Recession or not, the economy is entering a period of relative stability.
The Vistage CEO Confidence Index increased slightly to 75.3 in Q4 2022, 1.9 points higher than Q3 2022 and 6.3 points higher than Q2 2022. Even with these modest gains, it remains 22.3 points below Q4 2021, and is one of the lowest readings to date in the index’s 20-year history. The index measures the sentiment of business leaders on a variety of economic and business factors. Vistage surveys about 1,500 small and midsize companies in the United States each quarter.
A key driver of the low level of confidence can be attributed to sentiment about the U.S. economy. Just 4% of Wisconsin CEOs surveyed believe the economy will improve in the year ahead, while 53% believe it will worsen.
That can be attributed to the headwinds of high inflation and skyrocketing interest rates clashing against a resilient and strong labor market to essentially create an economic stalemate. Nobody wins big and nobody loses big.
While this period of uncertainty presents a variety of obstacles, it also gives many CEOs the time and opportunity to reset and refocus on the two items that are most important for a business to succeed: customers and talent.
Customers’ behavior has changed
First and foremost, customers are at the heart of every company’s ability to succeed. You can’t sell anything successfully if you don’t have buyers.
Last year, 78% of CEOs surveyed reported that buyers’ behavior changed because of the COVID-19 pandemic. Slightly more than half (51%) of Wisconsin CEOs reported their buyers’ behavior has changed due to inflation. Business leaders continue to be challenged by how they communicate with and sell to customers in an increasingly digital-first world and in a hybrid workforce.
This creates opportunity for customer-focused companies that are prepared to meet customers where they are, equipped with the relevant messaging. Customer-focused strategies need to accelerate decisions in a time where budgets are tighter and sales cycles are longer.
Keeping top talent is critical
Employees are the fossil fuel of every organization’s growth. Leaders learned just how crucial having the right talent was during The Great Resignation that started in early 2021 when employees voluntarily resigned from their jobs en masse, in the wake of the COVID-19 pandemic. Hiring became a near impossibility.
Even today, 69% of Wisconsin CEOs report the problem of operating at full capacity due to hiring issues. Despite economic uncertainty, 56% of Wisconsin CEOs plan to hire more workers in the year ahead. The healthy jobs market remains a bright light in an otherwise gloomy U.S. economy.
Retention is one of the most cost-effective and efficient ways for CEOs to shore up their workforce and fill productivity gaps. Over half of Wisconsin CEOs (57%) have already either added retention bonuses, or plan to, in the year ahead.
To further hone their retention strategies and help increase productivity, nearly all (97%) of Wisconsin CEOs either already invest in employee development programs or plan to in 2023. Another 93% have either already invested in leadership development or plan to.
Wisconsin has also seen a surge in employee training programs – 70% of those surveyed said they have already created internships or apprenticeship programs or intend to in 2023. This is truly a long-game strategy to retention. Building someone’s skills from the ground floor embeds loyalty and helps fill talent gaps by widening the pool of available talent.
In tandem with retention, 81% of Wisconsin CEOs report they’ve invested in technology to reduce labor burdens. These investments are not intended to replace people with robots, but to increase collaboration, amplify productivity, fill hiring gaps and improve the employee experience – particularly for digital-native Gen Zs and millennials.
CEOs who use this time of low economic growth to turn inward and focus on the fundamentals – their customers and their employees – will be poised to weather the storms of persisting inflation and more interest rate hikes.
As long as unemployment remains at near-bottom lows, the economy will continue ticking forward but at a slower pace. Those who master the basics now will be first in line when the economic merry-go-round inevitably starts again.
