Millennial magnet: attract and retain the largest generation in the U.S. workforce
Nuveen’s latest research reveals a generation who grew up with Captain Planet, clicktivism, conscientious consumerism and corporate mischiefs.
More than one-in-three (35%) American workers are millennials, making them the largest generation in today’s labor force.1 At the same time, millennials — generally described as those born between 1980 and 1996 — are by far the most likely generation to switch jobs. In fact, 21% of millennials in 2016 reported switching jobs within the past year, compared to roughly 7% of Generation Xers and other non-millennials.2 And with unemployment trending at an all-time low of less than 4%, how can you compete for top talent — and retain your best employees — in this tight labor market?3
Nuveen’s latest research suggests it’s critical to build a strong employer brand — and responsible investing (RI) can help. Our research uncovers a generation that has been socialized with social media, educated to care about the environment and society and exposed to corporate catastrophes that have affected both investment performance and trust in corporate governance.
Responsible investing defined
Responsible investing (RI) is an expanding investment discipline that recognizes the importance of environmental, social and governance (ESG) factors across asset classes. Though RI goes by many different names, its approaches all share similar goals: better long-term performance and risk management, while promoting positive outcomes in the world around us.
Rise of the purposeful employer: millennials want to feel proud about the mission of their employer — responsible investing can bolster that image.
Published in November 2018, Nuveen’s Fourth Annual Responsible Investing Survey finds that employees want to work for an employer that makes a positive impact on the world. There is also an upward trend in employees wanting to work for an employer that can better society and the environment.
Why? Perhaps because employees see work as an extension of themselves — 43% of career-seekers view work as something they are passionate about; not just a job.4 The notion of a purposeful employer translates to benefits. RI options within a plan menu can bolster that image. Among affluent employees, 71% agreed that having the ability to choose responsible investing options in their retirement plan would make them feel good about working for their employer.5
The minds of millennials: Captain Planet, corporate mischief and clicktivism.
Why would millennials be attracted to a purposeful employer? Two reasons:
Reason 1: Socialized to care as children
It’s the norm! The roots of caring about the environment run deep with millennials: 92% of this generation learned to care for the environment from TV shows, books and their parents, compared to 63% of non-millennials. Many high schools and middle schools require students to participate in community service. It’s an expectation of millennials; not an afterthought.
Reason 2: The #age of #activism
People, especially millennials, are more engaged and enraged than ever before — and demand answers fast. One tweet can spark a protest, cancel a top-rated television show or cause panic in the boardrooms of the nation’s biggest brands. Every controversial incident is recorded on a phone and plastered all over social media. For good or ill, people report feeling significantly more engaged with current events than they did five years ago. How does this cultural shift affect RI? Does all this engagement stop at “clicktivism,” or do hashtag campaigns actually translate into real-world changes in consumer or investor behavior?
Not all employees look at responsible investing the same way. Our research uncovers three main profiles of people interested in RI — each with their own unique motivations. Plan sponsors should message the benefits of responsible investing to these three audiences.
Tale of three attitudes:
- Investment improvement/ reduced risk
Motivation: “Responsible investing can add alpha and reduce risks. Companies are likely to perform better when they adhere to ESG principles.”
- Woke wealth/ personal identity
Motivation: “I want my portfolio to align with my values. My investments represent who I am.”
- Recommendation ready
Motivation: “The investment professionals are more knowledgeable about these issues, so I follow what they recommend.”
Tips for plan sponsors:
- Research the types of RI solutions, requesting support from consultants and asset managers as necessary.
- Incorporate RI strategies on the plan menu as a standalone option or alongside non-RI options. Plan sponsors who choose to add dedicated RI strategies to their core menu have access to a variety of solutions in the marketplace today across traditional asset classes.
- Document the fiduciary investment due diligence process for selecting and monitoring RI options, as you would any other investment solution on the menu.
- Communicate the menu changes to participants, and convey
the benefits of RI to create engagement. Explain the potential to achieve better performance by choosing companies that are proactively managing ESG risks (and opportunities).