Mid-Market Exec’s Confidence in Economy Highest Since 2011

December 08, 2014, 07:02 AM

Filed Under: Economic Commentary

Related: Deloitte, Survey

Mid-market executives’ confidence in the US economy soars in Deloitte’s Fall 2014 Mid-Market Perspectives report, as 45 percent of executives say they expect the economy to improve in the next 24 months—compared with just 10 percent in Spring 2014. Buoyed by improving economic conditions, the majority of mid-market executives are increasing hiring and capital investments and expect double digit revenue growth.

“We are seeing the mid-market start to open the throttle,” says Roger Nanney, vice chairman, Deloitte LLP and national managing partner of Deloitte Growth Enterprise Services. “After months of cautious optimism, mid-market companies are looking to leverage the improving market conditions to their advantage. They are making investments in areas that will drive and sustain growth, eyeing a variety of expansion opportunities and even considering going public. This is the most optimistic the mid-market has been since we started our survey in 2011.”

Strong fundamentals and improving economic conditions drive optimism and investments
According to the report, mid-market fundamentals are looking increasingly healthy, with 56 percent of executives reporting higher revenues, 48 percent reporting higher profits, and 46 percent reporting higher productivity, compared to 50 percent, 37 percent, and 37 percent, respectively, in Spring 2014.

Stronger results and the perception of improving economic conditions are causing mid-market executives to feel more confident about their future prospects, as a majority (52 percent) anticipate more than 10 percent revenue growth in the next 12 months.

Further, mid-market executives recognize that achieving these growth targets will require investments in strategic areas, such as technology and hiring. As such, 63 percent of respondents say they expect to increase their workforces in the coming year, compared to 43 percent in Spring 2014. Similarly, nearly half (49 percent) of mid-market leaders say they expect an increase in capital investments over the next 12 months, up from 36 percent in Spring 2014.

Faced with talent shortages, mid-market companies adapt...

Nearly two thirds (64 percent) of mid-market executives agree that it is difficult to find new employees with the skills and education to meet the needs of their businesses.

Recognizing the skills shortage, many mid-market companies are taking matters into their own hands and proactively looking for solutions to address the problem. Topping the list is in-house training, which is ranked as the number one solution by 54 percent of executives, followed by global hiring (15 percent) and partnerships with post-secondary institutions (11 percent).

Technology is another key factor in the evolving landscape of talent management: More than three quarters (78 percent) of executives say they use technology as a recruiting tool and about the same amount (77 percent) say they use it for training and development programs.

Finally, responding to the needs of an increasingly mobile and diverse workforce, companies are offering a variety of work-life fit programs, such as flex hours (offered by 58 percent of mid-market companies), wellness/exercise programs (45 percent), and telecommuting (41 percent) to attract and retain talent.

Mid-Market Eyeing M&A and IPOs...

Nearly half (46 percent) of executives say they are likely, or very likely, to make an acquisition in the next 12 months—a significant jump from the 31 percent who held the same view just six months ago. And 28 percent believe their company is likely to be the target of a merger in the next 12 months, compared with 13 percent in Spring 2014.

Meanwhile, mid-market companies are considering taking advantage of the strength of the capital markets, as 18 percent of mid-market executives express interest in an IPO in the coming year, compared with just eight percent in Spring 2014.