In my final conversation with the late George Dalton, founder of Brookfield-based Fiserv Inc., he expressed concerns about the collective mindset of the American entrepreneur.
At a coffee shop in Milwaukee's Historic Third Ward in 2011, Dalton, who had acquired more than 100 companies over a storied business career, said American entrepreneurs must find the will to again be “swashbucklers.” They must be bold and daring, willing to take on risks in the face of uncertainties, Dalton said.
Dalton passed away a short time later, but his words ring even truer today. Multiple signs are pointing to an increasing pace of growth for the American economy in the second half of 2015:
- The Conference Board Leading Economic Index for the U.S. economy increased 0.7 percent in May to 123.1, following a 0.7 percent increase in April and a 0.4 percent increase in March. “The U.S. LEI increased sharply again in May, confirming the outlook for more economic expansion in the second half of the year after what looks to be a much weaker first half,” said Ataman Ozyildirim, director, business cycles and growth research at The Conference Board.
- The U.S. economy added 280,000 jobs in May – the strongest month of the year so far – as wages continued to rise and the labor participation rate ticked upward. The latest report from the U.S. Labor Department exceeded most analysts’ expectations. While the unemployment rate rose to 5.5 percent from a near seven-year low of 5.4 percent in April, analysts said that was because more people, such as new college graduates, attempted to enter the labor force, indicating confidence in the jobs market.
- U.S. new home sales rose 2.2 percent in May to a seasonally adjusted annual rate of 546,000, the strongest pace since February 2008, according to the U.S. Commerce Department.
- U.S. sales of cars and light trucks at an annualized rate reached 17.71 million in May, the strongest level since 2005.
- Of the more than 11,000 employers recently surveyed by Milwaukee-based ManpowerGroup in the United States, 24 percent expect to add to their workforces and only 4 percent expect a decline in their payrolls during the third quarter. Seventy percent of employers anticipate making no change to staff levels, and the remaining 2 percent of employers are undecided about their hiring plans. When seasonal variations are removed from the data, the Net Employment Outlook is +16 percent, equal to the second quarter Outlook. “U.S. employers have reported the same steady hiring plans throughout 2015, and the third quarter results are no exception,” said ManpowerGroup chief executive officer Jonas Prising. “We are seeing the signs of a healthy labor market, with the outlook improving compared to 2014.”
- The vast majority of employers surveyed by the Metropolitan Milwaukee Association of Commerce are projecting increases in revenues and hiring in the third quarter.
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Although the outlook for the economy overall is so strong for the second half of the year, many business owners are tired. They have slogged through a long, tedious recovery from the Great Recession. Their employees have had to do more with less.
Several analysts and experts are expressing concerns that fatigue and timidity may be holding many companies back from expanding their workforce, launching that additional product line or service, expanding their plants, expanding their market territories or investing in equipment. Such a lack of investment at a time of overall economic growth can result in missed opportunities. Inaction can come with a cost, they say.
“Companies continue to stretch their people beyond what is reasonable and quite frankly, sustainable. Companies are still doing more with less, and I suspect that an inflection point will come where mission critical people will burn out,” said business consultant Christine McMahon, a columnist for BizTimes Milwaukee.
Lead or get out of the way, McMahon says.
“Leadership – strategic leadership – is a critical business need. There is a tremendous shift/change taking place right now. The leaders who navigated and survived the recession are either selling their companies, turning it over to others, or should turn it over to others because they are doing a bad job. There are a lot of bad leaders out there, and there are some really smart young leaders who are capable of stepping forward if given the opportunity,” McMahon said.
Rick Bauman, Ph.D., a Milwaukee business psychologist, understands how many company leaders may be weary from slogging their way through the long recovery. However, that weariness cannot be an excuse for business paralysis, he said.
“The thesis of many business owners being fatigued by the long economic recovery process is both understandable and defensible. The old saying, ‘It’s lonely at the top,’ is absolutely true,” Bauman said.
“The question before us today, however, given the indicators of overall economic growth, is what can or should we be doing to stay safe but still take advantage of the opportunities embedded in new investments in planning effort, economic commitment, and execution of an action plan?” Bauman asked. “These factors represent confronting change with all of its ambiguities and finding a path. In doing so, it is what defines the difference between being a manager and a leader: a manager does things right; a leader does the right things. Those companies that have such leaders have the best chance to prosper.”
Daniel Sem, Ph.D., the newly appointed dean of the Concordia University Wisconsin School of Business Administration says companies that are afraid to be bold in the second half of the year will be left behind by those that seize the day.
“There is growth coming, but only for those companies who prepare for it strategically and in a timely way; those that don’t will be left in the tracks of those with foresight and courage. But hey, that is what capitalism is all about,” Sem said.
George Dalton is calling us from the grave. Be a swashbuckler.
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