The Journal The Authority on Global Business in Japan

“They are looking for a place where they are highly valued, feel they are needed, and are praised for
being useful to others.”

When I heard this comment by Kimiaki Nishida, professor of social psychology at Tokyo’s Rissho University, I was struck by the similarities to the problems confronting middle managers in Japan who are dealing with Millennials. Nishida’s remarks concerned the reasons young people join terrorist groups like Aum Shinrikyo or the Islamic State.

Japan is facing a succession-planning crisis. This is being driven by a demographic pivot, where the number of young people entering the workforce will decline faster than demand for their services.

Considering social and political debates about opening immigration to curb this downward spiral haven’t even begun, this is not (yet) a viable option. The Japanese birthrate shows no signs of improving either, as family sizes stay small and couples become parents much later than a generation ago.

Does McKinsey & Co.’s late 1990s reference to a “war for talent” ring a bell with anyone?

Middle managers are often the direct reporting line for these Millennials, yet the generation gap is vast. This is the fax and PC generation sitting across grey metal desks from their app and iPhone successors.

One generation remembers basking in the warm embrace of the bubble hedonistic extravaganza. The other has only known shivering in the cold turmoil of the bubble burst, the Lehman shock, and the triple whammy of earthquake, massive tsunami, and nuclear reactor core meltdowns. The Millennial’s emotional mix is about to become even more complex.

One of the greatest wealth transfers in history will slowly begin to take place, as the older generation of Japanese, who are massively cashed up compared to previous generations of retirees, pass their wealth on to their kids. The Japanese tax office is salivating, already expanding inheritance tax brackets so they can harvest this wealth migration.

Ironically, the wealth transfer will gradually dial down some of the career progression concerns previous generations confronted. The increasing affordability of housing will be driven by population decline, gradually providing a greater sense of security to this younger generation.

So, a bigger cash buffer, a larger sense of security, instant digital access to information, diminished worker supply and, thus, less career urgency, will combine to produce confronting new attitudes.

Paraphrasing Nishida, the young want love—not tough love.

The “highly valued” component certainly conforms with our global research validated in Japan, that “feeling valued” is the key emotional trigger to becoming more engaged in your work. Employees that feel more engaged are more motivated, loyal, and likely to be innovative.

Crunch time! Is your middle management tuned in to these critical messages? Are they having boss–subordinate conversations, performance reviews, and coaching interactions that genuinely communicate “we value you here,” “we need you,” and “we really appreciate you?”

Sound a bit fluffy? Statistics tell us that in 40 percent of workplaces, such interactions are absent or not effective enough to prevent Millennials from walking out the door—to supposed greener pastures—after three or four years at a company.

The cost of their departure to the organization is huge. After three or four years of investment, the company should be reaping the productivity dividend from its efforts to educate young workers about the business. There is also the additional sting of opportunity cost to replace departing staff and train their successors.

Ouch! And double ouch, because it is only going to get worse; recruiters take note! Companies are foolish if they don’t do something now to better educate their leaders, especially front-line supervisors and middle managers. Though highly inconvenient, Millennials are never on your timetable.