). So I asked Sinar the chicken-or-egg question: Is it more likely that millennials tend to be drivers of aggressive growth, or that they’re drawn to aggressive-growth companies? He said it could be seen either way:

Someone who’s just embarking on his career is going to pursue [employment in] an organization that’s got a strong growth trajectory. So the companies that might appeal to those just entering the work force are probably those that are growing already. Certainly, the focus on innovation and some of the initiatives that an organization puts in place to drive growth are the types of initiatives that will appeal to the millennial generation. At the same time, I think millennials bring new perspectives to organizations. Organizations that are growing more quickly are also hiring more quickly, of course, so they will tend to rely less on leaders who have been with the organization, and have a higher proportion of new individuals they’re bringing in. So that could also contribute to the higher proportion of millennials.

I also found it interesting that the research showed that millennials appear to receive a significantly higher percentage of promotions than leaders from other generations do. The study concluded that this could be attributed to two factors: that they’re starting at lower management positions with more opportunity for advancement; or that organizations might be reacting to millennials’ reputation for readily changing jobs. I asked Sinar if he had any sense of which is likely to be more frequently the case, and he had this to say:

I think some of that relates to the assumptions and stereotyping that’s occurred about generations. As more of the millennial generation enters the work force, some of those myths are being dispelled. So the latter factor, where organizations are reacting to millennials’ reputation for readily changing jobs, I think that reputation is changing, so that’s probably becoming less of a driver. Of course many organizations, regardless of what someone’s preference is, are not going to promote a person unless there’s a business case for it, and the business is growing sufficiently to support that. So I do think that the lower entry point for millennials, on the whole, is the more likely scenario there. I think organizations are finding that there are a lot more similarities than differences between the generations, so I see the reputation driver becoming less of an influence going forward.

The millennial topic aside, Sinar pointed out that the technology and telecommunications industry is confronting some key leadership challenges:

There is lower leadership quality, compared to most other industries, but it’s improving. The area of bench strength—organizations defining their leaders over the next three years—is actually where we saw even bigger challenges and obstacles for the technology and telecommunications industry. Our research indicates that this industry is exhausting its supply of ready-now leaders faster than it’s replenishing them. That’s where the pace of growth can create the danger of not putting in place the right leadership development processes. You can quickly outstrip your supply of available leaders, and the technology and telecommunications industry is one where that risk is particularly high.

A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.

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