Alexandra Levit's Water Cooler Wisdom

Goodbye to My Current WSJ Column, The Workplace Report

All good things must come to an end.

My syndicated WSJ column, The Workplace Report, is coming to an end. The last 20 months have involved an unprecedented amount of change in the workforce and human resources spheres. I'm leaving it with five major predictions for the near future world of work, featuring Workplace Report highlights from the last year and a half of coverage.

The demand for skilled workers will reach a crisis point due to demographic shifts and falling fertility rates. According to Manpower Group’s 2023 Talent Shortage Survey, 77% of global employers say they are already struggling to find workers with the right mix of technical skills and human capabilities.

Talent intelligence, internal talent mobility, skills-based hiring, and the rise of short-term, rapidly assembled teams comprised of a mix of people with different geographies and employment arrangements – including contract workers and the first permanent WFH employees – will alleviate the squeeze.

Generative AI spreads its influence across industries. Generative artificial intelligence is a form of AI capable of generating text, images, or other media by learning the patterns and structure of input training data and then generating new data that has similar characteristics.

In the coming years, we will see expanded accessibility and impact via AI democratization, the integration of AI into a variety of work functions, and numerous use cases developed and publicized. People are unlikely to lose their jobs due to Gen AI alone, but rather to a human who knows how to work with Gen AI. And managers will need a whole new skillset to supervise human workers empowered by AI to make independent decisions.

Organizations are called to step up holistic employee care. In keeping with the longstanding view of employees as commodities, most organizations have been unaccustomed to concerning themselves with aspects of employee lives outside what they did between office walls.

However, as the definition of full-time employment becomes more fluid and mental health and burnout numbers remain higher than pre-pandemic, some (but not all) organizations will answer their employees’ calls for help (retaining  COVID-19-era benefits and adding new ones, managing layoffs effectively, etc.).

Employee experience will rise to the forefront as an essential part of engagement. Across the employee lifecycle, from talent acquisition to onboarding to learning and development, performance management, and offboarding, companies are making progress customizing their employee experiences to different groups depending on their unique journeys and requirements. Diversity, equity, and inclusion and allyship strategies will continue to be a priority for the most forward-thinking organizations.

The employee experience of the next several years is high tech and high touch and focuses on two overarching themes: purpose and flexibility. Also, the employee experience of 2030 will likely begin to include the metaverse, which will greatly impact organizational culture and work structures.

HR compliance is rising to a never-before-seen level of complexity. This has involved hundreds of new regulations associated with re-opening, distributed and remote work, vaccination, and labor relations, as well as those associated with human capital disclosures, pay transparency, and the increasing use of AI in organizations.

It is just a matter of time before lawmakers draft guardrails to use these technologies ethically and to safeguard sensitive data. As these regulations will vary by country, state, or locality, this will be increasingly difficult for HR and workforce professionals to keep up with.

Why Labor Shortages Are Happening and What Leaders Should Do

Workforce futurists have been predicting mid-twentieth century labor shortages for some time now, but many forecasts seemed unduly alarming – until the pandemic. Now, a confluence of factors is rapidly decreasing the global worker supply.

Employers have noticed. According to Ceridian’s 2023 Executive Survey, 66% of the global leaders surveyed have experienced a labor shortage in the past 12 months. And 88% said it’s at least slightly likely shortages will continue over the next year.

The surveyed leaders aren’t wrong about the likely continuation of labor shortages. And many executives I’ve spoken to recently are wondering why there is a labor shortage and how they can protect their organizations from critical deficits in the near- and long-term.

So, why is there a labor shortage? Let’s look at some of the causes.

Fewer people in the workforce

The main culprit, as futurists have noted for decades, is demographic shifts. Specifically, falling fertility and labor force participation rates mean there are simply fewer workers available to be hired.

Over the next decade, with most baby boomers entering retirement, the number of working-age people aged 15-65 is projected to decline by over three percent in some countries, including the United States. And even the people in this age range aren’t necessarily working to their full potential. Per a recent World Bank analysis, the global labor force participation rate has fallen steadily since 1990 from more than 65% of working-age people to less than 60% today.

These figures are already affecting unemployment. In April 2023, the U.S. Bureau of Labor Statistics’ Jobs Report showed that unemployment for 20-to-24-year-olds fell to 5.4%, the lowest it has been since 1969. As a result, newly minted college graduates are entering a job market that’s not only more robust than a year ago, but significantly stronger than it was before the pandemic.

Low-wage workers lack mobility

Labor shortages among low-wage workers are getting the most attention recently. And with good reason, as they are currently among the most dire shortages. One major factor is stricter immigration policies, and the other, economists speculate, is a “dual labor market” that doesn’t allow much room for mobility.

A new research paper published by economists at the Federal Reserve Board in Washington, D.C. shows this dual labor market is a problem for countries like the U.S. The researchers’ analysis documented a primary workforce comprising 55% of the population. These workers have high levels of employment stability and are only unemployed for short periods of time.

The secondary labor market, on the other hand, makes up 14% of the population and lives in a constant state of flux with poor wages and working conditions. These workers experience six times higher job turnover than those in the primary tier and are 10 times more likely to be unemployed. At present, extremely limited mobility between the two sectors negatively impacts the United States’ (and others’) ability to attract lower-wage workers who want to climb their way up.

For the full piece, head over the Ceridian blog.

How to Attract and Engage Unretiring Senior Workers

 

Experts have long predicted that baby boomer retirement would decimate global workforces, leaving employers with untold numbers of positions to fill and significant losses of organizational knowledge. But for nearly a decade, the bigger story has been baby boomers unretiring and returning to work.

Since a 2015 RAND Corporation study showed that 40% of retired workers over the age of 65 had returned to work, there has been a steady stream of data illustrating the unretiring trend. Many seniors simply don’t have the money or the inclination to leave the workforce and stay out.

According to ONS statistics in the UK, employment rates for people older than 65 had already doubled between 1993 and 2018. Then came the economic hardships associated with the pandemic and inflation. Of those who left during the pandemic and returned, 48% said they did so because they needed money. 

A recent Indeed survey reported U.S. unretirement levels around 3.3%, higher than the below 3% average seen since 2017. A UK survey also found that two-thirds of people who retired during the pandemic expect to keep working in some form.

While baby boomers and older members of Generation X (born 1963-79) are concerned about having enough money to fund their retirement, financial considerations aren’t their only motivation for boomeranging back to work.

Many seniors are in good health and find that traditional retirement models breed boredom, dissatisfaction, and unhappiness. Even part-time jobs and volunteer positions can offer a sense of productivity and purpose.

The rise of post-pandemic hybrid and remote work has also coincided nicely with the unretirement trend. Some older workers who may no longer have the desire to manage full work weeks onsite can contribute meaningfully to organizations in ways that work for their current lifestyle.

Given their willingness to return to work, let’s look at a few ways your organization can cultivate seasoned talent in different phases of your employee lifecycle.

Talent acquisition

Sadly, many organizations discriminate against candidates based on their age when they should be doing the opposite. An industry veteran is one of the best hires you can make for a variety of reasons. Whether the person has previously worked for your organization or not, a candidate who has 20 or 30 years of experience in your line of work has seen it all and possesses critical institutional knowledge. They should be eagerly welcomed into the fold.

To that end, make sure your talent acquisition systems are set up so that older applicants don’t experience unnecessary roadblocks. Your candidate experience should show them they are valued from the very first interaction.

Although video and panel interviewing have recently become mainstream, keep in mind that many older applicants have not yet been hired in this way, and the techniques may be foreign to them. When in doubt, overexplain the process and go out of your way to ensure their comfort.

For the rest of the piece, check out the Ceridian blog.

Halfway Through 2023, The Return to Office Debate Still Rages

In workforce and HR circles, one of the main events of 2023 so far has been the return-to-office (RTO) debate – and specifically the opposing viewpoints of those who want to remain remote and those who yearn to be in the office again.

Last year, it seemed like most companies had settled into harmonious hybrid work arrangements, with many mandating that office-based employees report to physical locations one to two days per week. But recently, a growing number of organizations, including Apple and Starbucks, are walking back remote-work policies. And new Congressional legislation aims to decrease telework options for federal workers in the U.S.

Some employees aren’t accepting the changes. SHRM reports that weeks after Disney CEO Bob Iger said he would require corporate employees to return to the office four days a week, 2,300 of them signed a petition asking him to reconsider the policy.

Through companies like Apple, Starbucks, and Disney, we see the pro return-to-office perspective. But it’s clearly not the only point of view. Let’s summarize the main points of each argument in the return-to-office debate.

The pro-office point of view

In his memo to employees, Disney’s Iger stated that “creativity is the heart and soul of who we are and what we do at Disney. In a creative business like ours, nothing can replace the ability to connect, observe, and create with peers that comes from being physically together, nor the opportunity to grow professionally by learning from leaders and mentors."

Humans are social creatures who bond with one another and often ideate more effectively in a team context. This is why many leaders want people back in the office.

Then there are the financial realities – at least for organizations based in the U.S. As Bloomberg recently reported, U.S. cities and states grant billions in tax incentives to companies who open offices in their areas. These agreements often include an expectation that companies will deliver something in return: full-time jobs, done primarily on-site. These new jobs bring new payroll and tax revenues— but not if they’re performed remotely. Naturally, leaders don’t want to jeopardize these lucrative incentives.  

For the pro-remote point of view, check out the rest of the article on the Ceridian blog!

 

A New Era in Tech-Based Recruitment

Communicating with the passive candidates whose email addresses you’ve stored in your CRM isn’t a new idea. Taking a page from the marketing team’s playbook and segmenting those candidates into groups based on a common qualifier (location, career stage, etc.) isn’t necessarily new either.

What has changed in recruitment segmentation, however, is the power of technology to help talent professionals do it more effectively. First of all, since recruitment segmentation came onto the talent acquisition scene as a popular strategy, the ability to automate email campaigns and customize their cadence to the individual has grown far more sophisticated. This is done by creating intelligent workflows.

According to IBM in a recent white paper, intelligent workflows are processes created by combining artificial intelligence and predictive analytics to enable organizations to segment candidate pools and decide how to modify the experience based on the candidates’ expectations and needs.

Organizations can use segmentation and automation hand in hand to design the recruitment experience based on candidate availability, work effort and experience and to provide different levels of service at the right point in time in the hiring process.

“Automation is especially crucial in terms of speed of engaging candidates — and keeping them engaged throughout the entire process,” wrote the IBM authors. “Even with higher unemployment rates, top candidates are in high demand, and competition to hire is fiercely competitive. Organizations that do not automate the process to the degree that it both entices and meets the candidates where they are are likely to see top recruits accept offers with competitors.”

The IBM authors pointed out that by deploying intelligent workflows, HR leaders can access real-time information that gives them a complete picture of their labor and talent pools. The strategy also allows for a more conscious approach to diversity, equity and inclusion (DEI). “Instead of having to wait for historical data and react to changes that have already occurred, recruiters can create and change experiences to open doors for candidates in ways previously not possible,” they said.

They cited the example of one company that shifted from a center-based employment model to a co-location model, which meant that 40% of their employees would work virtually. But many employees in contact center positions preferred working on site, and attrition occurred.

The company then used segmentation to determine talent availability and virtually manage the recruiting process through texting, self-scheduling and video interviews. Because so many of the organization’s employees did not want to make the move to remote work, the organization added a personalized touchpoint to encourage top talent to remain in the pipeline. As the organization examined the data and was informed of the shift in preferences, recruiters adjusted their approach to improving hiring success.

Of course, the best use of software-driven intelligent workflows incorporates human recruiter creativity. My favorite example is from a Recruiting Daily blogger, Christine Hampton. She has used intelligent workflows to segment and automate communications to passive candidates by, among other things, the rejection reason and recruitment event.

“If a candidate tells me they are on a contract till December, then slamming them with jobs right now will just frustrate them,” she wrote. “I note if the candidate is interested, and I set up a multi-channel cadence to stay in touch till their contract is complete.”

Christine explained that you can have separate segments for a myriad of rejection reasons – “just started a new job,” “happy in current role,” “can’t meet salary requirements,” etc. Not only does this approach align with future recruitment marketing campaign messaging, but it also saves time and creates a platform for starting personal conversations with candidates.

She added that if you’ve been recruiting for a while, you have likely attended many events. “You meet a candidate at a job fair, and they pique your interest, but the timing isn’t right. Three months later, an opportunity arises, and you think, ugh, what’s the name of that lady I met three months ago? She had red hair, about five feet five inches, and had glasses,” she said. “I am sure I’ve had a few missed connections in the past before the CRM existed.  Now I keep a folder for the specific event and date, and the candidate is easier to find (and communicate with).”

The bottom line is an ironic one. In this new era of recruitment segmentation, the best TA professionals will leverage technology to become even better at developing strong human relationships with their top candidates.

To learn more about how to leverage technology to build a stronger talent pipeline, check out my recent webinar with SilkRoad and ERE Media!

The Future of Skills-Based Hiring

A few weeks ago, I attended a dinner where some colleagues emphatically insisted that the future of hiring could not and would not become skills-based until organizations stopped selecting people based on educational pedigree.

I pointed out that this is already happening. When I graduated from college in the late 1990s, you had to have a bachelor’s degree to get an entry-level professional position. It didn’t matter what skills you had. Today, depending on the role, if you can show skill competency, many organizations will overlook a lack of formal education.

The real question is: Have we moved the needle enough to combat ever-increasing global labor shortages? The answer may indeed be no, and that’s likely because there’s no sense of urgency. Many organizations still think the traditional mode of hiring – via resumes and follow-up, subjective interviewing – works just fine.

Let’s look at the problems with the status quo and how your organization can reap the rewards from a new approach to talent acquisition. Skills-based hiring will be the future, but there’s no time like the present to move in that direction.

The trouble with resume-based hiring

Resume-based hiring has a variety of flaws, namely that people are notoriously bad at self-assessment. A resume only captures a small amount of what a person has done and can do. And even if their skills are presented somewhat effectively, the hiring manager may be negatively influenced by factors like what font the candidate used and whether too many words are crammed onto the page.

Resumes (and LinkedIn profiles) also capture just one moment in time. This means that unless a hiring manager is reviewing information that was just sent to them by a candidate for a specific job, the hiring manager has no idea how current the information is.

Finally, resume-based hiring assumes that the organization wants to hire someone for a static role. The hiring manager wants to see straightforward evidence that the candidate has already performed this role because they aren’t expecting it to change much. But this is an outdated view of jobs. Today, employers must approach hiring with career flexibility in mind.

Organizations need to hire people with as deep of a skills bench as possible so that those employees can move fluidly through the organization as business requirements evolve. It's hard to assess how well someone will be able to do this from a resume.

But if an organization isn’t going to hire employees based on resumes and wants to get to the heart of the skills candidates possess today, how can this be achieved?

How to get started with skills-based hiring

I’ll readily admit that skills-based hiring is a difficult task without technology, and specifically, without artificial intelligence. But new talent intelligence platforms allow organizations to leverage career data points to paint a much broader picture of the skills a given individual might have. Talent intelligence tools also allow organizations to focus on the skills necessary for success within a particular career path, which might not always be what human hiring managers think they are.

This technology is especially good at uncovering skill adjacencies. Using skill adjacency, you can infer that a person who is good at skill A often excels at skill B. For example, we can infer that someone who is good at trigonometry is probably also good at geometry. Or we could guess that an experienced marketing professional could more quickly learn public relations.

The rise of the flexible career experience

 

For recruiters who are accustomed to resume-based hiring, this is a whole new world. For example, when a company is hiring for a customer service manager, a recruiter may search for candidates with resumes containing that exact title. Until recently, we simply have not had the tools to surface candidates who may have the right customer skills based on their life experiences instead of the positions they’ve held.

By focusing on workers’ capabilities rather than exact job titles, companies can build a broader pool of diverse, qualified candidates. This is an especially useful approach post-pandemic, given that most workers accumulated a wide variety of transferable skills inside and outside their main jobs in the areas of communication, problem solving, and adaptability. Skills like this support success in any role but may not be found on these candidates’ resumes, so it’s wise to have another way to account for and assess them.

In short, hiring based on educational pedigree and resumes is the past while hiring based on skills and potential is the future. And technology can go a long way to help us transform hiring practices – both culturally and operationally.

For the original article,  head over to the Ceridian website.

It's Time to Stop Talking Quiet Quitting and Quiet Firing

“Quiet quitting” and “quiet firing” are the latest buzzwords to take the world of work by storm. But while the terms themselves may be new, the concepts aren’t. And they illustrate a troubling trend taking place in the post-pandemic workplace.

Quiet quitting refers to employees who show up to work and seemingly do the bare minimum to meet expectations. Quiet firing happens when employers actively seek to make work conditions less favorable by taking away attention, resources, or opportunities from employees with the hope that they’ll resign.

Both quiet quitting and quiet firing are passive aggressive moves born out of uncertainty. Quiet quitters don’t want to pull the trigger because they may be afraid of what awaits them on the other side of unemployment in a volatile economic and social climate. And at a time when employee well-being and retention are front and center, quiet firers may be concerned about outright firing an employee.

The sudden shift to remote work that took place during the pandemic resulted in a loss of culture for many organizations, and unfortunately, that culture is not likely to spring right back into place for companies transitioning their employees to hybrid work.

Using in-office time as an opportunity to create an environment of camaraderie and psychological safety can go a long way toward mitigating both quiet quitting and quiet firing. Here are three specific strategies:

Facilitate face-to-face interactions

Quiet quitting and quiet firing are more difficult to pull off when you have formed genuine, authentic connections with your managers, reports, and colleagues. Managers should lead by example and show up. Some examples might include hanging out in the cafeteria or breakroom and hosting events. Where possible, hold performance discussions and regular one-on-one check-ins in person, and make use of casual lounges to support engagement and spontaneous meetings.

And this might go without saying, but if you’re asking people to be in the office a few days a week, don’t have them sit in an empty room by themselves. If an employee’s team isn’t there and they’re at their workstation all day devoid of human interaction, they might as well have stayed home. This is a surefire recipe for quiet quitting.

Avoid proximity bias

According to a recent Prezi study, 66% of hybrid workers feel that workplaces favor employees who are together in a physical office. To combat this so-called proximity bias, which could lead to inequities that drive both quiet quitting and quiet firing, level the playing field in how you structure your video meetings. For instance, everyone should join from their own computer to avoid spotlighting remote employees who aren’t in the office.

Co-create new norms

Quiet quitting and quiet firing may happen because managers and employees are afraid to speak up about their needs. For example, maybe you’re a caregiver and the long commute associated with returning to the office has been especially punishing for you, so you quiet quit. On the other hand, if you’re that caregiver’s manager, you may not want to overload your employee, but feel you have unmovable performance expectations, so you quiet fire.

By surveying employees to find out what policies work for them and working collaboratively to establish new norms for performance and productivity, you can build a culture that’s naturally more supportive of different concerns and points of view.

The bottom line? If you use your return-to-the-office efforts as a chance to learn about your employees directly and holistically, you will experience less “under-one’s-breath” phenomena such as quiet quitting and quiet firing.

For the original piece, check out the Ceridian blog.

Is Employee Monitoring Right for You?

For about a decade, donning my workforce futurist hat has required ongoing dialogue about employee monitoring tools and their inevitable march toward greater sophistication. Often, the question has not been “Will we monitor our employees?” but “What will we monitor about our employees?”

Today, employee monitoring is routinely making headlines. Stories abound of employers using monitoring software to track the location of their staff, detect signs of quiet quitting, record how much time employees spend on different activities, and take screenshots of their devices – sometimes without employee consent.

In August, the New York Times reported that eight of the 10 largest private U.S. employers are using software and other technologies to track the productivity of their employees.

According to a Capterra study reported in The Globe and Mail, 35% of Canadian employees work for a company that uses at least one monitoring tool that they know of. Another 18% weren’t sure if their employer was tracking them.

Canadian employees are divided on how they feel about being tracked. While the majority said using such tools did not affect how they work and did not impact workplace culture, 23% said it added stress and made work feel more “hostile.”

Overall, I’m not a fan of using software to track things like keystrokes, screenshots, and how much time employees are spending in various applications. If an employee wants to waste time on the clock, chances are they’re going to figure out a way to do it without their supervisor finding out. Presumably, you hired an adult to perform responsibilities as an adult would, so there’s no need to deploy technology as a babysitter.

As for efficiency, we need only look at individual and team performance metrics to determine if there’s an issue. Generally speaking, we shouldn’t care how long a specific task takes as long as quality work is executed consistently and delivered according to deadlines.

Instead of putting your technology dollars into monitoring workers and risking diminished morale and complaints over a loss of privacy, direct your investment toward cultivating a vibrant employee experience that fosters autonomy and trust. Such an experience should ideally include a mix of online and offline and human and technology-driven touchpoints.

In fact, you can use a purposeful lack of monitoring as an opportunity to survey your employees about their perspectives on company policies and start a dialogue with them more frequently about their individual goals and workload.

You might be thinking: Is any kind of employee monitoring appropriate? Given how vulnerable remote workers are to cybercrime, there may be a time and a place. Consider this: In a recent study, 80% of security and business leaders said their organizations are more exposed to risk because of remote work.

If you’re going to monitor employees for cybersecurity purposes, just remember that the goal should be protecting rather than calling out your people. And make sure you’re transparent with employees about why you’re collecting data and what you’ll be using it for.

For the original piece, head over to the Ceridian blog.

2023 Business and Employment Trends for Small Business

While business is generally stabilizing and neighborhood institutions are finding innovative ways to stand their ground against larger competitors, concerns including inflation and stubborn supply chain disruptions continue to dog many owners.

According to the November 2022 Small Retailer Report from American Express Business Class, which surveyed 300 small business retail decision makers, most small retailers currently operate in both online and brick-and-mortar settings, and retailers view their brick-and-mortar stores as a place for customers to discover and try products, as well as for boosting brand awareness and recognition.

Creating an In-Store Experience

Small retailers are encouraging their customers to shop in-store and make their in-store shopping experience more social. According to the Small Retailer Report, 69% of small retailers have offered in-store shopping experiences or events in the last 12 months, and 74% hope to offer in-store shopping experiences or events within the next six months.

State of Kid is one of those retailers that values in-store shopping experiences. A hybrid concept that combines a boutique retail experience and enrichment classes for children ages 0-8, the store launched in late 2019 and now has three brick-and-mortar locations in South Florida. Founders Alana Oxfeld and Cheryl Gonzalez created State of Kid after moving to Miami from New York and Switzerland, respectively, and struggled to find modern parenting solutions that met their needs.

“State of Kid combines retail with experiential programming. Parents can shop while they bring their children in for art, music, science, cooking, and much more,” says Oxfeld. “We offer a highly curated selection of kids’ clothes and gifts that aren’t often found at major big box retailers or on Amazon. Additionally, we are known for our exceptional service and personal connection with our customers.”

The State of Kid owners have worked hard to make their stores appealing for kids and parents alike. “Our aesthetic is inviting and playful. Children generally leave our enrichment classes—from Tumbling Tots to Jam with Jamie—with huge smiles on their faces. That sense of fun extends into the retail space, and often families congregate long after the class has ended, continuing the party-like feel,” says Oxfeld.

Milk Room, a vintage, luxury streetwear and sneaker boutique with three locations in southern California, prides itself on its custom sneakers. Founder Greg Monterrosa provides a memorable in-store experience for customers by hosting fashion, art, and music shows at each location, and running a podcast.

“Milk Room is a true community,” Monterrosa says. “Our stores are run by local designers. When you walk in, you see local art and emerging brands, and you’ll catch a scent from a local candlemaker or essential oil maker.”

Standing Out From the Competition

The Small Retailer Report also found that small retailers plan to prioritize (46% versus 37%) the online shopping experience than the in-store shopping experience in the next six months. For small retailers that operate via online stores and e-commerce, 96% hope to enhance their online shopping experience within the next six months.

Although concern about competition from big box retailers and larger chains is high, ahead of Small Business Saturday small retailers are positioning themselves for competition through customer loyalty, their prices, and their specialty products.

The owner of Dallas-based Taco Ocho, Mani Bhushan, works hard to stand out from other local restaurants. When you walk in to Taco Ocho, you will probably notice the colorful walls painted by a local artist, Latin music playing in the background, and the smell of tortilla chips baking in the oven. Bhushan, who is in his seventies and still works shifts at his restaurants, opened Taco Ocho in 2011 and has been in the industry for over 40 years.

For the rest of the piece, check out AMEX Business.

Small Business Grows Amidst Inflation and Economic Uncertainty

 

Despite an uncertain economy and the toll of inflation, small businesses are growing their revenue, expanding their brand, and prioritizing their customers. 

Kabbage from American Express’ September 2022 installment of Small Business Recovery Report, which polls 550 small-business leaders and tracks the recovery trends and growth outlook of U.S. small businesses, presented some surprising and encouraging findings.

The report reveals that respondents nearly doubled revenue year-over-year between July 2021 and July 2022 while profits remained flat amidst economic hurdles such as inflation and supply chain disruptions.

In the previous version of the Small Business Recovery report, from June 2022, 80% of respondents said they were confident they could withstand a potential U.S. recession. The data from the latest report helps illustrate why small-business owners (SBOs) are so optimistic. Cross-analyzing the survey results between July 2021 and July 2022, the data shows U.S. small-businesses revenues have increased on average by 87%.

This trend is on point for Stefan Kalb, CEO of Shelf Engine, a grocery store forecasting business that results in more products on the shelves and less spoilage. “We’re one of the few fortunate businesses that prospers amidst economic challenges, as they create more demand for our solutions,” he says. “The grocery industry operates on razor-thin margins and needs every tool at its disposal to cut costs. That’s especially true now, as rising inflation means consumers are carefully watching every dollar they spend.” 

Managing Revenue When Costs Are High

Not every business is in as good a position as Shelf Engine, however. While overall profits among U.S. small businesses have slightly declined four percent, 75% of respondents report feeling impacted by inflationary pressures and 56% of respondents expect economic pressures to last through summer 2023. SBOs are doing their best to manage increasing costs.

Kristina Schlegel, CEO and founder of California-based food crafting company Make Bake, has noticed these trends in her own business. “We’ve definitely seen our revenue grow as we’ve expanded our wholesale business from 50 to nearly 200 retailers in the last 12 months,” she says. “But inflation in our supply chain has certainly cut into those profits. As a business, we’re also in that ‘messy middle’ – incurring more costs in product development, marketing, and trade shows to get to the next level as a brand. And it’s challenging to be in a growth phase of your business while your costs are rising so quickly.”

For the rest of the piece and the research report, check out the AMEX Business' website.