By Harry S. Dennis III, for SBT
The latest TEC (The Executive Committee) surveys show that business executives view the economy with cautious optimism and guarded uncertainty.
For the first quarter of 2007, we have the benefit of a nationwide survey from Vistage, formerly TEC International, and two additional TEC Wisconsin surveys of CEOs. A total of 1,943 people responded.
In terms of overall economic conditions, about the same percent of the U.S. and Wisconsin samples (80 percent plus) believe conditions have improved or remained the same from a year ago. For the balance of this year, both groups expect more of the same, with only about 17 percent saying they expect conditions to worsen.
Regarding investments in capital equipment over the balance of this year, about half of both groups expect to see increases. About 15 percent of both groups anticipate decreases.
Expectations for higher revenues this year were evenly matched for the U.S. group and one of the Wisconsin samples, with almost three out of four respondents expecting increases. Unexpectedly, a second Wisconsin sample with 228 respondents painted a different picture, with a little more than 40 percent forecasting higher revenue growth.
However, turning to profitability expectations, the three samples align themselves again with 60 percent plus anticipating increased profits in 2007. Another 25 percent of each group sees no changes in profitability this year.
Product pricing is always an interesting component of these surveys. Here, a significant difference appears between the U.S. group and one of the Wisconsin groups, and the other Wisconsin group. Specifically, 70 percent of one Wisconsin sample anticipates price increases, and half of them indicate that they will increase prices twice during the year. However, 40 percent of the national sample and another Wisconsin group (102 respondents) expect to increase prices.
Regarding the amount of price increases planned, one Wisconsin sample shows average increases of 3.24 percent, with a range from a low of 2 percent to a high of 10 percent. No data are available for the other two samples.
About 60 percent of the U.S. sample and one of the Wisconsin samples expect to increase their employment base in 2007. Data from one of the Wisconsin samples is more specific. About 35 percent, or 228 companies, plan to add salaried employees. But, significantly, 43 percent are undecided about their salaried employment needs.
With respect to hourly employees, 70 percent of this same group anticipate adding, on average, five employees per reporting company. Only 10 percent of this group remains undecided.
Both the U.S. group and Wisconsin groups continue to see finding, hiring and training quality employees as the most significant business issue for 2007. A distant second concern by these groups is economic uncertainty. Interestingly, only 8 percent of the U.S. sample list health care costs as a significant issue, while 15 percent in Wisconsin identify it as a significant concern.
Since employee retention was listed as a major concern, a logical question is: What steps are companies taking to retain their satisfied employees? Both the U.S. and Wisconsin samples ranked more compensation and more training about evenly, followed by more flex-time, job-sharing and working from home. This accounted for more than 70 percent of the responses.
About 20 percent of both groups mentioned more benefits and more perks.
A new question asked if the respondents were using online services such as MySpace, Facebook or Google to research potential job candidates. About 20 percent of both the U.S. and Wisconsin samples indicate that they do.
Separately, both the U.S. and
Wisconsin CEOs do not report participating widely in the more commonly used online communities such as Google, Yahoo and MSN groups, MySpace and YouTube, etc. for any other business purpose.
Regarding the proposed increase in the federal minimum wage from $5.15 to $7.25 over two years, Wisconsin is decidedly more opposed to the increase than the U.S. sample. Forty percent of the U.S. sample support it, and 30 percent of the Wisconsin sample concurs. About one-fourth of both groups support it—if it comes with tax breaks for business.
A little more than a quarter of both groups expect to see interest rates rise in 2007, but two-thirds see no change. With respect to energy costs, 55 percent of both groups expect to see increases, and 40 percent expect no change.
As a percent of revenue, the survey asked, how much do the respondents spend on their sales and marketing plans? Nearly three-quarters of both groups spend 5 percent or less. Ten percent of both groups report spending more than 10 percent.
However, in terms of satisfaction with results, less than 10 percent of both groups report a high degree of satisfaction, and about one-third say they are satisfied. Nearly half state that they are somewhat satisfied or neutral on the subject.
The second Wisconsin sample,
228 respondents, offered some additional insights:
• Health care costs: Most TEC members are expecting to see increases in the 10 percent range. However, 28 percent of those surveyed don’t know what to expect.
• Global competition: 62 percent say they think it will be the same as last year, and 9 percent believe it will intensify this year.
• Recession: 57 percent predict no recession this year, and 29 percent have no opinion, leaving 14 percent who believe we will see one.
• The economy: 42 percent think the economy will grow this year between 2 and 3 percent. However, 51 percent predict growth of 1 to 2 percent.
• Congress: Half the group is unsure about how the shift of control in the House and Senate will affect their business. More than one-third see no impact at all.
All in all, we might conclude that these results are mixed in tone and character in terms of 2007 expectations. The overall issue appears to be one of cautious optimism flanked by guarded uncertainty.
That isn’t too far removed from where the TEC community stood on these issues at the beginning of last year. Until next month, here’s hoping your year is off to a good start.
Harry S. Dennis III is the president of The Executive Committee (TEC) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at (262) 821-3340.
