Gen Z - Key Characteristics No.3 - Pragmatic
This is the key characteristic which raises eyebrows the most often when I mention it to audiences. To others, pragmatism does not sit well with what can be hardened perceptions around idealism, entrepreneurial spirit and a general sense of entitlement.
Beyond that I would say that pragmatism is not just a key characteristic, but also one of the true standouts. If you want to understand this generation, you really need to understand this.
Solopreneurs
In recent years there has been an explosion in individuals setting up their own businesses and other enterprises. The graph below shows one well-known example.
Undoubtedly the pandemic has been a significant influence. When faced with time on their hands, and uncertainty over future prospects, millions took the plunge and sold their talents online.
The number of individual Etsy sellers had already increased substantially in advance of the pandemic. Some of this can be attributed to growing awareness of the platform and the means of using it. By 2012 Etsy was already seven years old. In the seven years that followed the number of sellers more than tripled. The numbers have more or less stayed at this level since.
This graph includes all sellers but the demographics are revealing as revealed in this report. It shows that 86% of Etsy sellers were women. More significantly in terms of this series, they were twice as likely to be under 35 than the owners of all other businesses. In addition, those on low incomes were also far more common, and this most frequently refers to the young. Gen Z is a big part of driving the Etsy boom.
Etsy is just one example. Another is Depop, which describes itself as a ‘community-powered circular fashion marketplace’. Etsy is about the handmade, Depop rewards those with an eye for a bargain they can sell on for a profit, particularly vintage clothing. If any of this series is making you feel old, bear this in mind. For an item to count as ‘vintage’ it must be at least 20 years old. This brings the beginning of this century, millennium even, into the vintage category. All of this for a platform with over 40 millions users where 90% of its users are Gen Z.
New companies and dissolutions
The table below from Companies House shows the number of new companies (or ‘incorporations’ - dark blue) against the number of dissolutions (light blue) since the late seventies.
Over time technology has made it easier for new companies to be incorporated, but that does not wholly explain the steep incline within the graph. The number of new companies has not always outpaced the number of dissolutions, although those times are restricted to times of economic recession. The pandemic may have maintained and extended a trend, but it did not create it.
Over a quarter of a million Gen Z are named on Companies House as directors. They are a key part of this expansion.
Furthermore the acceleration also coincided with them coming into the workplace. In 2020-21 almost half of all companies on the register were four years old or younger, and three quarters less than ten.
From one perspective this presents as entrepreneurial or, to use a modern phrase, solopreneurial. The difference between the two is that the solopreneur carries out all business tasks, whereas the entrepreneur contracts some out. Here are millions of people worldwide striking out on their own and deciding that they do not need to follow traditional work routes or careers.
Or are they?
Employment statistics
McKinsey’s 2018 ‘True Gen’ report contains some interesting statistics from their 2017 surveys of 17-64 year olds in Brazil, not least because they precede the pandemic.
The numbers on the left may fall dramatically for Gen Z but it does not represent the fall in employment it indicates. As McKinsey states it shows ‘a high preference for regular employment rather than freelance or part-time work’ for those so young. The oldest Gen Z was not even 20 at this point, and the age bracket includes many still in full-time education. Note the upwards tick on the right for those in Gen Z who disagree on the importance of a ‘job’, compared to Gen Y/Millennials.
For Gen Z of school age this goes beyond the paper round or Saturday shop work. It is also providing a more viable alternative to higher education, or means of supplementing its cost.
Attitudes
McKinsey’s report also states that Gen Z are ‘less idealistic than the Millennials we surveyed’ and said they were ‘keenly aware of the need to save for the future and see job stability as more important than a high salary’.
Recruitment website Monster carried a survey and found that
● 64% of Generation Z want their own business
● Gen Z are concerned about long-term prospects
● Gen Z have multiple streams of income out of necessity
In the previous year the figure was 42%, so this is an increase of more than half in a single year. Even the smaller figure is ten points higher than for any other generation surveyed.
The tools and technology may be in place for Gen Z, and anyone else, to go their own way through solo/entrepreneurship. These tools may feel more intuitive and reliable to a generation of digital natives which has grown up with such software. Despite that, it does not mean it is a safe option which can produce a reliable source of sufficient income. The Etsy and TaskRabbit type side gigs have not just become more popular because they can be set up quickly and easily, but because they are required to pay the rent and the bills. This is about supplementing an insufficient level of income to cover costs at modern levels.
A pragmatic response
As with any generation there are lots of examples of young, highly-enterprising individuals making their mark, some of whom are phenomenally successful. With the oldest Gen Z closer to 30 than 20 at the time of writing it feels a little premature to judge if there are more than in any other generation. Having said that I do expect this to be the case, particularly as traditional ways of working continue to erode. A limited definition of ‘entrepreneur’ only referring to business moguls setting up multi-million multinational companies will also continue to erode.
There are more Gen Zs with their own enterprise, and many of those businesses are very small. As with other generations some Gen Zs not only have one side hustle, but a combination of them to form one overall income. Portfolio careers are no longer the preserve of those with long professional histories.
There is an element of hedging bets in all this. One issue from the pandemic is that some professions and trades were hit far more than others. The same applied to ‘casual’ employment or those who had not worked long enough in an organisation to have a greater level of employment rights which protected their jobs. Those whose line of work could go online did so, but many could not.
Gen Z are making decisions about their professional futures in the context of an economic outlook which continues to be highly problematic for them.
Significantly the pandemic has accentuated these circumstances, but did not create it. The decisions made by many Gen Zs to set up their own business has not been made with an expectation of a lucrative future, but of one where they may be able to attain what previous generations expected if it goes particularly (or even spectacularly) well for them. The freedom offered by going it alone should not be underestimated either, including in terms of controlling working hours and conditions.
It is a more attractive alternative to what many have had in the workplace. Side hustles make part-time work a more viable option. I spoke to a group of Gen Zs in an organisation where the large majority of them were part-time. The organisation did not need them to be full-time, and this gave them the freedom to pursue other interests. Some of these involved work with each other elsewhere.
For Boomers, Generation X and perhaps many Millennials being an entrepreneur meant there was an intention of a future that was at the very least self-reliant, and ideally lucrative. Even the arguably more efficient model of solopreneurship needs to be separated from an expectation of prosperity, rather than survival. Gen Zs are simply making a pragmatic response to the circumstances in front of them bequeathed to them by older generations.
This is part of a series of blogs on Generation Z (years of birth 1997-2012). Over the course of these blogs and through the talk I have put together I explain
● how and why Generation Z is different, naming seven key characteristics
● the challenges this presents for leaders and organisations
● the actions not only to overcome those challenges but ensure future prosperity.
Gen Z is the most important generational shift yet. Their experiences and outlook are not understood well enough by those who have come before them. Generation Z has huge, as yet mostly untapped, potential to meet the challenges of today.
To see an overview of the whole series, including dates of generations, go to https://www.alexatherton.com/gen-z.
Click on the link to book Alex to speak at your event about Generation Z
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