Entrepreneurial Surge Impacts Companies’ Human Resources Strategy during the Economy Rebound
The “Kelly Global Employees Index”, released in China by the world's leading human resources consulting firm Kelly Services (Fortune 500), shows that:
High enthusiasm of Chinese employees in starting an enterprise
- Entrepreneurial spirit of Chinese employees is the highest around the world
- It is expected that the number of people who start their own business will exceed the world's average in a short time (within 2 years)
- Top 5 industries affected by the entrepreneurial surge
- Intergenerational contrast of entrepreneurial intentions: "Post-80s" share the strongest entrepreneurial intentions while "Post 60s-70s" are experiencing a loyalty decline
Chinese respondents lack confidence in their entrepreneurial capabilities
- Chinese employees have insufficient confidence in their entrepreneurial capabilities
- Intergenerational contrast of confidence in capabilities: "Post 80s" are less confident of their entrepreneurial capabilities
- Company opportunities
"The Kelly Global Employees Index" is an annual survey to interview more than 130,000 employees worldwide from North America, Europe and Asia Pacific about their career development.
- High enthusiasm of Chinese employees in starting an enterprise
- Entrepreneurial intention of Chinese employees is the highest around the world
According to the survey, 49% of respondents in China say that they are planning to start their own business, which is much higher than the global average (24%). In contrast, the figure in India is 25%.
- It is expected that the number of people who start their own business will exceed the world's average in a short time (within 2 years)
According to the survey, among people who have intentions to start their own business, 61% respondents in China are expecting to start their own business within 2 years and 26% say they will do it within the next 3-5 years. Meanwhile, 23% respondents in India are expecting to start their own business within 2 years and 32% say they will do it within the next 3-5 years. For global respondents, the rates are 38% and 33% respectively.
- Top 5 industries affected by the entrepreneurial surge
The survey shows that for Chinese people, 5 most attractive industries for starting their business are education (25%), manufacturing (25%), financial services (24%), bio-pharmaceuticals (24%) and business services (24%). Rapid development of these industries has attracted a large group of talents, among whom many are planning to leave their companies to start their own business.
- Intergenerational contrast of entrepreneurial intentions:
- "Post-80s" share the strongest entrepreneurial intentions
According to the survey, the post-80s show more entrepreneurial enthusiasm than the post 60-70s and post-50s in China. The number of the post-80s who are planning to start their own businesses is 54%, while rates for "Post 60-70s" and "Post 50s" are 44% and 39% respectively.
Reasons for the strong entrepreneurial enthusiasm of “Post 80s” in China are as follows:
- Government incentives
Chinese government has taken a variety of measures to encourage "Post 80s" college graduates to start their own businesses in order to improve the employment opportunities. These measures include "seed money", free risk assessment, free policy training, the maximum discount loans, partial tax relief and other preferential policies.
- Pressure of cost of living
Economic development has resulted in the continuously rising cost of living. Due to the lack of experience of "Post 80s", their incomes are lower. Facing the higher cost of living, they often like to achieve their goals through entrepreneurship.
- A large number of emerging business leaders
After 30 years of the reform and opening up, sustained and rapid economic growth has made numerous business leaders and people of wealth. Particularly in the Internet, high-tech and bio-pharmaceutical sectors, a large number of young and promising entrepreneurs have emerged. Their success stories have been on the public’s lips, inspiring the Chinese people to win their wealth by starting their own businesses.
- Leadership
As a company expands its scale, middle-level professional technology and management talents will become relatively scarce, while many excellent rank-and-file employees will be promoted to front-line managers. Their relatively weak management expertise will affect the loyalty of subordinates.
Mr. Mark Hall, Director of Operations Greater China of Kelly Services concluded: "For the post-80s who want to start their own businesses, the economic rebound has brought them opportunities, but competition in the Chinese market will be more severe. The post-80s generation needs to further expand the width and depth of their abilities, and to improve their professional competence according to market demands. These are important factors to ensure the sustainable success of start-up companies."
For a company, “the post-80s employees are key talent reserves, which will impact the corporate development directly. Companies should use systematic thinking to face the post-80s entrepreneurial surge. In addition to designing targeted programs for entrepreneurial concerns, the key is to improve loyalty in the following areas, so that the duration of employment can be extended and the organizational performance improved as well.”
• Improve the leadership of their superiors
• Prepare career development plans
• Increase the professional degree of training
• Provide job rotation opportunities
• Provide project-based job opportunities
• Provide mechanisms for intrapreneur
• Increase the incentive part of the remuneration
• Provide more targeted opportunities for welfare
• Strengthen corporate culture
• Promote communication
- Post 60-70s’ corporate loyalty will drop in China
According to the survey, during the economic turbulence, the loyalty of the post 60-70s employees is the lowest around the world, compared with other generations. Meanwhile, different from other countries, Chinese "Post 60-70s" employee loyalty is higher than other generations.
The main reason is that when economic situation is uncertain, leaving a company would result in higher risk. As the pillar of the family, often they will be more prudent in considering new opportunities. If facing a better economic environment, their loyalty will drop.
Most "Post 60-70s" are faced with the bottleneck of their career development.
Because of the economic turbulence during 2008-2009, many multinational companies began to contract their global business. Organizational restructuring tends to affect middle-level and senior staff changes in China.
When faced with more external job opportunities, the threshold for employment is lowered after entrepreneurship.
Extensive professional ability and experience, good customer resources and leading management concept will lay the foundation for "Post 60-70s” when starting a business.
Motivation from the success of people of the same or younger age.
Consideration of how to accumulate more material wealth to face risks in future life.
- "Post-50s" generation is a relatively stable group
Mr. Zhang Zhisheng, General Manager of Kelly Services (Greater China) said: “As the economy rebounds, good economic expectations enable companies to adjust their strategies in order to expand their business scales and seize market opportunities. Middle and high-level professional technology and management talents of the post 60-70s and outstanding employees of the post-80s will become popular again. Talent strategy ushers a more updated and complex challenge. Many companies will pay increasing attention to the targeted talents of competitors and enterprises of upper and lower class while ignoring the impact of entrepreneurial surge. Companies should focus on the characteristics of different generations of employees and design retention programs accordingly. On the other hand, entrepreneurial group will expand in future. They have outstanding skills, good customer resources and business sensitivity and should also be included in targeted talents for companies."
- Chinese respondents are not confident of their entrepreneurial capabilities
- Chinese employees are not confident of their entrepreneurial capabilities
According to the survey, being asked “Do you have sufficient capabilities for starting a business on your own?”, only 29% Chinese respondents think that their capabilities are sufficient to become self-employed, while the rates are 44% and 48% respectively in India and around the world. This reflects the Chinese employees’ lack of confidence in the width and depth of entrepreneurial capabilities.
- Intergeneration contrast of confidence in capabilities: "Post-80s" are less confident of their entrepreneurial capabilities
With an intergenerational contrast, 23% "Post 80s" say that they have sufficient capabilities for entrepreneurship. The rate is 34% for "Post 60-70s", while almost half (48%) of the post-50s say that they have sufficient skills to support their own business.
When asked about "What is the degree of market demand for your existing capacity", Chinese respondents think that the market demand for the post-50s is the largest (39%). The rates for the post-80s and post 60-70s are 28% and 36% respectively. This reflects the lack of confidence in the importance and leading position of their abilities.
The reasons for being unconfident of their entrepreneurial capacity of Chinese employees are:
- Competition demands professional skills
Economic rebound has brought increasing competition globally and locally. This means higher requirements for the depth and width of service ability of entrepreneurs.
- New requirements arising from industrial restructuring and emerging industries
The Chinese Government strongly advocates innovative society and industrial restructuring promotion to encourage new industries. Meanwhile, service industry has an increased share in the economy, which necessitates more leading and essential service support. The importance and leading position of entrepreneurs’ capacity will serve as the foundation for their sustainable development.
- Regional business development
Considering the labor costs, more foreign companies are actively entering secondary cities, so that local entrepreneurs are required to improve their service ability.
- Gap between talent supply and market demand
Though China has abundant labor force, there is still a relatively large gap between the supply of professionals (including professional and technical skills, management ability, and practical ability) and market demand in both quantity and quality.
- Company opportunity
Chinese people believe that the 3 overriding issues for starting a business are:
- Income uncertainty 36%
- Lack of support (from company and family) 20%
- Risk of failure 18%
- Lack of skills 11% (the rate is higher than India (5%) and the global average (7%))
Mr. Mark Hall, Director of Operations Greater China of Kelly Services said: “For enterprises, this means opportunity. Companies cannot expect to retain employees forever. They can only hope to make employees stay longer than their competitors. A systematic way of thinking should be used in the face of entrepreneurial surge. First, programs should be designed according to key elements that affect employees' loyalty: elements such as leadership, career development, salary, employer brand etc. Design targeted programs related to starting a business, especially parts that help employees improve their professional competence. Thus, the duration of employment can be extended and the organizational performance improved as well."