Why PBCs appeal to workers who care about more than profit
Public Benefit Corporations attract a generation craving purpose
Earlier this year, the millennial generation, encompassing roughly those born between 1980-2000, became the largest demographic group in the U.S. workforce. That presence stands to keep expanding as the generation’s youngest members graduate from college over the next 10 years and older workers steadily retire.
Clearly, recruiting and retaining employees from the youthful demographic will continue to grow in importance for business owners. Although to date, many report that millennial workers frequently jump to new jobs with minimal rationale.
For a majority of the workers in the age range, however, the attraction to a job goes beyond a paycheck and benefits. According to a recently released study from the consulting firm Deloitte, 60 percent of millennials look for a “sense of purpose” from employers, and the rate jumps to 77 percent among millennials who are heavier social media users.
Proof of purpose in Colorado …
Traditionally, the sole reason for a corporation to exist has been to benefit its shareholders. Over the past five years, a new type of corporation, known as a benefit corporation, has emerged in 30 states and the District of Columbia as an option for owners looking to fulfill more than a pure-profit mandate. Here in Colorado, such companies have been able to incorporate as public benefit corporations (PBC) since April 2014.
As part of becoming a Colorado PBC, the company is required to state the company’s purpose in its articles of incorporation. Furthermore, there’s a commitment to accountability and transparency, as the state requires that that the company prepare an annual benefit report to identify how it fulfilled its stated purpose.
In other words, for current employees, prospective workers or any other interested party, a PBC can easily point to its reason for being and its ability to live up to its related commitments.
… and proof that it can matter to jobseekers
Skeptics of benefit corporations do exist, and many of them resurfaced in September when the renowned crowdfunding platform operator Kickstarter converted to a PBC in Delaware, its corporate home. As part of its new charter, the company said that it measures its success by how well it achieves its mission of helping bring creative projects to life, not by the size of its profits.
In addition, the company’s co-founder and CEO, Yancey Strickler, told the New York Times that Kickstarter’s management never wanted to be sold or go public, a statement that provided hard-line investors fodder to potentially marginalize the business. But within hours, one of the early investors, Fred Wilson of Union Square Ventures, published a blog post that explained that none of the company’s angel investors, venture investors, employees or stock-holding board members dissented from the company’s decision to convert to a PBC.
Perhaps just as important as the investor buy-in, in the weeks following the conversion to a PBC, the company saw a 33 percent jump in visits to its jobs page, Strickler recently told the online publication Quartz.
A way to meet workforce demand
Of course, it’s not enough for a company to simply declare that it’s a PBC dedicated to fulfilling the interests of multiple stakeholders and then proceed along a traditional corporate path singularly focused on profits. Indeed, it must regularly deliver on its purpose.
For that reason, and others, it would be naïve to insist that traditional shareholder ownership models will are on a path toward extinction.
For management teams looking to pursue a balance of profit and purpose, however, corporate structures such as the PBC offer an alternative—and the related mindset could prove valuable as the millennials’ position in the active workforce keeps enlarging.