From the April 2001 issue of Entrepreneur

Over the years, there's been much written about Generation X in the workplace. Only 10 years ago, Xers were turning corporate policy on its ear. Baby Boomers saw young Xers as brash and unmanageable, and Xers saw themselves as self-reliant individuals who didn't need (or trust) traditional corporate structure.

As they say, what goes around comes around. Now in their 30s and late 20s, those Gen X upstarts are finding themselves in a situation they've never faced before: managing a younger generation-the new group of employees in their early 20s known as Generation Y, which has a different outlook on life and work.

"Gen Xers had the mac-and-cheese years of struggle where, even after grad school, they still found themselves working up the ladder. Now a 22-year-old kid walks in who can't shave yet and wants an $80,000 salary," says Steven Rothberg, 35, founder and president of Minneapolis-based CollegeRecruiter.com, a job search Web site. He says most Gen X-led companies he recruits for begrudgingly accept the demands of the market. "They hate it, but they deal with it. They feel they're having to pay unfair wages," he says. "There's an under-lying anger."

Have You Paid Your Dues?

Ask thirtysomething Gen Xers about their youth, and they'll recall the corporate layoffs of the 1980s and the difficulty of finding their first "real jobs" in the economic downturn of the early 1990s. Their experiences have made them pragmatic and cautious. Gen Yers, on the other hand, have yet to seek work in a bad economy. As long as they've been paying attention, the economy has been golden, job offers plentiful and starting salaries high. According to Jobtrak, a job Web site, the average starting salary in fall 2000 was $37,268. Another Jobtrak study in March 2000 revealed that 52 percent of graduating college students expected to be millionaires by the time they were 40 years old.

Gen X entre-preneurs and managers aren't sure they want to accommodate these expectations Gen Yers are bringing to the workplace, although they know it's what the current market dictates. As much as they hate to admit it, Xers have taken some workplace cues from their Boomer elders, applying a "dues-paying" mentality in their own businesses. Xers see a company ladder that should be observed and respected, even in a prosperous economy.

"It was never so easy for us. We always had to work hard. Gosh, I sound like my grandparents," says Joshua Shaub, 30, president and CEO of New York City-based Mighty Seven Networks, an e-marketing company with 35 employees. Shaub says that when he graduated from Cornell University in New York City in 1992, he took any job he could get. He spent a year as a desktop publisher, hoping eventually to work his way into a "good" wage. "I fought upstream and developed my skills. In the early 1990s, the system was harder, and $30,000 was a good salary," he says. "Now I have 24-year-olds asking for $75K. It's ridiculous."

Shaub says he had a 22-year-old job applicant come in who expected his pay to be raised from $45,000 to $80,000 in one year if he came on board. Shaub asked the applicant why he deserved such a dramatic increase. "He told me that now he had three months of work expe-rience and knew the industry," Shaub says. (The applicant didn't receive the job.) Then there was the 22--year-old sales employee who wanted a huge office and "a lot of respect" without having enough experience to navigate the small deals yet. Shaub says his thirty-something managers have complained that Generation Y workers lack professionalism. "[In Gen Y], there's a mis-perception of competency and a lack of understanding of how business is done," Shaub says.

When his Gen Y employees ask for raises, Shaub reminds them that the company is making an investment in them. He then tells them how he started the company and explains the financial risks he is taking as an entrepreneur. Finally, he lays out his performance expectations and associates raises with structured goals. "My attitude is, if they are interested in learning the business and getting better at their jobs, I'm willing to invest in them," he says.

But while dues -paying is a big thing with thirtysomething Xers, it's a hard concept for today's younger workers to grasp-and one that, by and large, they don't feel they need to. "Paying your dues is null and void in today's economy. It means that I was miserable, so you should be miserable, too," says Claire Raines, co-author of Generations At Work (AMACOM), which reveals how different generations can work together. "Age and rank used to correlate. Now the world has changed."

Meeting Halfway

Renee Hillman, 22, is the marketing director for Raleigh, North Carolina-based Concept 2000 Realty Inc., a 17-employee firm. She agrees that today's job market, combined with Gen Y's tech-savvy abilities, has made people in her age group very optimistic. "We have lots of expectations paywise and respectwise when we're first going into a job. We've been overwhelmed with options," she says. "In fact, I left my last job because I felt that my work wasn't appreciated or my opinion valued." What do Gen X leaders need to realize about today's younger twentysomethings? "Remember that we're not that much younger than you are. Speak to us and involve us," she says.

Her boss, Sheri Phares-Moritz, 27, Concept 2000's owner, says the younger twentysomethings in her company want instant advancement, total involvement and regular bonuses. She and Hillman discuss a raise every six months. "She lets me know her worth," Phares-Moritz says with a smile. Even though the age difference isn't huge, Phares-Moritz feels light years away from her younger workers in what she's experienced in the working world. When she told her Gen Y employees that one of her first jobs in the mid-1990s had a salary of only $18,000, they were amazed. "For a whole year?" they asked.

Phares-Moritz constantly assigns of-ficial benchmarks so she's ready when Gen Yers approach her for raises. "It gives me a tool based on company policy," she says. Discussions about raises often concentrate on long-term goals and on what employees' skills are worth. "They want change right now. You try to keep them focused and tell them the money will build if they stick with it."

Rothberg says Gen Xers misinterpret Gen Y's desire for more money and responsibility early on as a signal that they want to leave. That's because the groups have different time frames for advancement. "Gen Xers want to get two to five years on a re-sume or they think it looks bad. Gen Yers think that if they have two to five years in one place, they're not advancing."

And Gen Y is only the tip of a very large iceberg. The Millennials-the kids of the Boomers who will be entering the work force over the next decade-are hot on the heels of Gen Y and will have even higher expectations toward work, says Bill Strauss, co-author of Millennials Rising (Vintage).

For Gen X leaders, Gen Y is just a test-run for bigger changes ahead. Raines says that as today's teens move from the soccer field to the office, Gen X entrepreneurs can expect calls from anxious Boomer parents checking in on their children's career progress. "This is already starting to happen," she says.

The challenge for thirtysomething entrepreneurs is to keep everything in perspective and to acknowledge that times have changed since they started out in the early 1990s. Chuck the dues-paying mentality, Rothberg says, and stop trying to apply yesterday's rules to today's jobs. Failing to change is counter-productive, and Rothberg has seen leaders struggle. "Some Gen X company leaders refuse to acknowledge that reality has changed," he says, "and they're having a difficult time recruiting."

Making It Work

Here are some quick tips for working with Gen Y employees:

  • Explain your sense of hierarchy. Make sure your Gen Y employees under-stand why a hierarchy exists, and be prepared to alter your thinking. Take time to explain what kind of dues-paying is required to get employees to where they want to be in the company, and listen. Offer concrete benchmarks for advancement, and acquaint Gen Yers with business risk when discussing pay raises.
  • Add responsibility. Because Gen-eration Y wants more responsibility sooner, try to offer continuing training and mentoring. Gen Yers are enthusiastic when they feel their opinions mean something. "Gen Xers can start providing the initiative with Generation Y," Strauss says.
  • Focus on similarities. Both groups share similarities, including a positive attitude toward free agency and basically the same desires (the only difference being the expected speed in realizing those desires). Carolyn A. Martin, a master trainer for Rain--maker-Thinking Inc.-a New Haven, Connecticut, firm that researches the working lives of Americans born after 1963-and co-author of Managing Generation Y (HRD Press), believes that Gen X leaders have their work cut out for them in managing younger generations. Says Martin, "The challenge for Gen X will be translating their experiences and thinking."