It is our responsibility as CEOs and business leaders of midmarket organisations, to analyse and consider the internal and external factors that will impact our business plans for the year ahead.
The Executive Connection CEO Confidence Index September Quarter 2019 shows leaders are looking to the year ahead with confidence in the economy, their businesses and themselves; with a clear understanding of the challenges they need to overcome. This quarter, CEOs across the country feel the economy has turned a corner, but it isn’t all clear roads ahead; with talent and access to credit remaining key challenges for leaders looking to drive growth in FY2020.
CEOs anticipate a better road ahead in FY2020
The Index has moved into cautiously optimistic territory regarding economic outlook for the year ahead. The number of leaders who anticipate a softening economy in the next 12 months has declined from 33 per cent to 19 per cent. The majority of executives and business owners are now more confident; more than half (52 per cent) anticipate conditions will remain steady, while 26 per cent predict economic conditions will improve.
A stubbornly optimistic mindset
CEOs are optimistic about their own prospects, forecasting growth and increased investment in the next 12 months. Three-quarters (73 per cent) of leaders anticipate growth in sales revenues, and 63 per cent expect company profitability to lift. Most organisations (53 per cent) are looking to keep their prices steady, while 40 per cent are looking to increase prices to support improvements in sales revenue and profitability.
While both investment intentions and hiring plans slipped this quarter, they remain strongly positive with most businesses still planning to expand their workforce (50 per cent) and increase capital expenditure (41 per cent). Majority anticipate growth in sales, profits and pricing power and planned investment and employment levels remain high despite the small fall.
The latest survey was undertaken after the RBA’s first rate cut in almost three years, and this appears to have positively impacted CEOs’ expectations for the economy. However, recent cuts are not having a material impact on a business’s ability to obtain finance, with one in four finding it harder now compared to three months ago.
SMEs lead on flexible work; modest wage increases ahead
Attracting and retaining highly skilled workers are the top two talent issues identified by leaders in this Index, and many indicate that throwing money at the problem is not proving to be a sustainable or effective solution. Flexible and fractional working is emerging as a new area of focus for SME leaders looking to attract high calibre talent in a competitive and fragmented environment.
It is great to see that SME leaders are teaming agile and creative decision-making with a considered focus on people, to ensure they are well-placed to drive growth in their businesses in the year ahead.
CEOs are employing new ways to tackle their talent challenges, including investing in technology and automation to streamline repetitive tasks and free up their workforce to focus on critical thinking, strategic activities and innovation. This shift in focus for workforce capability comes at a time when demand for highly skilled workers is predicted to outstrip supply, to the tune of 739,000 workers by 2020.
Overall, CEOs remain optimistic of their own prospects and have a brighter outlook for the economy. Interest rate reductions and income tax cuts will only provide further support to economic activity thus helping to underpin already positive perceptions. There are good reasons to believe this uplift in confidence across Australia’s mid-sized businesses is signalling a stronger economy over the second half of 2019.
Stephanie Christopher, CEO, The Executive Connection
