CEO Insights for What's Ahead | 3.22.23
The Conference Board Leading Economic Index? (LEI) for the US fell again by 0.3 percent in February 2023 to 110.0 (2016=100), after also declining by 0.3 percent in January.
Downward trend: The LEI is down 3.6 percent over the six-month period between August 2022 and February 2023—a steeper rate of decline than its 3.0 percent contraction over the previous six months (February–August 2022). February marked the US LEI’s 11th consecutive monthly decline.
Broad weakness: Negative or flat contributions from eight of the index’s ten components more than offset improving stock prices and a better-than-expected reading for residential building permits. While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the US economy.
Recession ahead? The most recent financial turmoil in the US banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists. Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the US economy into recession in the near term.?
Across the country, there are almost 11 million jobs waiting to be filled—a near-record high. A new Solutions Brief by the Committee for Economic Development, the public policy center of The Conference Board (CED), details the consequences of the historic labor shortage and recommendations for solving it.
US workers alone can’t fill gap: Even if all currently unemployed workers could fill these job openings, the nation would still have a shortfall of more than five million workers. This underscores why comprehensive immigration reform is a must.
Damage on multiple fronts: Widespread workforce shortages are playing a significant role in both elevating and perpetuating inflation, increasing recession risk, and jeopardizing long-term economic growth.
The path forward: For policy and business leaders, CED advocates an approach that consists of two pillars:
Gen Zers highly value their life outside of work and strongly consider “work-life balance” when choosing employers, according to our report on the motivations of Gen Z workers. To best attract, engage, and retain Gen Zers, give them as much control as possible over where and when they work.
They still crave in-person interactions: Consider flexible work environments supplemented with opportunities for in-person interaction such as periodic in-person team meetings, team-bonding activities, and networking meetups.
What we’re saying: “Many Gen Z knowledge workers finished their education and started their careers on virtual platforms during the pandemic. For them, hybrid work is the expectation,” said Robin Erickson, PhD, Vice President of Human Capital at The Conference Board. “Business leaders should discuss the importance of schedule flexibility and hybrid work with the entire C-suite to ensure their buy in and update policies about where and when work is accomplished to optimize worker autonomy and control.”
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According to data presented by Broadridge at an ESG Center Roundtable on shareholder voting, retail investors represent approximately 30 percent of the shareholder base at US public companies. With 71 percent of retail investors not voting, that means that 22 percent of the average company’s shares aren’t being voted. That’s like having BlackRock, Vanguard, and State Street not show up to vote at all.
Why it matters: These missing voters and votes are a problem. Retail investors tend to be more supportive of the company’s positions than institutional investors. With declining support for company directors and say-on-pay proposals, and an expected increase in actual and threatened proxy contests, companies can use all the support they can get.
The path forward: There are a few key steps companies can take:
In a lively session at our conference, The Power of Corporate Communications, Microsoft’s?Chief Communications Officer, Frank X. Shaw, spoke about communications in the age of AI.
AI in action: Shaw told his personal story of seeing and testing artificial intelligence in action for the first time and feeling fear for what it meant for his role. Only after pushing through that anxiety was he able to see it as a transformational tool. He said it is very good at summarizing, at crafting blog posts, and it can help validate collaboratively written content to ensure key messages are getting through.
AI in the workplace: When asked how to situate AI in the workplace, Shaw said it should be best understood as a co-pilot, which needs its human pilot to be in charge at all times. He believes AI can help businesses with a shortage of skilled workers, such as security and healthcare professionals.
QUOTABLE
“How can you become an intentional leader—to make sure that everyone feels like they have part of your time, part of your insights, and part of your championship of their development? …A leader has to be intentional about making sure that it's a positive experience for every employee, regardless of the way he or she works.”
— Rebecca Ray , Executive Vice President of Human Capital, The Conference Board. She joined the CEO Perspectives podcast to discuss leadership in a hybrid world.?
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