Entrepreneurs are more than twice as likely to be hiring new staff this year as large corporates, according to the EY Global Job Creation Survey 2016.
The survey of nearly 2,700 entrepreneurs globally also finds that disruptive entrepreneurs (who change some or all of the rules of their sector) and innovative entrepreneurs (who have created a brand new product or service in the past year) are also growing their workforces at a much faster rate than more conventional entrepreneurs.
The research has been launched ahead of the EY World Entrepreneur Of The Year™ event.
Mark Weinberger, EY’s Global Chairman and CEO, said: “The disruptive force of technology is transforming individual companies and creating entirely new sectors. In this environment, entrepreneurs are pivotal drivers of global job creation, and in some cases are navigating economic and political uncertainty better than established players”.
“Technology is also transforming some of the most fundamental aspects of how we do business. This evolution will change what job skills are needed, which new businesses are created, it will impact our education systems and will challenge our regulatory systems.”
Confidence is driving a global appetite to hire
Over half (59%) of the entrepreneurs from 12 key markets surveyed expect to increase their total global workforce in the next 12 months, up from 47% in 2015, a jump of 25% year-on-year.
What’s more, the proportion of entrepreneurs planning to hire this year is more than double that of large corporations (28%), according to EY’s latest Capital Confidence Barometer.
Taking into account all anticipated workforce changes for 2016, entrepreneurs expect to grow their overall global workforce by 9.3%, and expect 12% of new hires to be young people in their first jobs.
India, China and Brazil top the leader board in terms of the proportion of their entrepreneurs anticipating growth.
Indian and Brazilian entrepreneurs also expect to hire at a faster rate than anywhere else, but China’s rate of growth is slower than the global average (8.5%).
France, Canada, the UK and the US follow closely behind in hiring expectations, with entrepreneurs in the UK leading the developed markets by rate of growth, at 10.5%. Entrepreneurs in the Middle East/North Africa (MENA), Japan and Sub-Saharan Africa (SSA) are least likely to anticipate growing their overall workforce in the year ahead.
This hiring is driven by strong confidence levels in the economic direction of their domestic market and the global economy – up slightly year-on-year at 72% and 67% respectively overall.
However, there are interesting variations by country and region. Confidence is up on both counts year-on-year in the US, the UK, Canada, Brazil, France and Australia. Confidence is down in China, India, SSA, Germany and Japan.
Disruption and innovation pay dividends for entrepreneurs
The survey also shows that the more disruptive and innovative the company, the more they hire and the faster they do it.
The most disruptive entrepreneurs – the 17% of respondents who say they have changed all or many of the rules in their sector – are 58% more likely to forecast an increase in their overall workforce in 2016 compared to their more conventional competitors. At 18%, the net workforce growth level of these most disruptive entrepreneurs is twice the average global figure.
Even when companies changing only “some” of the rules are added to this, the impact of disruption remains clear: they are 46% more likely to grow their workforce compared to more conventional businesses and, at 12%, net workforce growth is still higher than the global average of 9%. This suggests that any level of disruption has a positive impact on anticipated workforce growth.
Globally, there are more disruptive entrepreneurs in MENA (70%), India (64%), Sub-Saharan Africa (60%), Australia and the UK (both 57%).
Innovative entrepreneurs – those who say they have created an entirely new product or service in the past year – have similar hiring plans. They are 95% more likely to expect to grow their workforce in the next year compared to those who have not created a new product or service. Their net workforce growth levels (at 18%), like their disruptive counterparts, are also twice the global average figure.
Sugan Palanee, Africa Head of Markets at EY, said, “The study shows that the majority of entrepreneurs do well in business by challenging the status quo, and redefining the boundaries of sectors and industries.
What is encouraging is that these disruptors are blazing a trail of growth in today’s fast-moving and transformative business environment, spotting opportunities and relentlessly executing on them.
“In our view, the findings could be something of a stark warning to businesses that are not embracing change, innovation or disruption, as they risk being left behind by disruptors who, we know from the survey, are laser-focused on attaining the talent that will allow them to attract customers and drive growth.
Business together with governments need to focus on fostering an environment in which innovative and disruptive entrepreneurs can flourish.”
Young entrepreneurs are more disruptive, but —
Youth clearly has a role to play in disruption levels: 65% of entrepreneurs under the age of 35 are “disruptors” compared to just 27% of entrepreneurs over the age of 55.
Younger companies are also much more likely to be in the disruptive category – 59% of entrepreneurial organisations less than five years old are identified as disruptive, compared to just 27% that have been in business trading for more than 25 years.
Unlike disruption levels, however, inventiveness and innovation is not linked to youth or tenure of business – in fact, the age group containing the most innovative entrepreneurs is the 65+ segment.
Palanee said: “Entrepreneurs play a key role in helping realise the benefits of disruption through the jobs and wealth they create, the new products and services they produce and in the way they encourage creativity and competition.
As the pace of technological change accelerates, it is even more crucial that the value created by the disruptive and innovative entrepreneurs is nurtured and supported.
From our work with entrepreneurs, it is evident that they have the best chance of success when they operate inside a healthy entrepreneurial ecosystem.
Whether they are targeting organic or inorganic growth, entrepreneurs need an environment where governments, businesses and entrepreneurs can work closely together to create the right conditions for entrepreneurship to thrive.”
African Eye Report
