by J. Veronica Biggins, Managing Director Diversified Search, AltoPartners Global Board Practice Leader

This article was first published in the Directors & Boards 2018 Annual Report

The post-Boomer generation now assuming leadership roles - and certainly those from the Millennial generation who will follow - bring with them different expectations about their work environments and what a “corporate culture” needs to look like. These emerging and future leaders dersire a career that carries purpose and meaning along with being financially rewarding.

Boards today speak about protecting their culture, or protecting their brand. The word culture, to me, is a more central concept. Companies that are known for a “good culture” attract smart, talented people who want to grow and be a valued part of an organisation.”

It is nice to have fun and find joy in what you do. I am a member of the board of Southwest Airlines, which is regularly listed as one of the “best places to work” in the country. Each employee is clear as to how they add value to the organisation through customer focus. Employees are proud of their work, because Southwest has a strong emphasis on a culture that values its employees. According to the Bureau of Labor Statistics, the average length of stay of an American employee at their place of employment is currently 4.6 years. At Southwest, it’s 11.5.

Obviously, being a talent magnet is not just about having fun. It’s about creating a place where people want to spend time, where they get up in the morning and look forward to spending time solving complex problems and discussing creative ideas with others. In one of my former lives, I served as assistant to the president and director of presidential personnel in the Clinton White House. The most valued were the career employees who understood how to get things done. People who had witnessed and been part of history through many administrations. I have given a lot of thought as to why people enjoy and find value in work that they do, whether it’s The White House or Zappos. (Yes, I love shoes.) My life today is about partnering with corporations, recruiting C-suite executives and corporate board members. And one of the most important roles today in the boardroom is succession planning. One bad hire in the C-suite has lifelong consequences.

Potential new employees assess a company in the same manner a company assesses them: They look at Glassdoor, LinkedIn and other career portals. As Yelp has proven in less than 15 years of existence, peer-to-peer crowdsourcing has changed the way consumers select everything from vacations to bagels. It’s not foolish to believe that in this digital age, C-suite executives are doing some crowdsourcing of their own. They want to know if they will fit in with the culture.

What are they finding? What makes a smart, successful executive open to a possibility at one company, but not at all interested in its competitor? It’s not compensation and perks, even though they have their place in the conversation. People are concerned about the value of their work; people are concerned if there is respectful culture; people are concerned if there is an inclusive culture; people are concerned if they can grow and flourish. We have long known that a vibrant, inclusive and collaborative culture, where employees feel they are stakeholders not only in their own careers but in the direction and vitality of their company, can be a difference-maker in employee retention. It is increasingly becoming a factor in C-suite recruiting.

A study done this year by the tech company Businessolver reinforced the importance of emotional intelligence from leadership in promoting and sustaining a positive work environment that retains top talent. The survey showed that while perks were nice, 60% of respondents said they would be willing to take a pay cut to work for a company that was strongly empathetic. Southwest, for one, rolls this idea into its DNA (branded as “Living and Working the Southwest Way”), but that didn’t come from the marketing arm. It extends all the way back to Herb Kelleher, who decided in the late 1960s that he wanted to form a different kind of airline, one based on the belief, says Julie Weber, the airline’s vice president: people, that “happy employees make for happy customers, which makes for happy shareholders.”

Another study, published in the buisness magazine Inc. last December, presented feedback from a dozen Fortune 500 global companies on how they retain their positions as talent magnets. The words and phrases that came up over and over again in their responses were telling: “vision”, “selflessness”, “meaningful jobs”, “work balance”, “growth and development”. No company can be all things to all people, including its employees. Directors must always be mindful of their responsibility to their shareholders to foremost guide their company’s financial security. But what we are learning is that strong earnings are now, more often than not, the product of being a talent magnet, one with a talented, happy, and invested workforce - and the visionary CEO who builds it.