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Fast-Growing Companies Proud to be Cautious
The CEOs of America's fastest growing private companies expect a significant increase in productivity over the next 12 months, but regard their caution in spending on hiring and innovation as an important factor in their future success, according to PricewaterhouseCoopers' 'Trendsetter Barometer'.
Workforce efficiencies and technology improvements are the two most frequently cited drivers for anticipated growth in 2005, but many also feel that their restraint - avoiding premature spend on hiring or new technology - is a key factor.
Twenty-one percent of surveyed CEOs expect their company's productivity to be 'much greater' in 2005 and a further 39% 'somewhat greater'. Just over a third (37%) expect it to stay about the same and 2% expect it to be lower. If the expectations of respondents prove accurate, the overall increase across all surveyed companies will be 8.3%.
Almost all CEOs who expect higher productivity (98%) say their workforce's performance and efficiency is definitely a contributing factor. IT / technology improvements are next (78%) but the next two biggest factors are both instances of restraint on the part of management: not jumping the gun on hiring was cited by 73%; and limiting expensive or risky new business initiatives, by 58%.
According to PwC's Jay Mattie, 'These business leaders have a track record of faster growth, and they are wisely pacing their new hiring and investments to lag, rather than lead their sales momentum'.
Other contributors include non-worker efficiencies such as lower cost of goods and materials (cited by 34%), and lower staff support (29%). Use of domestic outsourcing suppliers was noted by 22%; but relatively few cited outsourcing offshore (9%), or to their own workers in subsidiaries abroad (6%).
Eighty-two percent of these fast-growing companies expect a net increase in hiring in the next year (although the general figure for all businesses is also high at 73%). Surveyed companies attribute 10.1% of their revenues to the Internet, versus 7.2% for other companies.
The 'Trendsetter Barometer' is developed and compiled with assistance from researchers BSI Global Research, Inc. 364 CEOs of privately held product and service companies were interviewed - companies were identified in the media as the fastest growing US businesses over the last five years, and range in size from approximately $5 million to $150 million in revenue / sales. PricewaterhouseCoopers' home page is at www.pwc.com
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