In an environment where individual companies are being transformed by the disruptive force of technology, and where entirely new sectors are being created, entrepreneurs are becoming increasingly pivotal to global job creation, according to EY global chairperson Mark Weinberger.
In a statement following the launch of the EY Global Job Creation Survey 2016, Weinberger highlighted that, in some cases, entrepreneurs were navigating economic and political uncertainty better than established players.
The survey of nearly 2 700 entrepreneurs across 12 key markets globally found that more than half (59%) of those surveyed expected to increase their total global workforce in the next 12 months, up from 47% in 2015, a 25% jump year-on-year, making them more than twice as likely to hire new staff members this year as large corporates (28%), according to EY’s latest Capital Confidence Barometer.
Taking into account all expected workforce changes for 2016, entrepreneurs expected to grow their overall global workforce by 9.3%, and expected 12% of new hires to be young people in their first jobs.
Moreover, disruptive entrepreneurs – identified as those who change some or all the rules of their sector – as well as innovative entrepreneurs – those who have created a brand-new product or service in the past year – were growing their workforces at a much faster rate than more conventional entrepreneurs.
“Technology is . . . transforming some of the most fundamental aspects of how we do business. This evolution will change what job skills are needed [and] which new businesses are created; it will impact on our education systems and will challenge our regulatory systems,” said Weinberger.
In terms of the proportion of entrepreneurs expecting growth, India, China and Brazil topped the leader board in EY’s survey. Indian and Brazilian entrepreneurs also expected to hire at a faster rate than anywhere else, though China’s growth rate was slower than the global average (8.5%).
France, Canada, the UK and the US follow closely behind in terms of hiring expectations, with entrepreneurs in the UK leading the developed markets by growth rate, at 10.5%.
Entrepreneurs in the Middle East/North, Japan and sub-Saharan Africa, however, were least likely to expect to grow their overall workforce in the year ahead.
Meanwhile, the survey showed that the more disruptive and innovative the company, the more they were prepared to hire.
The most disruptive entrepreneurs (comprising 17% of respondents) were 58% more likely to forecast an increase in their overall workforce in 2016, compared with their more conventional competitors.
At 18%, the net workforce growth level of the most disruptive entrepreneurs was twice the average global figure. Even those companies changing only “some” of the rules were 46% more likely to grow their workforce, compared with more conventional businesses and, at 12%, net workforce growth was still higher than the global average of 9%. This suggested that any level of disruption had a positive impact on expected workforce growth.
Globally, there were more disruptive entrepreneurs in the Middle East and North Africa (70%), India (64%) and sub-Saharan Africa (60%), as well as in Australia and the UK (both 57%), than in the rest of the world.
Innovative entrepreneurs, meanwhile, had similar hiring plans. They were 95% more likely to expect to grow their workforce in the next year, compared with those that had not created a new product or service. Their net workforce growth levels (at 18%), like those of their disruptive counterparts, were also twice the global average figure.
“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,” said EY Africa head of markets Sugan Palanee.
Palanee highlighted the survey’s findings as a “stark warning” to conventional business not currently embracing change, innovation or disruption.
“They risk being left behind by disruptors who, we know from the survey, are laser-focused on [getting] the talent that will allow them to attract customers and drive growth. Business, together with governments, needs to focus on fostering an environment in which innovative and disruptive entrepreneurs can flourish,” he said.
Palanee further emphasised that, with the pace of technological change accelerating, it was becoming increasingly crucial for disruptive and innovative entrepreneurs to be 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.”
Meanwhile, of the entrepreneurs surveyed, 65% under the age of 35 were considered disruptors, compared with just 27% of entrepreneurs who were over the age of 55. Younger companies were also much more likely to be in the disruptive category, while 59% of entrepreneurial organisations less than five years old were identified as disruptive, compared with just 27% that had been in business trading for more than 25 years.
However, EY found that inventiveness and innovation were not linked to youth or tenure of business, as the age group with the most innovative entrepreneurs was the over-65 segment.