Economic optimism ‘not translating into good news for staff’

Business Environment 29 April

A buoyant economy doesn’t necessarily mean impending salary rises and expanding workforces.

That’s the message from the Chartered Management Institute (CMI), which has revealed in a new report that controlling costs will be the main priority for many small and medium enterprise (SME) managers in 2014.

While two-thirds of respondents said they were optimistic regarding their prospects for the next 12 months, a similar number admitted that freezes on pay and recruitment were also likely to be on the horizon.

CMI chief executive Anne Francke said that SME leaders were remaining cautious, with many unsure how to reward staff for their loyalty without overstretching themselves.

“This raises a question about how strong economic optimism really is, and if organisations are not investing in developing their teams to build that growth, such optimism could be short-lived,” she said.

One issue highlighted in the survey was whether managers believed they had the right workforce behind them to achieve the growth levels they desired.

Just over half (55 per cent) of respondents said that they felt that they were well-equipped in the personnel department to reach their targets, although two-thirds said they had encountered challenges when it came to recruiting people with the desired level of skill and talent.

As a result, the importance of training and developing the existing workforces of many businesses should be seen as a priority for many SMEs.

Recent research by Zurich Insurance found that another employee-related concern that many business owners were bracing themselves for in the new year was that of staff retention.

The study found that, despite optimism in the economy increasing, firms were worried that they would not be able to offer anything to encourage their best workers not to jump ship for a better offer in 2014 as the jobs market stabilised.

What are your thoughts? Do you think the new year will deliver the positive news that everyone is expecting?

Posted by the Secret Businessman