In the 15 years I’ve been teaching MBA students, their career plans have changed dramatically. Until the early 2000s they aspired to work in traditional corporate jobs for companies like Deloitte, JPMorgan, and GE. After that, the top destinations became tech giants such as Apple, Google, and Facebook.
In the past few years; however, a new favorite career choice has emerged, which eclipses any other form of traditional employment—working for themselves or launching their own business.
This is consistent with data highlighting the global rise in self-employment and startup activity. According to World Bank data, 30% of the global population may be working for themselves, and even strong economies—where job opportunities abound—are experiencing an increase in self-employment rates. Furthermore, this pattern will only be exacerbated in the near future, when more millennials leave college to enter the job market, and when those currently in employment give up working for someone else.
Although millennials are expected to make up 75% of the workforce by 2025, a significant number will never be employees in the traditional sense. Turnover figures for millennials are already twice as high as for other generations, with millennials rarely staying on the job for more than three years. Millennials are also more likely to work for themselves.
So, what explains all of this?
Why? It is not that millennials are inherently attracted to more harmonious living conditions, or a better quality of life. Rather, they are more self-centered and independent, which makes it harder for them to follow rules.
Jean Twenge, professor of psychology at San Diego State University, surveyed more than a million millennials, and found that self-importance, self-esteem, and narcissism have been on the rise for the past five decades. Clearly, this is having an effect on employment preferences—working for yourself is the easiest way to avoid having a boss, and not having a boss is particularly appealing if you value freedom and independence.
That said, people who launch their own business or work for themselves end up working more hours and earning less on average. If your goal is to improve your work-life balance, then you should think twice before quitting a full-time job or starting a company.
On the one hand, they think Steve Jobs and Mark Zuckerberg can easily be emulated, as if hating college or being a misfit guarantees entrepreneurial success. This ignores the extraordinary talent and work ethic that characterizes mega-successful entrepreneurs, who are a freak of nature and statistical exception in the first place.
On the other hand, millennials are more prone than other generations to overestimate their own talents. Although most people are overconfident, millennials are even more self-deceived about their abilities than other people are. They especially overrate their creative talents, which leads them to interpret their own ordinary ideas as disruptive and innovative.
Although society does benefit from growing entrepreneurial activity, millennials themselves would suffer less, and be less disappointed if we educate them about the minute probabilities of being a successful entrepreneur, particularly when they are neither very talented nor hard-working. This can be done by providing honest and critical feedback on their potential.
Tech Giants Are Now Seen as Greedy, Corporate, and Non-Creative—So They Are No Longer An Appealing Employment Prospect
This is ironic given that most of these young companies were once perceived as creative, philanthropic, and anti-establishment, but it took less than two decades for them to acquire the same reputation that investment banks developed in almost a century.
Employers can learn a big lesson here: if they want to attract millennials, they must present themselves as innovative and successful without seeming greedy. Trust matters to everyone but since these young tech firms have grown rich primarily by productizing millennials, many of them feel betrayed now. Time will tell if Google, Facebook, and Amazon can recover their early reputation, or whether their place will be taken by a new generation of companies that understand and connect to generation Y.
In short, it is not so much that millennials want to work for themselves—they simply don't want to work for others who are too demanding or constraining. Millennials want to feel creative, and they need achievements that can match their self-perceived potential. Self-employment is just a coping strategy for avoiding boring or tedious work; and a shot at fulfilling somewhat grandiose aspirations. There is compelling evidence for the fact that older generations are also ditching traditional jobs to go freelance, enter self-employment, or launch their own business.
The No. 1 reason for this is that they have been traumatized by previous experiences with bosses. We call them "necessity entrepreneurs" but only because they have the necessity to avoid incompetent bosses. One cannot blame millennials for trying to do the same.
—Dr. Tomas Chamorro-Premuzic is an international authority in psychological profiling, consumer analytics, and talent management. He is a professor of business psychology at University College London, vice president of research and innovation at Hogan Assessments, and has previously taught at New York University and the London School of Economics.