For many businesses, 2022 was a year of global disruption, sudden inflation, price rises, talent shortages, and adapting to new ways of working.
But while a new year often connotes a new start, businesses will continue to face many of the challenges they’ve faced this year throughout 2023.
This year at Vistage we released our Decision Factors: Unleashing Workforce Productivity, research paper which explores some of the key challenges businesses face next year – and suggests some of the best practices and considerations they should take on board to face them.
Here are the top four consideration for business leaders ahead of the New Year:
1. The economy
CEO confidence has plummeted this year due to our volatile and uncertain economic landscape. In fact, in Q2, our CEO Confidence Index saw a 16.8-point drop from Q1.
Throughout 2022, our index also saw economic expectations plummet, plans for expansion and financial prospects sinking, and factors like revenue and profitability projections having an impact on overall confidence. This hints at a rapid slowdown of economic activity and slower growth overall.
Key considerations for business around the economy in 2023 are:
- Inflation will continue to impact daily life. Business leaders should consider how best to mitigate the effects of inflation on their business and workforce.
- Interest rates will reset at a higher level. This will impact everything from the cost of capital to credit card debt.
- Unfortunately, the high energy costs we’re seeing towards the end of 2022 will not subside in 2023. Business leaders should evaluate where they can modify energy usage to reduce costs and adopt more sustainable practices.
- The current talent shortage is leading to an empowered workforce that’s redefining work and the workplace. Businesses should evaluate their offering.
2. The war for talent
As well as economic uncertainty and slower growth overall, businesses have continued to experience significant talent shortages throughout 2022.
In fact, our Q2 confidence index found that hiring and retention was the most common business challenge this year. While a high 69% of CEOs reported that challenges around hiring impacted their ability to operate at full capacity.
With so many businesses struggling to hire and retain the right talent, 48% of CEOs have refined their recruitment strategies to increase their chances of success. Here are some best practices for your recruitment strategy in 2022.
- Introducing dedicated positions for hiring and using recruiting firms for executives and managers.
- Reviewing the process and timing and using flexible options as a differentiator.
- Making hiring an issue for the entire organisation and offering incentives for referrals.
- Investing in apprenticeship programmes and looking to other countries for low-cost employment.
3. Customer behaviour
Observing customer purchasing behaviour gives you a good idea of how confident they feel about their business prospects.
And, while the pandemic certainly had a negative impact on buyer behaviour, buyers grew even more cautious with their purchasing in 2022. This year, we saw fewer new prospects, slowing sales cycles, and smaller orders. 41% of CEOs say the sudden rise of inflation resulted in this change in buyer behaviour.
Key considerations for business leaders going into 2023 include:
- More buyers are searching for and purchasing products online. Companies should rethink their digital platforms to meet the demand for digital interactions.
- Virtual selling is replacing face-to-face. Customers now expect salespeople to have advanced technological skills and deep knowledge of products, markets, and customers.
- Sales cycles will slow further due to more conservative buying approaches.
- Customers will look to establish and maintain stronger relationships with suppliers. More sophisticated digital interactions are key to achieving this.
4. Changes in leadership
No role experienced more significant change as a result of the pandemic than the frontline manager – or boss. And that change is here to stay in 2022 and beyond.
The shift from traditional, Monday-to-Friday, 9-to-5, office-based work to a more flexible, hybrid workplace has meant that frontline managers now need to connect digitally with remote employees, offer better clarity around tasks and delivery, and maximise in-office days.
Our Confidence Index from Q1 this year found that 69% of small- and medium-sized businesses invested in developing their leaders.
Here are three key responsibilities for leaders in 2023:
- Leadership: Connecting teams to business goals, setting the vision and direction, driving business culture, and rewarding employees for good performance.
- Coaching: Empowering employees to excel, motivating and inspiring people to do their best work, working with them to develop their skill sets, and setting goals for improvement.
- Management: Clearly defining roles and responsibilities, setting expectations, and evaluating performance and quality of work.
Vistage is the world’s leading business performance and leadership advancement organisation for small and medium sized businesses. For more information visit www.Vistage.co.uk.