How Will Gen Z Manage People?
As they move into management positions, it’s clear Gen Zers will do things differently. Will they learn from us, or will we learn from them?
Good Morning!
Here are today’s highlights:
It’s not just Wendy’s. Lots of restaurants are trying dynamic pricing.
John Arensmeyer on what small businesses heard in the state of the union address.
Spurred in part by social media, more people are starting vending-machine businesses.
Some companies are promoting alternatives to résumés.
MANAGEMENT
Here comes Gen Z: “Generation Z—generally defined as college grads and 20-somethings born sometime between 1997 and 2012—entered the workplace when there wasn’t even one to go to. Those years, marked by a global health crisis and social unrest, helped shape their views about life as well as work. Many of them were home as their parents’ workplaces closed, so they got a ground-floor view of what jobs really looked like, and they didn’t like what they saw: a work-life balance that left little time for life, management that seemed to not care about the mental health of their employees, and an organizational structure that didn’t give workers much of a voice.”
“At a New York startup company called August, employees enjoy ‘mindfulness Fridays’—a more-relaxed workday for deep focus without meetings. The company, which makes menstrual-care products, also has manager-driven quarterly ‘heart checks’ to see how direct reports are feeling about how hard they are working and how much they are paid.”
“It’s a work style introduced by Gen Z co-founders Nadya Okamoto, 26, and Nick Jain, 24, who graduated from Harvard and Princeton, respectively, during the pandemic. ‘We talk a lot more than most places about how to prevent burnout,’ says Okamoto, who says she was diagnosed with borderline personality disorder two years ago, and speaks openly about it.”
“A survey of 1,344 managers by ResumeBuilder.com found that 74 percent believe Gen Z is more difficult to work with than other generations, due in part to lacking skills as well as motivation. In another ResumeBuilder survey that interviewed hiring managers who assessed a Gen Z candidate, 58 percent said Gen Zers didn’t dress appropriately, 57 percent said they struggled with eye contact and 47 percent said they asked for unreasonable compensation.”
“But those ‘weaknesses’ might be in the eye of the beholder. What older workers see as workplace liabilities, others see as signs of potential leadership strengths. ‘It’s not that they don’t want to work,’ says executive coach Scott De Long, 64, who consults workplace leaders on how to manage increasingly younger teams. ‘They don’t want to work for people who treat them the way that we were treated when we grew up.’” READ MORE
PRICING
Lots of restaurants are trying dynamic pricing: “If you are hungry for barbecue on a Saturday night this month, a delivery of a pulled-pork sandwich from Cali BBQ could cost you around $18. Or you could hold off a few days and order the same sandwich delivered on a weekday afternoon for around $12. Restaurants like San Diego-based Cali BBQ are experimenting with a form of the dynamic pricing long used by airlines, hotels, and ride-hailing services.”
“Shawn Walchef, Cali BBQ’s owner, said that variable pricing attached online to the pulled-pork sandwich boosted the four-unit chain’s $30,000 in monthly delivery sales by $1,500 since the company began testing it in early 2023. ‘That’s very meaningful for a small business,’ Walchef said about the sales boost. ‘I recommend it to every restaurant owner.’”
“Drew Patterson, co-founder of restaurant dynamic pricing provider Juicer, said restaurants need to reference ‘happy hour’ and other known promotions when explaining variable pricing to customers. ‘You need to make it clear that prices go up and they go down,’ said Patterson. Dozens of restaurant brands use Juicer’s technology to change their prices based on demand trends, with an average swing of up to 15 percent, Patterson said.”
“Gene and Georgetti, a historic Chicago steakhouse where Frank Sinatra once regularly dined, in late 2022 implemented dynamic pricing on two booths frequented by celebrity customers. Diners typically pay a $20 fee when they book the booths at busy hours, helping counterbalance the restaurant’s rising expenses, managing partner Michelle Durpetti said.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
John Arensmeyer on What Business Owners Need Now: This week, the founder and CEO of Small Business Majority talks about whether he heard what he wanted to hear in Joe Biden’s State of the Union address, what he makes of recent court rulings asserting that the Minority Business Development Agency must support owners of all races and that the Corporate Transparency Act is unconstitutional, and what he makes of the growing demand from businesses for more immigration.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
SMALLBIZ TECH
Gene Marks says not updating your software can cost you real money: “I’ve been dealing with this problem daily over the past 20 years. My whole life is about obsolete systems, out-of-date software, and patched-together databases. My company sells customer relationship management software to mostly small and mid-sized businesses. And you should see the old technologies they still have! It’s not uncommon for me to bump into older versions of Microsoft Office — I know of one company still running Office 97! I see companies using QuickBooks on desktop computers. Remember ACT and GoldMine for contact managers? Yup, they’re still out there. Great Plains? MAS 90? Oh yes, you can still find remnants of those ancient accounting systems in today’s products made by Microsoft and Sage.”
“My company’s biggest competition isn’t other CRM software. It’s getting someone to move off of their prehistoric, proprietary system built on FileMaker Pro that hasn’t been updated since the guy who created the system died 10 years ago.”
“Many of my clients have shrugged their shoulders and said, ‘Hey, if it ain’t broke, why fix it?’ I get it. But now my feelings are starting to change. No, I’m not siding with big tech. It’s about succession.”
“This is not a tech issue. It’s a valuation issue. Any buyer would immediately discount their purchase price to compensate for the costs of having to upgrade or replace these old systems. My advice to any business owner who’s looking to exit their company within the next decade: it’s time to upgrade.” READ MORE
ENTREPRENEURSHIP
Vending-machine businesses are becoming trendy: “With a brick of cash in his hand and a grin on his face, Jaime Ibanez shows his half-million YouTube subscribers a path to earning money without burning many calories: Vending machines. In videos with titles such as ‘This Is HOW MUCH My Vending Machines Made IN 7 DAYS!!’ the swoopy-haired 23-year-old Texan makes the rounds to his 51 machines, stocking them and taking the profits. His channel promotes the idea that with diligence and luck, anyone can go from snacks to riches.”
“Vending machines might seem an unlikely candidate for trending investment of the 2020s, but the idea has captured the imagination of Americans dreaming of easier money. Some pursue chips and soda as a side hustle because their regular paychecks aren’t enough for them to get by. Others bet on vending machines as a ticket to upward mobility, to quitting their jobs and becoming their own boss.”
“The startup cost is low and the formula simple. Buy a used machine for $1,500, load it up with products from Costco, charge a 100-percent markup, and let the crinkled dollars roll in. But turning a profit takes real work, and the machines can be a losing proposition when stuck in locations without enough hungry foot traffic.”
“‘There’s a real sense that doing things the so-called right way won’t necessarily land you in the middle class,’ said Lana Swartz, a media-studies professor at the University of Virginia who researches financial technologies. ‘If the old rules no longer apply, then there’s a searching for new rules to get ahead or to get by.’”
“Last spring Rob Smith, a 30-year-old truck driver in Orlando, Fla., spent $4,000 on his first machine, a credit-card reader, and a load of snacks and drinks. He recently acquired his fourth machine, which is at an industrial bakery. His first three machines take up three to five hours of his week and bring in about $1,500 a month in revenue, which works out to roughly $750 in profit.” READ MORE
HUMAN RESOURCES
An influx of workers—some working remotely, others coming from abroad—is keeping the job market in balance: “The steadily strong overall pace of job creation is striking. As Scott Anderson of BMO Capital Markets pointed out in a note, the three-month moving average of payroll gains moved up to 265,000 in February from 233,000 in January. Meanwhile, wage pressures are actually softening. The year-over-year gain in average hourly earnings slowed slightly, to 4.3 percent in February from 4.4 percent in January.”
“There appears to have been an uptick in immigration as the pandemic eased—one initially undercounted by government agencies. As a result, in January the Congressional Budget Office estimated that the U.S. population rose by 0.9 percent in 2023 from a year earlier compared with a Census Bureau estimate of 0.5 percent.”
“Even more intriguing, BlackRock’s Rieder argues that work-from-home policies ‘have enabled a surge in labor market participation, particularly among prime-age female workers.’ Whether a worker is male or female, it is easier to commit to a job when one knows that he or she can be home part of the time should a child or an elderly relative need care.” READ MORE
There are alternatives to résumés: “For about eight months in 2018, Khyati Sundaram spent much of her day at a desk in a corner of her London flat applying for jobs. Sundaram had attended top universities in the U.K. and the U.S. She had an MBA, had JPMorgan on her résumé, and had run a startup for six years. Yet after pumping out more than 500 applications, Sundaram had landed only a few dead-end interviews. Eventually, a recruiter told her that her résumé didn't fit anywhere because her experience was too varied. That led Sundaram to a company called Applied, which tries to make brief skills tests — and not the résumé — the thing that gets people a shot at a job.”
“Sundaram, now the CEO of Applied, is making it her mission to kill the résumé — or at least diminish its role in hiring. ‘We don't look at anyone's résumé, ever,’ she told Business Insider, referring to how she hired at Applied. Sundaram wants other leaders to follow suit because our work bios — and even job experience — aren't always good predictors of who will succeed in a role. And résumés can leave candidates exposed to bias in the hiring process.”
“One way to measure skills is to do what Applied and other companies do: Have the candidate take a test. Sundaram said the approach of testing can help make hiring fairer. The company might use only five or six questions per test to help identify suitable job candidates. In a statistical analysis, Applied found that 60 percent of the about 25,000 hires made through its platform would have been overlooked based on their résumés.”
“SHL, a global talent-screening company, offers a 15-minute assessment that employers can give to job seekers. The test measures 96 soft skills — things like how someone communicates or how consultative or persuasive a candidate is. SHL has also developed hundreds of tests that examine specific business and technical abilities, including coding simulations in more than 50 languages.” READ MORE
THE 21 HATS PODCAST
Shawn Busse and Laura Zander discuss what exactly Laura’s job should be: She’s CEO, of course, and she’s been focused on acquisitions and growing the business, but she’s never really found someone to take over the big role she used to play, which leads to these questions: Should she go back to being her own chief marketing officer? Or does she need to go out and spend real money to hire one? And then, toward the end of the conversation, Laura actually devises a plan on the spot to sell yarn in a surprising and creative way, which perhaps answers the very question we’d been discussing. Plus: Shawn explains how having the right partner can make or break a business as he celebrates having made his final payout to his own former partner.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren