Midsize US companies struggle to retain employees


By Sabine Vollmer

The US had more open jobs in April than at any time in the past 15 years, according to the most recent data from the US Bureau of Labor Statistics. The shortage of talent was perhaps most evident at midsize US companies.

That’s according to a new report from Deloitte. About the time the labour data were being collected, Deloitte interviewed more than 500 executives at midsize US companies, which Deloitte defines as those generating revenue of $50 million to $1 billion.

Sixty-three per cent of executives said they noticed a rise in the number of employees who were choosing to leave the company and take a job elsewhere. In a similar survey three years earlier, just 43% of respondents reported higher attrition.

To tackle attrition in a blossoming economy, midsize companies plan to invest more in cloud computing, data analytics, and mobile technology; raise worker compensation; and boost training.

Investment wish list

The cost of emerging technologies has become affordable for midsize companies, offering them “an opportunity to be on a level playing field with larger companies,” said Roger Nanney, national managing partner of Deloitte Growth Enterprise Services.

Fifty-eight per cent of respondents say they will likely invest in cloud computing or software as a service in the next year, up from 46% in the fall of 2014. That topped the investment wish list.

Data analytics or business intelligence technology came in second, with 53% of respondents considering investments in the next year, up from 40% last fall. Midsize companies also plan to invest more in the automation of business processes, enterprise application suites, and robotics (43% of respondents).

The investment plans are a positive signal of the potential growth of midsize companies, Nanney said, because emerging technologies can boost productivity.

The majority of midsize US companies are either keeping other capital investments stable or holding off on them, at least for the time being, the Deloitte survey suggested. But about half of the respondents said they plan to boost capital spending in the coming 12 months, up from 36% a year ago.

Growth strategies among midsize companies are mostly organic, according to survey results. Over the next year, 36% of respondents expect their companies to grow in existing markets, 15% plan to develop new products and services, and 13% anticipate growth through strategic alliances and collaborations.

International markets also play a significant part in midsize companies’ growth strategies. In the survey, 70% of respondents said their companies generate revenue outside of the US.

Staying competitive

To sustain the growth and address talent shortages, 32% of the executives expect their companies to increase compensation in the year ahead. Fifty-two per cent plan to invest heavily in employee training.

To assess their competitiveness in a tight labour market, Deloitte suggested executives at midsize companies ask the following questions:

  • Are you focused on employee retention by offering competitive compensation and challenging training opportunities? Are you paying attention to voluntary attrition? The tacit knowledge your employees have is valuable, and the cost to replace them can be high.
  • If your company provides products or services related to capital expenditures, do you have a strategy in place to address customers’ pausing capital spending? Do market conditions provide potential benefits if you are contemplating a capital expenditure?
  • Are there merger and acquisition opportunities worth considering? Understand the valuation of your enterprise, and monitor M&A conditions in your industry.
  • Do you have a solid understanding of the implications and benefits of cloud computing and data analytics?
  • Do you communicate again and again to drive engagement and build trust throughout your organisation?

Related CGMA Magazine content:

How to Link Employee Training to Corporate Performance”: Aligning employee skills development to corporate performance targets and establishing quantitative targets makes training programmes more effective, a McKinsey survey suggests. Companies can accomplish this by following three steps.

Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.