The immediate aftermath of the 2008 global financial crisis (GFC) was ironically a time of hope for many of us who saw the opportunity to reshape the architecture of the short-term profit-driven institutions that had unleashed this worldwide crash. While we seem to have fallen back into “business as usual”, I am excited by what I see as the erosion of what is wrong with capitalism, and many UK companies are at the forefront.
These pioneers are undertaking the difficult challenge of eschewing short-term financial profits that narrowly focus on shareholders in favour of longer-term economic, environmental and social gains that consider the interests of their stakeholders. This pivot is complex and involves every part of a company’s operations. I will focus on one key aspect that to me is the most promising in terms of achieving this culture change—talent recruitment and retention.
Based on my own experience with MBAs and executives in the UK and around the world over the past 15 years, juicy paychecks and perks are no longer the only draw. While attractive, for a substantial minority such traditional conditions are no longer sufficient.
To illustrate, I recently sat in a meeting with senior executives at one of the UK’s leading financial institutions, listening with unexpressed delight as they shared their worry with me that the financial sector has fallen into such ill repute that “talented individuals no longer want to work in banking”, and those that do, leave within a few years.
In addition to the reputational fallout for the financial sector post-GFC, there are other reasons for this trend. For one, the communications and information revolutions have made possible a new level of awareness about circumstances and events occurring in every corner of the globe. There is a growing concern with the state of the world in general—from poverty and continued human rights abuses to environmental deterioration and climate change.
Such concerns are felt by a growing cross-section of corporate executives who realise that social and environmental causes are too important to be sidelined. People no longer want to separate how they make their money and how they find meaning in their lives—they seek to combine markets and human values.
In one of my MBA electives last term I posed the following question to a class of 80-plus MBA students: “If you were being recruited by two major financial institutions, and the one difference between their offers was the possibility that after working in the company for two years, they would support your working on a specific deliverable with the social venture of your choice—which company would you choose?”
Every student opted for the company that promises such an option.
One might posit that this rather idealistic desire to “change the world” will last as long as these aspiring transformers are free from marriage, children, mortgages and the ensuing financial worries that drive many to seek monthly paychecks and annual paid vacations. There is little doubt that money is great, otherwise, why would so many people be so focused on accumulating lots of it? What is different today is that it is not just Millennials, but increasingly also mid-career professionals who are questioning their relationship with money. That is where the issue of retention enters into the equation and is posing a challenge for companies as these folks leave to pursue a better balance.
People no longer want just a job—they want opportunities to increase their competencies, expand their horizons and contribute to a wider social goal. Business leaders and those at the helm of human resources departments are challenged to meet the career and personal aspirations of a crop of employees who increasingly won’t settle for working to meet quarterly returns.
A small number of the world’s most recognised companies have adopted very progressive approaches to staff retention, supporting career breaks for staff and offering the possibility to work with high-performing social enterprises. These enterprises are of growing importance: in the UK alone, Social Enterprise UK estimates that in 2012 there were 70,000 social enterprises contributing £18.5bn (US$28bn at current exchange rates) to the UK economy and employing almost a million people. Providing an opportunity for select employees to complete a project alongside a social entrepreneurial venture can be a powerful, experiential way to have key talent learn and develop new approaches. These opportunities stimulate employee creativity and bring valuable market and technical insights as well as concrete ideas on how to profitably build social impact into their mainstream business.
Many business and HR leaders want to cloister themselves and pretend it’s business as usual. But the ability to “unlearn” ushers in openness to creative, innovative and market-generating ideas that no one else has detected. Managers will need to engage others and be flexible, collaborative change agents.
Companies are searching for more effective staff development tools; the best of them look for opportunities for their key employees to learn through experience. When managed effectively, this type of learning is anchored more deeply and can therefore drive real change in their own performance and satisfaction and can infect the wider functioning of their organisations.
Companies retain their best people by treating them as individuals, independent of their place in the hierarchy. As with their customers, company employees do not remain loyal when treated like a faceless herd. Paradoxically, while companies have fine-tuned their ability to segment their markets, they have not transferred a similar approach to their employees.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
