Millennials, or Generation Y, were born between 1980 and 2000 and are now entering that time in life when they are influencing everything from homeownership rates, the cost of renting apartments in urban America, and even how U.S. corporations deal with the concept of “duty to serve.” Since the conclusion of World War II, the role of corporations in American society has been focused first and foremost on maximizing profitability, and the role of the corporate board of directors has been to be stewards for the owners or shareholders. The idea was that a corporation, above all else, was to maximize profits and forever increase shareholder value. As millennials are entering the workplace, how might they change that notion?
Let’s first take a look at some characteristics of “millennials.” Authors William Strauss and Neil Howe wrote that every generation has common characteristics with four basic themes that tend to repeat themselves. Millennials are thought to be more like the “civic-minded” G.I. Generation, with a strong sense of community both local and globally. Imagine the G.I. Generation or “The Greatest Generation,” but with all the benefits of technology and the Internet. In 2008, Ron Alsop, another author, called millennials “Trophy Kids,” for whom mere participation is frequently reward enough — winning might just be the cherry on top and not really the primary objective, at all. This may explain why millennials in the workplace are looking for versatility and flexibility and strive for more work-life balance. Finally, as we are seeing with the surge in support for Democratic candidate Bernie Sanders, millennials’ political attitudes are increasingly liberal on both social and cultural issues. There are strong levels of support for classic liberal economic policies, same-sex marriage, opposition to animal testing and support for women’s reproductive rights.
Today, there is much conversation and debate driven by millennials and changing social values, over the common belief that corporations and their directors have a legal duty to maximize profits and “shareholder value” even if it means skirting ethical rules, damaging the environment or disenfranchising employees. As employers work to fill jobs, many corporations both publicly owned and private are defining their corporate purposes in much broader terms. Corporate America is shifting to a place where shareholders’ “best interests” may not always mean maximizing profits. In fact, many boards of directors are recognizing the difference between long-term investors planning to hold stock for many years and short-term speculators. They recognize that maximizing profits by firing employees, avoiding taxes, selling shoddy products and polluting the environment may not be in the best interest of shareholders and may make it next to impossible to attract fresh new young employees.
Corporations that are on the leading edge today, like Google, Facebook and Amazon, are offering a different kind of workplace where work-life balance is encouraged. You are seeing a movement toward more paid leave, community involvement and focus on the individual. This isn’t just happening in Silicon Valley and at technology companies. The movement toward a friendlier workplace is popping up at financial service firms such as Quicken Loans, Capital One, Ford, General Motors and many othercompanies across the nation.
Interestingly, the movement toward responsible corporate citizenship is also being supported by the investment community with a broad range of mutual funds that only invest in companies that exhibit the highest levels of sustainability and corporate ethics and that treat their co-workers as investments, not expenses. The Forum for Sustainable and Responsible Investment recently reported that “sustainable mutual funds had equal or higher median returns and equal or lower volatility then traditional funds.”
Millennials are demanding change in both society as a whole and corporate America in particular. It might be time to pay attention.
Elihu Spencer is a local amateur economist with a long business history in global finance. His life work has been centered on understanding credit cycles and their impact on local economies. The information contained in this article has been obtained from sources considered reliable but the accuracy cannot be guaranteed.