Keywords

1 Introduction

Today’s conditions in the workplace are frequently characterized as the worst for the economy since the Great Depression and the hunt for a job becomes extremely difficult for candidates, as well as employers complain that it is impossible to find suitable employees. Companies are having difficulties in attracting new employees, who are ready to stay with the company for a long time; therefore, they experience costly recruitment and increasing average cost per employee. From the candidate perspective, the problem is that they are not able to find a position that fits their desires. Talent acquisition and new Millennial generation for organizations is one of the main challenges of the future (Deloitte 2017).

Currently, the labor market is dominated by three generations of employees—Baby Boomers, Generation X, and Millennials (Milligan 2014; Beaman 2012). Research shows that generations have different characteristics which do not simply relate to their stage in life (CIPD 2008). Part of employees called “Millennials” have been very often discussed topic in the last couple of years, especially after Gallup (2016) analytics has paid extra attention to youth at work market. Just the fact that Millennials are the least engaged generation shows the relevance of the statement that expectations of employers and employees do not match. According to Gallup (2016) research Millennials seem to be not understood at work.

Human capital is the most valuable resource in post-industrial society (Kartal et al. 2017); therefore, for a growing number of employers, understanding the needs and expectations of employees, especially Millennial generation, is crucial: attracting talent requires to know what exactly they expect from the employer (Maurer 2017). Moreover, the expectation match is also important to retain employees (Roepe 2017).

According to Business Dictionary (2017), expectation is an “average probability of a chance occurrence.” However, Longman Exams Dictionary (2006, p. 517) states that expectation in plural has the following meaning: “a feeling or belief about the way something should be or someone should behave.” According to the definitions, for this research, an expectation of employee is a belief about the way a certain job should be and how an employer should treat employees. According to Noe et al. (2016), there are two types of expectations: explicit expectations that we usually see in the job contract and unspoken expectations, many times also called implicit expectations, and referred to as “a psychological contract” (Noe et al. 2016). The psychological contract in contrast to explicit expectations in not formally written on the paper. As noted by Rigoni and Nelson (2016), only half of the employees have been informed and have understood what is expected from them.

Milligan (2014) believes that each generation has different ways or so-called models of how they want to build a career and understanding these models could help employers to attract and work with the employees from different generations. Similarly Roepe (2017) states that employers must adjust to the young employees and HR professionals must update their strategies in order to retain the youth in a company. Younger generations of employees want that expectations are clearly explained and will go to the employer that will give the best clarity of expectations and a clear path of the career. The importance of expectation match is equally important to retain employees (Roepe 2017).

This chapter aims to measure the gap between expectations and realities in the Latvian job market with a major focus on generational differences and Millennials. The chapter answers two major research questions: RQ1: what are the gaps between workplace expectations and reality in five aspects of the work environment—work–life balance, job meaningfulness, salary and transparency of remuneration system, career and growth possibilities, and relationships between colleagues and management? RQ2: which generation experiences the biggest gap between expectations and reality? This chapter looks at generational differences from a fresh perspective, namely, that it investigates which generation is ready to tolerate a greater difference between expectations and workplace reality. This empirically based look at differences between desired and real work conditions should be useful to managers for understanding the reasons for unrealistic high expectations of potential employees. By understanding the acceptable level of mismatch between expectations and reality in respect to different generations, HR managers can better tailor job offerings. Moreover, as expressed by Twenge and Campbell (2008) organizations and managers who understand various aspects of generational differences can better accommodate differences or exert constructive counterpressure.

2 Generations in Today’s Workplace

The generational theory with commonly used generational names—Veterans, Baby Boomers, X, Y, and Z—emerged and developed in the USA in the second half of the twentieth century. Karl Manheim, a leader in generational research, in 1950 defined that generation is a group of people of similar age who have experienced historically significant events and social changes over a period of time, which became part of the individual’s identity and affected the views of the world (Spiegel 2013). As Milligan (2014) has described, there are 4 generations in the current job market: Traditionalists (born 1922–1945), Baby Boomers (born 1946–1964), Generation X (born 1965–1980), and Millennials (born 1981–2000). There is also Generation Z, but this generation is just entering the job market (Ukleja and Espinoza 2016).

Baby Boomers (also called demographic boom generation) still attract researchers because they are a phenomenal generation that has changed a lot in the workplace. As they grew up, they challenged traditional values and earned a reputation for charismatic rebels (Gotsill and Ball 2010). Although the demographic boom generation was by nature rebellious, they still look at work as an adventure, and for them, career and career advancement is an important factor. The term “workaholic” was created to describe this generation (Hobart and Sendek 2014) and a long-term career in one organization is quite typical for them.

Generation X was the first generation to fully question the social contract “one job/one company.” They perceive the work as a mutual agreement—“I work for you, giving you time, energy and effort, but you give me a salary. I don’t owe you anything else” (Hobart and Sendek 2014). Their greatest value is the balance in their lives. The Generation X introduced the idea that their private life deserves the same attention and respect as working life (Gotsill and Ball 2010). Representatives of this generation were the first who wanted to take responsibility for their careers and to introduce terms like “professional development,” “career planning,” and “work–life balance.” Representatives of this generation are looking for emotional security; they are informal and independent (Abib-Pech 2013).

The next generation is Millennials, also called Generation Y. Susan Milligan (2014) states that this generation’s “needs are so different.” According to Roepe (2017), technology has a huge influence on generational differences. They are often called “digital natives” because they have grown up in an information age, a world where technology is a lifestyle. Generation Y does not know everyday life without technology—a portable or stationary computer, mobile phones, the Internet. High-speed technologies have contributed to the situation that Millennials do not accept the word “wait” (Gotsill and Ball 2010; Vaterlaus et al. 2015). This generation does not regard technology only as a means of helping to do more work or ensuring work–life balance; technology is an integral part of their lives. Generation Y is the most educated and most skilled in the labor market; it feels very protected and structured (Ukleja and Espinoza 2016).

Another significant difference between the Millennials and previous generations is the lack of formalities that occur when the Generation Y communicates with senior management (Lipkin and Perrymore 2009). At workplaces, Millennials’ behavior can be considered inappropriate because they are fearless and inconspicuous; they freely offer their opinions without taking into account the corporate hierarchy and disregarding generally accepted norms (Erickson 2010; Ukleja and Espinoza 2016). Generation Y has challenged and changed the long-term corporate formality (Lipkin and Perrymore 2009; Caraher 2014). The Millennials want leaders to engage in their professional development. For example, Gallup (2016) research believes that Millennials expect meeting their managers once a week for better performance and higher engagement. Ernst & Young (2015) found they would like to have “opportunities to learn from within.”

This generation feels good when doing multiple tasks at the same time and wants to learn new things quickly and take on new challenges (Hobart and Sendek 2014). The Generation Y has high self-esteem because they are told that they can be anything and can achieve whatever they want, regardless of their origin, and they are aware of their strengths (Lipkin 2009). Millennials value diversity, corporate social responsibility, optimism, and involvement in decision making. They have high expectations for their employer and they want direct and fair treatment from their managers (Ukleja and Espinoza 2016). As Bates (2016) mentions, young people have expectations from employers, and they live with a thought “What investments are you making in me?”

Still, Millennials care a lot about the meaningfulness of their jobs. Their survey conducted in the USA shows that students in the age group from 15 to 29 believe that the work should be meaningful, and for them, the sense of giving back or working for society is a key factor in choosing the ideal future employer. Millennials are looking for something “bigger than themselves” in life to feel fulfilled (Bates 2016).

Currently, employees born after 2000, Generation Z is coming into the job market (Bates and Miller 2017). In some sources, the beginning of the Z generation’s birth year is not the year 2001, but the year 1995, as the generational boundaries are becoming more and more volatile and more specific, and generations are more characterized by their values than their birth years (Keldsen and Koulopoulos 2014). Ryan (2017) believes that Generation Z are the ones born between 1994 and 2009 and that after 2009 the births of the Alpha generation started.

There are fewer members of the Generation Z than the Generation Y because the birth rate in the Western world has decreased rapidly. Generation Z’s values and attitudes have been influenced by the experience of the 2007–2008 mortgage crisis, African refugees, and ISIS (Ukleja and Espinoza 2016). This is a generation that has not experienced the events of September 11, 2001, in the USA, and for them, it will only be an event that will be told in history. Generation Z representatives “do not remember the time before the emergence of social media and, in their opinion, social media is not a medium, but a means of communication and learning, a tool of world cognition” (Dorsey 2016, p. 14). Only time will tell what the impact of the Generation Z on the labor market will be. They have a very strong ability to use the latest information technologies and have the ability to think creatively. However, despite this, the Millennials believe that the Generation Z representatives will need a great deal of support to enter the labor market, as their professionalism and personal characteristics (maturity, patience) are not sufficiently developed, but they can be learned through learning and through experience (Deloitte 2017).

To summarize, the major differences between generations fall into one of the five categories: work–life balance, job meaningfulness, salary and transparency of remuneration system, career and growth possibilities, and attitude toward colleagues and management. According to the theory, the following relationship is predicted:

Hypothesis 1

: Millennial generation is ready to tolerate the smallest gap between what they expect from the workplace and the real situation.

3 Methodology

The empirical setting for this study is EU member state Latvia. In December 2017, the number of permanent residents of Latvia was 1.93 million, which is 37.8 thousand less than it was in January 2016 (LR Central Statistical Bureau 2018). During the last 10 years, the number of inhabitants has decreased by 277.7 thousand, or by 12.5%; moreover, due to an aging population, the number of the employable population has decreased by 17.5. In 2016, 31.88% of the economically active population were representatives of the Y generation, 46.85% of the X generation, and the fifth or 21.26% of the Baby Boomers generation.

In the situation with decreasing population, still, the Central Statistical Bureau (CSB) shows that in the third quarter of 2018 Latvian unemployment rate constituted 7.0%; moreover, youth unemployment rate constituted 11.0%. Unemployment reduces people’s life satisfaction (Aysan and Aysan 2017) and for almost a decade Latvian unemployment rate exceeds European Union Average (LR Central Statistical Bureau 2018).

The situation in the Latvian labor market and its future prospects are determined not only by the abovementioned population structures and demographic indicators, but also by the high migration from Latvia to other European Union countries, the imbalance of labor demand and supply (mismatch of skills and education), and the high proportion of employees with comparatively low pay rates. According to the forecasts of several Latvian economists, by 2030, the major changes in labor demand are expected in the service sector, which is also in line with global trends. The economists point to a growing demand for managers and different professionals who need appropriate education, as well as for the professions and skilled workers (Kassalis et al. 2014).

3.1 Respondents

The research is based on quantitative methodology. Data were gathered by an online survey in the spring of 2018, and the total number of respondents was 2010. For the purpose of this research, respondents born before 1964 were assigned to Baby Boomers (n = 198), those born between 1965 and 1980 belong to Generation Y (n = 764), Millennials are born between 1981 and 2000 (n = 1051), and all respondents born after 2001 belong to the Generation Z (n = 33). Thus, 50% of the sample is represented by Millennials, 38% are Generation X, 10% are Baby Boomers, and only 2% are representing the Generation Z. The most important sample demographic characteristics are presented in Table 1.

Table 1 Respondent profiles
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Respondents representing Generation Z were excluded from the analysis of factor importance and gaps between expectations and reality because only five of them were employed and they were not able to evaluate the workplace realities yet.

3.2 Questionnaire Development

The questionnaire included 11 demographic type questions, a section measuring the perception of importance of five workplace factors, and factor blocks measuring expectations and reality (2 × 29 items) for five workplace factors: work–life balance, job meaningfulness, salary and transparency of remuneration system, career and growth possibilities, and relationship with colleagues and management.

The perception of the importance at workplace factors sample statement is “Job for me is an opportunity to prove myself,” and respondents were asked to indicate their level of agreement with the statement in four-point Likert type scale. For measuring workplace expectations, respondents were asked to indicate the level of importance of the factor in four-point Likert type scale where 1 was assigned to “not at all important,” 2 to “of little importance,” 3 to “moderately important,” and 4 to “absolutely essential.” For example, a statement “Possibility to learn at the workplace” measured respondents’ perception of the importance of growth possibilities.

After expectation section respondents were asked to evaluate their current employment experience and only those who were employed proceeded to the final section. The number of respondents employed at the moment of the survey was 1778, 178 of them were Baby Boomers, 715 Generation Y representatives, 880 Millennials, and only 5 belonged to Generation Z. Only they completed the final section of the survey. In this section, they had to state their level of agreement with the statements about their current job in four-point Likert type scale where 1 was assigned to “strongly disagree,” 2 to “disagree,” 3 to “agree,” and 4 to “strongly agree.” The factors measured in expectations part and in workplace reality part were identical, for example, in the expectations part statement “fair remuneration principles,” and in the reality part, statement “remuneration principles in my organization are fair to everyone.”

Before analysis, Cronbach’s alpha coefficients were calculated for all workplace factor blocks (see Table 2). All factor blocks show acceptable internal consistency reliability for expectations and reality, except that expectation scale regarding career and growth possibilities shows alpha below 0.7. This can be explained by the fact that the perception of the importance of this factor still is a personal factor.

Table 2 Descriptive statistics
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4 Analysis and Discussion

Mean values in Table 2 show that for all workplace factors expectations exceed reality. Paired sample t-test was used to evaluate the differences between expectations and reality, and it showed that in all five workplace factors expectations appeared to be significantly higher than reality (t ranged between 21.42 and 44.82; all p < 0.001). Differences in percent were the following: salary and transparency of remuneration system expectations exceed reality by 23%; career and growth possibilities and work–life balance expectations are 17% higher than reality, whereas job meaningfulness and relationships with colleagues and management appeared to be evaluated only 10% lower than expected values.

Figure 1 presents the result of the first section of the questionnaire—an evaluation of the importance of five workplace factors according to the respondents of three generations.

Fig. 1
figure 1

Generational perception of workplace factor importance. (Source: Survey results and own calculations)

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Kruskal–Wallis test showed that differences between generations are statistically significant for an opportunity to prove oneself (Chi-square 12.73**), the importance of others’ opinion (Chi-square 12.74**), the presence of new technologies at the workplace (Chi-square 122.96***), and the importance of work being interesting (Chi-square 23.21***). Interestingly, differences between appreciation of teamwork appeared not significant (Chi-square 6.46; p > 0.05). Thus, teamwork is an equally important part of work life for all generations of respondents. According to Chi-Square test, generation has a small to medium effect on importance of the factors (Pearson Chi-square = 61,108***, Phi = 0,185***, and Cramer’s V = 0,107***). This finding is consistent with Macky, Gardner, and Forsyth, who found that differences in attitudes toward work and careers between generations exist, but effect size tends not to be large (Macky et al. 2008).

All respondents evaluated interesting work and an opportunity to prove themselves as more important factors. Similarly, Beaman (2012) states that Millennials are concerned with self-fulfillment. All generations showed low need for social approval; however, Millennials evaluated this aspect higher than others. This finding contradicts Twenge and Campbell (2008) who found that in the USA generation Y has a lower need for social approval.

Views on technology also vary across generations (Beaman 2012) and, as seen in Fig. 1, Millennials consider working with technologies more important than other generations. This result proves the statement that generational differences are both technological and psychological (Twenge and Campbell 2008).

Further gaps between expectations and reality (average difference between all five workplace factors) were calculated and differences assessed between generational cohorts (see Fig. 2).

Fig. 2
figure 2

Gaps between expectations and reality for workplace factors (n = 1773). (Source: Survey results and own calculations)

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Average gaps between expectations and reality were assessed for differences between generations. Kruskal–Wallis test showed that differences between generations are not significant for work–life balance (Chi-square 5.47; p > 0.05), transparency of remuneration system (Chi-square 4.01; p > 0.05), and job meaningfulness (Chi-square 4.90; p > 0.05). Whereas for career growth possibilities and relationships with colleagues and management differences appeared to be statistically significant (Chi-square 5.9.89** and Chi-square 23.15***). For both factors, Millennials indicated the smallest gap. This result is in line with CIPD (2008) which stated Millennials will be more engaged in work if they have access to personal development.

Similarly, CIPD (2008) indicated that Millennials want work–life balance and over half feel they can achieve it. This research shows that in Latvia Millennials are the ones who experience the smallest gap between expectations and reality in respect to work–life balance; however, the difference from other generations is not statistically significant.

Finally, the total average gap for all five workplace factors was calculated and differences between generations unanalyzed (see Fig. 3). Total gap differences appeared to be statistically significant, as indicated by Kruskal–Wallis test (Chi-square 9.194; p = 0.027).

Fig. 3
figure 3

Total average gap between expectations and reality for workplace factors. (Source: Survey results and own calculations)

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The findings show that Generation X is the one who is experiencing the biggest discrepancy between expectations and reality, whereas Millennials are ready to accept the smallest difference. Thus, the results are in favor of the hypothesis that Millennial generation is ready to tolerate the smallest gap between what they expect from the workplace and the real situation and are in agreement with what was found by other researchers that Millennials “want everything to happen instantly” (Kamau et al. 2014, p. 38).

5 Conclusion

The aim of this research was to measure the gaps between expectations and reality in the Latvian job market with a major focus on generational differences and Millennials. The results of the empirical assessment show that significant gaps exist between workplace expectations and reality—especially related to transparency of remuneration system, career and growth possibilities, and work–life balance.

Generation X experience the biggest perceived gap between expectations and reality in the Latvian job market, whereas Millennials are the generation with the smallest gap. Thus, it can be concluded that Millennials are not ready for a compromise, and, if they do not get what they want, they will sooner leave the country and search for more appropriate job elsewhere.

This research has certain managerial implications. While it is important to avoid generalizations, still generational theory proved to be helpful for HR professionals in Latvia. Understanding employee expectations may help to attract and retain a workforce. As stated by CIPD (2008), by understanding what motivates employees, an organization can develop a compelling value proposition to engage and reward them. For managers, it is important to understand that readiness to tolerate the gap between expectations and reality decreases: Gen X is ready to tolerate the largest gap between expectations and reality, whereas for Gen Y the acceptable gap is significantly smaller. To attract and keep talent, Latvian organizations should firstly ensure transparency and fairness of remuneration systems and secondly should invest in learning and growth.

This research has certain limitations which are leading to future research. First, the results are context limited leading to limited generalizability of findings. Further analysis could be done in other contexts. The results are based on subjective opinions of the respondents what might lead to common method bias. Furthermore, differences within generations between could be assessed. Future research should include more respondents from generation Z, which is currently entering job market and is of interest for researchers and practitioners.