Times are changing. So is the workforce. And we know workforce changes affect business norms on many levels.
The oldest members of Generation Z, born 1996-2010, are beginning their careers, as millennials move into management positions. Corporate values are expected to be radically reshaped by Gen Z ideals, which focus on financial security, aversion to debt, tech intuition, digital comfort, work/life balance, and a shift toward informal training and an interest in becoming self-made entrepreneurs.
Generation Z will likely be a major financial influencer. Its members are on track to become the largest generation of consumers, and they are good at rapidly gathering trusted data to inform their choices, actions and purchases. So far, they show that they are smart consumers made even smarter with mobile technology.
A hallmark of Generation Z is this: as a whole, they prefer experiences over possessions. They do not care about status or “stuff.” The equipment leasing and finance industry noted this trend and has made recommendations, as outlined in its 2018 Industry Future Council Report, “Preparing for Radical Customer and Employee Change Between Now and 2030: Gen Z and the Multi-Generational Workforce of Tomorrow.”
Gen Z says: use it, but don’t keep it
Strongly influenced by the Great Recession of 2008-2009, the members of Gen Z are price-conscious, risk-averse and heavily influenced by digital transformation. They depend on social media and spend an average of nine hours per day online. Because they are hyper-connected to people and newly refreshed information, they are also quick to advance and adapt.
While they are entrepreneurial, they are not likely to care about opulent offices or flashy toys. The Equipment Leasing and Finance Foundation is using this information to adjust its future strategies. The foundation predicts that interest in direct equipment purchases will wane as members of Generation Z focus on usage rather than possession and ownership. Their report concluded that “members of Generation Z, who possess many talents and technological skills, are likely to question nearly every traditional aspect of business. Jobs will evolve to use new technologies. More business models will change to accommodate increased desire to use rather than own equipment.”
The equipment leasing industry and those it serves are living during a digital transformation, which means they are familiar with constant technology turnover and upgrades. Couple that with a Gen Z workplace that is frugal and dependent on data, and you may find that businesses of the future have little desire to purchase technology, but a definite need to constantly upgrade it.
Equipment financing is already a double-edged sword. Business owners don’t want to spend money on technology that may be outdated next year; but they don’t want to rely on last year’s outdated technology either. Because it eliminates drawn-out purchasing terms, leasing has Gen Z appeal.
Equipment leasing predictions
Industry experts predict that equipment financing needs will increase, along with equipment complexity. And business customers will want to pay for software on a per-use and rental basis, leaving room for a quick switch to newer, better programs. More rental companies may pop up in this new landscape, with fewer people wanting to purchase a piece of machinery that could be obsolete by the time it’s paid off.
A likely scenario is a future defined by accelerated transformation. In a more digitized world, technology will drive nearly all improvements and advancements in all industries. Equipment financing and leasing lenders are wise to recognize that and create optimized lease structures to meet customer values and expectations.
Getting more comfortable with change
A major perk of equipment leasing is that the majority of a company’s cash can remain free to invest in activities that drive growth. And those drivers can change quickly with new trends, new apps, and new engineering. Companies also need to be mindful of their own customers’ use of technology, which is important to the product or service being provided; new interfaces, marketing platforms, and mobile payment systems are all critical for sales. All these scenarios require adaptability.
The equipment finance industry will need to embrace change and its accompanying technologies in order to adapt to Generation Z. Understanding this shift in values and needs will help business owners and lenders from all generations work together for the best solutions.
To learn more about Crestmark’s equipment leasing and financing options, click here or contact us at 888-999-8050.