Throughout my long and fascinating business career, it’s become a shop-worn organizational truism that “people are our most important asset.” Sure, that makes those of us hearing it — who (needless to say) are ourselves people — feel good. But most companies have never fully acted as if they took this cliché too seriously.
Which stakeholders we deem most important to us, as a business community, seems to evolve over time. Treating customers with respect and humility — that’s Business 101. Then, in the 1970s, “shareholder value” came into vogue as the inescapable guiding principle of the modern enterprise.
You’ll notice a pattern here — that most companies (not unreasonably) have tied stakeholder value to the flow of funds, from customers and/or investors. Non-financial resources — like the labor of people — have often been taken for granted, except perhaps at the top of the corporate ladder.
I spoke recently at The Conference Board’s (TCB) Communicating Total Rewards conference on the emerging role of Purpose in employee compensation. In hearing some of the other great speakers, I began to realize that another sea change in stakeholder value is underway. Companies worldwide are finally realizing that employees really are their most important asset — and are beginning to act that way.
Why? My view is that four powerful trends have converged — two driven by evolving employee attitudes, the other two driven from the enterprise.
Overall, I noted two big trends here:
(1) Purpose is increasing factored into the career value equation. According to the widely-followed Edelman Trust Barometer, 60% of employees worldwide choose their employer based at least partly on their beliefs and values. And this trend is accelerating — 51% of top-school business students surveyed by the Yale Center for Business and the Environment reported that they are willing to trade salary for better environmental practices of their employer.
(2) The Great Resignation continues unabated. The cascading crises of the pandemic -> economic shock -> racial injustice -> Ukraine war have people questioning how their personal purpose fits into the enterprise purpose of their organization. LinkedIn recently reported that 30% more people are now changing jobs versus pre-pandemic.
Two big trends govern here as well:
(3) Labor is currently a seller’s market — there’s more demand than supply. US unemployment has reached 3.6%, which is near its historical low. Wages are rising at all levels as the “war for talent” becomes permanent. TCB’s C-Suite Outlook 2022 found that the top priority of CEOs worldwide is to “Attract and retain talent.”
The net result is that (4) Employees are now deemed the most important corporate stakeholder. We have evolved beyond Employee Communications toward considering the total Employee Experience. The “voice of the employee” is increasing heard in Employee Resource Groups, feedback sessions with executives, and social media — and plays an increasingly influential role in executive decisions.
These four trends have combined to create new challenges for employers — and new opportunities to weave Purpose and meaning into their employee experience — starting with their compensation principles and programs.
Thanks to Lisa Hunter (Program Director, Senior Fellow and Total Rewards Institute Leader, The Conference Board) and to Beth Bannerman (Chief Engagement and Sustainability Officer, Amyris) for their comments. The opinions expressed remain my own. Thanks to Soylent Green for the lead meme.