OUR INVESTMENT THESIS ON EMPLOYEE ENGAGEMENT PLATFORMS

John Gage was one of the earliest employees at Sun Microsystems, where he served for many years as Chief Researcher. His contributions to computer science are many, but chief among them is his famous insight, "The network is the computer." Gage’s prescient and visionary thinking on networks helped Sun successfully ride the wave of changes triggered by the commercialization and popularization of the Internet.

But today a different network is emerging, more powerful and enduring than any other, one which has less to do with technology and more to do with the original human software – culture. And given that Cue Ball as a firm is centered around one motto and that is: People First, Always, it is only but fit that we have a view as to where the world is going as it relates to people and people management.

One of the main current issues we see in the market is that the corporate social bond between an employer and an employee is broken, especially with the millennial workforce. The reason why that group is so important today is because for the first time they make up the largest generational cohort in the workforce. A PwC study found that:

  • Over 25% of millennials expect to have six employees or more in their lifetime, compared to 10% in 2008.
  • 38% of working millennials say they are actively looking for different roles, and 43% say they are open to offers.
  • Only 18% expect to stay with their current employer for the “long term”.

Millennials are looking for good work/life balance and strong diversity policies but leave when they feel their employers have failed to deliver on their expectations. The rise of the on-demand gig economy proves how employees are yearning for more choice and flexibility at work. 28% said that work/life balance was worse than they had expected before joining a full-time employer, and over half said that while companies talk about diversity, they did not feel that opportunities were equal for all.

Furthermore, what’s exacerbating the broken bond is that employees are also no longer dependent on employers for certain basic financial and health needs as before. Consumerization of healthcare solutions and insurance (emergence of tele-medicine, ZocDoc, One Medical Group, blowout of Oscar) means employees are not solely dependent on their employer for that. Poor performing 401Ks, potential to live a longer life than ancestors and cheap alternatives to investments (Wealthfront, Lending Club, Betterment) means employees don’t have a special penchant for this benefit either. Employees today are committed to their personal learning and development and this remains their first choice benefit from employers (in second place was flexible working hours and choice, cash bonus came at third place). And of course the rise of social media and digital interactions mean people are left “alone together” and the resurgence of community feeling within an organization is necessary.

The above paints the problematic picture today as to why employee engagement is broken and therein lies the opportunity for companies to improve that employee experience via services, products and platforms. We will see large enterprises doubling down on “engagement 2.0" platforms and services such as VirginPulse for health and wellness*, LingoLive for communication, SmartPath for financial wellness, Jubi for learning and productivity, Blueboard for experiential employee rewards, Everwise for mentoring employees, HighGround for employee goals management, not to mention a plethora of charity and volunteering events to encapsulate a corporate’s social responsibility. We will see the idea that 1099 is better than W2 evaporating as employers will look to incorporate flexibility and choice in salaried employees as well. Finally, we will see compensation structural changes as businesses look to award long-term driven performance alongside short-term driven performance to help with retention. All this to say, ultimately, the team and the culture a business propagates internally where they rejoice and “champion” the employee as much as performance is going to be the new enviable competitive edge a company can have. Great corporate cultures are guided by values and in the years to come employers must learn how to leverage technology to foster and amplify those values so that their cultures become their new networked advantage. We are bullish on platforms that can help companies solve this problem by putting the employee first.

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*VP is a CB portfolio company  
NB: Co-penned with Anthony Tjan, Managing Partner at Cue Ball.