In this ever-shifting landscape of business, executives are facing a paradigm shift in their top concerns. As we approach the final quarter of 2024, the economic outlook has taken an unexpected turn, revealing a complex tapestry of challenges and opportunities for business leaders across the nation.
The Changing Face of Executive Worries
For much of the year, inflation has been the specter haunting boardrooms and strategy sessions. However, recent data suggests a dramatic shift in this narrative. The latest AICPA & CIMA Economic Outlook Survey paints a picture of easing inflation fears, with only 57% of business executives expressing concern about inflation over the next six months—a significant drop from 75% in the previous quarter.
Yet, this silver lining comes with its own set of clouds. The survey reveals a sobering statistic: merely 26% of business executives feel optimistic about the U.S. economy's prospects for the next year, down from 35% in the prior quarter. This decline in confidence extends globally, with optimism about the world economy dipping from 22% to 19%.
The New Top Concern: Employee and Benefits Costs
As inflation concerns recede, a new challenger has emerged to claim the top spot in the hierarchy of executive worries: employee and benefits costs. This shift reflects the complex interplay between economic recovery, labor market dynamics, and the evolving expectations of the workforce.Tom Hood, executive vice president for business engagement and growth at AICPA & CIMA, offers insight into this transition: "Election years are always a volatile period, and signals from the economy have been mixed lately.
There's less worry about inflationary pressures, but geopolitical concerns continue to weigh on global commerce. We've also seen downward revisions to strong U.S. job-growth figures, and many business leaders are concerned about rising labor costs, which is making the hiring outlook worse than it had been earlier this year."
The Human Element: Navigating Workforce Challenges
This shift in executive concerns brings the human element of business into sharp focus. Companies are grappling with difficult decisions regarding staffing and compensation as the year draws to a close.A recent survey by ResumeTemplates reveals a startling statistic: 72% of companies anticipate a round of layoffs before year's end. Even more striking, 95% of respondents report having already implemented layoffs this year.
These decisions are not made lightly, with 89% of managers believing such moves are necessary for future success.The reasons behind these layoffs are multifaceted, ranging from performance management (59%) and cost-cutting (59%) to preparing for future growth (52%) and restructuring (51%).
The Bonus Conundrum
For those employees who weather the storm of layoffs, the question of year-end bonuses looms large. The ResumeTemplates report offers a mixed outlook: 57% of companies plan to offer bonuses to all employees, 33% to some, while 6% have decided against bonuses entirely.
Julia Toothacre, chief career strategist for ResumeTemplates, warns of the potential fallout:"Companies need to consider the overall impact of layoffs, not only on those let go, but on the employees who stay. Of the employees who remain, morale will be significantly impacted, especially during the holidays. They may feel frustration and anger towards leadership."
Salaries on the Rise, But Bonuses Lose Favor
Despite economic uncertainties, salary increases remain on the horizon. The Conference Board's report on US Salary Increase Budgets 2024-2025 projects a 3.9% increase in salary budgets for the coming year, a slight uptick from the 3.8% increase seen this year.However, the landscape of compensation is evolving.
The report notes a 3% decrease in companies offering signing bonuses, with retention bonuses also seeing a slight decline. This suggests a shift away from short-term, one-time bonuses that were prevalent in a tighter labor market.Dana Peterson, chief economist at The Conference Board, provides context for these trends:"Despite a slower pace of hiring and slight increases in unemployment, elevated wages are expected to continue into 2025. A shrinking labor supply is driving businesses to focus on retaining their current workforce, leading to sustained salary increases and higher real wage growth as inflation moderates.
"As we navigate this new era of executive concerns, it's clear that the human element of business—from employee costs to workforce retention—will play a pivotal role in shaping corporate strategies and economic outlooks in the months to come. Business leaders must strike a delicate balance between managing costs and investing in their most valuable asset: their employees.
Comments