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Generation Y

Culture And The Bottom Line: Why Burritos Are Outperforming The S&P 500

You can’t put a price on culture. Or can you? Danny Meyer is a renowned New York City restauranteur and the CEO and founder of Union Square Hospitality Group. He believes success in any business is based on culture. In 2009 Meyer appeared on Jim Cramer’s show Mad Money.

You can’t put a price on culture. Or can you?

Danny Meyer is a renowned New York City restauranteur and the CEO and founder of Union Square Hospitality Group. He believes success in any business is based on culture.

In 2009 Meyer appeared on Jim Cramer’s show Mad Money. On the show, Cramer’s producers surprised him by wheeling out a tray featuring food from various public restaurant companies: a lobster from Red Lobster, a bowl of spaghetti from the Olive Garden, a Big Mac from McDonalds, a steak from Ruth’s Chris Steak House, and a burrito from Chipotle.

Cameras are on Meyer and Cramer says, ‘You’re a great restaurateur. Tell our viewers based on the flavors of these foods what restaurant company to invest in.’

Meyer’s unexpected response:

“I don’t even have to taste the food. I can tell you which one to invest in right now. I would invest in Chipotle, the burrito. Because I know they care for their employees, they care deeply for their supply chain, they care about the impact of their food on the community. That’s the most sustainable long-term way to be greedy.”

The idea resonated with the Mad Money host, ultimately sparking what Cramer called the “Danny Meyer Index.” It’s an index of companies, selected by Meyer, all of which understand and leverage the concept of hospitality and culture to its fullest. The index currently contains: ChipotleWhole FoodsAppleAmazonAmerican ExpressNordstromeBay, Men’s Wearhouse, Southwest AirlinesMattel, GoogleBed Bath & BeyondCostcoBrown-FormanGoldman Sachs, and Salesforce.com.

And it looks like you can put a price on culture. Since its creation in February 2009, the index has generated a 375% gain, crushing the S&P 500, which is up 128% over the same period.

Culture is not something you can actually see, yet it is in the environment and experiences your organization creates for its employees, customers, clients, members, and volunteers. To put it simply, it’s how your organization makes people feel and it’s those feelings—whether good or bad—that are very powerful influences.

Culture has always been important, but right now it’s crucial because culture really matters to Generation Y (1982-1995), the largest generation in history rapidly moving into positions of leadership and influence. This generation bases their employment and purchasing decisions largely on company culture.

Gen Ys have been given the negative label of being entitled, and well—they are. Their expectations are set a little higher and their patience is a little shorter because they have been raised in a world driven by technology and credit cards. They have been given more choices and access than any other generation, so they’ve never had to settle for inadequate, irrelevant, or unhappy and they’re certainly not about to start.

The only way your organization will stand a chance at engaging Generation Y is if the organization’s culture is positive, engaging, and service-oriented, thereby making the experience exceptional.

Consider Google. From its inception, Google became renowned for having a workplace culture that was truly revolutionary. The company was built on the premise that people want meaningful work, knowledge of what’s happening in their environment, and the opportunity to shape that environment.

Success has certainly followed. Google generates $50 billion in revenues and attracts one million job applicants each year, continually earning honors as the best company to work for in the United States, Canada, Japan, India, Korea, Brazil, and elsewhere.

Surprisingly, most organizations aren’t paying much attention to culture but instead making decisions based on nothing other than financials and historical performance reports.

I recently facilitated a board retreat for a large membership association struggling to engage younger members. Prior to the retreat I asked board members to meet with people between the ages of 18-32 and ask them a list of provided questions. Among the list were these two questions: ‘What has to happen to make you feel like you belong?’ and ‘What one word would you use to describe success?’.

When the responses were shared at the retreat, the board members (85% who were Baby Boomers) were shocked to discover that overwhelmingly Gen Ys answered those two questions the exact same way. To feel like they belong Gen Ys must be heard; and they describe success as happiness.

That’s all about culture, people. And great culture drives engagement and real monetary returns.

Meyer’s book, Setting the Table, features a circular diagram of five stakeholders: Employees – Customers – Community – Suppliers – Investors. In a recent interview, Meyer explained the diagram:

“The reason it’s called a virtuous cycle is if you break it at any point, you’ll break the whole thing. If your employees don’t love coming to work, who in the world are you to think your customers will be having a great time? And if you’re not rooting for your community, why would your community be rooting for you?”

In other words, culture is key to your organization’s success. Improve your culture and the money will surely follow.

Zs came of age in an era of disruption

In many ways, it’s symbolic that Generation Z is named after the last letter in the alphabet because their arrival marks the end of clearly defined roles, traditions, and experiences. After all, Gen Z is coming of age on the heels of what has been referred to as the most disruptive decade of the last century. America has become an increasingly changing and complex place.

For example:

  • ‍Zs were born into a “modern family era” in which highly involved dads help out at home, and the nuclear family model (two parents, married, with children) represent only 46% of American households.
  • ‍Zs are the first generation to be born into a world where everything physical, from people to places to pennies, has a digital equivalent.
  • From the time they were infants, Zs had access to mobile technology. As a result, their brains have been trained to absorb large amounts of information, and Zs are especially adept at shifting between skills and subject matter.
  • Zs tend to have crystal-clear memories of sitting up for the first time at six months old because they can easily and quickly reference the photos and videos their parents shared on social media or saved in the “cloud”. 

Members of this generation have undoubtedly been shaped by crisis and disruption. This generation will largely be responsible for confronting the aftermath of the Great Recession, high youth unemployment, the effects of climate change, terrorism, energy sustainability, and more. These dark events have undoubtedly made this generation more cautious and pragmatic, but they have also provided this generation with the inspiration to change the world – and their grit will likely allow them to do it.

Coming of age during disruption means that most Zs will be comfortable being the disruptors. While Millennials tend to be collaborative and innovative, this generation tends to be sincere, reflective, thick-skinned, and self-directed, and will likely approach work in much the same way.

Zs were raised to be competitive

In the era following World War II, Boomers (1946-1964) were born and eventually became the wealthiest, most prosperous generation in history. Raised to aspire for the American Dream, this very large generation moved into positions of power and influence, and served as the workforce majority for 34 years.

With the American Dream alive and well, Boomers had no reason to teach their children, mostly Millennials, about competition. Instead, they taught them to focus on academic achievement and to be team players because if everyone works hard, everyone can win.

Enter Generation X (1965-1981). In contrast Boomers, Xers came of age during a time when change and economic and political uncertainty began to take root. They have lived through four recessions, struggled with debt and economic decline most of their lives, and watched the best educated and accomplished generation of all time (Millennials) graduate during the Great Recession and become the most debt-ridden generation in history.

Gen Xers can be defined by their independence and anti-status quo approach to life, and they have taught their Gen Z children to be competitive, believing only the best can win. They have encouraged their children to be realists, finding something they are good at and aggressively pursuing it.

Xers have raised their Zs with an intense focus on competitiveness -- in academics, sports, and other activities. This approach to parenting has many implications, but one stands out in terms of business: Gen Z is likely to lead.

Millennials in the workplace created and aggressively advocated for collaborative work environments. In fact, their aversion to leadership has been so strong, some Millennials sought out companies that boasted boss-free or team-managed workplaces.

In contrast, Zs have been raised with an individualistic, realistic, and competitive nature. They have been taught the skills to successfully defy the norm. This means we’re going to see the pendulum shift away from collaborative workplaces towards a widespread demand for, and pursuit of, leadership development.

Zs are career-focused.

While Millennials have been criticized for their “delayed adulthood”, Gen Z is showing signs of “early adulthood”. Educators and parents often describe this generation as being more serious and contemplative about the world. Zs are thinking about their career paths and exposing themselves to career training at an earlier age than Millennials. It’s probable that some of this early onset of adulthood is caused by parents, who are pressuring their children to be competitive and successful and to avoid the debt that plagued both the Gen Xers and Millennials.

The numbers from our global research found 46% of Gen Z said they know what career to pursue and 51% have taken a class at school focused on their career interests. Forty percent joined an extracurricular program (team, club) based on their career interests.

Zs are seeking financial security. 

Zs have been shaped by the aftermath of the Great Recession. They watched Millennials become debt-ridden and are concerned about falling into the same trap. XYZ University’s survey results show 66% of Zs said financial stability is more important than doing work they enjoy, which is the exact opposite of Millennial survey results.  Also, 71% of survey-takers have a paying job.

Zs value leaders who are positive and trustworthy.

When presented a list of leadership traits, Zs ranked positive and trustworthy the highest. While Millennials and Gen Zs both value trust in a leader, Millennials usually cite collaboration and vision as most important. In other words, Millennials focus on the outcomes leaders inspire, whereas Zs are more likely to consider leaders’ attitudes and personalities. To Z, what leaders encourage others to do isn’t as valuable as how they make them feel.

 

Zs want to be challenged.

Both Millennials and Gen Zs place a very high value on feeling challenged and appreciated in the workplace. However, according to our survey results Millennials rank appreciation slightly higher than challenge, whereas Zs rank feeling challenged slightly higher than appreciation.

Time will tell how Zs go down in history, but we know this generation’s influence on history will be unlike any other.

 

Does your organization have what it takes to engage the next generation? Take this quiz to find out.

 

Sarah Sladek is CEO of XYZ University. Our generational intelligence can assist you with engaging and retaining young talent and members.

Sarah Sladek

Concerned about declining engagement in our nation’s membership associations, non-profits, and workplaces, Sarah Sladek founded XYZ University, the nation’s first and only generations-focused training and engagement strategy company, in 2002.

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