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• Gen Z is lazy.
• They don’t take initiative.
• They’re too sensitive.
• They do what they want.

If you run a small or medium business, you've likey heard or felt some version  of this frustation. When expectations aren't met and performance issue repeat, it's natural to look for explanation.

This article isn't abput defending Gen Z or criticising business owners. The challenges are real, and in SMBs they're felt more acutely because every role matters. Instead, this article offers a more useful lens: what Gen Z behaviour is actually telling you about the way your business is set up to manage people.

The SMBs People Maturity Model ™ - Foundational, Operational, Strategic Stages

All of our consulting work is anchored in a simple SMBs People Maturity Model ™, which recognises that businesses operate at different stages of people maturity depending on their size, complexity, and growth phase.

Broadly, these stages are:

• Foundational – where expectations are informal, leadership is hands-on, and simplicity is a strength
• Operational – where structure, consistency, and manager capability start to matter more
• Strategic – where people systems are intentionally integrated to long-term goals and sustainable growth

None of these stages are right or wrong. Each is appropriate at different points in a business’ journey.

This article is written through that lens. Rather than suggesting there is one “correct” way to manage Gen Z, it explores how common Gen Z challenges show up at different stages of SMBs People Maturity Model ™— and how those challenges are not only normal, but manageable, when expectations are aligned to the maturity of the system.

Why Gen Z Feels Different at Work

Every generation is shaped by the conditions under which they enter adulthood and work. Gen Z entered the workforce in a materially different context to earlier generations — one shaped by constant technology, frequent feedback loops, disrupted education and early work experiences (COVID & Lockdowns), and ongoing economic uncertainty.

This has influenced how they communicate, how they interpret expectations, and how they assess effort versus outcome. Many are accustomed to environments where rules are explicit, feedback is frequent, and consequences are visible. In contrast, many workplaces — particularly in SMBs — still rely heavily on implied norms, informal correction, and “learning by watching.”

This context doesn’t lower standards. It changes how standards need to be communicated, reinforced, and applied. Where expectations are unclear or inconsistently enforced, friction is more likely to surface — and Gen Z tends to surface it earlier and more visibly.

Gen Z as a “People System” Stress Test

Gen Z doesn’t create people problems.
They expose them.

Small and medium businesses often operate with lean structures, informal processes, and high trust. These can be strengths — until expectations increase faster than the system supporting them.

When clarity relies on individuals rather than structure, when feedback is delayed, or when standards are unevenly applied, behaviour starts to look like attitude. What’s often happening instead is a mismatch between expectations and system maturity.

The 3 Most Common Gen Z Challenges in the Workplace (SMBs)

Across industries, business owners consistently raise the same challenges when discussing Gen Z at work. This article discusses the three most commonly experienced.

1. Gen Z Communication Norms At Work

Gen Z are often described as difficult to communicate with — not because they lack opinions, but because how they communicate doesn’t always align with workplace expectations.

Many are confident expressing views and setting boundaries in familiar or values-aligned settings. Friction tends to arise in situations that require informal judgement — speaking up in person, navigating hierarchy, or having uncomfortable conversations. In these moments, communication may shift to delayed responses, heavy reliance on messaging, or disengagement from conversations that feel unclear or emotionally charged.

The tension here has two sides.

On one side, Gen Z brings communication habits shaped by digital environments where clarity is explicit and disengagement is easy. On the other, many SMBs rely on unspoken norms — “you’ll know when to speak up”, “just use your judgement”, “we expect you to tell us if there’s a problem”.

Neither approach is wrong. But when these assumptions collide, misinterpretation follows.

What looks like poor communication is often a gap between how communication is expected and how safe or clear those expectations actually are in that environment.

2. Gen Z Feedback Sensitivity and Performance Conversations

Gen Z are often described by their managers as “too sensitive to feedback” or as taking things personally. For many managers, even routine performance conversations can feel heavier than expected.

What’s usually at play is not an inability to receive feedback, but a mismatch in how feedback is delivered and when it shows up. Many Gen Z employees are accustomed to frequent, informal feedback and early course-correction. In contrast, a manager may delay feedback until an issue has become noticeable or frustrating.

When feedback arrives late, bundled with emotion, or without clear reference to agreed expectations, it can feel disproportionate — even when the message itself is reasonable. This is especially true in environments where feedback is rare when things are going well.

Neither side is doing anything wrong. The friction arises when expectations about feedback timing, tone, and purpose aren’t aligned with the maturity of the system delivering it.

3. Gen Z Engagement, Effort, and “Doing the Minimum”

Concerns about Gen Z “doing the bare minimum” come up frequently in SMBs. Leaders describe employees who appear disengaged, unwilling to go above and beyond, or overly focused on balance rather than effort.

What’s often being observed is not a lack of work ethic, but a difference in how effort is understood and expressed. Many Gen Z employees place strong value on clarity, fairness, and visible outcomes. When expectations around effort, ownership, or progression are vague, engagement can drop quickly.

In smaller businesses, where roles are fluid and contribution is often defined informally, this can be misread as indifference. In reality, effort tends to increase when people understand what “good” looks like, what matters most, and how their contribution connects to outcomes.

Again, neither perspective is inherently wrong. Friction arises when expectations around discretionary effort exceed what the system clearly defines or consistently reinforces.

These frictions are real — but they don’t exist in isolation. How they play out depends heavily on the maturity of the people system they sit within.

How These Issues Show Up Across Stages of the SMBs People Maturity Model ™

The challenges above aren’t unique to any one type of business. What changes is how strongly they’re felt, and how easily they can be addressed, depending on the maturity of the people system.

This is where the SMBs People Maturity Model ™ helps — by clarifying what’s normal at each stage and what actions work without adding unnecessary complexity.

Foundational

At a Foundational stage, people practices are simple and informal. Expectations live in conversations, leadership is hands-on, and issues are dealt with as they arise.

In this environment, Gen Z challenges often feel constant and personal — not because they’re worse, but because there’s little structure to absorb them.

Micro-example:

A Gen Z employee waits for direction rather than stepping in. The owner sees this as a lack of initiative, but there’s no shared understanding of ownership beyond “help out where you can.”

At this stage, Gen Z can be managed well — but only when expectations are stated plainly, reinforced quickly, and kept simple. Friction is normal when clarity depends on individuals rather than systems.

Operational

At an Operational stage, the business has grown. Policies exist, managers are in place, and expectations are higher — but consistency and capability often lag.

This is where Gen Z challenges often feel most frustrating. Not because behaviour has worsened, but because the system is now being used more often, and its gaps are exposed.

Micro-example:

A manager avoids regular feedback, then escalates suddenly when performance slips. The Gen Z employee reacts defensively, and the manager concludes they’re “too sensitive.”

At this stage, friction is a sign that the business is stretching into structure. What’s needed isn’t more rules — but better support for managers.

Strategic

At a Strategic stage, expectations are clear, feedback is routine, and managers are equipped to address issues calmly and early.

Here, Gen Z rarely stands out as a “problem generation.” Not because they’ve changed, but because the system removes ambiguity.

Micro-example:

Clear role outcomes and regular check-ins mean feedback is normalised. Small issues are corrected early, and performance conversations stay factual rather than emotional.

At this stage, Gen Z issues don’t disappear — they simply stop being generational.

The Point That Matters

None of these stages are better or worse. They reflect different business realities.

Every stage of people maturity can work with Gen Z — problems arise when expectations exceed the maturity of the system.

When that mismatch occurs, normal friction is mislabelled as attitude, entitlement, or work ethic. When expectations are aligned to what the system can genuinely support, those same challenges become manageable — at any stage.

Next Steps and SMBs People Maturity QuickScan ™

The question isn’t:
“What’s wrong with Gen Z?”

A more useful question is:
“Are our expectations aligned with the maturity of our people systems?”

Answering that honestly often does more to improve performance, engagement, and workplace harmony than any generational debate ever will.

Not sure where your business sits right now?

The SMBs People Maturity QuickScan ™ is a short diagnostic designed to help you understand whether your people practices are currently Foundational, Operational, or Strategic — and what that means for managing challenges like those described above.

It takes around 10 minutes and provides a practical snapshot of where your system is supporting you — and where expectations may be stretching it.

If this article reflects what you’re experiencing in your business, a short conversation can help you make sense of it.

I offer a free 30-minute discovery call for SMB owners who want to talk through what’s showing up in their people practices, how it relates to their stage of maturity, and what practical options make sense — without jumping ahead of where the business actually is.

Further Reading: Gen Z Research Reports

1.  SMBs People Maturity Model™

2.  McCrindle Research: Understanding Gen Z in the Workplace research summary on Gen Z expectations, feedback and workplace motivations.

3.   McCrindle Research: Generational Worker Profiles Infographic

4.  Deloitte 2025 Gen Z & Millennial Survey — global insights on values, work/life balance and career expectations.

5.   Gallup’s Generation Disconnected Data on Gen Z in the Workplace

6.   Microsoft Work Trend Index Report describes high message volume and fragmented work patterns (e.g., high daily email volume, rapid skimming), increasing the need for clearer priorities and rhythms (generation agnostic).