What Generation Z Wants from Businesses
By Cindy Waxer
If data gauging consumer sentiment about their work and the companies they buy from is any indication, then members of Generation Z could apply that Z to zig-zag. That’s because members of the generation born between the mid-1990s and the early 2010s often switch course when it comes to attitudes about corporate activism and ethics, and their influence on buying and employment behavior.
On one hand, Gen Zers want to engage with companies that make a difference in the world. Yet their daily purchase decisions are more likely to be shaped by Kim Kardashian and less by trustworthy leaders and product quality.
Welcome to the complex landscape of modern-day leadership. In a January 2020 SAP study of nearly 10,000 Canadians and Americans, we unearthed the key sentiments influencing why people buy from, work for, and respect a company – qualities such as price, product quality, and a positive experience for customers and employees.
To gauge respondents’ levels of emotional intensity, individuals were presented with 17 global issues, such as climate change, education, and work-life balance, and were asked to attach an emotional rating to each one, choosing from 12 different emotions, such as admiration, disgust, and enthusiasm. (Response choices were equally balanced between positive and negative emotions). Using their responses, we generated a standardized Emotional Index to capture the strength of participants’ emotions across all areas.
We then examined responses across generational divides to provide leaders with a snapshot of what people from varying age groups expect from leadership, and the emotional responses these individuals have to leadership decisions. Although there are plenty of similarities across groups, Generation Z and its zig-zags challenge business leaders’ understanding of this generation’s needs and the key factors influencing their decision-making. Here’s why.
Passion that’s hard to pin down
Generation Z, aged 10 to 25, comprises one of the largest groups of Passionates – those who report the most intense feelings about a range of global issues, second only to Millennials. In fact, Gen Zers demonstrate more passion for the issues they care about (31.6% vs. 18.9% for the other three generations combined). Generation Z also shows less neutrality (53.9% vs. 60.4% for all others combined), and less dispassion (14.5% vs. 20.8%).
However, despite the strong feelings Gen Zers display toward corporate accountability and social activism, the factors shaping Gen Z behaviors – how they buy, work, and calculate respect – are often contradictory, making members of that generation a challenging demographic for businesses to understand.
Who are the Passionates?
And how will they shape the future of corporate leadership?
Case in point: 83.1% of Generation Z cares more about companies being positive forces in the world and improving people’s lives than all others participating in the survey (78.9%). It’s a statistically significant difference that shows that Gen Z is paying attention to corporate behaviors that go beyond selling goods and services. But despite this desire to see businesses effect positive change, the buying considerations of Generation Z (like the also-young Millennials, and unlike older Generation Xers and Baby Boomers) are more focused on appearance and celebrity endorsements than on the quality of the products and services they buy (see Figure 1). And when asked about factors such as personal trust in business leaders and those leaders’ ethical behavior, these young people care less than those in older generations when considering key purchasing decisions.
The takeaway: The fact that Gen Zers are more interested than others in appearance and celebrity endorsements than product quality or ethical behavior isn’t an excuse for businesses to abandon their values. Rather, it’s an opportunity for digital business leaders to balance traditional characteristics – such as price, quality, and product features – with community-based initiatives, from celebrities involved with fundraisers to brand sponsorship, to strengthen their connection with Gen Z consumers.
Generation Z as talent for hire: Big-picture impact, specific reviews matter
When it comes to employment, Generation Z also cares more than others surveyed about the big-picture difference their employers make. Eighty-six percent say it’s important that an employer makes a difference in the world and improves people’s lives, slightly more than all other respondents (83.7%).
Yet when it comes to employment decisions, the young people in Generation Z, accompanied by their slightly older Millennial peers, care more than those in more mature generations about celebrity endorsements and online reviews of workplaces (see Figure 2). And they care less than older generations about the quality of the products and services their employers offer and the prevalence of a positive work experience.
The takeaway: Gen Zers still place plenty of emphasis on high-value traits, such as empathetic leadership. However, their appreciation for celebrity endorsements and online reviews means digital leaders should consider placing more stock into these fringe aspects than perhaps they thought to drive recruitment and retention.
Another defining feature of Generation Z: a strong belief that communities should play a central role in tackling the world’s problems.
While Gen Zers believe government should play an important role in addressing big challenges, they place a greater importance on communities relative to the older generational groups. (It’s a finding echoed by responses from Millennials in our survey). It’s easy to understand Gen Z’s commitment to community. These young people are most likely to enjoy strong ties to community environments, ranging from public school systems and close-knit neighborhoods to religious affiliations. Conversely, negative feelings of distrust about established institutions may explain Generation Z’s desire that government agencies play a smaller role in resolving world issues.
The takeaway: Given Gen Z’s strong communal ties, business leaders seeking connections with these young people should consider focusing their efforts and investments in grassroots, community-oriented organizations that directly affect Gen Z’s opinions of them.
Are you overlooking this talent pool?
Learn why employers should incorporate age in their DEI strategies.
Generation Z top concerns: Emotional well-being, respect for all
In many ways, Generation Z displays distinct and meaningful differences from other generational groups in its regard for community and prioritization of mental health, sexual harassment, and diversity.
In fact, 44% of Gen Zers say mental health is an issue that matters most to them, a significantly higher response rate compared to older generations. Respondents could be reflecting concerns highlighted by mental health professionals. A 2019 American Psychological Association report shows that highly publicized issues, including mass shootings, sexual assault, and controversies over immigration policies in the United States, were causing “significant stress” among members of Generation Z.
As Figure 3 shows, there are also notable differences in attitude toward sexual harassment and diversity – both priority issues identified more often by Gen Zers than other groups – as the awareness of social awareness (think of the emergence of the Me Too movement) has greatly shaped this generation’s attitudes toward women’s rights, inclusion, and pay equity in the workplace.
A generational difference also shows up in what respondents care less about. Generation Z respondents, having grown up trading personal information for technological convenience, are less likely to identify data privacy as a chief concern. Healthcare access also ranks low among Gen Zers, as many of these young individuals have yet to consider employment benefits packages.
The takeaway: Stringent data privacy rules are critical to gaining any generation’s trust in today’s digital world, but companies must extend their codes of conduct to include non-technology-related areas, including pay equity, work-life balance, and diversity, if they wish to win over Gen Z.
A generation within reach
Clearly, there is a disconnect between what Generation Z holds sacred and the factors shaping the way they spend their money, seek employment, and dole out respect. These unusual twists and turns challenge businesses to broaden their understanding of Generation Z and the real impact societal beliefs may or may not have on purchasing and employment decisions.
That’s not to suggest, however, that these young Passionates are out of reach. Our research suggests that we are observing a generation finding, differentiating, and identifying their belief systems as they strive to current on shifting trends while transitioning from adolescence to young adulthood in today’s world.
And digital business executives should be concerned about Gen Zers’ sensibilities. This young generation, more likely to undergo swings of sentiment than more mature Baby Boomers or Gen Xers, can instill a sense of urgency to stay up to date with trends that matter to these young people. In that sense, our research is a call to action: stay engaged with Generation Z.
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