2022 Business Leaders Outlook: Confidence breaks through

If you thought 21 months of disruption would have business leaders feeling down, you’d be wrong. The business community is more optimistic than it has been in years, and the reason is a renewed confidence in the thing that matters most: human capital.

Results are in from Chase’s annual Business Leaders Outlook survey, and the findings reveal a world far different from a year ago or even early 2020.  

In November, Chase surveyed decision-makers at more than 1,000 businesses with annual revenues spanning $100,000 to $20 million across key industries, including restaurant, retail, construction, and professional services. Chase also broke down trend data by region and added an exclusive focus on Black, Hispanic and Latino business owners to get a better understanding of how they’re navigating another pandemic year.

In this year’s survey, confidence was down for business leaders at every level: global, national, local, industry and company.

More than half of respondents (61%) expect profits to increase in 2022. A quarter of respondents plan to launch new offerings or enter a different vertical to compete. Roughly half say remote work has increased employee productivity and work-life balance. The research is clear: Leaders are forging ahead and leaving behind the old ways of doing business — for good.

Business leaders are betting on themselves

Business leaders have noticed the major economic concerns that weren’t present in past surveys, including choke points in supply chains (16%) and the higher cost of doing business from inflation (20%). But the research suggests that business leaders are allowing themselves to feel good about the areas where they can exert control and letting go of the areas where they can’t.

Black business leaders are significantly more optimistic than their peers about the local, national and global economies in 2022. Despite being hit particularly hard by the pandemic, Black respondents are also predicting higher revenue and profits in the year ahead, compared with the total population.

Sentiments also vary by region. Respondents in areas of the Northeast, including New York and New Jersey; the South, including Florida and Texas; and parts of the Midwest, including Illinois and Michigan, were more likely to say that the pandemic has had a “very positive” impact on their business overall.

After two years of being tested by near-constant disruption, business leaders are confident in their firms’ ability to ace whatever comes next.

Are people the new bottom line? 

Almost half of businesses (46%) plan to hire in 2022, a higher percentage than in the past three years of survey data. Expected sales growth was the most popular reason cited for hiring (57%), followed by “company’s financial position has improved” and “current workforce overworked,” which tied at 44%.

Many businesses are feeling either “extremely concerned” (23%) or “very concerned” (19%) about the limited supply of qualified job candidates. Both Black, Hispanic and Latino business leaders are significantly more concerned about limited access to qualified candidates than the rest of the respondents. Concerns over talent pipelines are higher in California and Arizona, as well as Florida and Texas.

To help allay these concerns, business owners are moving aggressively to fortify recruitment and retention strategies. The most popular tactics are offering flexible hours (40%) and increasing wages (38%). In the minority small business community, the push for increased incentives is even stronger, with 64% of Hispanic and Latino business leaders and 56% of Black business leaders reporting that they have increased or will increase wages.

Roughly half of respondents in areas of the Midwest (52%) and South (49%) say they have increased or will increase wages to appeal to workers. But delivering higher wages isn’t the only way business leaders are engaging their labor forces.

Building better workplaces to attract and retain people

Stories of burnout abound, whether it’s restaurant owners who’ve had to double as nightshift dishwashers or older employees opting for early retirement. As a result, more business leaders are reassessing — and boosting — their benefits programs. This includes:  

• Increasing benefits such as health care, childcare, medical leave and sign-on bonuses (28%)
• Offering 401K (37%)
• Offering upskilling opportunities and training (25%)
• Allowing employees to work remotely (33%)

Hispanic and Latino business leaders appear to be leading this benefits revolution: At 62%, they are twice as likely as other business leaders to cite increasing benefits as their talent acquisition strategy for 2022. They’re followed closely behind by Black business leaders (56%). Besides showing a greater interest in enhancing their employee offerings compared with the general population, Black, Hispanic and Latino business leaders are more likely to invest in entrepreneurial training programs to help them run their businesses better.

From a regional perspective, respondents in New York and New Jersey are almost twice as likely as other U.S. leaders to say they are enhancing their benefits programs and 15% more likely to invest in training programs.

Do these major leaps in employee compensation come down to supply and demand? Not entirely. The survey data suggests that changing values are a driving force in the new direction.

Nearly two-thirds (60%) believe their core values as a business owner have changed since the pandemic. And a quarter (27%) say they value relationships with their employees more. This might be why more companies than ever are offering health insurance — 61% in 2021, compared with 52% in 2020. And of the companies that don’t offer health insurance, a stunning 25% plan to in the future.

For 2022, business leaders are thinking about a holistic approach to best support employees, including offering health insurance, 401(k) plans or flexible work arrangements. Changes in values are leading to real policy and action.

Inflation: the elephant in the office

Economic uncertainty (23%) remains the top challenge business leaders cited for 2022. Some of the more evergreen concerns of business leaders ranked at the top, including:

• Taxes (22%)
• Ability to grow sales/revenue (21%)

New to the Outlook survey, inflation (20%) has joined the worry ranks. Supply chain disruptions (16%) and rising labor costs (13%) — two other commonly cited concerns — are compounding the inflation issue for business leaders.

Inflation fears among business leaders are not shared evenly. For example, it was the second-biggest concern for areas of the South and Midwest but less likely to be a concern in New York and New Jersey. This may also be why areas of the South and Midwest saw higher percentages of respondents say that they are increasing wages.

Nevertheless, 42% of business leaders say that bringing down inflation should be the top priority for the government for the next 12 months. Addressing inflation topped the desire for federal action on tackling the pandemic, which stands at 40%. All of this suggests that businesses have little appetite for passing rising costs to their consumers, even if the price of commodities is rising beneath their feet.

It should be noted that Black, Hispanic and Latino business leaders agree that addressing inflation should be a priority for the government — but second to addressing the COVID-19 pandemic.

The new business playbook: flexible everything 

The accelerated shift to online sales and services continued in 2021, as restaurants invested more in delivery and retailers moved more products through eCommerce channels than ever. And the trend looks like it will only tick up for 2022, with the percentage of firms going all in on eCommerce up 7% from last year’s benchmark. But a higher percentage of businesses are taking or plan to take an omnichannel approach, giving retailers more ways to interact with customers. Indeed, the flexible approach extends beyond the channels for sales.

Whether or not businesses have a brick-and mortar space, decision-makers are making deeper investments in ways they can be found online. This includes:

• Maintaining a Facebook page (52%), the most common digital presence among business leaders
• Posting to their Instagram account (35%)
• Deploying paid digital advertising (22%)

At the same time, 30% of businesses now have a website with eCommerce capabilities, giving them the option to bring in revenue no matter what happens with store closures or in-store purchasing pattern shifts.

There’s also a higher expected demand for flexible funding in 2022. Just under half of businesses (48%) plan to use a business credit card as a source of funding, up 10% from last year. And many are preparing for the unexpected, as 29% plan to fund with their business line of credit. Demand for traditional or online loans is up 8% from last year, but the numbers show business leaders expect a larger appetite for just-in-time funding in 2022. This is clearest among Black, Hispanic and Latino business leaders, who say they expect their credit needs to increase in 2022.

• 41% of total business leaders expect credit needs to increase   
• 50% of Hispanic and Latino business leaders expect credit needs to increase
• 64% of Black business leaders expect credit needs to increase

Work itself is becoming more flexible. In 2020, a stunning 72% of companies moved some, if not all, of their workforces to remote work. That same year, 19% of business leaders were planning to shift to a hybrid model. Now, the percentage moving forward with hybrid work has jumped to 24%. It’s yet one more way leaders are reimagining business as usual.

It all comes back to people

Business leaders are figuring out how they will move forward in 2022, and their plans start with their teams. Some are making online operations a part of employee training so that customers can have great experiences no matter where they occur. Others are rewarding employees for picking up the extra work due to a labor shortage.

Despite continuous waves of a global pandemic and forces outside of their control, business leaders are realizing the way through is with their people. They are optimistic about the future, and doubling down on investments in their workforce is giving business leaders the confidence they need to charge ahead.

About the 2022 Business Leaders Outlook survey

This survey was conducted by Chase Insights from November 11 to 29, 2021. It features data from 1,005 business leaders across the professional services, retail, technology, health care and other key industries. The results of this online survey are within statistical parameters for validity, and the error rate is plus or minus 3.1% for the findings, at a 95% confidence level.

If you haven’t already, explore JPMorgan Chase’s Business Leaders Outlook Survey conducted for midsize businesses.