OPINION1 September 2022

Companies with social conscience are big pull for Gen Z

Opinion Sustainability Trends UK Wellbeing Youth

Steve Leigh, managing director, Sensu Insight, outlines the impact that heightened ESG requirements are having on businesses and employees.

Climate change protestor

In recent years, there has been an increased demand for businesses to take ESG considerations more seriously, especially when it comes to key ethical issues like diversity, equal pay, sustainability and, most recently, their responses to crisis situations. This has led to a shift in ethical expectations from both the public and employees.

But what are these expectations, and why is it crucial for businesses to meet them to maintain a strong employer brand and reputation?

The ethical expectations placed on businesses

We recently conducted research into what employees want from their employers, covering three age groups, Gen Z, Millennial and Gen X. The findings revealed how the ESG standpoints of UK businesses can have a major impact on where current and new employees choose to work.

Our Employer Brand Report surveyed 1,000 UK adults on the most important factors that determine who they would and wouldn’t work for.

The results showed that while most employees want their employers to be socially conscious and strive for moral standards, like equality and diversity, Gen Z prioritised it the most and were most likely to let this determine their choice of workplace.

Nearly a third ( 31 per cent) of Gen Z employees (aged 16 to 24 ) would choose to work for employers that proactively prioritise diversity and inclusion in their workforce, compared to 13 per cent of Millennials ( 26 to 41 ) and 11 per cent of Gen X ( 42 to 57 ).

Additionally, 32 per cent of Gen Z respondents want to know how their employer invests in responsible and sustainable business processes, compared to 21 per cent of Millennials and 14 per cent of Gen X. A similar trend is apparent for issues such as the gender pay gap and diverse representation in the workforce.

What this shows is that today’s graduates and job seekers will base their job hunt on more than just pay and benefits so this needs to be taken into consideration.

The impact of responding to world crises, such as Ukraine

In addition to the ESG topics outlined above, world crises and how businesses respond to them also have an impact on employee opinion, according to our Ukraine research.

The conflict between Russia and Ukraine saw global, and even local, businesses reacting in many ways in support of the Ukrainians affected by the war.

A wide range of responses were seen, ranging from messages of support or sympathy to fundraising, pledges to provide aid, and even sector specific support. For example, Microsoft offered its IT and cyber-security services free of charge to assist Ukraine against cyber-attacks from Russia.

In addition to this, many leading businesses decreased, suspended, or terminated trade with Russian businesses or those with connections to the Russian state.

Impact on reputation

Following these responses, businesses saw an impact on their reputation, some positive and some negative. For example, many companies that swiftly responded to the crisis saw praise and support on social media or an increase in product sales.

On the other hand, brands that were delayed in their response were labelled by the public as disingenuous or “following what other brands

were doing.” For employer brand reputation, the impact either reaffirmed positive employee perception, or changed it to something more negative, especially for younger employees.

Timing of response key

Based on our data, employees’ views changed mostly depending on the nature and timing of the response. As previously stated, employees, especially Gen Z, now have a much higher ESG expectations and expect their employers to meet them.

Because of this, companies that didn’t meet this standard with their Ukraine response suffered an impact to their reputation, altering how likely employees are to stay in their current role, and even become a deciding factor for their resignation from the business.

According to our findings, 31 per cent of respondents aged 18-34 are more likely to work for businesses that acted swiftly against Russia, as opposed to those that took their time to respond.

Additionally, 18 per cent of respondents said they would be less likely to work for a business that took no action against Russia at all, following their role in the conflict. Further still, seven per cent of respondents reported that they were either actively looking to change jobs, or have already resigned their role, as a direct response to their current employers’ inaction relating to Ukraine.

What can be learnt from this?

From these findings, it’s clear that businesses need to actively listen and understand what their employees expect from them and then demonstrate this in their policies, processes and communication.

A good way to do this is by publishing a strong ESG policy and clear evidence on how it is being delivered. These show where a business stands on a range of environmental, social, and government topics, something increasingly important for recruitment.

Potential employees now take an authentic position on ESG issues incredibly seriously when choosing somewhere they’d like to work, and if a business fails to live up to their promises, it can negatively impact their reputation and employer brand image.

It’s vital for businesses to understand the reputational impact their pledges and responses can have, not just for their customers, but their potential employees as well.

For example, those of the Gen Z generation will make up most of the new graduate talent that businesses will want to recruit, so appealing to their views will benefit their reputation and encourage them to apply for roles.

It’s obvious that recruits are now increasingly basing their employment decisions on much more than simply pay and benefits. Therefore, consideration is needed in order to both boost reputation and obtain and retain staff.