Former Aetna CEO Ron Williams and The Conference Board's Rebecca Ray discuss their report on millennials' leadership qualities.

In coming years, the millennial generation will be poised to take over the C-suite from baby boomers. But what kind of leaders will they turn out to be? A new report sheds light on the leadership styles of millennials, and debunks some stereotypes. It turns out they are more like the older generation than originally thought, and the current differences are mainly due to the life stage that they are in, according to “Divergent Views/Common Ground: The Leadership Perspectives of C-Suite Executives and Millennial Leaders,” a report by The Conference Board, RW2 Enterprises and Development Dimensions International.

The Knowledge at Wharton Show on Sirius XM channel 111 recently featured former Aetna CEO Ron Williams, who is CEO of RW2 Enterprises and a vice chairman of The Conference Board, and Rebecca Ray, The Conference Board’s executive vice president of knowledge organization.

An edited transcript of the conversation follows.    

Knowledge at Wharton: It seems like this is the right time to do research on millennials in leadership.

Rebecca Ray: I think so. There has been quite a bit of research around millennials in general, and unfortunately quite a few of the popular headlines that we found in our research don’t necessarily ring true. But there has been less research based around millennials as leaders themselves, so when Ron Williams brought forth this opportunity to explore this, we just jumped at it. We thought it would be a great area to explore, because they truly will inherit the next generation of leadership.

Knowledge at Wharton: Ron, what was it that you saw that made you want to make this pitch?

Ron Williams: I do a lot of coaching with C-suite executives, and I also do a lot of speaking to leadership groups in companies, many of which have a lot of millennials. I was struck by the contrast in the expectations of the skills, experiences and attributes that CEOs indicated that they wanted to see in the next generation of leaders. When I talked to that next generation of millennial leaders, they had a very different point of view. So it seemed to me that there needed to be some high-quality work done to try to answer some important questions about talent development.

Knowledge at Wharton: How much of the generational switch are you seeing in terms of the leadership of companies?

“A lot of the differences that are talked about come from life stage – they’re not so much generational differences.” –Ron Williams

Williams: It depends a lot on the industry. In technology industries, there are a lot of companies that have CEOs and members of the C-suite who actually are millennials. In more established industries, they typically are two jobs, sometimes three, away from the C-suite itself. What that means is that within the next three years most of them will be within one or two jobs of the C-suite.

Knowledge at Wharton: Rebecca, you mentioned a moment ago that this research is about millennial leaders specifically, and not millennials in general. Why the distinction?

Ray: When we looked at the literature, there were a couple of seminal research projects that we thought were well done, and we thought rather than duplicate their great work, we would try to build on it. One that we particularly found helpful was that of Jennifer Deal and Alec Levenson, who are the co-authors of What Millennials Want From Work, which came out last year. Very well done, very large scale, very global in nature and it really helped us, along with a couple of other seminal reports, to think through how we would approach this project. But we felt it was important to go where there was less traffic, if you will, to carve a new path. There’s very little [research], comparatively speaking, about millennial leaders.

Knowledge at Wharton: Ron, your team dug into the lifespan of a millennial leader. One thing they found was that the length of time a millennial leader is looking to be in a job is not as short as many people may have assumed.

Williams: We were struck by a couple of important observations, one of which is they expected that they would remain with their employer. When you looked at the percentage that expected to remain for over 10 years, it was approximately 48%. If you think about the image in the popular press about [millennials’] job-hopping and lack of engagement, it really was surprising to see that the numbers were as high as they were, at least to me. There is another side of that equation: These are leaders, and that retention is based on the fact that the company has demonstrated their commitment to them by developing them and giving them promotion opportunities

Knowledge at Wharton: Some of them may not be at the leadership level yet, but they may be within one step of that.

Ray: There have been some very good opportunities afforded to millennials, at least among the folks with whom we spoke. They felt as though they were progressing at a pretty good rate. Also, what we found in the study was that in their earlier years, they expected to move more quickly, and that they had an understanding that as they moved through the corporate ranks, that these promotions would come with longer tenure at each step.

Knowledge at Wharton: I would think that if we are seeing millennial leaders in larger numbers who are looking to be in a position 10, 15, 20 years, that would have an economic impact in other areas as well — in real estate, for example. Real estate has been an up-and-down piece to the economy over the last few years; it could benefit from this.

Williams: It’s possible. We had a lot of assumptions that we were interested in validating or invalidating, and one of the things we learned is that a lot of the differences that are talked about come from life stage – they’re not so much generational differences. That was really an important fact. What that may mean is that whether it’s housing or starting a family or getting married, a lot of these things may perhaps come later to this generation, not that they won’t come.

Knowledge at Wharton: Rebecca, I also saw that the report found that these millennial leaders have a similar mindset to some older CEOs. It’s not truly the gap that maybe a lot of people may have been expecting.

Ray: There are some very interesting instances where CEOs, at least those in this study, and the millennial leaders that we surveyed, seemed to be sharing an awful lot of viewpoints about things. There are a couple of key areas, and perhaps we can spend a few moments talking about some of the differences. But they more alike than not and the differences are more attributable to life stage.

“It deflates the myth a little bit about millennials not being achievement-oriented. I think they are very goal driven.” –Rebecca Ray

While they are going to make choices that make sense for them as they move through the process, this is a generation that came into the workplace at a time when it was difficult to make as much money, comparatively speaking, as earlier generations had, and so they will always look to try to close that gap. They are also, generally speaking, much more saddled with school debt, and so starting a family, buying a home, are choices that may be delayed simply because they need to play catch up for a little while. Again, it’s a matter of life stages, not generational differences.

Knowledge at Wharton: Millennial leaders don’t necessarily like the open workspace that has become a fad the last few years. I find that interesting, because that seemingly really developed because of the millennial generation.

Ray: There are different views as to whether or not folks find that effective. CEOs, generally speaking, thought that was a more important element of workforce design than did millennials. And in fact, millennials and non-millennial leaders — regardless of generation — were less enamored of the open floor plan. They were also less enamored of flatter organizational structures. I think what they all wanted — and both millennial leaders and non-millennial leaders ranked these things higher than did CEOs — were flexible policies for vacation and work schedules, and then more flexible options for working remotely and collaborating virtually. It’s less about what does the workplace look like when they get there; it’s more about how do they work and where do they work.

Knowledge at Wharton: Ron, the flexibility issue is something that the business world has been back and forth on. It has to be decided almost on a case-by-case basis, correct? And I’m curious about your experiences with this when you were running Aetna.

Williams: Employees really do value it and it’s particularly attractive to working mothers. What I found when I was running Aetna is that it really contributed significantly to retention and employee engagement. There is a balance you have to find between what positions, what parts of the organization can work remotely, and which parts really need to work together in certain spaces. Like most things, it’s not all or nothing; it’s really figuring out how to use it, and also how to build the systems. For example, once messaging came online, people could message each other regularly no matter where they were and have a conversation, or then switch to the telephone. So I think it can be used very, very effectively, wisely in certain situations, with certain types of jobs, and at certain levels in the organization.

I do want to come back to the open office question, because it’s one I’ve done some informal questioning on, and if we think about it, it really came out of the technology sector, particularly on the West Coast. It tended to have more informal and collegial environments. The big difference is those are software development companies where getting the user of the software and the developer in the same space, iterating back and forth in an agile development way, really contributes lots of value. That’s really different from other types of industries, where people sometimes need to put their heads down and actually concentrate on what they are doing.

Knowledge at Wharton: I wanted to delve into the issue of corporate values, which, perhaps unsurprisingly, a lot of millennials believe is very important.

Ray: That’s right, although I would say that values have probably been important in every generation. But I think the difference here might be that these millennial leaders are perhaps more likely to walk to another situation where they feel that the values are more aligned with who they are and what they want to accomplish. What we heard pretty consistently was that these folks want to have an impact. They want to work for a company where their values are fairly aligned, and that’s very, very important to them, as well as other things that all of us would want — a respectful workplace where they are fairly compensated and treated with respect, that sort of thing.

When we looked at various values and asked millennial [and non-millennial leaders] at either early or late career stages, as well as CEOs, pretty much across the board all of them ranked “ideas, technology, and rational problem solving” as number one. They were very aligned on the view that there should be a purpose to the company, and when the company does well, it provides opportunities for communities and for its employees. It was also interesting to us to see that competition and achievement, as well as worldly success, were rated higher by millennials than it was by the non-millennial leaders and CEOs. It deflates the myth a little bit about millennials not being achievement-oriented. I think they are very goal driven.

Knowledge at Wharton: It’s not necessarily that I would expect them not to be achievement-oriented, but that you think of them as wanting to pick and choose where they seek that achievement.

Williams: I think that’s true. There is sometimes a willingness to look for that alignment. We always have to come back to the millennials we are looking at as a cohort where there has been a commitment by the company and demonstrated results by the millennial. That creates a platform for forward growth, forward evolution, and they have continued to be there because they believe they are in a company that meets their ethical beliefs, that has a good mission and good values.

Knowledge at Wharton: Ron, with this type of data — and again, also in light of your experience at Aetna — what kind of impact can the results you found really have on the structure and mindset of a company?

Williams: It’s a very important study. One of the things that boards of directors in major companies spend a lot of time on is talent management and talent succession. The board is the one entity that will be around past any individual CEO. And the question boards ask themselves isn’t where the next CEO will come from, but where will the one after that come from? So looking deep into the organization and trying to be certain that the company is attracting, retaining and addressing the needs of high potential talent that can give it a real competitive advantage in the future is extremely important. The implication in this data is that companies will have to begin to think about their development programs and employee-relations policies to be attractive and to move this generation through the chairs to get them ready for the C-suite opportunities.

Knowledge at Wharton: You could also potentially change the mindset of HR. The department can be a very important piece of the puzzle, especially when you’re talking about retaining employees and the cost savings that a lot of companies can achieve by being effective in that.

Williams: Absolutely. But this is the province of the CEO, senior management and the board, in terms of creating an organization and a culture, workplace policies and recognition-reward development that is attractive and rewards the kind of talent that is going to be necessary in the future.

Knowledge at Wharton: Rebecca, this data being relatively new, what kind of reactions are you getting? Some of your results fall right in line with cultural expectations, but some of are almost 180 degrees from current expectations.

“Part of the myth about millennials is that everything is [about] technology … but they still crave a lot of face-to-face time, a lot of soaking up the wisdom of other folks.” –Rebecca Ray

Ray: We’re just in the process now of being able to share this in forums like this one and also in public briefings. The companies with whom we have shared the data [told us that] when they looked at their aggregate data … they see themselves in this, and that much of this begins to ring true.

When you’re looking at the question of where the next CEO is coming from a couple generations away, it is an important responsibility. Also, for those of us who have been in the talent-management space — thinking about the methods by which the most effective ways to develop leaders can be proven — [we see it happening] through rotational programs for the most part, as well as through coaching and certainly some formal programs. But those rotational and developmental opportunities are the ones that are most effective, and quite often, they’re not leveraged to the extent that they could be, nor is internal coaching. Some of these younger leaders are absolutely hungry for more time with senior leaders, and they want access.

Part of the myth about millennials is that everything is about technology, and can they have a performance review in 140 characters? Well the short answer is, of course you can, but I’m not sure how valuable that is. They want to leverage technology to get things done faster and better, but they still crave a lot of face-to-face time, a lot of soaking up the wisdom of other folks. And this was an informal thing that we asked in focus groups: How many aspired to be a CEO? About one in five said that they would be interested in becoming a CEO. And some of the millennial leaders with whom we spoke had huge responsibilities, some really intense responsibilities. If that is any harbinger of who these folks are when they get to the top positions, we’re going to be in good shape.