HOW ESG ALIGNMENT CAN IMPROVE EMPLOYEE RETENTION AND ATTRACT FUTURE TALENT

Naturally, as a company desirous of growth in the short, medium and long terms, you want to attract the best and brightest talent to your organization, right? Right. So when you’re developing your recruitment strategies, it’s vital to keep in mind that today’s and tomorrow’s job seekers – especially Gen Z and Millennials – aren’t just weighing salaries and benefits when deciding whether to accept an offer.

Studies increasingly suggest that emerging professional talent gravitates towards businesses that are run ethically and sustainably. In other words, an employer’s commitment to ESG issues can make or break their ability to retain their employees. 

But, you may ask, “What else matters besides compensation and benefits for a healthy work-life balance?” 

In today’s world? Plenty. Potential and current employees have much higher expectations of their companies; for example, they expect their employers to consciously – and deliberately – own the management of their environmental impact; the ethical supply of raw materials; a commitment to social justice issues, data usage and protection, and more. In fact, a recent study found that a majority of MBA graduates are willing to accept a lower salary to work for an environmentally-responsible company. 

For the past decade or so, we’ve seen businesses shift their priorities to embrace ESG issues. More and more organizations are using ESG to benchmark their progress as they come under increased scrutiny based on how they drive and shape policy to promote positive work environments. Increasingly, job applicants, especially those in the Gen Z and Millennials categories, want to work for companies that have more accountability. They want to work for employers who are conscious of the impact their businesses have on their customers, employees and communities.

By 2025 – if current demographic trends continue – Millennials will comprise 75% of the world’s workforce, and their influence is already being felt across businesses and sectors.  As they enter the workforce, they’ll bring with them a strong commitment to social contracts. Today’s younger job-seekers are educated, principled, opinionated – and outspoken. They’ll voice concerns about their company’s activities, forcing leadership into the uncomfortable but unavoidable possibility of losing their best talent if they don’t take ESG seriously.

Here is another reason to champion ESG in your company: Additional research suggests that contented employees will work harder and stay longer with their organization. Prospective employees will also be enthusiastic about their potential employer’s pipeline of qualified candidates, ensuring a steady flow of highly-qualified, committed colleagues. In a competitive marketplace, companies that invest in ESG performance stand to gain an advantage with Millennials and Gen Z, who not only tend to expect more from their employers and the world but are more likely to see themselves as ESG stakeholders.

Make no mistake, though: Outright compensation and brand name recognition still hold appeal for prospective employees, but according to Vicki Fan, CEO of Mercer Hong Kong, they are no longer the talent magnets they used to be. “Employees, especially the younger generations, are less interested in working for organisations that don’t have a purpose aligned to their values.” Fan adds that one in three employees would prefer to work for an organisation that shows responsibility towards all stakeholders, not just shareholders and investors.

We should all aspire to leave our world a better place. For an individual, that means behaving sustainably in his or her personal life. And for a company, that means having a meaningful and strategic purpose and finding ways to tie that purpose into the values and day-to-day work of individual employees.

Every person wants his or her working life to have a higher purpose that goes beyond just doing a job and earning an income. Yet too many people spend most of their waking hours in workplaces that fall short of providing that higher social purpose. Companies that can resolve the tension people feel between their personal values and the best interests of the business will benefit by having a highly engaged and productive workforce – proud to play a part in bringing positive change to communities around their country and the world as a whole.

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