Dutch Executives Seeing Green – How Millennials Are Reshaping the World

Image

Davos, Switzerland — If you can’t beat them, bribe them. Are the days of environmentalists versus capitalists coming to an end?  DSM, a global firm based in The Netherlands, is tying forty-percent of its executives’ short-term incentive pay to whether or not the company meets its environmental and sustainability goals. 

What is driving capitalism’s sudden interest in saving the environment? My guess is that it’s the Millennials, the twenty-somethings who make up the most rapidly growing demographic in our current workforce.  When  Millennials go looking for jobs, they seek out employers who are a cultural fit. That is, they want to work for companies which care about the same things they care about and which demonstrate that care both by the way they do business and by the non-business causes they support.  Outside of Silicon  Valley and the High-Tech world, Millennials have not yet made it to the C-Suite. However they are the force which is motivating a growing number of companies to select and act on a cause. Actions companies take may include realigning their business practices to support the cause they’ve adopted, allowing employees to perform volunteer work on company time,  educating their employees and their clients about the cause, or making outright donations to non-profit organizations.

Because they are tuned into and care deeply about such things as culture and branding, Millennials are making an impression on corporations not only as prospective employees but as prospective consumers of their products and services.  The radio station I listen to each morning (The Rod Ryan Show  on Houston’s 94.5 The Buzz) appeals  to a Millennial audience. In their sometimes R-rated, may-not-be-suitable-for-more-sensitive-listeners morning banter, the Buzz’s DJs make more references to “giving back” and talk more about what celebrity or what local business is doing what good deeds than any station I have ever listened to before. Not only that, the show itself supports its favorite causes. Its Drumsticks for Drumsticks campaign auctions off drumsticks signed by famous drummers to raise money for the Houston Food Bank.  In the fall, it raises funds to provide backpacks to underprivileged Houston school children. This spirit of giving back is being repeated by other companies throughout the United States whose clientele is primarily Millennials.

Because the Millennials’ manner of speaking (concise, direct, straight-from-the-hip) often comes across as curt, Baby Boomers tend to write them off as rude. But these young people have heart. They not only care about the world, they pay attention to how individual companies treat the environment,  animals, third world countries, and other underdogs, and they demonstrate their concern by choosing which companies they will or will not work for and whose products or services they will or will not buy.

The BBC reports that  “At the Davos 2014 World Economic Forum, a gathering of more than 1600 global business leaders in Switzerland this week, one of the hot topics is ‘doing business the right way’.”  In fact, the summit’s theme is Reshaping the World.

When I was growing up, Bob Dylan sang, in his awful twang, about “The Times, They Are A-Changing.”  Well, guess what. Nothing is static. The times are changing again, maybe, (sorry, all you doomsayers) for the better. Under pressure from our young people, corporations are recognizing that the bottom line and making the world a better place are not necessarily mutually exclusive. In fact, they may be more closely linked than we ever imagined before.

Advertisements

What Are Behavioral Economics? Or Why Johnny Lingo Paid Eight Cows for His Wife

Image

From a Human Resources standpoint, Behavioral Economics occurs when an employer pays its workers more than what the current market demands, on the premise that the more valued the workers feel, the better they will perform.

Patricia McGrerr‘s  famous short story “Johnny Lingo’s Eight-Cow Wife” (Women’s Day, November 1965) is a good example of this principal. On the Pacific island where Johnny Lingo lived, a man could purchase a decent wife for two to three cows. A highly satisfactory wife could be had for four to five cows.  Sarita, the woman Johnny wanted to marry, was plain and skinny and, in the opinion of most islanders, worth only two cows, three at most.  To everyone’s amazement, Johnny paid eight cows for her.

After Johnny and Sarita wed, she became a beautiful, charming woman, one of the finest in the village. Johnny attributed her transformation to the price he had paid for her.

“Do you ever think,” he asked, “what it must mean to a woman to know that her husband has settled on the lowest price for which she can be bought? … I wanted Sarita to be happy, yes. But I wanted more than that. … Many things can change a woman. Things happen inside, things happen outside. But the thing that matters most is what she thinks of herself. In Kiniwata, Sarita believed she was worth nothing. Now she knows she is worth more than any other woman in the islands.”  

In theory, the more valued your employees feel (as reflected by their salaries), the more they will value themselves and their skills and the more likely they are to live up to your high expectations.

This is just one aspect of Behavioral Economics, the main gist of which is that humans do not always behave in an economically rational way.  Johnny Lingo’s decision to pay eight cows for a wife who was originally worth no more than two or three was anything but rational.

The sometimes irrational and, therefore, unpredictable decisions people make in regards to finances and economics can be a force for good (the transformation of Johnny’s wife) or for evil. Many economists blame the crash of 2008 on the irrational decisions made by banks and other organizations.

This theory of Behavior Economics plays an important role in Janet Yellen, our newly appointed Chairman of the Federal Reserve’s, approach to economics.

If this post is the first time you’ve heard of Behavioral Economics, it’s not likely to be the last, as Ms. Yellen takes over our nation’s economic reigns.

Only time will tell how many cows she is truly worth.

Welcome to Millionaire’s Row – The United States Congress

Gold CoinAccording to a survey just released by The Center for Responsible Politics, for the first time in American history, most members of Congress are now millionaires. Republicans in Congress have a median net worth of $1 million, while the Democrats’ median net worth is $1.4 million. Hmm, maybe Democrats are a lot better at business than people think..