Confidence Index Q4 Results: Retention Takes Front and Centre
Every quarter, we survey more than 200 business leaders across some of the UK’s most top-performing businesses to find out how they feel about the economy, their prospects and business challenges they face.
We call this our Confidence Index—and Q4’s results are now ready to share.
While we’re seeing some negativity around the economy and employee retention, overall CEO confidence has increased slightly this quarter, following a five-quarter decline. Despite that, overall confidence this quarter sits at a substantial 40.6 points lower than it was in Q4 2021.
In this article, we’ll run through some of the Index’s key findings and explore the external factors that might be causing them. To read the full Confidence Index, you can download it here.
Outlook on the Economy worsens
81% of business leaders said that economic conditions worsened throughout 2022, with businesses seeing steep inflation for wages and compensation, energy costs, and prices from vendors. And the stats back that up—GDP declined by 0.3% in Q3 when compared to the previous quarter.
But what’s more worrying is that business leaders aren’t expecting things to improve. More than half expect economic conditions to worsen over the next 12 months, with 8 in 10 expecting further price increases for products and/or services.
Despite this, there are some things to feel positive about.
Almost half (47%) of our respondents say their supply chains are slowly recovering following the disruptions they experienced throughout the pandemic, while many expect sales revenues to increase over the next 12 months. Which brings us to our next section.
Business prospects improve slightly
The impacts of months-long lockdowns, resource scarcities, labour shortages, and the cost-of-living crisis (which has left many consumers with much less disposable income to spend on goods) have undoubtedly had an effect on business sales and profitability since the beginning of 2020.
In December 2022, retail sales volumes fell by 1.0%, while retail sales values (unadjusted for price changes) fell by 1.2%. Compared with February 2020 (pre-pandemic), total retail sales are 13.6% higher in value, but volumes are 1.7% lower.
But businesses are feeling slightly more positive about their prospects in Q4 than they did in Q3. In fact, more than half (53%) expect sales revenues to increase over the next 12 months (compared with 48% in Q3), and 35% expect profitability to improve (versus 30% last quarter).
That’s compared with just 14% that expect sales revenue to decrease and 34% that think profitability will decrease.
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Pressures on retention
This quarter, businesses face a double whammy with unemployment rates plummeting (reaching a low 3.7% in November) and retention becoming harder than ever. This means that not only are there fewer skilled labourers on the market but they’re also more likely to resign to pursue a better offer or alternative career.
This is having a huge impact on businesses—with 60% of business leaders saying that hiring challenges are impacting their ability to operate at full capacity (slightly down from 67% in Q3).
Despite these challenges, more than half of all leaders plan to increase their total number of employees over the next 12 months. 51% are refining their recruitment strategy to help achieve this, while four in five (80%) say that this will focus on retention and employee morale.
Here’s how business leaders plan to improve retention rates:
- 81% are offering better development opportunities for employees
- 74% are offering more flexible working while 70% are offering remote working
- 70% are boosting wages
“It’s all about finding the right balance by investing time and resources into the right talent; but that also can, and should, be counterbalanced by developing your own leadership skills as a CEO – particularly during this difficult economic period.” – Geoff Lawrence, Managing Director (UK), Vistage.
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Category: Business Growth & Strategy