Leadership and the diversity of generations
In today’s developed society, population life expectancy continues to grow. This presents challenges to business leaders as the workforce comprises people that cross multiple generations. Generations X, Y and Z each offer different experiences and have different expectations and opinions. Rosangela Pereira Peixoto, RS Technical Regional Director, Russell Bedford, Brazil looks at the approach business leaders need to take to get the best out of all generations
Just last year, 34 regulatory bodies and standard setters in 12 major markets were conducting official consultations on ESG. However, this year could well see infinitely more firms than ever being impacted by one or more of those ESG disclosure regimes being discussed, with significant progress likely towards a single, streamlined, set of sustainability disclosure standards becoming globally mandatory.
The most significant headway came last November 2021 when the IFRS (International Financial Reporting Standards) Foundation – the London-based non-profit that overseas financial reporting standard-setting - announced the creation of the International Sustainability Standards Board (ISSB) to develop a global baseline for sustainability disclosures for the capital markets, at the COP26 climate summit in Glasgow.
In March 2022, ISSB launched a 120-day consultation on its first two proposed standards, one setting out general sustainability-related disclosure requirements, the other specific climate-related disclosure requirements. It is now working together with the International Accounting Standards Board (IASB) to oversee and drive the process.
Key to those are likely to be the need for all organisations to provide sustainability related financial disclosures to investors and other capital market participants which need to highlight exactly how such moves would either build or erode the value of the organisation, and to highlight all the sustainability-related risks and opportunities being created.
This expected uniform measurement is being referred to as ‘dynamic materiality’, and ISSB aims to issue the new standards by the end of the year.
The European Commission and European Financial Reporting Advisory Group, meanwhile, are also planning to replace their current non-financial reporting regime, with the proposed Corporate Sustainability Reporting Directive.
This would require all large companies to include sustainability disclosure in their annual reports, detailing again how ESG impacts and influences their ability to create value, and on their wider social, economic, and natural environmental impacts.
The Securities and Exchange Commission (SEC) in the United States also published a climate disclosure proposal in March.
Britain has already ordered sustainability disclosures be made on the same ‘materiality’ basis, and for climate-related disclosures on any financial affects.
Another UK shift has seen moves to outlaw greenwashing, or disinformation produced by organisations to enhance their image as environmentally responsible, while discussing its intentions on climate concerns, which can mislead investors’ views on businesses.
But let’s be crystal clear – companies shouldn’t fear adopting ESG practices or being forced to stick to any new rules.
According to Moore Global’s latest research, firms embracing an ESG agenda in recent years have actually enjoyed a significant boost to their bottom lines, as well as wider strategic benefits.
Our own study just published - spanning eight major economies – revealed ESG presents various opportunities that are potentially game-changing for businesses, at a time when they have already been facing debilitating effects of Covid, supply chain disruptions, an ongoing energy crisis and chronic staff shortages.
The Centre for Economics and Business Research (CEBR), which conducted the research on our behalf, calculated the potential ESG-related revenue uplift for the 1,262 large businesses we spoke to at an incredible US$4 trillion – that’s $45 million for every firm.
Profits also rose faster for ESG adopters and there are other key business benefits as well, such as better customer retention and brand impact, easier access to capital, and fewer issues hiring staff.
With the eyes of the world on COP 27 taking place this week, its clear sustainability has become so much more than just a corporate nod to being PC. Its universal coming-of age this year could mark a definite shift by business and society towards greater global responsibility for many generations to come.
Featured image: Mary Tressel, ESG Sector Leader, Moore Global
The group we call Generation X is composed of people born between 1960 and 1979. These people experienced the arrival, and subsequent development, of new technologies and the social revolution created by the arrival of women in the workforce. These events disrupted generally accepted norms that had existed in the workplace for many years. This is a generation that had to learn how to adapt and develop new skills just to stay relevant in the workplace.
Generation Y comprises people born between 1980 and 1995. These people entered a more globalised workplace, fuelled by the growth of the Internet that enabled instant communication and multitasking. Shaped by a rapidly changing work environment, these people became hungry for new challenges.
Next came Generation Z, formed by those born between 1996 and 2010. These people only know a world that is completely digital. This is a world where everything is connected, that offers easy and rapid access to information, and has created a generation that is largely self-taught and, being used to immediacy, one that expects things right now.
Faced with this multigenerational and diverse workplace, the challenge for business leaders is how to meet their differing needs and expectations and keep each generation motivated.
Diversity brings advantages
A team that comprises multiple generations can bring many advantages. These gains often arise out of differing experience; the older generation can pass its experience on to the younger generations, influencing their behaviour, while the younger and rapidly developing generation can help to influence an older generation that may be more resistant to change. Everyone has the opportunity to gain from everyone else and this enriches the entire team.
To harness the benefits that diversity brings, business leaders must recognise the profiles of the people that make up a team, appreciate their different characteristics, and understand what motivates them. Only by doing this will you see results.
Leading diverse teams
In Brazil, currently the workplace largely comprises Generations X and Y – although Generation Z is arriving in the workplace, many are still in full-time education. Generation Z is largely motivated by stability while Generation Y looks for challenges. This makes it essential for business leaders to recognise these differing needs and characteristics.
A study carried out by Adriel Leal Diniz and others, entitled Leaders’ challenges in driving baby boomers, and X and Y generations in the workplace, tells us that to be a leader it is necessary to live leadership, and wake up and sleep breathing leadership; it is necessary to squander humility, understand relationships, and understand and serve people. Antonio Cesar Amaru Maximiano, in the sixth edition of his book General management theory: from the urban revolution to the digital revolution, informs us that ‘…the leader guides the group and encourages everyone to participate. The emphasis is on the leader as well as the group.’
It follows that all business leaders must develop skills that enable them to lead diverse teams, particularly in communication. Further, leadership styles will need to align with the policies and strategies of the wider business. Sometimes this might even vary across internal business areas – where an autocratic style might work in one area, a more open style might be better in another. This decision will be driven by the profile of each team and what you want it to achieve.
If you respect individuality and encourage collaboration, generational differences will complement each other and turn diversity into a force for growth.
Featured image: Rosangela Pereira Peixoto, RS Technical Regional Director, Russell Bedford, Brazil