Business Confidence Index 8: Just the Job


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The latest Business Confidence Index shows that although business confidence shows only marginal
progress, businesses globally plan to hire more sales and marketing staff in their bid for growth.

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Business Confidence Index 8: Just the Job

  1. 1. Just the jobAlthough business confidence shows only marginalprogress, businesses globally plan to hire moresales and marketing staff in their bid for growthRegus Business Confidence Index – Issue8 – April 2013
  2. 2. ContentsManagement Summary............................................................................................2Key Findings and Statistics...........................................................................................3Confidence and business size correlation.....................................................................3Introduction...............................................................................................................4The Regus Business Confidence Index..................................................................6The Results................................................................................................................7The Regus BCI by country............................................................................................9New blood for a fresh start.........................................................................................10Selling their way out of a recession............................................................................. 11Business size and confidence correlation...................................................................12Conclusion...............................................................................................................13Country Highlights..................................................................................................14Methodology............................................................................................................15About Regus............................................................................................................16 1
  3. 3. Management Summary 1 Regus, Walking the tightrope,Although business confidence has yet to show April 2012significant progress, climbing only three points sinceOctober 2012, businesses around the world aresetting their sights on growth, and report intentions toincrease headcount, especially in sales and marketing.In other words, businesses are refusing tobe disheartened by the extended economicslowdown and intend to trade their way backinto growth. Smaller firms – so often the engineof economic recovery and growth – stand outfor their very strong intentions to hire. Given thisprojected investment in people, it is vital that otheroverheads remain flexible and scalable to alignwith growth rates achieved.The latest Regus Business Confidence Index (BCI),based on the views of over 26,000 senior businesspeople globally, reveals business confidence levelshave yet to show signs of significant growth. Inparticular, business confidence in most matureeconomies has stabilised or picked up slightly.Emerging and high growth economies, that hadbeen displaying very high levels of confidence,have shown little progress, with the exceptions ofMexico and China that seem to be regaining theirmomentum once more. Companies reporting profitor revenue growth have slipped back a few pointsshowing that confidence is based on outlook ratherthan performance.However, the majority of respondents reportthat their company will be increasing rather thandecreasing headcount and fully 25% say they will Given that smaller businesses are particularly likelyexpand the workforce by over five percent. This is to be contributing to the creation of new jobs ita promising sign for the global economy and for is important that they are able to remain nimbleemployment prospects. It is also an important factor and responsive to market changes. By opting forfor government treasury officials as income tax is flexible working they will be better able to expanda disproportionately significant contributor to tax and retract from markets without heavy penalties,revenues. In particular, businesses will be hiring more increasing their staff numbers and focusing effortsstaff in the sales and marketing, operations and IT on acquisition rather than expensive and lengthydepartments. As businesses eye growth they are leasing arrangements, one of the major causes ofclearly counting on new talent and their sales and corporate distress during the downturn.1marketing teams to lead them out of the downturn. 2
  4. 4. Key Findings and Statistics • Fully 25% plan to increase staff numbers by over five percent, highlighting a positive turn for• The latest Regus BCI reveals that global the global job market. confidence has made only slight progress compared to six months ago; climbing just • The areas businesses are most likely to three points from 111 to 114 since October increase headcount in are: 2012 and broadly flat since October 2011 -- Sales & marketing (57%)• Revenue and profit growth also remain largely -- Operations (40%) unchanged compared to October 2012 with -- IT (19%) 39% of businesses reporting profit growth compared to 43% in October, and 49% • The fact that more than half of businesses plan reporting revenue growth instead of 52% six to bolster their sales and marketing department months before. is a clear indication that businesses globally are bullishly looking to trade their way out of the• Emerging markets continue to show that they downturn and will be relying on new talent to are suffering from the effects of a slow global do that. economy, although China is looking significantly more confident. Confidence and business• Despite this knock on effect, growth economies size correlation continue to report higher average confidence • Large (124) and medium (123) businesses rates than mature economies at 126 Index continue to remain more confident in their points compared to just 104. outlook than small firms (109).• Although companies reporting revenue and • However, small businesses (28%) are more profit growth have dipped since October 2012 likely to be hiring over 5% of new staff than in both emerging and developed economies, larger businesses (16%) confirming their major developing economies continued to be more role as providers of employment. likely to have experienced growth than their more mature counterparts. • This calls for governments globally to act now to support small businesses’ contribution to• 58% of companies in emerging economies growth and employment. report revenue increase compared to only 44% in developed economies and 47% profit growth • Small businesses are marginally less likely to compared to 35% in mature economies. hire more sales and marketing personnel (56%) than large firms (58%), although this remains• Internationally trading firms confirm that they the top area for investment in new talent. are performing better with 48% reporting growing profits compared to 35% of • Instead, small businesses stand out for a domestically trading only. More exporting higher than average intention to hire more businesses report increased revenues (55%) administrative staff (17%) than large companies than domestically focused (45%). (11%) possibly to help them manage their hoped for growth• Despite this, a positive sign emerges with 85% of businesses reporting they plan to increase headcount or maintain it unchanged. 3
  5. 5. IntroductionThe recovery expected to start in 2013 has beendescribed as ‘fragile and timid’ at the 43rd WorldEconomic Annual Meeting in Davos in January,and the global economy is expected to growa tentative 3.5%. Although mature economies 2generally do not appear to be out of the woodsjust yet, some other geographical areas wereidentified as particularly strong drivers of futuregrowth, these are: Japan, China and Africa. 3In particular, in Japan Shinzo Abe’s ‘Abe-nomics’, African exports, combined with mining strikes, 2 The World Economic Foum, The Global Economy in 2013:set to drive up inflation through quantitative easing contracted South African growth to 2.5% in 2012.8 “Fragile and Timid Recovery”, 26th January 2013and activate new fiscal stimulus, are regarded as 3 Ibid.a possible solution to Japan’s 15 year deflation All eyes are of course on the USA as changes 4 The World Economic Foum,pattern and a way to accelerate growth.4 The in the world’s largest economy cannot but set The Global Economy in 2013: “Fragile and Timid off a ripple effect among its trading partnerspositive effects on confidence are already manifest Recovery”, 26th January across the globe. In March, after a deal on deficit 2013; The Financial Times,with recent survey showing that household ‘Abe-nomics’ not enough to reduction failed to be made between Democrats rescue Japan, 28th Februaryspending rose 2.4% year –on-year in January and 2013 and Republicans, President Obama signed offsales of luxury items like watches and jewels were 5 The Wall Street Journal, $85bn in government cuts which he fears may Inflation Expectations Mayup 6.8%.5 be rising in Japan, 4th March mean 750,000 jobs could be lost and half a 2013After a slowdown lasting seven quarters, the percentage point knocked off America’s economic 6 The World Economic Foum, The Global Economy in 2013:Chinese economy is also starting to look bullish growth this year. Currently the impact of so-called “Fragile and Timid Recovery”, 26th January 2013; Theagain with the Chinese central bank expecting sequestration has been mainly felt by Defence, but Economist, Served in China: Services are poised to be8% growth for 2013 as domestic consumption as cuts reach $1.2tn over ten years it is likely many ome the country’s biggestincreases and the services sector gains more other departments will begin to feel the squeeze sector, 23rd February 2012 7 The Wall Street Journal,momentum. National statistics report that in too.9 Although the President warns that the middle Inflation Expectations May2012 the Chinese services industry accounted class will be heavily affected by these cuts, at the be rising in Japan, 4th March 2013for 44.6% of GDP growth, just one point behind start of 2013 many indicators were positive for the 8 Bloomberg, South Africanindustry which has so far represented the main USA economy: sales of previously owned homes Export Slump Curbs Economic Growth, 27thgrowth driver.6 grew 9% and factory orders increased in January10 February 2013 while car sales grew in February.11 9 The Guardian, US faces huge job losses as ObamaOverall The World Economic Forum reports a orders $85bn cuts, 2ndmuch higher expected growth rate for emerging In Canada, which exports around 75% of March 2013 10 CNN Money, Housingeconomies at 5.5%, than for the developed products merchandise to the United States, rebound continues withnations at 1.5%, with the African continent and relies for around 25% of total financing from strong sales and price gains, 21st February 2013;expected to grow 5.7%.7 Nevertheless, slow the USA, economic activity is expected to pick Reuters, Factory Orders Fly Even as Defense in thedemand in Europe and the USA continues to up in the second semester of 2013 in spite of Dumps, 27th February 2013affect even developing economies. South Africa the ‘sequester’. In particular, more stable global 11 CNN money, Strong February auto salesfor example has been forced to downsize its economic conditions are expected to trigger capital reported, 1st March 2013previsions for 2013 as a slump in demand from spending.12 Similarly in Mexico, manufacturing 12 IMF Survey magazine, Canada: Growth Set toEurope, representing the market for a fifth of South output was affected by fiscal uncertainty in the Strengthen in Second Half of 2013, 14th February 2013 4
  6. 6. USA where Mexico sends 80% of its exports. 1.4% growth in the Eurozone.17 Employment inHowever, the central bank estimates Mexico’s GDP the area looks equally lacklustre with 17-countrywill expand between 3% and 4% in 2013.13 block unemployment in reaching 11% in January according to Eurostat, and accounting for aroundIn the UK, the British key services economy, which 19 million people in the euro zone and more thanaccounts for 75% of Britain’s economic output, 26 million in the European Union unemployed ingrew faster than expected in February,14 pushing January 2013.18the threat of a triple-dip recession a little furtherfrom the horizon . In fact, it was feared that a Surprisingly perhaps, even in emerging economies 13 The Wall Street Journal, Mexico’s Economy Postsfurther dip in output in the first quarter of 2013 the slowdown has cost jobs. Although India Steady Growth in Fourth Quarter, 18th February 2013could drive the country into a triple-dip recession.15 has continued to grow, the slower pace of 14 CIPS/Markit, UK servicesNevertheless, a recent report by Lloyds Banking development has meant that between 2005 and PMI, Business activity increases for secondGroup raises hopes that oil and gas firms may 2010 5 million jobs were lost.19 In Brazil, much consecutive month, 05 March 2013be set to create up to 34,000 jobs in the next like other emerging economies, 2012 saw a 15 The Guardian, UK servicestwo years and the Recruitment and Employment significant slowdown in growth reaching slowest sector growth eases triple- dip recession fears, TuesdayConfederation reports that the seasonally adjusted pace in three years. According to the Brazilian 5th March 2013index of permanent staff placements presented Institute of Geography and Statistics (IBGE), GDP 16 Reuters, UK hiring pick-up adds to signs of economicsteady growth in January 2013.16 increased only 0.9% in spite of efforts to stimulate recovery, 8th February 2013 the economy with tax cuts and low interest rates. 17 Sky News, EurozoneThe Eurozone economy continues to look bleak In particular, consumer spending is seen as Economy Will Shrink Again, Warns EU, 22nd Februarywith the European Commission expecting a 0.3% unable to continue sustaining the same levels of 2013contraction in 2013 following a 0.6% reduction in rapid growth as Brazilian households are heavily 18 The New York Times, Euro Zone Reports Record2012. Within the Eurozone, Germany’s economy in debt.20 Joblessness and Low Inflation, 1st March 2013is expected to grow by 0.5% this year, and France 19 India Today, Amid economicby 0.1%.This, however, compares favourably slowdown, India lost 5 million jobs during 2005-2010, 5thwith the Italian and Spanish economies which are March 2013expected to contract 1% and 1.4% respectively. 20 BBC News, Brazil economy grew 0.9% in 2012, 1st2014 should mark a more positive year with March 2013 5
  7. 7. The Regus BusinessConfidence IndexEvery six months the Regus BusinessConfidence Index (BCI) endeavours to provide anup-to-the-minute picture of business confidencearound the globe and overall business outlook.The index is calculated on a basis of aggregate This, however, follows twelve months ofof positive statements combining year-to-date contracted index results and should be seen asrevenue and profit trends with forward views on sign that conditions are stabilising as shown inexpected revenue growth and the timing of the full Figure 1.momentum of economic recovery. The benchmark Between April and September 2011 the index hadaverage for the Index was set at 100 in September contracted 11 points, then a further point between2009 in the first publicly divulged edition. September 2011 and April 2012 and finally twoNo significant variation was noted between points between April and September 2012.October 2012 and April 2013 as the index grew amodest 3 points overall from 111 to 114. Figure 1: Variation in global index values October 2009 - April 2013 130 125 120 115 110 105 100 95 90 85 80 Oct Apr Oct Apr Oct Apr Oct Apr 2009 2010 2011 2012 6
  8. 8. The ResultsIn an uncertain global Figure 2: Proportion of companies reporting revenue growtheconomic environment, 0% 10% 20% 30% 40% 50% 60% 70%the proportion of global Mexicobusinesses reporting Indiarevenue growth has Germanyremained largely Brazil South Africaunchanged compared to USAOctober 2012. (Figure 2) China CanadaWhile companies reporting revenue increase have Global Averagedipped slightly in most economies some emerging Francemarkets such as Mexico and South Africa stand UKout for bucking the trend. China and Brazil on Netherlandsthe other hand have taken a significant dive on Australiathe back of the global economy. Australian and BelgiumBelgian businesses also are much less likely to April 2013report growing revenues. Japan October 2012As Figure 3 shows, profit trends similarly reveala slight contraction from 43% in October 2012to 39% in April 2013. Mexico, South Africa morebuck the trend with more businesses reporting Figure 3: Proportion of companies reporting profit growthincreased profits than six months ago, while the 0% 10% 20% 30% 40% 50% 60% 70%USA and Canada remain stable. The Netherlands,where six months ago the picture had looked Indiasignificantly gloomier than elsewhere around the Brazilglobe, appears to be returning to the global norm. GermanyThe biggest losers are Australia and Belgium Mexicowhere the proportion of profit reporting companies Canadahas contracted significantly. USAAlthough the global outlook still looks muted, with South Africamature economies struggling to avoid sinking Chinaback into recession, and emerging economies Global Averagerecovering from the knock on effect of a globalslowdown, indicators are also reporting positive Netherlandssigns. In particular, a high proportion of firms in UKdeveloping economies continue to report revenue Franceand profit growth. Exporting businesses also Australiaconfirm their role as economic drivers with a Belgiumhigher than average proportion of firms reporting April 2013positive revenue and profit performance. Japan October 2012 7
  9. 9. Growth economies continue to stand out for compared to almost half (47%) in emerginghigher performance although the proportions of economies.businesses that have experienced revenue and This latest iteration of the Regus Businessprofit growth or both has dropped since October Confidence index also confirms previous reports2012 (Figure 4). 58% of businesses in emerging that internationally trading firms are performingmarkets achieved revenue growth compared to better than those focusing solely in domesticjust over two fifths (44%) in mature economies markets (Figure 5).21and firms reporting risen profits followed the sametrend with just over a third (35%) in developed, Figure 4: Businesses in growth and mature economies reporting profit and/or revenue growth 0% 10% 20% 30% 40% 50% 60% Growth Mature Revenues increased Profits increased Figure 5: Mainly domestically/internationally trading companies reporting revenue and/or profit growth 0% 10% 20% 30% 40% 50% 60% Revenues Profits Internationally trading Domestically trading 21 Regus, Breaking new ground, January 2013 8
  10. 10. The Regus BCI by countryGrowth economies continue to record above developed economies while Belgium, down sevenaverage levels of confidence with India, Brazil and points on six months ago, France and the UKMexico in the lead. Germany and Canada stand remain lacklustre.out for their high levels of confidence among Figure 6: The Regus Business Confidence Index April 2013 0 20 40 60 80 100 120 140 India Brazil Mexico Germany Canada China South Africa Global Average USA Australia Japan Netherlands UK France BelgiumFigure 7: The Regus Business Confidence Index October 2012-April 2013 October 2012 April 2013 Variation Australia 116 105 -11 Belgium 96 89 -7 Brazil 133 136 3 Canada 122 123 1 China 110 123 13 Germany 124 130 6 France 95 91 -4 Global Average 111 114 3 India 141 137 -4 Japan 93 101 8 Mexico 122 135 13 Netherlands 89 95 6 S. Africa 116 121 5 UK 94 94 0 USA 107 111 4 9
  11. 11. New blood for a fresh startAlthough performance is still slow to improve, in are particularly likely to boost their employeeorder to gain some further insight in to businesses’ numbers significantly, contributing to developingprospects for the coming twelve months, the a growing middle class and domestic demand forsurvey also enquired as to their hiring intentions. products and services in these countries.These are an important indication of what lies Even where intentions to hire an additional 5%ahead for the economy and can be related to the or over of staff are lower than average such asintention the most of new opportunities and try to Belgium, Japan and the Netherlands, we still findgrasp a change in mood. that more than one in ten companies has its sightsFully 85% of businesses globally are planning set on expanding workforce. Of course businessesto increase headcount or maintain it the same. will then have to find flexible and scalable solutionsIn particular, a quarter are planning to make to accommodate increasing workforce withoutsignificant additions to their personnel by adding falling into the trap of lengthy and expensiveover 5% to their workforce as shown by Figure 8. leasing arrangements which 45% of businessesThis is a strikingly positive prospect for the previously reported were one of the biggest factorslabour market as a whole and a clear indication of corporate distress during the downturn.22 Thisthat businesses want to be prepared to grasp time round, firms will be opting for more flexibleopportunities for growth which they are expecting approaches that allow them to rapidly retrench orto arise in the next year. Growth economies such grow to accommodate new talent depending onas India, Brazil, South Africa, China and Mexico market response. Figure 8: Companies that plan to increase headcount by 5% or more 0% 5% 10% 15% 20% 25% 30% 35% 40% India Brazil South Africa China Australia Mexico Global Average Germany UK Canada USA France Netherlands Japan Belgium 22 Regus, Walking the tightrope, April 2012 10
  12. 12. Selling their way out of a recession Figure 9: Departments global business expects firms to expandAsked to identify which departments or areas (golbal average)of business they believed companies in their 0% 10% 20% 30% 40% 50% 60%sector would be most likely to hire in, morethan half of respondents selected sales and Sales & Marketingmarketing highlighting that they intend to opt formore salesmanship to help steer them out of arecession. After sales and marketing, respondents Operationsalso highlighted operations, as additionalbusinesses won by these departments will needto managed, and IT. While this spells good news ITfor sales and marketing professionals, HR wasthe department businesses were least likely tobe hiring in (5%) suggesting businesses feel they Adminalready have enough HR resource to handle thisnew hiring spree, or that they plan to carry out theselection process through outsourcing or non- Financespecialist members of staff (Figure 9).Businesses in emerging economies were the HRmost likely to believe that sales and marketingjobs would increase with China, India and Mexicotaking the lead as shown by Figure 10. Japanesebusinesses also show bullishness as 65% believethat sales and marketing staff will be increased Figure 10: Respondents expecting companies in their sector toin their sector. Belgian companies are the least expand sales and marketinglikely to hire new sales & marketing staff (48%), 0% 10% 20% 30% 40% 50% 60% 70% 80%but among the most likely to increase their adminstaff (22%), while Australian businesses are almost Chinaequally divided between new operational staff India(48%) and sales (50%). Mexico Japan Brazil Global Average South Africa Germany France USA Netherlands Canada UK Australia Belgium 11
  13. 13. Business size and confidence Figure 11: The Regus Business Confidence Index by companycorrelation size October 2012-April 2013Once again the Regus BCI finds that smaller 95 100 105 110 115 120 125businesses are less confident than their largercounterparts. Small and medium businesses have April 2013 Smallcrept up 2 index points since October 2012, while October 2012large firms have grown 3 points (Figure 11).Small businesses are less likely to report Mediumincreased revenues (45%) than medium (58%)and large firms (60%) and the same holds truefor profit growth. Only just over a third of smallcompanies (36%) reported profit growth in the Largepast twelve months compared to half of largebusinesses. However, they are more bullish in theirexpectations for revenues to rise in the next twelvemonths (76%) than larger businesses (72%). Figure 12: Plans to increase headcount by company sizeSmaller businesses reveal more of their fighting 0% 5% 10% 15% 20% 25% 30%spirit in the fact that they will be leading hiring inthe next year. 28% of SMEs will be hiring morethan 5% new staff compared to only 16% of Smalllarge firms where overall only 74% of businesswill be hiring or maintaining headcount the samecompared to 87% of small firms (Figure 12). All Mediumsizes of business will be investing in sales andmarketing staff, but small companies will alsobe investing in new admin staff (17%) more thanlarger firms (Figure 13). Large Figure 13: Respondents expecting businesses in their sector to increase headcount by company size 54% 55% 56% 57% 58% 59% 60% 61% 62% Small Medium Large 12
  14. 14. ConclusionBusiness confidence globally remains lacklustrewith the effect of reforms in the USA and continuingEurozone instability affecting markets globally.Nevertheless, there are positive signals that Small businesses confirm their key role as driversbusinesses expect improvement even over the of economic growth and employment, but they willnext twelve month period and their intentions to need to ensure that they take the lesson learnedhire new staff are testament to this newly bullish in the recent downturn and avoid lengthy propertyattitude. In particular, as firms report that sales & leases as they look to accommodate new roles are the most likely to be increased, In particular, as internationally trading firms reportit looks as though companies are preparing to better performance than those trading exclusivelytrade their way out of the downturn. domestically, businesses will be taking advantage of solutions that allow them to retrench or expand their sales and marketing efforts in their chosen markets in a flexible manner. 13
  15. 15. Country Highlights Companies in my sector will Intend to increase increase headcount in the salesCountry Revenues rise Profits rise headcount by +5% and marketing departmentsUK 44% 34% 25% 51%USA 53% 45% 21% 53%France 47% 32% 21% 55%Germany 61% 48% 25% 55%India 63% 54% 39% 67%China 52% 42% 30% 71%Belgium 32% 22% 13% 48%Netherlands 43% 37% 19% 52%Brazil 60% 52% 38% 59%South Africa 57% 43% 31% 57%Japan 26% 22% 16% 65%Australia 40% 29% 27% 50%Canada 50% 46% 24% 52%Mexico 63% 47% 26% 66% 14
  16. 16. MethodologyOver 26,000 businessrespondents from over Respondents were asked about profit and revenue90 countries were growth in the past twelve months and about their outlook for the future.interviewed duringJanuary 2013. Respondents were also asked about their businesses’ intention to hire and which departments they believed would see the biggest increase inThese were sourced from Regus’ global contacts headcount in their sector.database of over 1 million business-peopleworldwide which is highly representative of seniormanagers and owners in business across theglobe. Respondents were asked about profit andrevenue growth in the past twelve months andabout their outlook for the future. Respondentswere also asked about their businesses’ intentionto hire and which departments they believedwould see the biggest increase in headcount intheir sector.The survey was managed and administeredby the independent organisation, MindMetre, = 500 15
  17. 17. About RegusRegus is the world’s largest provider of flexible Over 1,300,000 customers a day benefit fromworkplaces, with products and services ranging Regus facilities spread across a global footprintfrom fully equipped offices to professional of 1,500 locations in 600 cities and 99 countries,meeting rooms, business lounges and the which allow individuals and companies to workworld’s largest network of video communication wherever, however and whenever they wantstudios. Regus enables people to work their to. Regus was founded in Brussels, Belgium inway, whether it’s from home, on the road or 1989, is headquartered in Luxembourg and listedfrom an office. Customers such as Google, on the London Stock Exchange.GlaxoSmithKline, and Nokia join hundreds For more information please visit:of thousands of growing small and medium www.regus.combusinesses that benefit from outsourcing theiroffice and workplace needs to Regus, allowingthem to focus on their core activities. 16
  18. 18. Whilst every effort has been taken to verify the accuracy of this information,Regus cannot accept any responsibility or liability for reliance by any person onthis report or any of the information, opinions or conclusions set out in this report.Copyright © 2013. Regus Plc. All rights reserved.