By Penny de Valk, Associate Director, Equiteq
It’s now well established that millennials are changing the nature of the workplace and businesses need to respond. However, the extent to which millennials are influencing M&A activity – as well as how creating a culture in which millennials can thrive can drive equity value – is yet to receive the same level of recognition.
The importance of millennial views when it comes to M&A was underlined most recently by research from the consultancy EY. This found that almost three quarters (74%) of senior executives consider millennial attitudes and preferences when making M&A decisions.
With millennials a growing section of the workforce, they could be set to influence M&A activity further still. Those organizations that meet their needs and earn their loyalty will become more attractive to prospective buyers – who will naturally gravitate towards firms with an engaged and loyal workforce. That’s because engagement is a major driver of productivity, encouraging people to perform at their best, as well as central to retaining talent. All of these things are crucial to accelerating growth and driving business success.
Also, because a culture that meets the needs of millennials can also help boost engagement amongst the wider organization, focusing on business culture can be an effective way to drive equity value by motivating and engaging the entire workforce.
Millennials don’t want different things to most employees
There’s a tendency to talk about millennials as if they – and their expectations of the workplace – are completely different to everyone else.
That’s unlikely to be the case. The entire workforce is likely to appreciate flexible hours, a work-life balance, to do work with purpose, and to receive regular feedback on their performance.
While research shows millennials might value these things more – or even expect some of these things as a matter of course – they are important to everyone. A study by PwC, for instance, found 65% of people around the world would like to work for organizations with a ‘powerful social conscience’. As a result, a culture that focuses on purpose and social values can meet the needs and earn the loyalty of the entire organization.
This helps drive equity value, because a consulting organization succeeds on the basis of the skills and knowledge of its people. When these employees are engaged and loyal, the organization becomes far more valuable to prospective buyers.
How should this culture look?
Here’s how a culture that builds equity value and increases the attractiveness of an organization to prospective buyers should look:
Millennials recognize the benefits of entrepreneurialism – with an EY study finding 71% believe in the importance of taking risks in order to get ahead.
Despite this, the study found that not many millennials consider entrepreneurialism a viable career path for themselves.
That’s created a vacuum that businesses can fill by establishing a culture of ‘intrapreneurship’.
This involves empowering all employees to truly drive the success of the business by incentivizing them to share, develop and implement their own ideas, approaches and service lines.
This not only appeals to millennials but can also allow consulting firms to access the untapped potential and innovation that exists across their organization.
Frequent communication and two-way feedback
The annual review is outdated. Research suggests that millennial employees require more frequent feedback, believing a lack of guidance on how to grow is stifling their careers. Again, addressing this can benefit the team more widely.
Clear, regular information on what teams are doing well and the targets they should be aiming for only make it more likely a business will achieve its goals.
Additionally, it’s important to ensure this works both ways – allowing team members to provide their own feedback on what the business could be doing differently and the direction their role could take.
Not only can this create more loyal and engaged employees, but it can also play a role in fostering a culture of intrapreneurship that could inspire millennial employees and unleash innovation in the business.
A performance culture
A performance culture appeals to prospective buyers as well as millennials and other employees across the organization.
What this means in practice is a people-based focus, in which good ideas can come from anyone and employees are fairly rewarded and incentivized based on their ideas and overall contribution to the organization.
Encouraging and valuing the ideas of the entire company will enable people to perform at their best and also help secure the best talent – both of which can significantly drive equity value.
While it’s become fashionable to talk about millennials as if they are an entirely separate category of employee, what they expect and require isn’t hugely different from the wider workforce.
As a result, knowledge-led services businesses, such as consulting firms, IT services firms and media and marketing agencies, can invest in creating a business culture that earns loyalty and encourages the entire organization to perform at their best, which can increase firms’ attractiveness to buyers, accelerate growth and drive equity value and business success.
If you are preparing to sell your consulting firm and would like to discuss your plans, please get in touch.
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