MANY pejorative comments are made about Generation Y. They are accused of being divas at work who expect everything to fall into their laps.

Supporters of this generation – born in or after 1980 – counter that its members are independent, innovative and creative and ready to engage in companies that are prepared to offer the environments in which they thrive.

Jonathan Austin, chief executive of Best Companies, which compiles the Sunday Times 100 Best Companies to Work For supplement, argues that debate about the merits of the Y generation – aka the Millennials – compared with Generation X (born 1966-79) and the Baby Boomers (born 1942-65) is pointless. Generation Ys are what they are – shaped by their times – and demographic changes and the global hunt for top talent means they are much in demand.

“Generation Y people are looking for organisations that offer more than money,” said Austin. “I’m not saying money isn’t important – some of them are carrying debt from university – but our data show they are looking for a working environment in which they can continue to learn. They also want flexibility and a real work-life balance. They simply aren’t prepared to mortgage their lives to the company.”

Richard Alberg, senior vice-president of Kenexa, a global recruitment and retention specialist, agrees. He said Generation Y’s highly educated elite were particularly in demand because of the cutthroat global competition in which only firms with the smartest people can win.

With UK universities now turning out 250,000 graduates a year – many times more than they did a decade ago – companies might be expected to be awash with choice. According to Alberg, however, the attainment of 30% to 50% of those graduates is so disappointing that competition for the best of the graduate crop remains intense.

Meanwhile, Alberg said a much bigger “second population” of Generation Ys “with perhaps less to offer” were finding themselves more in demand than they might have expected because of changing demographics. The upshot is much more choice for Generation Y, and most companies are rethinking their strategies to reach, recruit and retain its members.

“The shop has to set itself up where people live,” said Alberg, referring to the new focus on social-network sites such as MySpace. “It’s actually easier to reach people now because they can be searched for in the places they tend to congregate online.”

But Mark Shaoul, head of marketing at Network Rail, jokes that he shuns some of the sites that others rave about as fertile recruiting grounds. “We probably would avoid Second Life [a computer-based world in which people can create an alternative self and lead a fantasy life],” he said. “We want people who are more interested in the real world than in spending hours in a virtual one.”

Shaoul argues that companies have to rethink the fundamentals of how they operate in order to recruit and retain Generation Y, and he has just written a paper to persuade Network Rail executives of that.

“This is all about the people we want to be managing Network Rail in 20 years,” he said. “We need to create an environment that gives Generation Y the flexibility and variety they want in work. We have to allow people to switch jobs within the organisation and still move up the ladder. We must let them build a portfolio career within the organisation. At the moment, people tend to stick with one discipline.”

Given that one of the characteristics of Generation Y is their lack of loyalty to a particular employer and their willingness to move around gathering experiences that will add to their employability, is it realistic to think that a Generation Y recruit will stick around long enough to lead an organisation? Shaoul believes it is possible, as long as companies offer the variety this generation want and do their best to identify and nurture home-grown talent.

To this end, Network Rail opened a leadership-training centre 18 months ago. Like other firms, it is also trying to lure the best by getting them young. It is already targeting school pupils and has moved its apprenticeship scheme – which takes 240 school leavers a year – online.

Companies including the accountants KPMG and Price Waterhouse Coopers and the Atkins engineering consultancy, all of which are among the Sunday Times Best Companies to Work For – are also responding to the challenge of Generation Y by offering all or some of the following: a broad range of experiences; early international postings; social-responsibility initiatives; development and learning opportunities; and a good work-life balance. All agree that salary matters but that money alone is a poor motivator of this generation.

Cancer Research UK’s head of resourcing, Rob Farace, said this was obvious at university careers events. “We are one of the few voluntary-sector organisations to do the milk round and we have graduates asking us to encourage more voluntary groups to attend,” he said. “They tell us they want jobs where they can make a difference. We have Oxbridge firsts who are now making our graduate-training schemes their first choice rather than coming to us after they’ve been turned down by the big professional-services firms.”

Despite all the agreement about Generation Y’s greater bargaining position, Alberg cautions against overstating the point. Even those in the strongest position – the cream of the Generation Y graduate crop – have to make a living at a time when that seems to require more money than it did before.

“Just look at the cost of housing,” said Alberg. “Work-life balance may not be on for the minority of very sought-after graduates. I feel they will have to work as hard as the generation before, although technology will allow them to work more flexibly.

“However, I think more of this generation will give it all up a few years down the line after deciding the six and eventually seven-figure sum isn’t worth it.”

And in fact some firms are already turning their backs on the idea of a “work-life balance”.

“We wouldn’t use that term now,” said Charles Macleod, Price Waterhouse Coopers’s UK resourcing leader. “We use ‘sustainable working experience’ and we offer a package that involves very busy and less busy times. This is a client-driven business where we work to deadlines. We make it clear when we visit universities that we will be demanding of graduates and their time.”

It may not be a complete picnic for Generation Y.

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