Smaller companies are bullish on hiring and profitability in 2023

It’s a good bet we’ll hear a lot about big companies laying off employees in the coming weeks. The latest example: Goldman Sachs just announced a purge of 3,200 employees.

Yet there’s more of a sense of calm – even slight confidence – when it comes to staff retention and even hiring among decision makers at smaller employers. The latest Small and Midsize Business (SMB) CEO Confidence Index from Vistage bears that out.

“Business leaders are shifting their focus to areas they have more control over, such as hiring and retention,” said Joe Galvin, Vistage’s chief research officer. “In the new year, we can expect hiring to remain a priority for CEOs, and begin to see some degree of stabilization after the unprecedented turbulence of 2022.”

Among CFOs surveyed by Vistage in the 4th quarter of 2022:

• 60% plan to increase their workforces in the next 12 months (up from 52% in the 2nd and 3rd quarters of 2022)
• 61% say finding good candidates to hire is impacting their ability to operate at full capacity, and
• 84% of those who are having problems hiring plan to boost wages and 60% are allowing for remote work options and flexible hours and schedules.

Better revenue streams means more employment

CEOs for SMBs expect higher profits and increased revenues in 2023, which in turn should lead to an increase in job retention and hiring.

The Vistage survey found:

• 43% of CEOs anticipate higher profits (way up from 32% in Q2 2022), and
• 58% expect increased revenues.

Despite relatively optimistic outlooks on their own companies’ revenue streams and employment, CEOs are pessimistic about the economy as a whole. Case in point: 15% of CEOs say the economy recently improved while 58% think it worsened. Only 10% expect the U.S. economy to improve in the year ahead – 51% think it’s going to get worse, maybe a lot worse.

“The negative outlook for the national economy is hardly surprising given the Fed’s commitment to substantially hike interest rates to reduce inflation,” concludes Vistage. “Whether the Fed can accomplish this goal without significant increases in unemployment is the primary source of CEOs’ uncertainty about future economic prospects.”