Due to the impending shortage of skilled workers, on the labour market an employee market is emerging. This requires addressing the needs of the youngest generation, Generation Z, in the labor market in order to attract and retain them in the company. This scientific contains possible motivational incentive systems based on practical case studies.
Economic and demographic circumstances have changed. There are several generations who take part the labour market now. These are subdivided in the baby boomer generation, the following generations x and y and the youngest one called Generation Z. The existence of several generations active on the labour market at one time was also the case in the past, but a demographic change can be observed, which has an increasing impact on the professional world. The retiring workers of the baby boomer generation leave a large number of vacancies. In contrast, the numerically smaller in the mid-90s born workers of Generation Z now gradually enter the labour market which creates an employee market. This can be seen by the proportion of young people between the ages of 15 and 24 in the total population, which at the beginning of 1981 was 16.6% and only 10.0% at the beginning of 2021. As a result, Generation Z is in an employee market due to the shortage of skilled workers.
2. Definitions and Theoretical Background
2.1 Motivation in a Professional Context
2.2 Motivation Theory Approach According to Alderfer (ERG Theory)
2.3 Generations Currently Active in the Labour Market
2.3.4.1 Essential Features and Characteristics
2.3.4.2 Demands on Working Life
3 Application Examples in Practice
3.1 Example A
3.2 Example B
4 Possible Motivational Incentive Systems
4.1 Company Management
4.2 Direct Managers
5 Results and Discussion
6 Concluding Remarks
6.1 Summary
6.2 Critical Review
6.3 Outlook
Bibliography
List of Figures
Figure 1: Comparison of Maslow's and Alderfer’s Theories
Figure 2: Dominance Principles of Alderfer's ERG Theory
1 Introduction
Economic and demographic circumstances have changed. There are several generations who take part the labour market now. These are subdivided in the baby boomer generation, the following generations x and y and the youngest one called Generation Z. The existence of several generations active on the labour market at one time was also the case in the past,[1] but a demographic change can be observed, which has an increasing impact on the professional world. The retiring workers of the baby boomer generation leave a large number of vacancies. In contrast, the numerically smaller in the mid-90s born workers of Generation Z now gradually enter the labour market which creates an employee market. This can be seen by the proportion of young people between the ages of 15 and 24 in the total population, which at the beginning of 1981 was 16.6% and only 10.0% at the beginning of 2021.[2] As a result, Generation Z is in an employee market due to the shortage of skilled workers.[3]
1.1 Problem Description
The characteristics and needs of the generations have changed significantly and this results in a generational conflict. The oldest generation baby boomers was used to adapt to the existing. In contrast, the youngest Generation Z tends to proactively rethink the existing, have a high level of entitlement and low loyalty to employers.[4] In addition, Generation Z can, because of the upcoming labour shortage, more than any generation before make demands on the world of work. “Today we have an employee market, ... the power actually lies with the employees today, ... because the employers have to apply to the employees today.”[5] Thus, company management and direct managers have the task of making their company interesting to attract and retain employees in future by taking the needs of Generation Z into account in a differentiated way. The aim of this scientific work is to describe possible motivational incentive systems that enable the company to satisfy the needs of employees in a goal-oriented manner.
1.2 Objectives and Structure
In order to specifically address the needs and requirements of Gen Z and to successfully master the search for skilled workers, the human resource departments of companies must rethink their motivational incentive systems. Possible systems are to be examined in the present scientific work.
The paper starts with the clarification of the term motivation in the professional context as well as the approach of the ERG motivation theory according to Alderfer. Then the generations on the labour market are differentiated from each other. Generation Z is presented in detail along with their characteristics and demands. On the basis of practical application examples, possible tools of motivational incentive systems are derived that can be used by company management and direct managers to respond directly and purposefully to the needs of Generation Z. This is followed by a look at the results as well as a discussion. The concluding remarks of the paper contain a summary, a critical review of the work and an outlook.
2. Definitions and Theoretical Background
2.1 Motivation in a Professional Context
Motivation, derived from the Latin term 'movere', which means 'to move', has several definitions, depending on the context. All animals share motivation to obtain their basic needs ...”[6] and in general, it is “… defined as the energizing of behavior in pursuit of a goal, is a fundamental element of our interaction with the world and with each other.” Motivation through leadership is relevant in several areas of life, where it's about increasing people's willingness to do something specific, such as in the family (parent-child relationship), in sports (coach – athlete) and at work (boss – employee).[7] In a professional context, motivation “… can be defined as an individual’s degree of willingness to exert and maintain an effort towards organizational goals.”[8]
Classically, there are two types of theories about work motivation. On the one hand, there are the process theories that describe psychological processes, how and why our actions are influenced. Classic examples are Vroom's Expectancy Theory or Adams' Equity Theory.[9] On the other hand, there are the content theories, which divide needs into different categories.[10] Examples of this are Maslow's hierarchy of needs, Herzberg’s two-factor theory of needs and Alderfer's ERG theory.
2.2 Motivation Theory Approach According to Alderfer (ERG Theory)
Clayton Paul Alderfer developed the ERG theory as a further development of Maslow's hierarchy of needs. Maslow’s remarks were originally intended to explain the connection between motivation and human behavior and not for use in a professional context.[11] He divided human needs into five categories which are named differently in different sources, but can be described as follows: physiological needs (e.g. food), safety needs (e.g. insurance), affiliation needs (e.g. belonging), achievement and esteem needs (e.g. accomplishments), and self-actualization (e.g. self-awareness).[12] To this day, these categories form a basis for many further insights into human motivation. As further development, Alderfer’s ERG Theory postulated three groups of core needs. These are existence needs, relationship needs, growth needs, hence the acronym ERG (Existence, Relatedness and Growth).[13] The close connection between the two theories is illustrated in Figure 1.
Figure 1: Comparison of Maslow's and Alderfer’s Theories[14]
According to Alderfer, existence needs are material and to be understood as basic requirements, analogous to the physiological and safety needs according to Maslow. Relatedness needs are of an interpersonal nature, analogous to the affiliation and achievement needs according to Maslow's hierarchy of needs. Finally, the growth needs of an intrapersonal culture, corresponding to Maslow’s self-actualization needs.[15] Maslow’s postulation that all needs must be satisfied in sequence has never been empirically validated. „The ERG theory (Existence, Relatedness, Growth) was formulated by Clayton P. Alderfer … as a reaction to Maslow's hierarchy of needs with the aim of empirically supporting the theory more than before (cf. Alderfer 1972, p. 4).“[16] Although Alderfer also assumes a hierarchical order of the need categories, in contrast to Maslow he assumes that several needs from different categories can be activated and pursued in parallel.[17] In addition, Alderfer describes four hypotheses, so-called dominance principles, on how needs can be activated. Frustration hypotheses: Unmet need leads to frustration. Frustration regression hypothesis: unsatisfied need leads to activation of a hierarchically lower need. Frustration progression-hypothesis: Unsatisfied need leads to intensification of the need itself or activation of hierarchically higher needs. Frustration progression-hypothesis: satisfied need leads to activation of a hierarchically higher need.[18] Figure 2 illustrates these hypotheses.
Figure 2: Dominance Principles of Alderfer's ERG Theory[19]
2.3 Generations Currently Active in the Labour Market
A generation can generally be defined as the totality of members of a certain age group. By this classification various characteristics and needs can be attributed to generations in order to derive alternative courses of action or strategies. In our society six generations are currently living. “Four of these generations are in active working life: baby boomers, Generation X, Generation Y and the young professionals, Generation Z.”[20] According to Alderfer's ERG theory, they all have a differently weighted value of the need categories existence, relatedness and growth. The shaping of the values and behavior of generations depends above all on the individually different socialization of people. This is the reason why no clear boundary can be drawn between the chronological classification of the generations. Depending on the literature or author, the years of birth of the generations are postulated differently. The following division of the years of birth into generations is therefore used as a basis for the following explanations. Birth years between 1946 and 1964 (baby boomers), between 1965 and 1980 (Generation X), between 1981 and 1996 (Generation Y) and between 1997 and 2012 (Generation Z).[21]
2.3.1 Generation Baby Boomers
Generation baby boomers is named after the high birth rate of their cohorts and refers to people born between 1946 and 1964[22] and many of them are now retiring. They were socialized in the 1960s and 1970s, which were shaped by the Cold War, the oil crisis and especially in Germany by the political and structural division into East and West.[23] They grew up with traditional role models and a clear hierarchy in the family.[24] Due to the numerical size of the generation, the baby boomers learned early on to compete against others and to rise in business and social status.[25] Baby boomers, in general, value commitment, loyalty and hard work and tend to adapt to the existing. Referring to Alderfer's ERG theory, the needs of baby boomers in their early professional life primarily related to the existence needs. Now, shortly before retirement, relatedness needs become more important, because family and work and especially the need for career advancement have priority for them.[26]
2.3.2 Generation X
People who were born between 1965 and 1980 describe Generation X,[27] which is socially characterized by experimental consumption and a liberal upbringing style through negotiation. As a result of the market launch of the pill as a contraceptive, the birth rate is lower than that of the baby boomers.[28] In childhood and youth, alongside the impact of separations with nearly tripled divorce rate,[29] Generation X were influenced by breakthrough technological advances, making them easier to embrace new technologies and integrate them into their everyday lives.[30] The reunification of Germany created a strong imprint and motivation, environmental catastrophes such as the Chernobyl disaster in addition created a stronger awareness of the environment.[31] In career entry of Gen X there was even greater competition than among the baby boomers, an increasingly dynamic environment, companies were rationalized and hierarchies flattened.[32] In the current phase of life, leisure time is taking a back seat for Generation X in favor of work and family, which means that they even tend to forego personal career steps.[33] This is why a balance between work and family life becomes more important to them.[34] Consequently, with regard to Alderfer's ERG theory, relatedness needs are currently more of a focus for Generation X employees.
2.3.3 Generation Y
Generation Y people are also called Millennials because their formative years took place around the turn of the millennium and are generally assigned to the years of birth 1981 to 1996.[35] In their early socialization, assassination attempts and more frequent natural disasters (e.g. tsunamis, oil spills) were important events as well as the dot-com bubble of 2000, the economic crisis 2009 and the Euro crisis in 2010.[36] Another striking change was the development and spread of the Internet from the mid-1990s.[37] The unsteady environment of this period is also often referred to as the VUCA world. VUCA stands for volatility, uncertainty, complexity and ambiguity.[38] Existence needs like needs for security were most important. Now, they are in the phase of finding a job or at the beginning of their career, creating their financial independence and becoming parents.[39] As a result, relatedness needs are given more importance, such as those for praise and recognition, a collegial atmosphere[40] and the compatibility of family, private life and work. Growth needs also come up, such as meaningfulness of work.[41]
2.3.4 Generation Z
Generation Z generally describes people who were born between 1997 and 2012.[42] Most of them are currently in the phases of childhood, adolescence, university time or at the beginning of their professional life and some are already starting a family.[43] The so-called digital natives are the first generation who grew up completely in the environment of modern internet, social media and a digitally networked world. In addition, they will feel a huge impact of the demographic change.
2.3.4.1 Essential Features and Characteristics
The socialization phase of digital natives extends from 2000 to 2030[44] with formative circumstances of increasing relevance of climate change and political and economic upheavals like Russia's attack on Ukraine or China's economic rise.[45] It follows that there is increasing uncertainty, coupled with an unprecedented fast pace of life. "Generation Z wants fast communication and information transfer - and thus feedback or confirmation..."[46] and is motivated by as much freedom and flexibility as possible. Interpersonal communication and entertainment are possible anytime, anywhere and almost continuously via social media and smartphones.[47] In addition to cost of living, climate change is one of the most important issues for Generation Z,[48] which can be seen, among other things, in the recent climate activist events such as the Last Generation climate protests in Germany. In summary, Generation Z is more individualistic, they want to develop themselves and have a strong need for social interaction[49] and thus have strong related needs and growth needs in relation to Alderfer's ERG theory.
2.3.4.2 Demands on Working Life
Meaningful work and possibilities for individual career development are more important in working life for Generation Z than for previous generations and even more important than adequate total compensation.[50] “Work should above all bring fun and self-fulfillment to the younger generation …“,[51] which means that, according to Alderfer’s ERG theory, growth needs come to the fore. In addition, “about four out of ten Gen Zs and Millennials feel constantly stressed”.[52] Thus, reduced working weeks and flexible working hours are demands of Generation Z[53] and offers like part-time work or home office are becoming increasingly important[54] to address relatedness needs. During the Corona pandemic, New Work approaches were already being implemented in companies, which was well received by Generation Z employees. it frees them up time to do other things they care about and has a positive impact on their financial situation and mental health.[55]
- Quote paper
- Dennis Arz (Author), 2023, Motivation of Generation Z. An Overview of Possible Motivational Incentive Systems, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/1370524
