Millennials and Generation Z’s (Gen Z’s) are tipped to have a great impact on how businesses operate. Millennials are those born between 1983 and 1994 while Generation Zs are those born between 1995 and 2002. These two groups account for more than half of the world’s population and most of the global workforce. Therefore, what they think, believe, buy and perceive is disrupting all norms and transforming society. A generation disrupted is a common phrase that has been used to describe the millennial age, and it is a fair assessment. Having to grow up in a world of accelerated transformation has left this generation unsettled about the future. Others have called them confused, unsure and lost, however, their youthfulness, should not be mistaken for a lack of clarity, these groups know what they want. The business world will have to accommodate their views and aspirations; after all, they are the majority. I will explore how business can tap into new opportunities by understanding millennials and Gen Z’s. The article shall draw lessons from South Africa.
In South Africa, millennials account for 27% of the population, translating into a purchasing power of fourteen million people. These large numbers make them a lucrative market and consumers for most products. More especially, because these groups have a high affinity to big spending, consumer power has fallen swiftly into the hands of millennials. A business must understand their consumption patterns; where, how and why they spend is crucial for business strategy. The millennials know this. Even more, they are aware that the current business arena must experience a shift, a disruption, in order to accommodate their needs. This is a unique opportunity for millennials to impact business practice.
Millennials value social impact. According to the 2019 Deloitte Global Millennial Survey, the South African millennials and Gen Zs expressed uneasiness and pessimism about their careers, their general lives, and the world around them. They have lost hope in business, political leaders and journalists, and now find a refuge of hope in Non-Governmental Organizations (NGOs). Most millennials value making a social impact and are more inclined to NGOs because their objectives have an underlying purpose to make the world better. A case in point is The Academy for Future Science, a South African NGO that examines new scientific ideas for the future, which will be crucial in navigating the transformations happening in the social, cultural, economic and environmental dimensions.
Most millennials are skeptical about business motives.
Millennials care and are compassionate. They want to know they are interacting with ethical organizations and businesses; organizations that prioritize the impact of their businesses to the communities around them, and the society at large. The 2019 Deloitte Global Millennial Survey shows 55% of millennials terming businesses as having a positive impact on the society. This is in fact good, considering that the number is significantly above the half mark. However, looking at the bigger picture that includes past statistics, 61% of millennials gave a similar response in 2018, pointing to a reduced level of confidence in the businesses. Indeed, organizations still make an impact by creating jobs and consequently improving living standards by the salaries they pay their employees. Yet what is a better living standard in a society not cared for?
In June 2019, one of South Africa’s largest industrial polluters, ArcelorMittal, was charged on accounts of going against environmental laws. The company does own a number of iron smelters around the world, but it was being called out for its operations at its Vanderbiljpark plant south of Johannesburg. This example, which is one among many, begs the question of true long-term impact. What is the point of paying salaries that are largely spent in medical care? What will the lives of these employees look like after years of working there? Which community are they going back to, the polluted one? It would make such a difference to be the manufacturing company that actually seeks ways to prevent the pollution innovatively while balancing profits.
49% of millennials would, if they had a choice, quit their current jobs in the next 2 years. Further, most millennials will patronize and support companies that align with their values. Many say they will not hesitate to lessen or end a consumer relationship when they disagree with a company’s business practices, values or political leanings.Millennials want leaders who act as agents of positive change and expect businesses to have a positive impact on the lives of the communities in which they operate. This calls for business to have strong corporate social responsibility arms. However, millennials do not see enough businesses stepping up to the plate. Sadly, the idea of businesses focusing on their own agenda (sole profit-making) rather than considering the entire society (societal problems such as looming pollution, illiteracy) is on the rise. 2019 recorded 83% of the agenda-driven businesses compared to 78% in 2018.
Interestingly, Milton Friedman, alongside other scholars, argued that businesses are artificial entities established to permit people to engage in profit-making, not social activities. They are structured to produce goods and services for which they receive money. This is their agenda, or the so called selfish interests – to get more profits. Their social obligation, according to this theory, is to return as much of their profits as possible to their direct shareholders.
Even so, the critics of business assert that businesses have a certain obligation beyond making a profit or not harming the society. They contend that businesses must help resolve societal problems, which is where the entire society gets included in the agenda. Companies owe a moral debt to society, since it is society that creates corporations and gives them a special social status.
Millennials and Gen Zs Value Experiences
More than half of millennials want to earn high salaries and be wealthy. However, their priorities are shifted. At the top of their list (57%) was travel and seeing the world. Slightly fewer (49%) said they wanted to own a home. They were also more attracted to making a positive impact in their communities or society at large (46%), than having children and starting families (39%). Millennials generally consider their ambitions achievable, yet many have had their dreams delayed by financial or other constraints.
A Love Relationship with Technology
71% of millennials feel positive about their personal use of digital devices and social media. But more than half said, on balance, that social media does more harm than good. 64% said that they would be physically healthier if they reduced the time they spent on social media, while 6 in 10 said it would make them happier. With cyber security concerns looming, only 14% of millennials strongly agree that the benefits of technology outweigh the risks associated with sharing personal data. 79% are concerned they’ll be victims of online fraud, and a quarter have curtailed consumer relationships because of companies’ inability to protect data.
Working Life and the Gig Economy
More than half of the millennials admitted that they were planning on leaving their current employer within the next 2 years, with only about a quarter staying beyond 5 years. Companies need to consider their talent strategies and align them to what is important to this generation. They also need to be aware that millennials are in no way afraid of contract work or navigating the gig economy, which actually appeals to most of them according to the survey.
Industry 4.0 represents the fourth industrial revolution that has occurred in manufacturing – the digitization of manufacturing. It takes what was started in the third revolution with adoption of computers and automation, and enhances it with smart systems fueled by data and machine learning. While technology has significantly improved our daily lives, new challenges have been birthed from the same, and these changing forces cannot be underestimated. In South Africa, the majority (working and unemployed) believe that Industry 4.0 will make it harder to get or change jobs. There will be increased skills gaps across all industries since the tasks to be completed and the skill set required are constantly changing. It is important that companies invest in up skilling and deskilling their workforce. This can be reinforced by bringing in technology which might foster continual professional development and life-long learning for their employees.
In a report by Deloitte titled ‘Preparing tomorrow’s workforce for the Fourth Industrial Revolution’, 4 key recommendations are given to the business community. One is to align stakeholders’ objectives and approaches, that is working with the broader ecosystem for impact. Two is to engage in public policy, strategically, through dialogue, advocacy, collaboration and influence. Three, develop promising talent strategies. This will be actualized by focusing on youth or under-represented populations, and implementing best practices that promote inclusivity and innovation, and drive economic return through differentiation. Lastly, invest strategically in workforce training approaches. The approaches should align with corporate social responsibility goals, talent practices, skill needs and corporate culture.
Optimism and Trust are Becoming Scarce
The 2019 survey saw a palpable deterioration of optimism, and a wide variety of both macroeconomic and day-to-day anxieties weighing on millennials’ minds. They have bleak expectations for the economy, which is affecting how they use their money. Committing to an investment is not their go-to option in their perceived state of limbo. Some of the likely factors driving economic pessimism were income inequality and lack of social mobility, and this highlighted the negative impact of an uncertain, unequal environment. Trust in traditional media is notably too low as political conversations over the last year were suspected to have contributed to increased skepticism. Moreover, millennials expressed low opinions of political and religious leaders. Indeed, something must change in order to win this key cohort over.
Millennials Say No to Debt
According to Differential Capital, unsecured lending has consumers sliding towards financial ruin. While the loans obtained may be touted as constructive credit, the reality is somewhat different. Unsecured loans have costs which many would consider egregious. A person in need of a one-month loan is not likely to be able to pay an annualized yield of 225% without likely needing further loans. This ensnares a debt trap that millennials are keen to avoid. They will seek other solutions to their need for instant gratification, whilst remaining debt averse.
The Ongoing Pursuit for Work/Life Balance
South African millennials are in a constant look-out for ways to positively impact their work/life balance. In today’s hyper connected world, convenience is the ultimate currency. Millennials are in search for convenience as the perfect solution for their work/life balance. A growing number of businesses in South Africa are offering an online shopping alternative to in-store purchases. A recent Nielsen e-commerce study, ‘The Quest for Convenience’, indicates an upsurge in online sales by approximately 5 times faster than offline sales. In addition to their existence, e-commerce platforms need to provide a frictionless shopping experience by engaging the millennial customers.
Millennials are a generation seeking more, in South Africa just as much as across the globe. Change is required to make room for them, to give them a future to look forward to – one that’s not so bleak. Organizations that can make the future brighter for millennials stand to have the brightest of futures themselves.
Written By Ida Mwangi @Noemie(Twitter) @Ida Mwangi (Linkedln)