The old model of capitalism, defined by Milton Friedman’s shareholder theory supporting profitability at all costs, is dissolving. Its replacement is a much more human-centric version of economics, whereby profitability is no longer at odds with stewardship. Can it last?
Over the past two years, an unprecedented number of people quit their jobs—nearly 25 million people gave notice in the second half of 2021 alone (the highest U.S. quit rate since the Bureau of Labor Statistics began tracking those numbers in 2000.)
The Great Resignation was facilitated by COVID concerns, but the pandemic wasn’t the main cause—the mass exodus was rooted in something much deeper: a fundamental shift in the socio-economic zeitgeist.
As people sheltered at home, they took time to reflect, rethinking their personal goals, reassessing their professional ambitions, and reprioritizing their economic objectives. In this process, many people decided that they were no longer willing to sell their souls for uninspiring work.
Our homes became our sanctuaries—safe spaces that were reimagined into flex spaces that could simultaneously serve as family fun hubs and productive work environments.
Work Through a New Lens
And then came the spiritual awakening: in an uncertain world, in which a black swan event could claim millions of lives in a relatively short period of time, why would we cede our fate to fickle and unappreciative employers? Why should we contribute our efforts to companies that don’t align with our personal values and mission? Why work for bosses who demand continuous improvement when real wages remain flat and other incentives are nonexistent?
Gone are the days when companies could incentivize employees with money alone. In a dramatic turnaround, executives who once had the upper hand are now scavenging for descent help.
Today, job seekers hold the power—in a labor-starved market, they have the staying power to negotiate for higher salaries and better incentives. They can hold out until they find a meaningful opportunity that offers acceptable compensation and aligns with their values.
The ESG Imperative
As the urgency of climate change swells, as extreme temperatures intensify, as sea levels rise, as superstorms and wildfires proliferate, as water and other natural resources become scarce, as species vanish, the ‘E’ in ESG has emerged as a moral imperative and a critical business requirement not only to satisfy investor demands, but also to fortify supply chains and reduce ongoing operational risk.
In some ways, solving for environmental challenges is straightforward (although not necessarily simple or easy.) Follow the science-based targets, and you’re on your way. And, with organizations like the U.N.’s International Sustainability Standards Board (ISSB) developing sustainability reporting standards and the U.S. Security and Exchange Commission (SEC) proposing new regulations for climate risk disclosure, companies will soon have basic guidelines to follow when creating ESG strategies.
Solving for the ‘S’ element is arguably harder, especially given today’s motley business environment. To be successful, it’s particularly important for companies to understand the nuances of today’s workforce.
Mission-driven, values-based millennials and older Gen Zs now comprise nearly 75% of the workforce. Socially diverse and economically powerful, this audience segment prioritizes purpose over paycheck.
No doubt, the human-centric ethic of these younger professionals is chipping away at Friedman’s single-bottom-line version of capitalism. They’re interrogating decades-old power structures, but will their collective force be impactful enough to dismantle the stronghold of those constructs, or will youthful exuberance hit the brick wall of status quo only to dissolve into jaded apathy and submission?
Will the push for environmental stewardship, social justice, transparency, and accountability have the wherewithal to reshape the zero-sum game of the Friedman Doctrine?
It’s certainly pleasant to fantasize about a system that equally values environmental protection, social justice, and self-actualization, but the harsh reality is that until we create the proper guardrails that force capitalism to evolve, such as a price on carbon and strict sanctions against human rights violators, it’s likely that only marginal progress will be made.
Enduring transformation will require the collective courage to first craft idealistic visions of utopian conditions, and then develop real strategies to get us there.
The good news: the distinct, albeit unpredictable, dynamics of today’s workplace has already generated a nascent purpose movement that is driving companies to be more responsible and transparent, shifting the corporate culture to empower people, protect the environment, and foster creative collaboration—all of which ultimately leads to greater long-term value.
Publisher’s Note: This content is made possible by our Today’s Home Buyer Campaign Sponsors: Whirlpool and Vivint. These companies take sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.