Millennials could eventually change the playing field in politics

In our June Nordea On Your Mind report "Managing millennials", I talk to Mathias Leijon, Global Co-Head of Corporate and Investment Banking at Nordea, about how the characteristics of the millennial generation could affect recruitment and talent management for corporates, and how millennial values and preferences will push even greater focus on sustainability and may in time rewrite the political map in the world's democracies.

“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise."

Sound familiar? In many ways, this quote probably resonates among the older generations when thinking about millennials, and in many ways, it might still hold true since being phrased by the Greek philosopher Socrates around 2,400 years ago.

Millennials are just like previous generations to a great extent shaped by the societal environment they have grown up in. But are they really different, as many claim? If so, how? And how could this affect areas such as talent management, leadership and investing?

Mathias: Millennials are, like all generations, formed by circumstances, which in this case include an integrated and connected global world, great cultural diversity, but also generally high youth unemployment. Although seen by some as a more individualistic generation, they also care much more about purpose, sustainability, the greater good and the environment than any generation before them. We need to be mindful of this when we approach them, both as leaders and as potential consumers of our goods and services, since making general classifications will likely lead to the wrong conclusions and actions.

So why are we making a huge effort to demystify the millennial generation? Because in some areas they clearly are different. In areas such as ESG/sustainability and politics, they are acting as a catalyst for change, and they will drive a need for more human and purpose-driven leadership. This will affect talent management and ultimately the appointment of CxOs.

We have seen a lot of changes in the world's political arena, with a surge in populism in the past ten years. Can the individualism and values of millennials bring more change as they make up a bigger share of the electorate in the years ahead?

Mathias: One aspect of the growing influence of the millennials which I think has not received enough attention is its impact on politics and the pipeline of future politicians. Given the restlessness of this new generation with a big desire for immediate gratification, it is doubtful whether enough people will have the necessary tenacity combined with a mindset of servant leadership to pursue a long-term political career. But putting this long-term issue aside, another related aspect worth considering is the potential emergence or resurgence of socialism in many countries. The political left has deftly homed in on economic inequality (see for example our October 2018 Nordea On Your Mind "The cost of inequality"), with many believing it has spiralled out of control, as well as on the environment, making the case for the need to vest power in the many rather than only in the elite as a pre-requisite for meaningful change. Some 51% of Americans aged 18-29 currently have a positive view on socialism according to a poll by Gallup, and in the US presidential primaries of 2016 more people voted for the more radical democrat Bernie Sanders than for the two final contenders Hillary Clinton and Donald Trump combined.

An argument could be made that young people have always been influenced by socialism, but it may be different this time. More ideological than realistic or pragmatic ideas about how to best solve the sustainability challenges that lie ahead, coupled with distrust in the financial marketplace, are on the rise. Whatever the solutions will be, they need to rest on sound financial ground to ensure that capital allocation and investment of capital work rationally and efficiently.

Millennials are often described as restless and impatient. Is that good or bad in an environment of major and rapid change?

Mathias: Technology and a constant flow of information spur curiosity and with this also that need for immediate gratification, which millennials are typically associated with. The pace of change in society has undoubtedly accelerated sharply, and some claim that the world has never changed as fast as it is changing now, and yet in the future, it will never change as slowly as today. This accelerating pace of change brings a natural development where drivers and sources of motivation for people change a lot. The millennials shy away from micromanagement, and crave empowerment, an autonomous way of working, and transparency. Those working conditions are needed to solve problems in an environment with lots of change. This is all good, but in order to make ends meet, and also to drive returns and shareholder value, these desires need to be complemented with stringent follow-up and KPI systems, and be aligned with incentive structures. In such an empowered and network-based organisation, a purpose-led organisation and leadership acts as the North Star.

What is really interesting is that if we then add that this generation has a very high share of immigrants, the highest of all generations so far, it creates a very attractive opportunity to drive diversity of thought. Numerous studies have shown that this is a superior way of solving complex problems and is a clear driver of sustainable competitive advantages and superior long-term returns. However, this is only if the collective intelligence of the group is greater than the sum of individual intelligences, which is too often not the case. To unlock this potential, the culture, the purpose and the leadership is imperative. This in itself is nothing new: the three areas mentioned just need to be tailored for the new contextual inner and external environment.

What will be needed to recruit, retain and develop millennial talent, and do you have any examples of what we are doing to get the most out of the millennial talent pool at Nordea?

Mathias: In light of today's rapid technological development and 24-7 connected world, which create vast opportunities for talent across industries and countries, talent needs organisations much less than we as organisations need that talent. It has always been important to attract, develop and retain talent, but how it is done will continue to evolve and change.

The introduction of millennials into the workforce has been a natural evolution, as the world is becoming more global and integrated. As most large companies of the advanced economies have a global business exposure, it is only logical that the greater good, sustainability and purpose-led leadership grow in relevance. Companies can facilitate this by allowing continuous learning and addressing employees' fears of being boxed in and stopping growing. At the same time, we as employers also need to ensure that the functional role is also optimised to secure value being created for customers and other stakeholders. It takes some time to learn the trade, and to strike this balance is not easy; it will differ between organisations, countries and industries. For example, we have been experimenting at Nordea Corporate & Investment Banking with offering talented and highly ambitious millennials the opportunity to engage in new projects such as automating a value chain, applying machine learning algorithms, and this with the full empowerment to drive real and actual change. This has been done on top of their functional roles. The key learning points to make this successful have been frequent feedback, full transparency, to really empower and trust your talents, but also the need to manage expectations of how fast an actual process can change in a big organisation without reducing creativity.

If you had to pick one area where you believe this generation will have the biggest impact, what would it be?

Mathias: It would be within asset management. From an asset management perspective, the size of the ESG-dedicated pool of assets continues to grow extremely rapidly. In order for corporates to be able to get access to the total pool of capital for their funding needs, irrespective of whether they are issuing bonds, equity or aiming for an IPO, they need a viable and credible ESG strategy in order to optimise their cost of capital. This also subsequently drives the capital allocation and long-term investment plans of a company and has a significant influence across its entire strategic agenda.

And perhaps it is here we can find the greatest contribution from the millennials, since their preferences, values and behaviour as consumers as well as investors are very much accelerating the pace of change of how people generally save, and how all those trillions of dollars will be allocated and invested.

A counterweight to all this, which we should not neglect, comprises people approaching the age of 60 or above. They are likely to work for up to ten more years and will probably typically vote in five or six more general elections. To call the shift in the balance of power between millennials and the average member of the population might yet be just too early. After all, the older generation analysing my own generation probably also agreed with the Socrates quote at the time.