Small business owners are returning to more guarded management techniques, as shown by a decline in the rate of new hires and an increase in those maintaining current compensation levels.
The most recent Business Confidence Survey from human resource technology provider Insperity Inc. found that slightly more than 26 percent of small business respondents said they are adding employees, down from 40 percent in the July survey, and under the 28 percent level from October 2012.
In addition, 68 percent are maintaining current staffing levels versus 56 percent in July and 63 percent last fall. Five percent are laying off employees, slightly above last quarter's four percent, but down from nine percent this time last year.
Insperity also announced compensation metrics from its base of 5,500 small and medium-sized Workforce Optimization clients. Compared to the 2012 third-quarter data, average compensation is up 2.9 percent and bonuses are down 11.7 percent. Average commissions received by worksite employees reflected an increase of 4.0 percent versus a 1.5 percent increase in the third quarter of 2012. Overtime pay was 9.7 percent of regular pay, below the 10 percent level that generally indicates a need for additional employees, but up slightly from 9.4 percent in the third quarter of 2012.
In the survey, 68 percent of respondents said they are either meeting or exceeding their 2013 performance plans, down from 72 percent in the last survey; meanwhile, 32 percent report that they are doing worse than expected, up from 28 percent in July. Concerning the timing of an economic rebound, 26 percent think one is currently in process versus 34 percent in July; 26 percent expect a rebound in the first quarter of 2014 or later; and 48 percent said they are unsure, up significantly from 38 percent last quarter.
"Survey responses indicate that business owners are returning to more cautious management strategies to safely execute their short-term and long-term business plans," said Insperity chairman and CEO Paul J. Sarvadi in a statement. "Regardless of industry, businesses continue to balance the current challenging risk-reward ratio in creative ways to serve clients and grow profits."
The economy again leads the list of short-term concerns of business owners, listed by 67 percent of survey respondents compared to 50 percent in July and 72 percent last October. Government health care reform ranked second at 55 percent, followed by rising health care costs at 53 percent, and controlling overall operating costs at 39 percent.
Regarding longer-term concerns, 64 percent of respondents indicated they are either very concerned or have elevated concerns about the federal deficit and total national debt; 63 percent pointed to the economy, a large increase from 46 percent in July but slightly lower than the 66 percent reported last October; 60 percent listed government expansion and its effect on business; and potential tax increases ranked fourth at 55 percent.
When asked about their pipelines for new business through the remainder of 2013, 45 percent of survey respondents expect sales to increase, down from 55 percent in July and 59 percent in April; 36 percent anticipate no change versus 29 percent last quarter; 10 percent predict decreasing sales and eight percent are unsure, down from nine percent in the previous survey.
The survey results showed that 71 percent of participants expect to maintain employee compensation at current levels through 2013, a sharp increase over 58 percent in July; 17 percent plan increases, down significantly from 29 percent last quarter; one percent expect decreases; and 11 percent are unsure.
Concerning their current profit-generating activities, 68 percent list selling new accounts, and 62 percent cite increased service to existing clients. This was followed by 46 percent saying they were adding new services or products, and 28 percent listing investing in new improvements.
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