Executives at middle market companies are making long-term investments in their operations, particularly in technology and strategic workforce expansion, as they look for new ways to enhance productivity in an uncertain economy. Although technology investments are straightforward enough, these companies are finding that attracting and retaining the types of employees with the critical skills necessary to boost productivity remains a challenge.
These are among the key findings of a new Deloitte report, Mid-Market Perspectives: America's Economic Engine – Competing in Uncertain Times, which includes the findings of a survey of 696 senior executives in middle market companies with annual revenues of $50 million to $1 billion. Two-thirds of the executives surveyed work in companies that are privately held. As the report points out, because so many of these companies are privately held, there tends to be little insight into their plans and actions, making this data more significant. "Their activities influence national trends in employment, output, productivity, and lending," states the report. "Understanding the thoughts and actions of those who lead mid-market companies is critical to grasping the big picture of the U.S. economy."
The Deloitte survey found that 70 percent of these executives expect to realize productivity gains primarily through business process automation and technology, including data analytics and business intelligence and customer relationship management software. The main goal is to bring in higher value customers and to generate more revenue per customer.
When it comes to hiring, the Deloitte report found that these companies face an array of contradictions. Although 44 percent of these executives plan to increase the size of their workforces over the next 12 months, 45 percent of these executives agree that the need for companies to become more productive is restraining new hiring and 49 percent say that labor costs are a focus for cost control. Still, those companies that are hiring new staff are counting finding new workers who have the specific skills necessary to generate higher productivity. Yet, this goal will be a hard one to achieve as 47 percent of the surveyed executives saying that it is difficult to find employees with the skills and education necessary to become productive immediately.
This last finding is backed up by a new survey of 316 North American companies, including 218 U.S. companies, conducted by Towers Watson and WorldatWork. This study found that 59 percent of the surveyed companies are having problems attracting critical-skill employees this year and 42 percent also reported difficulty attracting top-performing employees. Adding to the challenge is retention of these key employees. This survey found that 36 percent of companies are having difficulty retaining critical-skill employees, which represent an increase from 31 percent in 2010 and more than double the 16 percent reporting retention problems in 2009.