Small Businesses Standing Pat Awaiting Election and Fiscal Cliff Resolution, According to Insperity Survey
Small business owners are awaiting encouraging economic signs that justify increased business activity, according to the most recent Business Confidence Survey released today by Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America's best businesses. In support of this status quo position, when asked how they are managing the number of company employees, 28 percent said they are adding new positions, unchanged from the last quarter; 63 percent are maintaining current staffing levels, versus 65 percent in July; and 9 percent are laying off employees, up from 7 percent in the prior quarter.
Insperity also announced compensation metrics from its base of more than 5,700 small and medium-sized Workforce OptimizationTM clients. Compared to the 2011 third quarter data, average compensation is up 1.6 percent, and bonuses are up 0.4 percent. Average commissions received by worksite employees reflected an increase of 1.6 percent versus a 5.2 percent increase in the second quarter of 2012. Overtime pay is still low at 9.5 percent of regular pay, under the 10 percent level that generally indicates a need for additional employees, but up from 9.3 percent last quarter and 8.6 percent in the first quarter of 2012.
In the survey, 71 percent of owners and managers of small and medium-sized businesses said that they are either meeting or exceeding their 2012 performance plans, very similar to 69 percent in the last survey; meanwhile, 29 percent report that they are doing worse than expected, close to the 31 percent response in July, but still a notable increase from 24 percent in the April survey. More than 40 percent are unsure about the timing of an economic rebound compared to 45 percent in the July survey.
“With the exception of plans to increase employee compensation in the next few months, business owners are standing firm awaiting the results of the 2012 election,” said Paul J. Sarvadi, Insperity's chairman and chief executive officer. “Importantly, concerns about the impending fiscal cliff and its wide-ranging economic effects were certainly evident in answers to our open-ended survey questions.”
The economy once again leads the list of short-term concerns of business owners at 72 percent versus 74 percent last July; government health care reform remains second on the list at 52 percent, followed by rising health care costs at 50 percent versus 46 percent previously; and hiring the right people rose to fourth place at 42 percent.
For the list of longer-term concerns, 69 percent indicate they are either very concerned or have elevated concerns about the federal deficit and the total national debt; 66 percent rank the economy as their second concern; followed by potential tax increases at 65 percent and government expansion and its effect on business at 64 percent.
When asked about their pipelines for new business through March 2013, 52 percent of survey respondents expect a sales increase, nearly the same as the 51 percent reported in July; 34 percent anticipate no change; 7 percent predict decreasing sales, down from 9 percent last quarter; and 7 percent are unsure, versus 5 percent in July.
The survey results show that 53 percent of participants expect to maintain employee compensation at current levels through March 2013, versus 66 percent in July; 29 percent plan increases, a significant increase from 19 percent in the last survey; 3 percent expect decreases; and 15 percent are unsure.
Concerning their current profit-generating activities, 67 percent listed both increased service to existing clients and selling new accounts as the leading strategies. This was followed by 44 percent saying they were adding new services or products; and 30 percent listing negotiating with vendors.
Insperity conducted the survey Oct. 9-15, 2012, of chief executive officers, chief financial officers and other executives in a variety of industries from its more than 5,700 Workforce OptimizationTM clients throughout the United States. The overall sampling error of the national survey is +/- 4.5 percent at the 95 percent confidence level.
Insperity, a trusted advisor to America's best businesses for more than 26 years, provides an array of human resources and business solutions designed to help improve business performance. InsperityTM Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2011 revenues of $2 billion, Insperity operates in 56 offices throughout the United States. For more information, visit http://www.insperity.com.
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