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13/07/2022
Report, Trends, Perspectives

Why Are Younger Singaporeans Opting for Start-Ups?

Start-ups are undoubtedly a risky proposition. Being at the earliest stages of a business journey, start-ups are essentially unproven ideas that are not commercially viable just yet. Despite all these uncertainties though, start-ups are attracting the attention of younger generations around the world.

A recent study by Blackbox Research,”Emerging From The Pandemic: The New Mood In Singapore”, highlighted that nearly 3 in 5 (59%) respondents believe that younger Singaporeans will have better employment prospects at a start-up rather than at a typical large corporation.

The generational differences are noticeable. Only 29% of younger respondents aged 20-34 disagreed and felt employment prospects were better at large organisations. On the other hand, 42% of older respondents aged 50 and above felt employment prospects were better at larger corporations.

Room for growth

The biggest advantage start-ups have over larger companies is the avenue for growth. In the past two decades, start-ups have undergone a massive rebranding exercise. The risky propositions that start-ups inherently have are now being marketed as learning opportunities and avenues for personal development. Indeed, many start-ups do fail, but these failures serve as important and real lessons for those who join them.

Risk tolerance among younger Singaporeans is relatively higher compared to their older counterparts. Singapore is a highly developed country where people rarely worry about meeting basic needs. This means that younger Singaporeans, armed with a more solid foundation, are more willing to venture into uncharted territories. Start-ups are the perfect enabler for these ventures. It also helps that Singapore is a major hotbed for start-ups with over 4,000 tech start-ups employing close to 22,000 people in 2020 alone according to a Financial Times report.

In the past, larger companies provided avenues for staff to rise within the ranks. The potential promotions were powerful motivators to stay on. This is not the case anymore. Today’s large companies have fewer internal promotions within their organisations. Rising through the ranks is significantly tougher. Many larger companies, though certainly not all, tend to hire externally for senior positions instead of grooming their younger staff.

Another major obstacle to internal promotions is the lack of positions. Better roles within large companies are sometimes taken up by underperformers who are in their position partly due to their longevity within the organisation. Unfortunately, they can impede the growth potential of younger, junior staff.

The benefits of working at larger organisations are not what they used to be

An unfortunate trend among larger companies in recent times is the depressing salaries and increasing workloads. Inflation has dominated recent discussions about Singapore’s economy. Many Singaporeans have expressed concerns that salaries have not kept up with inflation. Real wages only rose by 1.4% and 1.6% in 2020 and 2021 respectively according to a Ministry of Manpower report. While start-ups were never able to compete with the financial remuneration of larger companies, it is concerning that some larger companies pay only marginally better than start-ups for the same role.

Overworked and underpaid

The depressing salaries have only been accentuated by the worsening workload. There have been several social media posts mocking the job descriptions of several roles offered by larger companies. These job descriptions read like work to be done by entire teams, not a single individual.

One major annoyance among younger Singaporeans is the request for last-drawn salaries, a practice common to many large companies. It is unclear why companies still practice this. Many Singaporeans speculate that the request for last-drawn salaries is an avenue to underpay new hires. The request for last-drawn salaries is problematic as it just highlights the misevaluation of potential hires by larger companies. Last-drawn salaries reflect the past talent level of the would-be hire. Companies are hiring in the present, and salaries should reflect the present-day capabilities of hires.

The way ahead

Larger companies have long been advised to adapt to younger Singaporeans entering and within the workforce already. Many news articles and social media posts have spoken at length about the change in priorities for younger Singaporeans.

It is difficult for larger companies to adapt to a rapidly changing workforce. Organisational inertia and a lack of understanding of the aspirations of younger Singaporeans make it difficult for companies to react.

A simple first step for larger companies is to stop asking for last-drawn salaries. This has a direct psychological impact on new hires, indicating that the companies are valuing hires as they are now and not in the past. Companies can also engage in public consultations with their younger staff and understand their aspirations and viewpoints. Importantly, younger employees should be involved in operationalising some of the organisational changes that will lead to a better work environment.

Growth, stability, and salaries are important advantages for larger companies. Being far more established with a proper commercial model, larger companies should be able to offer both stability and fair compensation. However, archaic practices and norms within larger companies are eroding these advantages.

Start-ups have focused on their strengths. Working in a start-up is tough. Yet, start-ups provide opportunities to grow, learn new skills, and assist in positioning their staff for better opportunities in the future. It is a rewarding environment to be in. These are all attractive propositions for younger Singaporeans.

To discover how Blackbox Research can help your business keep up with today’s workforce trends and changing employee perceptions and preferences, write to us at connect@blackbox.com.sg for our latest insights.

Author: Blackbox Research Team

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