When the 6-trillion dollar man takes the long view, it’s time for us to do the same
Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
–Larry Fink, CEO – $6 Trillion BlackRock investment manager in his 2018 advisory letter
These are strong words from a leading investor on the long-term success of our business models and key threats and potential facing them. No doubt he sees, as we all do, a worrying set of major trends:
- A record and continuing post-recession economic recovery
- High levels of corporate profitability and extremely low rates of unemployment
- A massive tax cut, enabling the repatriation of hundreds of billions in currently offshored profits
- The continuation of two decades of wage stagnation, and
- The simultaneous deepening of persistent income inequality.
Mr. Fink’s extraordinary, yet seemingly common sense conclusion is that we need to consider caring not only for shareholders but also for stakeholders, especially employees. But is that a likely shift?
Employers spent a century seeking smooth growth, as employees found serial turbulence
The last century of primary business focus – and thus the organization of work – has been shareholder gain. But capital accumulation may be faltering as the transforming engine of social progress. An innovative, determined, narrowly accountable private sector has turned a nation of farmers and shopkeepers into a productive colossus that dominates the global economy. We play an outsized role in feeding, clothing and wiring the world. Our government has played the role of midwife and back-up caregiver in this process.
Typical American lives have been dramatically reshaped in this evolution. Whole populations have migrated from rural to urban and then suburban homes. Farmers became factory workers, their children became office dwellers and today for millions of workers, the daily toil is the exchange of electrons from home-based offices. Long ago the work and “career” process was determined by the demands of plants and animals, the rhythms of the seasons and the passing of the farm or shop to the next generation.
Since World War II, that agrarian model has been largely replaced by a new regimen: an education cycle, a period of wage-based work and then death or idle years – aka, school/work/retirement. Education lasted through high school (18) or college (+/-21.) Work (mostly for men) consumed the next 40-45 years. Social Security (introduced 80 years ago) kicked in at 65. That remains today’s core model. Or does it?
Enter LONGEVITY as the Great Disrupter
As a society, we tend to be short-term doers rather than long-term planners. Several decades ago, no powerful and farsighted group of business, government, medical and labor leaders sat down and said, “Let’s dramatically lengthen our life spans! Public health campaigns can wipe out epidemics! Pharmaceuticals can treat life-threatening diseases! A massive healthcare system can achieve miracles! We can add two or three decades to our lives!” Had such a meeting occurred, would a subsequent gathering have followed to consider the impact of this blessing on the way we would work and live?
No, such Longevity Summits did not occur and no plan to redesign the trajectory of work exists. Happily and sadly, longevity “just happened.” And we are living with the consequences. Many forces and trends have converged in 2018 to insist that we need a fundamental rethinking of today’s rigid life and work cycles. The time has come to rebuild our approach to work and careers on the basis of deep flexibility.
The essential shift from rigid “flexibility” to fluid work trajectories and practices
We are well past the need for “flexible work” in the form of coming in a half-hour later or working at home while waiting for the plumber. We need flexible careers, flexible management and flexible organizations to integrate the fluid patterns of life into working lives that continue for as long as 60 or 70 years. Tough as it might be mentally and practically to throw off the restraints of tightly held assumptions and outmoded practices, brutal realities offer little choice. Among the drivers of long overdue transformation are:
- A rigid on/off view of work that undermines families, long-term health and economic security
- The unprecedented shift of the costs of college education to debt-laden students
- Assaults on the social safety net of robust pensions, social security, Medicare and Medicaid
- A massive transfer of wealth through tax cuts that lower rates and bring offshore billions home
- Intensifying fears of automation and a benefit-free future of “Gig Economy” and part-time work
- Perceived employment tensions between debt-ridden millennials and stressed pre-retirees
Larry Fink’s advice calls on us and offers an opportunity to step back in these tumultuous times and look at the big picture. It is time to consider a radical reassessment of the trajectory of work and the costly fixes for it that are both desirable and doable. Should we pose the whimsical, yet useful question: What might an imaginary Martian design team suggest as a better way of integrating work over a lifetime?
Consider “gap decades”, erase student debt, multiply on/off ramps and enable longer work
An objective and creative observer would likely say that it’s stunning that we moved from the Model T in the 1930s to a Tesla on a rocket this year, but the way we organize our work and lives remains static. There are numerous reinventions to consider, and we will outline a blueprint for change in the next several essays. A few provocative, yet feasible changes follow.
Encourage “gap decades” The school to work transition is the first area to reconsider. I have the joy and challenge of being the Boomer Dad of a millennial son, a chef in training. I bring to discussions of his future career 50 years of work in the traditional pattern. I could just encourage more of the same for him. As he prepares to graduate from the Culinary Institute of America, visions of The Ultimate Restaurant dance in his head. But since he leaves school single, debt-free and adventurous, for the past year I’ve been strongly supporting his dream while seriously challenging his timeline.
It all starts with longevity. I explain that I may reach a healthy 80+, barring catastrophic events. However, healthy at 21, he and his cohort will likely be going strong into their 90s or 100s. If he starts a restaurant next year, he could well run it or numerous successors for as many as 70 years until retiring at age 90. This is a brutal industry that wears people out early. Maybe, I suggest, he should consider a gap decade (give or take) before he commits to a start-up. Take a breath, take a break, travel the world and cook in the great global kitchens. Start your restaurant at age 30, invent a new cuisine, save well and take “early retirement” at 80. And in the process make it more feasible for older chefs to ply their trade without being “aged out.” Is such an approach feasible?
Erase student debt A post-graduation gap of any length – what could also be called a pre-career break — is a non-starter for the millions graduating today’s mandatory college facing heavy debts. The imposing monthly payments start immediately. These young graduates start working with a drag equivalent to a mortgage that is unrelieved by the joy of a spouse and a house. They might gain significantly from deeply instructive periods of travel, teaching, volunteer work at home and abroad. Their loan obligations make the idea unthinkable.
A small number of companies have begun modest programs to assist their employee in repaying student loans. Perhaps as companies consider ways to respond to the needs of their stakeholders, not just shareholders, this unplanned but severe phenomenon shaping and limiting our collective future could be addressed. Couldn’t a portion of the record profits and repatriated billions Larry Fink sees be applied to this pressing social challenge, enabling the shift forward of some of the fallow years of “retirement” to a period when the time could be invested more productively.
Multiply on/off ramps As women – still the primary caregivers in modern America – entered the workforce in huge numbers in the last couple decades, companies had to adjust to the “disruption” of babies, children, illnesses, etc. Modest adjustments were made: some flex, some leaves, some child care supports. As the workforce evolves and ages, new challenges emerge. Chronic illnesses, from cancer and HIV to back injuries and Parkinson’s, present to managers as the difficult choice between loss of talent and provision of more complex periods of flexibility and leaves.
The “minor” issue of eldercare is exploding as a growing number of older workers cannot afford to retire, caught between the desire and need to continue working and the demands of sudden care-giving for 80 and 90 year-old parents who fall, are hospitalized or suddenly need new places to live. If we picture our careers as a long freeway, they are designed with only a few on- and off-ramps in the early sections, and little flexibility past that. Indeed early on in this GPS-less journey, one can envision signs appearing that warn: “Last exit before serious uncertainty.” Isn’t it time for limited flexible work arrangements to give way to true flexibility over a working life, to more ramps, road side rests and slow lanes – to Life Cycle Flexibility.
Longer work, flexible retirement Just as the Boomers have changed many work practices to date, they are beginning to challenge “early retirement” and the 65 sell-by date as they speed toward abrupt and rigid exits. Not only are they facing great loss, but they are removing their talent from tight labor markets and taking valuable knowledge and experience with them. Like a glacier slowly engulfing outlying villages, some industries and companies are already sounding the alarm. We cannot afford to waste such a huge productive resource and not just allow, but force a powerful generation into dependency on unsustainable safety net programs. It’s time to end the notion of a senior “sell-by date.” Milk curdles, people don’t.
“Flexibility” needs reinvention from static arrangements toward routine diversity
None of these changes, or even more desirable and valuable ones, will come quickly and easily. Few things of lasting value ever do. Our purpose here is to turbocharge this discussion. Our next several essays will address the pressing need for acknowledging, and the rare and timely opportunity to seize on this inflection point to shape a better future for our grandparents, parents, partners, children and grandchildren. It is well past time to do the planning for longevity that never happened and to do redesign and rebuild the infrastructure that matters most: the way we integrate work and life over 100-year lifespans.
What seem like distant concerns of automation and potential job loss, the benefits and challenges of the Gig economy and inter-generational dialogue inside companies should all be addressed as we move forward intentionally and creatively. We look forward to those conversations.
NOTE: With a mixture of delight and trepidation, I can report that after considering his own career trajectory, my son called me recently to say he has accepted the chance to partner with a favorite counselor from years of summer camp on a new food truck business in Melbourne, Australia. He leaves this fall for the beginning of what he thinks might be a longer-term global journey.