Gen-Z Has Taste for Luxury and Little Regard for Debts

Gen-Z: Born from 1995-2010, reportedly buys 15 per cent of all luxury goods sold in China, compared with a worldwide average of 10 per cent. Their expenditures also account for 13 per cent of their total household income, compared with 4 per cent in the US and UK.

The willingness and desire of young Chinese to spend their income and that of their families is playing an increasingly large role in driving China’s economic development, while outpacing the consumption habits of their peers in the West.

Young people are very concerned about their appearance and willing to spend 40 per cent or more of their income on cosmetics, aesthetic medicine and clothing.

They also enjoy spending on whisky, vodka and blind boxes of art toys. They love watching TV series and videos of Chinese ‘ancientry’ style and ACGN. But rarely talk about politics and the authorities, which are risky to discuss in public.

‘Huang’ became a contracted live-streaming host for a social platform in China in 2016 when the concept was still in its infancy.

Dressed in ancient clothing, Huang sings Chinese pop songs and chats with his fans. He needs to entice 240,000 people a month to watch at least a minute of his live stream so he can earn his base salary. On top of rewards from fans, his monthly pay ranges from 10,000 yuan (US$1,540) to 40,000 yuan. If he can attract more than 1 million fans on several Chinese live-streaming social media platforms, he could earn more than 100,000 yuan (US$15,000) a month through advertising and promoting brands online.

The number of Millennials (born 1980-95) and Generation Z has reached 386 million, accounting for 27 per cent of the population. Most do not have siblings, and their peers are more like competitors. Their affinity for the internet is much higher than that of their parents, making them eager for a sense of belonging.

According to “Gen Z White Paper” by Kantar and Tencent Holdings, 46 per cent of Generation Z think the goal of consumption is to seek identity recognition, with socialising, personal style and immediate pleasure their key motivators.

42% of Chinese born in the 1960s are willing to socialise with acquaintances, according to the survey, but the figure is only 33% among those born in the 2000s, as they take solace in consumption.

A survey released by OC&C Consultants showed that of 15,500 young people born in 1998 or later in nine countries – China, the United States, Britain, France, Germany, Italy, Poland, Turkey and Brazil – China’s Generation Z saved less and spent a much higher proportion of their household income than in the Western world.

Compared with the generation born in the early stage of China’s reform and opening up, China’s youth have a stronger sense of identity with traditional culture and cultural nationalism, which has driven demand for domestic brands and products that incorporate Chinese traditional style and culture, a trend known as guochao that serves as an emotional outlet for self-expression.

Sales of hanfu, traditional garments worn hundreds of years ago, rose from 190 million yuan (US$30 million) in 2015 to 4.52 billion (US$696 million) in 2019, with half bought by Generation Z.

The group thinks property is the most reliable form of wealth. But the mortgage pressure in China’s first-tier cities is too huge. I feel I will not be happy for a lifetime if I buy one [flat] in Shenzhen. Except for living expenses and mortgage, there is no balance for eating, drinking and playing.” According to data from the People’s Bank of China at the end of June, the total credit card bills overdue for more than six months had soared to 85.4 billion yuan (US$13 billion), more than 10 times the level of 10 years ago. And around half of those who owe the debt were born in the 1990s.

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China Retains Role of World’s Factory as Exports Power Ahead

The rise of the Chinese economy over the past 40 years would not have been possible without the success of its export-driven growth model. While the economy has rebalanced away from export expansion in recent years, there is no let-up on its trade competitiveness.

China’s position as the “world’s factory” has strengthened despite a structural increase in production costs, and recent events such as the US-China trade war and Covid, both of which could have undermined its position in the global supply chain.

Successive US tariff increases on Chinese products had the anticipated effect. US-bound exports from China fell by 17 per cent from 2017 to end-2019, resulting in a sharp drop in China’s market share in the world’s largest consumer market.

But on the global stage, China’s market share grew by around 0.5 per cent, more than twice that of the next biggest riser, Vietnam, which saw growth of 0.2 per cent over the same period.

This happened for two reasons. First, by shifting their focus from the United States, Chinese exporters were able to explore new markets in the Asean region and countries along the Belt and Road.

Second, export diversion helped. By selling inputs to third countries for assembly before the final products were shipped to the US, China was able to circumvent some trade levies while still retaining value in the final products sold.

The signing of the phase one trade deal in early 2020 allowed some companies to breathe a sigh of relief. But little did they know that an even bigger storm was on the horizon – Covid.

On the one hand, China’s forceful response was quite effective in containing the outbreak, paving the way for a swift resumption of production and exports. On the other, the rapid spread of the virus to the rest of the world caused havoc with global production, bringing trade to its knees.

China therefore became the supplier of last resort in many pandemic-related goods, including personal protective equipment, medical machines and electronic gadgets for remote working. With China bucking the trend in global trade, its export market share soared in 2020 and foreign investment poured in.

The effective defence against the trade war and Covid reflects the resilience of China’s supply-chain ecosystem. This resilience is no longer built on cost competitiveness as China’s economy matures and the demographic cycle turns. It is a result of an accelerated upgrading of China’s domestic production system, which enables its economy to move up the value chain.

Take China’s involvement in iPhone’s production as an example. From managing only one part of the iPhone 3G’s production – final assembly – in 2008, China went on to contribute 11 items to the iPhone X’s production in 2018. Its share in iPhone’s total billing cost and retail value increased seven-to-eight-fold over 10 years.

In addition, Apple has significantly increased its production presence in China in recent years, contrary to frequent talks of the firm leaving China for more competitive locations. China in 2019 accounted for 52 of 59 of Apple’s global manufacturing centres up from 30 in 2015 despite rising US-China trade tensions.

China’s emergence as an export powerhouse also reshaped the landscape of global trade. Developed economies led by Japan and the US have lost significant market share to China in the medium term to highly skilled export segments. On the flipside, China lost market share in some low-skilled and labour-intensive sectors to emerging markets such as Vietnam due to rising wage costs.

However, China has retained many critical supply chains locally, making it necessary for others to cooperate with it and so allowing it to expand internally instead of relocating its production network beyond its borders. This strategy has helped China to establish an inclusive and enduring production ecosystem, which may prolong its days as the “world’s factory”.

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Funding the drive for Scientific Leadership

Artificial intelligence and quantum information are among the seven key areas China has identified as priorities for development as it seeks to become a global leader in the scientific field by 2035.

Integrated circuits, brain sciences, genetics and biotechnology, clinical medicine and health care, and deep Earth, sea, space and polar exploration were named as the other five sectors that will be given priority in terms of funding and resources, according to China is five-year plan for 2021-2025 and its vision through to 2035.

Government spending on basic research will increase 10.6 per cent this year and investment in research and development should grow at an annual rate of at least 7 per cent over the next five years.

This will enhance the capacity of enterprises to achieve technological innovation, unlock the creativity of talent, and improve the systems and mechanisms for making scientific and technological innovation.

Figures from the OECD show China has been closing the gap with Western nations on science and tech spending. In 2000, China’s funding for R&D was just 0.9 per cent of its GDP. But by 2018 the figure had grown to 2.1 per cent of GDP – or1.96 trillion yuan– putting the country 18th on a global list topped by Israel with 4.3 per cent.

Despite the increase, only about 5 per cent of China’s overall spending on R&D was on basic research, compared to 15 per cent in the United States in 2018. In 2019, China’s total R&D spend – by governments and companies – was 2.23 trillion yuan, or 2.2 per cent of GDP.  The figure rose to 2.4 per cent last year.

In the blueprint for 2021-25, China said it would set up national science centres in Beijing, Shanghai, Anhui and the Guangdong-Hong Kong-Macau Greater Bay Area. These would offer improved residency policies and explore skilled migration programmes to attract foreign talent and provide an ‘internationally competitive” environment for overseas scientists to work in China.

Institutes of Science and Development in Beijing said the 10 per cent rise in government spending on fundamental science this year would make it possible for scientists to study challenging topics without the pressure of having to deliver immediate results. It will also strengthen researchers’ confidence that their efforts will receive ongoing support from the government.

The five-year plan “sends a clear signal” about the government‘s intent. China may not have everything, but intends to play a leading role in some critical areas.

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Talent Acquisition and Technology

Despite companies reducing headcount talent acquisition is one of the biggest challenges organizations face. Organisations have had to move quickly in order to digitise to reduce headcount as well as reach out to customers. With technological innovations sweeping the market and more emphasis being placed on skill evaluation, talent assessment is no less than a marathon to grab high potential talent before competitors.

As the hiring process continues to evolve from newspaper ads to social recruiting, the next industry wave is automated recruitment. Organizations have started drifting away from manual hiring to technology driven processes.

To attract and retain top-quality talent in 2021 and beyond, building a strong employer brand should be a priority of every employer. With more organizations striving to create better workplaces and spend more to drive employee engagement, your brand must create a positive buzz in the market.

A positive employee brand can help you attract quality talent, retain them and close multiple requisitions on autopilot through referrals. Such is the power of employee branding.

How can technology make a difference here? State-of-the-art tools, applications and solutions can make a huge difference. Be it a smart career site, robust social media presence or a Candidate Relationship Management (CRM) system, technology can assist organizations in achieving a more refined branding strategy — and bringing in all the benefits that come with it.

When candidates have multiple jobs to choose from, you have to give them a good reason to join your organization, which should be different to a large salary increase. Providing a gratifying candidate experience can help to do the job.

The recruitment process can be broadly classified into three stages: SourcingScreening & Selection. Your job is to provide a seamless and hassle-free experience in each of these stages, so that the candidate thinks, “This organization has a nicely structured recruitment process. It must be a good place to work.” On the other hand, if there are roadblocks in any of these stages or if candidates get the impression that your recruitment process is haywire, they might look elsewhere.

Thanks to recruitment technology, there are plenty of options you can exercise to provide a great candidate experience.

Previously, organizations did not have any standard procedures for recruitment. They largely resorted to newspaper ads, walk-ins, unstructured face-to-face interviews or even pen-and-paper tests to fill vacancies. However, with time, they have realized that these methods came with drawbacks.

Traditional methods of recruitment were long and complex. They failed in assessing candidates’ soft skills or in understanding their weaknesses, since HR did not have any concrete data or framework to base their screening questions on. This ultimately increased candidate back-out and early attrition rates, leaving employers in a dilemma. Such an unstructured process has given rise to online assessments that now help in shortlisting candidates ideal for a job role, based on the skills they possess.

Data-backed results ultimately provide a boost to the employer brand value, improve candidate experience, enhance talent pool quality and help to carry out bulk, as well as niche, hiring in a seamless manner.

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Microfactory Developments

Microfactory is a small-to-medium scale, highly automated and technologically advanced manufacturing setup, which has a wide range of process capabilities. Typically, it is a whose output can be scaled up by replicating such setups in large numbers. Microfactory requires less energy, less material, and a small labor force, owing to the high-tech automated processes. The concept of microfactory also promotes the miniaturization of production equipment and systems according to the product dimension which helps in reducing the size of the factory, which, in turn, needs less capital, as well as lowering operating expenses.

With advancements in manufacturing technologies, such as 3D printing, along with other enabling technologies, microfactories has found its use in a variety of industries. New innovative start-ups have embraced this concept challenging the traditional way of manufacturing.

Traditional Manufacturing Model vs. Microfactory

The traditional manufacturing concept aims to reduce costs by building a large factory to achieve economies of scale and mass production. However it needs an extensive and costly distribution network to make products available to customers. Microfactory challenges this concept by setting up multiple small, but high-tech, manufacturing units, close to customers, which can function as retail outlets providing a customized product. Another difference is the sales strategy. In the traditional model, products are first manufactured in large quantities and then pushed to the market through various distribution channels, whereas, in the microfactory concept, products are manufactured only after getting confirmed orders from the customer, thereby generating pull from the market.

The following is an example of a hypothetical business case of manufacturing 250,000 cars per annum, comparing traditional manufacturing versus microfactory. Both setups are different and have several aspects that would lead to a complex comparison matrix.

Increased Innovation – Microfactories are versatile, highly-automated factories that enable lean manufacturing and boost the rate of innovation by integrating several functions. Being a small automated setup, microfactories enable several tests and iterations to be performed on a small scale without impacting the time and cost. Whereas, in a traditional factory, the impact of time and cost on several iterations would be huge.

Lower Costs – Microfactories are small-sized factories that require less floor space compared to traditional large factories. Energy consumption and raw material consumption is less, thus creating reduced waste and emissions. This positively impacts the operating energy, environmental energy, and processing energy of the factory, ensuring cost savings. Microfactories also cuts down on labor costs as the factory is highly automated with the support of artificial intelligence and robotics.

Increased Productivity – Microfactories require a small team of skilled staff for and do not depend on huge manual labor. In addition to the agility and high automation levels of microfactories, the engagement level of workers is also very high which boosts morale and thereby increasing productivity.

Customization/Personalization – This trend is driving manufacturers toward small factory space as it provides high-mix, low-volume manufacturing capability, where products can be customized and manufactured on-demand. The level of customization could range from small-batch with the current trend to individualization, where an individual can design the product via a consumer website.

Manufacturers Using Microfactory and Key Technology Providers

Automotive, garment, consumer appliances, and electronic waste treatment are some of the leading application industries currently using microfactories for commercial production. Local Motors in USA was one of the pioneers in establishing a microfactory for automotive production. Several companies are also investing in the development of new and advanced technologies required for establishing microfactories. Bright Machines has announced the availability of its AI driven automated microfactories. Combining software machine learning, computer vision and adoptive robotics says it can transform the most manual phases of today’s production line.

Manufacturers using Microfactories

Manufacturing technologies have evolved significantly over the years. Presently products are manufactured in large factories achieving economies of scale, and most of these factories are located in low-cost regions, primarily in Asia, and a few in Eastern Europe and South America. This has helped customers getting products at a better price. However, there are signs that this might not be the case forever. Low-cost labor is getting exhausted in these countries as the younger population is not willing to perform repetitive low skilled jobs or the cost has started going up significantly. In addition, the delivery delays, as well as the demands and preferences for indigenous products, are increasing worldwide. This will eventually make it difficult for manufacturers to get products manufactured at distant low-cost locations and bring them to the local market.

Another important aspect that should be considered is changing customer requirements. More and more customers are seeking products that are personalized/customized. Surveys conducted show that more than 50% of consumers in developed countries prefer personalized products and are ready to pay higher prices for it.

Considering the changing consumer dynamics, along with limitations to get products sourced from low-cost countries, large organizations need to rethink their manufacturing strategies. Organizations worldwide will have to understand that opportunity lies in opening multiple distributed manufacturing operations. This can be done by setting up a network of small, technologically advanced, flexible manufacturing facilities, similar to a microfactory, in close proximity to the customer location. It will help manufacturers to produce small batches of customized products suitable for local tastes and save logistics and transportation costs to the tune of 25% to 40% of the product cost. Not only this, but microfactories can help to offer a solution to the possible threats from global protectionism, trade war and disruption from epidemics like Ebola and Covid.

(Source: Futurebridge Analysis)

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Innovation Key on Road to

Technology and scientific research crucial to Vision 2035 aims to develop world-class strengths with stress on quality, not quantity. China has for the first time unveiled an ambitious road map for its plans to transform into a leading world power by 2035.

Technology innovation and scientific research are key to the Vision 2035 strategy. China plans to become a leading global innovation engine, to catch up to the average income level of developed countries, and display world-class strengths in economy, global governance and soft power, as well as green development.

China will recalibrate its reform strategy, putting greater emphasis on the quality, rather than quantity, of future growth with tech innovation and scientific research as key.

Resources will be directed to seven scientific frontier areas, including artificial intelligence, quantum information and integrated circuits, where US sanctions have been most keenly felt.

The ambitious Sci-Tech Innovation 2030 Agenda, will focus on quantum computing, plan engines and deep-sea stations among others.

China is prepared for a lost US market and is expecting a continuation of the decoupling policies, like the banning of hi-tech product exports to China. In fact, China has no option left but to reply on itself by boosting domestic innovation.

Digital push will set rules to protect personal data

Policymakers intend to build a “Digital China” with clearer boundaries for how and when tech companies can use the massive amounts of data they collect from users.

In his work report to the National People’s Congress, Premier Li Keqiang highlighted “innovation-driven development” and efforts to create “new strengths for the digital economy” under the 14th five-year plan that was submitted to delegates.

The National Development and Reform Commission, the agency involved in drafting five-year plans, said it would research and draft policy documents on the new internet industry, with a focus on guiding the integration of the digital and physical economies.

The draft plan also shows Beijing’s intention to speed up the roll-out of two “fundamental” pieces of legislation: the Personal Information Protection Law and the Data Security Law.

Both laws build on the framework set up by the Cybersecurity Law. The Personal Information Protection Law focuses on protecting personal privacy, while the Data Security Law is aimed more at protecting national security, establishing rules around markets for data and how the government collects and handles data.

Beijing aims to increase added value in the digital economy to 10 per cent of gross domestic product GDP by 2025, up from 7.8 per cent in 2020. The target was ambitious but reasonable considering the untapped potential of the digitalization of traditional industries, said Li Yi, chief research fellow at the Shanghai Academy of Social Sciences. “In the past two decades, the digital economy has transformed the way average consumers live, work and entertain [themselves], but there’s still huge room in the so-called industrial internet.”

The plan also calls for nurturing new digital industries, including artificial intelligence, big data, blockchain and cloud computing, along with expanding 5G technologies to more industries such as smart transport and logistics. The new five-year plan encourages firms to share data from search, e-commerce and social media services for the development of a third-party big data platform.

China’s digital economy was valued at 5.2 trillion yuan. At 40 per cent the size of that in the United States, it was still the second largest digital economy in the world, accounting for 36 per cent of China’s gross national product.

The 14th five-year plan also increases scrutiny of internet platforms, continuing a government crackdown on monopolies and unfair competition.

The encouragement from the government has led to the explosive growth of internet companies, but as Big Tech has now gained more powers, the regulators are becoming cautions with their tolerance.

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An Innovation Dilemma

It is likely take a generation for China’s per capita GFP to approach even half that of the US. The crux of the matter is technology. The world’s five technology powerhouses, in terms of spending on research and development are the US, Germany, Japan, South Korea and China. Although China has the benefit of scale, after adjusting for the size of its population and economy, it lags behind the other four. It is South Korea that punches above its weight. The technology race is shaped by three factors, investment, human capital and institutions.

Although China’s corporate-driven R&D spending has grown rapidly as a proportion of its economy, it still lags behind many East Asian and Western counterparts. South Korea, Japan and Germany have higher R&D intensity while the US is still the foremost in scale. Contrary to perceptions, a lower proportion of R&D in China is directly funded by the government than that in Germany or the US according to OECD data.

China has been producing many science and engineering graduates; in 2016 it produced 4.7 million graduates in STEM (science, technology, engineering and mathematics), greatly surpassing America’s 568,000, according to World Economic Forum data. However, despite the rapid expansion of its higher education system, the overall quality of Chinese universities still lags behind the US.

China’s population is ageing while the US is being replenished by immigrants. The US has a distinct advantage in attracting talent from around the world. From graduate students to faculty universities. Can China attract international talent?

Hong Kong is the obvious destination of choice in China for global talent, especially in finance and law, given its open media access, low tax and wide English usage. Unfortunately Hong Kong is not known for its hi-tech industries and it is expensive place to live.

There are vibrant hi-tech ecosystems in many Chinese cities, where, housing is more affordable. Preferential housing for talent is already in place in Shenzhen and elsewhere, but taxes are much higher and access to the global internet is restricted.

China should consider setting up “special innovation zones’ – such as in the Greater Bay Area or Hainan – where international internet access is unfettered and qualified foreign talent may pay low taxes. However, good and affordable international schools are also essential to make these zones attractive.

Chinese companies could set up R&D centres around the world. Just as multinational corporations have set up R&D centres in China to access its large pool of engineering talent, Chinese firms may do the same overseas. Russia or Spain, for example, may offer value for money. Importantly, what China needs is quality rather than quantity.

Besides financial reward and career prospects, global talent is also attracted to lifestyle, China could set up international innovation parks in places such as Bali, Jeju Island in South Korea, or New Zealand. At the same time, while based in resort-like facilities near beaches or mountains in these locations, international talent could undertake projects for Internship.

Tsinghua University and Peking University have long been top feeder schools for science and engineering PhD programmes in the US. China needs to attract more of its best and brightest graduates to return home. Whether trained locally or overseas, China has the largest pool of young engineers and scientists. China’s engineers have achieved formidable technological progress so far. The issue is whether they can develop their potential to the fullest.

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Antibiotics pipeline is falling behind in war on superbugs

The World Health Organization has warned that none of the antibiotics currently being developed against antimicrobial resistance are enough to tackle drug-resistant bacteria that are expected to kill millions by 2050.

In a report published recently, the WHO said none of the 43 such drugs in the pipeline addressed the 13 most dangerous superbugs it had identified.  Antimicrobial resistance (AMR) has been described by experts as a silent pandemic.

Research suggests the spread of bugs that tolerate drugs kills about 700,000 people a year, a figure that could rise to 10m by 2050 – the same number of lives claimed by cancer each year.

While observers and industry members had expressed hope the current pandemic could alert the world to the perils of under-investment in new drug research, progress has been stymied by on crucial problem: AMR drugs should be used as sparingly as possible, offering little commercial incentive for drug-makers to invest in research and development.

The 2020 report finds the antibiotic pipeline is “near static”, with only a few new drugs approved by regulators in recent years. Most of these offer little benefit compared with existing ones, or are variations of antibiotic drugs classes discovered in the 1980s. A number of pharmaceutical companies have given up on antibiotic development altogether because it is unprofitable.

Bacteria that cause pneumonia or sepsis are becoming more and more resistant to existing drugs, a process that has been accelerated by antibiotic misuse in humans and animals, according to Peter Beyer, interim head of the WHO’s global co-ordination department on AMR.

The report also highlights new classes of promising therapies including phages – viruses that eat up bacteria; antibodies; and immune therapies that weaken the effect of bacteria. There are also a number of initiatives aimed at enticing investors and companies to act.

Still, scientists insist that because antibiotics are so prevalent and used to treat a wide array of infections in key healthcare settings, and delay in action could be costly.

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COVID Changes the CHRO Role

The coronavirus pandemic has impacted senior management teams globally and in particular has brought greater focus on the role of the CHRO. COVID has greatly impacted organsation structures and ways of working which in turn has demanded new capabilities and responsibilities

CEO’s have turned to the CHRO and wanted solutions immediately – it was now more like a line management role. Line Managers were already in panic mode – restructuring production and revising supply chains, stores were closing, online was the new sales channel.  Leaders needed to create a new work culture, restructure jobs and lay people off while at the same time maintain morale.

Some larger companies had disaster plans to refer to, modify and implement. But many companies did not have them. CHROs needed to focus on rapid results, be resourceful and devise and implement action plans. Few were prepared for this as the HR role was traditionally advisory and not implementing major change, especially at short notice.

One of the biggest people impacts has been working from home. Remote working was more prevalent in US with approx. 40% already working from home but for the rest of the world it was a much more dramatic change. In Europe, Indian Sub Continent and Asia Pacific homes were much smaller, staff lived in tall blocks in 500sq ft flats with their family and grandparents. Kids were at home not at school, mothers (your employees!) needed to look after them. The kids needed the fast internet for Zoom lessons (and games!), but many homes did not have hi-speed internet connections or printers at home. Working from home became a sudden necessity without the time to think through and manage the consequences

Leaders suddenly needed to create revised organization models. Working from home revealed that many duties could be carried out from home without harming quality or efficiency. However others needed contact with numerous colleagues and the resources in the office. Important information was retained in peoples heads and not on line!

Now in early 2021 companies are starting to see the shape of a new normal and are planning changes. The CHRO is expected to play a key role in this. New policies and protocols need to be devised. Some staff are planning to leave their company as the new normal does not work for them or because it is a blend of job change and home change which clash.

CHR0’s now need to work with managers to define the new set of customs and practice, revise existing work rules and protocols and devise communications strategies to embrace the new reality.  Who will pay for remote workers’ connectivity and any required equipment as many roles need terminals not IPads to connect to complex company systems.  Data access and data security will need a major rework

Managers themselves may well be finding the new normal stressful as they cannot cope without their team being in the office or that having 20 faces on screen all day does not work either! Finally the role of the coffee machine is better understood!

Managing the new normal

Many roles will need redefining as they will be carried out in different ways. Staff who were based in a Head Office or Regional Office may find their role has significantly changed, or, perhaps is no longer needed. Offices may have been transformed into workspace. Leases have not been renewed and offices relocated to smaller premises in a different less expensive district. CHROs need to ensure that changes are carefully communicated especially those working from home! Not all line managers are good communicators!

Not only talent acquisition but also retention will remain a critical task. Employees need to be recognized and engaged, no matter if they are working remotely or waiting to return to the office in a changed role. New recruits joining a company may be nervous about new roles and how to meet subordinates and colleagues online in post-pandemic company structures they are not familiar with.

Control needs to give way to trust. Staff will need help to learn how to work remotely and with far less oversight. They may find they have a new boss and need to learn about what works and what does not work when based at home.

The pandemic and lockdowns have put pressure on employees in ways that not only test their wellbeing and private lives, but also that of our society. Caring for the workers’ well-being is one of the most important challenges for the CHRO and senior leadership.

CHROs will need to be creative, decisive, empathetic and leading these changes and communicating to the staff affected. The corporate culture will need to be rebuilt as soon as possible. A well-defined organizational culture is critical for long-term success. Culture is vulnerable in times of crisis. With financial problems on the one hand and structural changes on the other, it is easy to put organizational values, mission and identity aside

Looking at the positive side COVID has forced leaders to operate in a more agile way, which will probably benefit them in the future. Business leaders now have a better idea of what can be done outside of their traditional processes. Many are finding simpler, faster and less expensive ways to operate. The pace and scale of workplace innovation is growing rapidly

The CHROs who are effectively dealing with it while avoiding harming staff performance have gained a new sets of skills and responsibilities There will be new normswhich will promote and value human communication and feedback, adaptation to change and producing working results. The status quo ante has gone.

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Growing Your Company

Your research projects have started to show potential and you need to raise more funds for research, development and clinical testing. As your company grows the development of your management team will become as important as the scientific development. You will next need to be thinking ahead to strengthen capabilities in regulatory affairs, finance, commercial and market development in your management team.

The Biotech industry is growing rapidly. Talent is very much in demand. Demand is greater than supply. You need to have a talent development strategy comprising recruitment, succession planning and competency development. If you do not have a talent management strategy in place you also risk losing your own talent!

Potential investors will want to meet your management team as part of a due diligence process and hear them speak about how the business is developing and overcoming the challenges it faces. I have been through it with my own business!

Having a high quality management team will help to maximise the value of your business in the eyes of investors. A weak team will hinder your attempts to raise investment funds. A mis-hire or a non-hire while your business is growing at 15 – 20% a monthly can be crippling.

Raising funds

Whichever route you take to raise capital the requirements are similar. The major change is that the financing of the business has become as important as the scientific development

  • Predictable and consistent revenue. The business needs to be mature enough and its systems robust enough so that it can reliably forecast the next quarter and the next year’s expected income or reduction in losses! Investors or stock markets do not like it when companies miss earnings targets or have trouble predicting what they will be. Potential investors will question your team about this
  • A strong management team. You need an experienced top teamin place who have been with the company 2-5 years. Recent joiners with less than a year’s service will not be credible
  • Trade Sale is much more discrete and may not become public until it happens. An IPO becomes public a year before the event because of “book building” and getting approval to join the listing queue. This will put a lot of pressure on your team
  • Robust Systems and Processes. Investors will look for robust business processes in place. This is important even if a company stays private. But going public means every aspect of how the company is run will be closely examined.
  • Long Term Plan. The company needs to have a long-term business plan with financials and sales forecasts prepared for the next three to five years to help investors and the market see that the company knows where it is going.

Quality of Leadership

This is one of the biggest factors investors look at beyond the financials when considering buying into your company.

Your top team will typically include: Chairman, CEO, CFO, CMO, SVP Early Stage Development, SVP Late Stage Development, Head of Govt & Regulatory Affairs, Head of IT & AI, Chief Business Officer (Purchasing, HR, Administration), Chief Commercial Officer (Marketing and Sales). These people need to be high quality and not just names on doors. They will be quizzed by the Venture Capitalists and Investment Banks. Your investors will expect these people to have track record and have been with your company at least 2 years.

Our Role

Preparing for and executing major loan finance, a trade sale or an IPO involves major business transformation and operational disruption. These can be heavy burdens for startups which have been used to running lean.

Your recruitment and development plan will be almost as complex as your scientific development plan. It will need to be executed in parallel to ensure you have the right people in the right place at the right time! Recruiting a senior executive from a competitor typically takes six months as there will be a 3 months notice period in addition to the hiring process. Senior recruits may take longer as C suite recruits are often on 6 months notice.  If you want to recruit a senior executive from a competitor you may need to do this very confidentially and using an executive search firm.

Your company may also need part time Independent Non-Executive Directors with prior experience to sit on audit, compensation and governance committees.

We can help you to set up an HR function and assist them when there is a surge of recruitment. We are experienced in biotech, food tech and medical device recruitment, have a database of candidates and can manage the necessary confidentiality. We have a global network of offices to enable us to find the talent you need. We will work with you to develop and execute this plan in a cost effective manner.

Need Help?

If you need advice or a discussion, please contact Mark Geary, CEO of Asianet Consultants: mark@asianetconsultants.com

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