CEO optimism is not a new metric. It is tracked by businesses, economists and pundits as a barometer for decisions on investments in capital expenditures, employment and other expansion-related issues. The basic premise? If you want to know how much will be invested, ask the people making the investments!
The Wall Street Journal CEO Confidence Index is a partnership between WSJ and Vistage, the largest CEO peer-based organization in the world and Arkansas. The WSJ/Vistage CEO Confidence Index is a monthly survey of Vistage members across all industries, with a primary focus on small and medium-sized businesses. Results collected by Vistage members are analyzed by the University of Michigan and broken down into national and regional reports, including the Arkansas, Louisiana and Tennessee regional report.
The most recent regional data finds economic, workforce and wage growth despite an escalating war for talent.
Asked about economic conditions for the past 12 months, 26% of CEOs in the Arkansas regional data reported better economic conditions compared with national results, which showed 21% of CEOs seeing improvement. Over the next 12 months, 23% of Arkansas region CEOs expect better economic conditions, compared with 12% nationwide.
Strong optimism surrounding economic conditions is also driving positive feelings about future increases in sales revenues. Arkansas regional survey data show 72% of CEOs see increasing revenues, with 62% seeing profitability improving.
Both figures are 10% higher than in the national survey.
With CEO optimism stronger in the Arkansas region, the real question is where are these higher profits being invested?
Arkansas regional CEO optimism shows investments in workforce, wages and employee retention are lagging, but becoming much more important in the next 12 months.
Of the Arkansas CEOs surveyed, 62% increased their workforce in the previous 12 months compared with 58% planning increases over the next year. This slight decline is still a robust indicator of optimism and is more in line with 57% of national CEOs increasing workforce.
With increases in the workforce still showing strong momentum, the more interesting investment story lies in how wage growth is categorized by reason: regular cost-of-living increases, competitive wages for hiring, employee retention increases, and performance-based raises.
In regional data, 26% reported regular cost-of-living wage increases compared with only 17% of nationwide CEOs. This is not news in light of recent wage legislation in the state, but is noteworthy when examining the impact of legislation on the CEOs’ ability to use wages as a means to attract and retain talent.
Regional data showed 32% of CEOs increasing wages due to competitive hiring situations compared with a higher 37% nationally, which indicates Arkansas is somewhat lagging in feeling the full effect of the war for talent.
A startling 11% of Arkansas regional CEOs responded with wage increases related to employee retention over the previous 12 months compared with 21% of the national CEOs surveyed.
As our region becomes much more in line with national data, it is reasonable to expect organizations to invest more in employee retention and competitive hiring. This is supported by 44% of CEOs rating training and development as very important, 40% rating employee engagement as very important, and 69% rating a strong culture as very important.
Growth problems are great problems, and Arkansas CEOs see the next 12 months as a great landscape for increased profits so long as they can attract and retain top talent. While legislated wage increases have gotten us to the battlefield, the next 12 months will see the war for talent become much bloodier as organizations implement strategies for attracting, hiring and retaining top talent.
Brad Cousins is the CEO of Brad Cousins & Co., CEO of Ingage Human Capital Strategies and a Vistage Chair in Little Rock. Email him at Brad.Cousins@VistageChair.com.
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