BUSINESS leaders need to challenge their thinking on how they manage their workforce if they are to survive the next generation taking the reins of business, says one of Australia's foremost business relationship executives.

Speaking about Generation Y - a demographic predicted to be bigger than the baby boomers - Deborah Truter says planning for our future workforce is one of the key challenges facing Australian organisations if they are to achieve the maximum potential from the talented wave of young people re-defining the way we do business.

"Organisational change is at the core of understanding the four-and-a-half million Australians born in the '80s and '90s known as Generation Y or, more appropriately, Generation Why?" says Ms Truter.

"Leaders are intensely interested in the emergence of this generation as in the near future, two experienced people will leave the workforce for every one who enters it.

"This will have a significant impact on business and how we lead, attract and retain this talented generation."

Ms Truter says an Australian survey found that nearly 60 per cent of organisations had already experienced a shift in the expectations of employers and their Generation Y employees -and yet only 21 per cent believed they were managing this shift successfully.

"Appealing to the next generation of Australian workers will greatly influence an organisation's ability to sustain a competitive advantage in the coming years," says Ms Truter.

"High staff turnover greatly affects performance and service quality, so managing this transition will be fundamental to building sustainable organisations - and to get the best from Generation Y workers."

While the offer of a flexible workplace and a better work-life balance are important to this generation, Ms Truter says what they really want is respect, an understanding of the big picture and an active role in the decision-making process.

"They want to be part of creating their future, as well as leaving our planet a better place. While there is an emphasis on money, there is a greater desire to create a sustainable environment and create more harmonious, successful communities,"
she says.

"What is required is an underlying commitment for organisational change from management - a philosophy that is preached and practised, not just talked about. There will be a cost for businesses that alienate this entrepreneurial, fresh-thinking Generation Y in the form of higher recruitment costs and lower returns.

"While it may not always prove disastrous, it will mean minimal growth for a lot of businesses which don't manage this group correctly."

Ms Truter says Generation Y's insistence on a more people-orientated workforce and on engaging in work that makes a positive contribution to the community is a reflection on their different upbringing.

"As the 'self esteem generation' raised in the most prosperous of economic times, these Yers know they have options and simply won't put up with settling for anything less than their high expectations," Ms Truter says.