What Keeps the Competition Up at Night?

The National Association of Professional Employer Organizations (NAPEO) issued a tracking survey in 2022 asking participants, "What is the number one issue that keeps your competition at night?” The open responses can be grouped as follows:  

• Personnel concerns 
• Business growth concerns 
• Economic/Financial concerns 
• Other concerns 
• Nothing keeps me up at night 

Before addressing these issues in-house, consider outsourcing HR administrative burdens to a professional employer organization (PEO). Outsourcing HR functions have multiple advantages, significantly improving your business operations. 

Personnel Concerns 

Today, the average cost of replacing an employee accounts for approximately 20 percent of the individual's annual salary, according to the Center for American Progress statistics. Employee retention/turnover has become a challenge because of the changing workforce, technology, and side incomes. Therefore, it is no surprise that 10% of employers cite employee retention and turnover as their biggest concerns. 

Acquisition of qualified employees (9%) follows closely with HR-related challenges ranging from training, culture & values, onboarding & offboarding, administration, and structure.  

Business Growth Concerns 

Approaches that worked for you last year may not be viable in the current business world. HR professionals emphasize problem-solving, welcoming change, suitable systems, attitudes, and skills, and keeping up with the market. 

Making a profit (9%) is a top concern for businesses. Challenges such as low prices, hidden costs, inconsistency, fierce competition, and inconsistency may cripple profit-making and subsequent organizational growth. Other business growth concerns include: keeping current clients (6%), growing the business (5%), business closing (3%), and competition (2%).   

Economic/Financial Concerns 

GDP is no longer rising. Wages aren't stagnant, but they are falling behind inflation. Business leaders have only so much agency, power, and responsibility to mitigate these trends' financial/economic effects. The top external relevant economic factors are globalization, competitors, customers, and suppliers. 

The NAPEO survey highlighted that cash flow (5%), payroll (5%), and the declining economy (2%) are the top financial and economic concerns. During an economic crisis, HR's roles include fostering key partnerships, evaluating and addressing talent needs, and managing the mood. By showing their support for an organization and its employees through relevant economic actions, they support a business' mission/vision and employees' wellbeing and health. 

Other Concerns 

The top worry for 9% of companies was the COVID-19 pandemic. It presented severe financial, physical, and mental complications to people worldwide. Businesses have been facing communication, trust, and rapid policy change challenges. Businesses should consider issues such as fast communication and flexibility in adapting to policy changes. 

Inflation and high costs impact HR in several ways. Many companies cannot deploy their return to office (RTO) initiatives from 2020. Leadership and employees have been at odds with deciding whether to continue working from home or return to the office. Businesses also experience budget concerns and compensation and benefit package issues. 

Local, state, and federal governments mandate specific regulations for all businesses. These rules relate to advertising practices, employee practices, environmental concerns, and more. 5% of the business owners see government regulation as their biggest worry. 

Three percent of the respondents in the survey cited supply chain issues as a critical challenge for businesses in 2022. Global supply chains are straining under the unprecedented demand of restrained adequate logistics capacity and unprecedented demand. The average container shipping rates have quadrupled since 2019, causing schedule delays. 

Technology transformations play a pivotal role in business growth. These may include customer-oriented business apps, inventory management systems, data storage, and retrieval. IT professionals are constantly aware of software training difficulties, technical issues, and computer problems. Introducing new solutions and technologies influences the rise and fall of these concerns. 

Other challenges identified in the survey include general security (3%), managing paperwork (2%), and keeping everything running smoothly (2%). 

Nothing Keeps Me Up at Night 

Ten percent of business owners claim that they don't have any particular problem that worries them. As a business grows, entrepreneurs learn to deal with recurring challenges and have the right people to help address new challenges. 

The Lowdown 

Nearly 200,000 SMBS in the United States work with a PEO. They help you address several issues, including acquiring and retaining top talent, improving profitability, growing your business, increasing cash flow, processing payroll, and tax filing. They will also help your organization navigate COVID-19 and government regulations and update you with the latest HR technology. Consider partnering with a professional employer organization before your competition does. To learn more, read our blog Start from Square One: What is a PEO?