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Millennials and Their Employers Want the Same Thing. They Just Don't Know it Yet. The workforce is changing, but in ways it really isn't very hard for employers to live with.

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We're in the midst of a significant generational shift that is changing the face of work.

Baby boomers are retiring in droves, while millennials, those born from the early 1980s to the year 2000, have become the largest generation in the U.S. labor force. With the exodus of senior-level employees, organizations worry about "brain drain" and a "talent vacuum." These concerns are supported by new research showing a talent shortage that has risen over the past five years, to its highest level since 2007. In fact, 40 percent of employers across the globe report hiring difficulties. Management and executive skills are among the hardest to find.

Gen Xer's and millennials clearly have big shoes to fill. But at a time when they are needed to step in, millennials are notoriously difficult to retain. Research from Gallup shows they are the least engaged generation at work and are three times as likely to change jobs as non-millennials. The cost of millennial turnover in the U.S. is an estimated 30.5 billion dollars each year.

It's easy to pathologize millennials -- entitled and narcissistic come to mind -- but we need to take a step back and ask ourselves what's happening. What is needed to effectively manage this generational transition?

Related: 3 Touch Points to Better Engage a Multigenerational Workforce

In over our heads.

For starters, let's acknowledge that millennials are not operating in their father's workplace. Work has become increasingly flexible, virtual and distributed, which means that self-management is more important than ever. How many employers these days are not looking for a self-starter, someone capable of independent achievement and self-direction? ADP recently cited self-management as a "basic human need" in the evolving global workplace.

There is evidence, however, that the workforce is not fully prepared for the reality of self-management. For decades, psychologists have been studying development of psychological complexity into adulthood, and their research shows that self-management is an advanced and somewhat rare capacity, even among intelligent, educated professionals. Jane Loevinger used the term "ego development" to describe this kind of psychological growth, and William Torbert explained the evolution of "action logics" (see "Seven Transformations of Leadership" for an excellent read). Robert Kegan, a Harvard developmental psychologist, refers to "orders of consciousness," and has proposed that one of the most important developments in adulthood is the transition from what he calls the socialized mind to the self-authoring mind.

The socialized mind is what its name implies -- a worldview that develops based on forces of early socialization, including home life, school environment and so on. Socialization is a beautiful thing. Having mastered our instincts and moved beyond the simple eye-for-an-eye rules of childhood, we can truly take into account the wants and needs of other people and be shaped by them. We don't just follow social contracts to avoid punishment. We follow them because we care.

But today's world is demanding movement beyond the socialized mind, to self-authorship. This order of consciousness does not jettison socialization, but provides an independent seat of judgment from which to observe our social history and surround, rather than be run by it. We author our lives by weighing options and taking responsibility for our decisions. "The traffic made me late" doesn't work more than a couple times, because we acknowledge our choice in when we leave the house. It takes this level of maturity to effectively self-direct and self-manage, particularly when contexts are ambiguous and tasks are not externally-defined.

Related: Why Office Perks Aren't Enough to Attract and Retain Millennials

In large-scale studies, researchers have found that almost 60 percent of college-educated professionals have yet to reach the self-authoring stage of adult development. (The self-transforming mind, a later stage of development, is beyond all but a very few). These statistics lead psychologists like Kegan to state that we are "in over our heads," meaning that most of us need further development to effectively navigate the modern world. While age does not guarantee this kind of psychological evolution, it does seem to help. This means that the youngest members of the workforce may need the most developmental support.

Ready to swim.

Considering the pressing need for growth, there are two pieces of very good news when it comes to the millennial generation. First, they fully embrace the evolving nature of work. About two-thirds of millennials in certain business sectors have flexible working arrangements -- including time, location and role -- and the greater the flexibility, the higher they rate its positive effects. Indeed, PwC advocates for flexibility as a strategy to engage millennials. This indicates that the next generation is seeking out, rather than shying away from conditions that could put them in over their heads.

Second, millennials want to develop. According to Gallup, the "opportunity to learn and grow" tops the list of factors millennials look for in a job. Growth opportunities come in ahead of compensation, and far ahead of fun and informality in the workplace. So while a ping-pong table or slouchy dress code at the office may not be a bad thing, it is not where employers should turn to retain millennial talent. They can actually retain talent by meeting their own need to develop talent.

In their new book, An Everyone Culture: Becoming a Deliberately Developmental Organization, Kegan, Lisa Laskow Lahey and their collaborators, describe organizations that are already facing head-on the challenges of human development. The companies they describe, including an entertainment and real estate company, and a hedge fund, do not see personal growth as a touchy-feely extra-curricular, but rather an integral component of business success. And these companies are among the most successful in their sectors, profit-wise and workforce-wise. Next Jump, for example, a deliberately developmental ecommerce firm, has less than 10 percent turnover in its largely millennial workforce -- quite an accomplishment in an industry that averages 40 percent turnover across generations.

At a time when generational dynamics are shifting, we cannot expect to do business as usual. This is new territory, and no one has the right answer. But looking through the lens of human development can be clarifying.

Related: Generation Z: Are We Ready for the New Workforce?

A perfect fit.

When we consider these three factors -- the need for modern organizations to renew talent, the changing demands of the modern workplace and the hopes and desires of the next generation -- they fit together like pieces of a puzzle. There may be less of a problem here and more of an opportunity. The next step is for organizations to acknowledge today's most urgent developmental challenges and find ways for the workforce to grow together into the future.

Here are some suggestions for creating a millennial-friendly work environment:

1. Embrace developmental frameworks. The business world needs to be well-versed in adult developmental psychology. One accessible resource is Changing on the Job: Developing leaders for a complex world.

2. Offer employees both challenge and support. When millennial employees are in over their heads, they need the freedom to try swimming. But if they sink, offer a life raft rather than punishment. An employee can go further if he feels someone has his back.

3. Invest in developmental opportunities at all levels. It's common for employees to wait many years before receiving offers of leadership development programs or professional coaching -- if at all. Weaving developmental opportunities into organizational culture at all levels can help retain millennials and make them better contributors in the long-run.

Christina Congleton & Katie Heikkinen

Human Development Specialists

Christina Congleton, Ed.M., is owner of Axon Leadership, a consultancy specializing in developmental services for Gen X and Millennial professionals. Katie Heikkinen, Ed.D., is Director of ITC Online at Minds at Work, where she focuses on bringing the Immunity to Change process to scale online.

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