Let’s get digital: new generation challenges bosses’ methods

Large investors in Romania can quench their financing thirst by applying for state aid until the end of this year, while SMEs are waiting for a pending tailored scheme from the Ministry of Finance. Pundits from Daedalus, Boyden Global Executive Search, IBM, Microsoft and Google debated this, as well as the challenges posed by the upcoming digital generation on the labor market, at the IT&C Roundtable organized by Business Review.

By Otilia Haraga

“Companies must be aware that within 10 years, the digital generation will represent more than half of the employees on the market,” said Daniel Enescu, CEO of Daedalus, who urged companies to maximize the strengths of these employees. According to the Digital Generation Survey carried out by Daedalus at European and local level, the digital generation, defined as people born between the late 80s and early 90s, has a different thought paradigm, due to the availability of the internet while they were growing up.

These young workers have a different relationship with the management from previous generations. While generation X or Y viewed the boss as a content expert, this generation challenges this status. Managers need to position themselves as trainers or mentors instead, Enescu urged.

Furthermore, the digital generation has a short-term focus and wants instant gratification. “Companies must rethink their entire reward system and provide constant ‘like-type’ feedback. Incentive systems based on performances that are evaluated once a year are insufficient,” said Enescu.

This generation not only requires more flexibility but also tends to do more things at a time. Their attention spans are lateral rather than in-depth, they get bored easily and learn through gamification.

But for a number of reasons, these young workers are unprepared for the market demands. Valeriu Nistor, country sales director at IBM Romania, argued that school does not provide them with proper guidance. Moreover, they are raised in a different environment and have a short-term focus. “We all need to adapt to the world, a world in which new technologies are used to search for a new business model,” he said.

Dan Bulucea, country manager at Google Romania, agreed. “Is a fashion company that sells online an IT company?” he wondered. Quoting a McKinsey survey, Bulucea said that 75 percent of companies that are most productive on the web are not IT companies, and nowadays businesses cannot afford not to keep up with technology.

He also enumerated several Romanian companies that have become global businesses with the use of technology, such as dreamstime.com, becomegorgeous.com, oxigenxml.com, keepcalling.com, and soft32.com.

A good chief digital officer thinks ROI, understands the sector and the business inside out and is able to pull the real levers for change, including how and where to invest available funds.

He or she is also able to plan and execute long-term strategy around driving customer awareness, engagement, experience and monetization, said Andreas Landgrebe, managing director for Austria & CEE at Boyden Global Executive Search.

Companies in Romania that want to make long-term investments can apply for state aid, heard participants at the BR event.

The state aid scheme is not just for IT&C businesses, but for projects that comprise an IT&C component of 20 percent of the value of the investment plan. The total financing fund amounts to EUR 100 million.

Firms can submit applications and obtain approval only until the end of 2013. The period estimated for making payments is between 2013 and 2018.

“No financing agreement has been released yet but we have five applications for now and we hope that by the end of the year we will have ten,” said Livia Stan of the general division of state aid, anti-trust practices and regulated prices in the Ministry of Public Finance.

On this issue, Microsoft and IBM bosses said their companies are interested in applying for state aid in Romania.

“We are evaluating internally at Microsoft Romania the eligibility of our company for the state aid scheme H.G. 797/2012. Together with an external consultant we are about to identify if our growth plans in Romania can be accelerated by this scheme. However, we have not made any formal proposal to the decision-makers,” said Sorin Eftene, interim GM of Microsoft Romania.

Similarly, Nistor said the state aid scheme was one of the reasons why IBM had considered opening service centers in Romania.

Currently, the Ministry of Public Finance is also preparing a state aid scheme for SMEs, financed from the state budget. “We hope that from June 1 we will also start this new scheme, which will be available for longer than this one and will have a quite substantial budget,” said Stan.

“One of the issues that SMEs in Romania are currently facing is that once they have reached a certain level, the level of the entrepreneurship of subsistence, their growth opportunities are limited. One major limiting factor is that there is no capital or investment market that allows them to go from the level of several tens or hundreds of thousands of euro, where they can still find angel investors up to the stage where they can be on the radars of the large private equity funds that are currently present in Romania. If I look at the investment segment between EUR 300,000 and EUR 10 million, the range of investments in the Romanian market is very poor,” Sergiu Negut, transformation partner at Wanted Transformation Consultancy, told BR.

He suggested creating a platform where, for instance, 200 investors from Romania put up EUR 100,000 each, and the EUR 20 million fund created could be matched with an additional EUR 20 million from the government via the Ministry of Small and Medium Enterprises. “This would create a fund of EUR 40 million through which 20-30 such investments could be made and which would facilitate the growth of Romanian businesses,” he argued.

In response to the Romanian IT&C survey carried out by Boyden Global Executive Search, which was based on a brief questionnaire sent out to HRDs, business directors, board members and CEOs in the IT&C industry in Romania, 80 percent of respondents said new market challenges have appeared in 2013, compared to roughly 53 percent in 2012.

In 2013, some 53 percent have applied measures to increase innovation and creativity within their company, as compared to 33 percent in 2012.

On the other hand, just 40 percent have applied cost-cutting measures in 2013, a decrease from 46.7 percent in 2012.

Improving leadership capabilities also lost ground on these executives’ agendas, with 33 percent taking these kinds of measures in 2013, down from 53 percent in 2012. Interest in increasing employment motivation has remained at the same level since 2012.

Business Review will host the Focus on Employment & HR event on April 23, at the Ramada Plaza Bucharest. For more in-depth information, go to the events section of the www.business-review.ro website.

otilia.haraga@business-review.ro

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