Only a year ago, leaders of midsized businesses reported dramatic impacts to their operations due to the COVID-19 pandemic. Global supply chain disruptions grew and vaccines were still months away from approval, much less widespread distribution.
Even still, most executives who responded to the 2020 Business Leaders Outlook Pulse survey—fielded in June 2020—were hopeful about their outlook, with 1 in 2 predicting a full return to pre-pandemic business conditions within 12 months.
Talk about sticking the landing.
With the economy reopening and vaccination expanding, many of the 1,375 executives who responded to the 2021 Business Leaders Outlook Pulse survey said they see unprecedented economic opportunity and significant hiring needs in the next 6-12 months. They also revealed plans to build on pandemic resiliency strategies and shared timely views on new workplace models that could redefine how they recruit, train and lead.
Keep reading to learn how your fellow executives plan to navigate continuing challenges and seize new opportunities for the final months of 2021 and beyond.
Big Ideas
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Rebound
The percentage of business leaders who are optimistic about their companies and industries was the highest recorded in 11 years of the Business Leaders Outlook. Some 80% expect higher revenue/sales and 71% expect profits to increase for the remainder of 2021.
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Resiliency
Nearly two-thirds of respondents say they added new product/service lines in response to the pandemic that they’ll keep afterward. Most say they’ll keep pandemic-era supply chain strategies, too.
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Return to work
More than half of businesses already have or plan to launch a flexible working model, but this may be a work in progress because 73% of business leaders say preserving their company culture remains a top concern as they test alternating employees on- and off-site.
Big Idea #1: Economic rebound
Market and economic outlook is largely optimistic
After more than a year of pandemic disruptions, executive optimism at midyear 2021 is striking. Leaders’ view of business opportunity is particularly staggering when compared with the two most recent Business Leader Outlook surveys. Optimism about the local economy alone is the highest of any previous Business Leader Outlook survey—signaling rally expectations at the community level and a readiness for rebound.
Chart: Expectations Brightened Steadily Over Previous 12 Months
Table shows business optimism at three points in time: 2021 Pulse (June 2021), 2021 Annual (December 2020) and 2020 Pulse (June 2020).
The first line shows optimism in the global economy at 53% in 2021 Pulse (June 2021); 31% in 2021 Annual (December 2020); 17% in 2020 Pulse (June 2020)
The second line shows optimism in the national economy at 75% in 2021 Pulse (June 2021); 44% in 2021 Annual (December 2020); 35% in 2020 Pulse (June 2020)
The third line shows optimism in the local economy at 76% in 2021 Pulse (June 2021); 41% in 2021 Annual (December 2020); 33% in 2020 Pulse (June 2020)
The fourth line shows optimism in industry performance at 82% in 2021 Pulse (June 2021); 61% in 2021 Annual (December 2020); 45% in 2020 Pulse (June 2020)
The fifth line shows optimism in company performance at 88% in 2021 Pulse (June 2021); 77% in 2021 Annual (December 2020); 56% in 2020 Pulse (June 2020)
Leaders expect business expansion in multiple forms
Most midsized business leaders expect their revenue/sales and profits to increase for the rest of this year. In support of this growth, many also anticipate that their capital expenditures and credit needs will increase. Notably, the credit needs increase response is at the highest level in the history of the Business Leaders Outlook—following a time when many business leaders shied away from credit utilization. These are all strong indicators that executives are getting ready for future expansion or their businesses are at least stable for now—a sizable change from a year ago.
Chart: Leaders Expect Business Expansion
This chart shows business leaders’ 6-month expectations for revenue/sales.
June 2021: 80% increase; 16% remain the same; 4% decrease
December 2020: 69% increase; 19% remain the same, 12% decrease
June 2020: 47% increase; 21% remain the same; 33% decrease
Chart: Leaders Expect Business Expansion
This chart shows business leaders’ 6-month expectations for profits.
June 2021: 71% increase; 21% remain the same; 8% decrease
December 2020: 62% increase; 23% remain the same, 15% decrease
June 2020: 41% increase; 24% remain the same; 35% decrease
Chart: Leaders Expect Business Expansion
This chart shows business leaders’ 6-month expectations for capital expenditures.
June 2021: 46% increase; 44% remain the same; 10% decrease
December 2020: 32% increase; 45% remain the same, 23% decrease
June 2020: 18% increase; 39% remain the same; 43% decrease
Chart: Leaders Expect Business Expansion
This chart shows business leaders’ 6-month expectations for credit needs.
June 2021: 38% increase; 51% remain the same; 11% decrease
December 2020: 30% increase; 54% remain the same, 16% decrease
June 2020: 22% increase; 52% remain the same; 25% decrease
Hiring plans are up
With higher expectations for business revenues and profits for the rest of the year, most business leaders’ hiring plans are on the rise. Juxtapose this with the challenging labor market and business leaders may need to rethink their typical hiring and retention methods in order to keep pace with anticipated growth.
Chart: Hiring Plans Are Up
Three pie charts showing business leaders’ 6-month hiring plans as of June 2021.
81% plan to hire
18% plan no hiring changes
2% plan workforce reductions
Big Idea #2: Business resilience
Top business challenges in the next 6-12 months
Almost all survey respondents (95%) anticipate at least one business challenge in the next 6-12 months. Not surprisingly, the major challenge is ongoing supply chain issues, as lingering bottlenecks are making it difficult to keep up with consumer demand. Business leaders can likely expect supply chains to be a significant growing pain to overcome over the next several months.
Chart: Top Business Challenges in the Next 6-12 Months
Four charts showing the biggest challenges that business expect to face
Ongoing supply chain issues: 62%
Uncertain economic conditions: 37%
Revenue/sales growth: 35%
Preserving culture in a working-from-home environment: 27%
How leaders will sustain pivots made in response to COVID-19 business challenges
For business leaders, resiliency came in many forms during the pandemic. In some cases, it propelled their businesses forward in ways that enabled them to sustain or grow operations, satisfy consumer demand and address new challenges. From utilizing new suppliers to delivering new products or services at midyear 2021, leaders expressed a desire to continue leveraging their pandemic pivots in ongoing operations.
Chart: Manufacturing and Supply Chain Changes
Table showing the pivots that business leaders have made in response to COVID-19.
Utilized new suppliers: 62% have done and plan to continue post-pandemic; 4% have done but don’t plan to continue post-pandemic; 34% have not done
Automated ‘back office’ functions with new digital platforms: 51% have done and plan to continue post-pandemic; 4% have done but don’t plan to continue post-pandemic; 45% have not done
Managed some areas of supply chains remotely: 49% have done and plan to continue post-pandemic; 17% have done but don’t plan to continue post-pandemic; 34% have not done
Adjusted ‘last mile’ delivery strategies: 23% have done and plan to continue post-pandemic; 6% have done but don’t plan to continue post-pandemic; 71% have not done
Adopted ‘near shoring’: 18% have done and plan to continue post-pandemic; 5% have done but don’t plan to continue post-pandemic; 77% have not done
Note: Last-mile strategies are defied as the movement of goods from a transportation hub to a personal residence or other final destination.
Near-shoring involves shifting manufacturing or other facilities closer to key markets.
Growth, sustainability and agility pivots
Resiliency strategies emerged throughout the pandemic, but significantly in two areas: new product/service lines inside and outside traditional company portfolios and digital adjustments to operations. In each category, nearly two-thirds* of leaders said they made changes, additions or upgrades that they plan to continue post-pandemic.
*Nearly two-thirds (61% and 64%) represents the unduplicated calculation of those who have delivered new products/service lines within and/or outside of their traditional portfolio and/or those who have expanded e-commerce capabilities, digitized accounts payables/receivables processes and/or updated or enhanced fintech systems, respectively.
Chart: Adjustments in Services and Digital Operations
Table showing the pivots that business leaders have made in response to COVID-19.
Delivered new product/service lines within my traditional portfolio: 53% have done and plan to continue post-pandemic; 2% have done but don’t plan to continue post-pandemic; 45% have not done
Expanded e-commerce capabilities: 39% have done and plan to continue post-pandemic; 3% have done but don’t plan to continue post-pandemic; 58% have not done
Digitized accounts payables/receivables processes: 38% have done and plan to continue post-pandemic; 3% have done but don’t plan to continue post-pandemic; 58% have not done
Expanded into new geographic markets: 38% have done and plan to continue post-pandemic; 2% have done but don’t plan to continue post-pandemic; 60% have not done
Delivered new product/service lines outside of my traditional portfolio: 33% have done and plan to continue post-pandemic; 3% have done but don’t plan to continue post-pandemic; 63% have not done
Updated or enhanced fintech systems: 25% have done and plan to continue post-pandemic; 3% have done but don’t plan to continue post-pandemic; 73% have not done
Acquired a new line of business: 21% have done and plan to continue post-pandemic; 2% have done but don’t plan to continue post-pandemic; 77% have not done
Merged my business with another: 6% have done and plan to continue post-pandemic; 1% have done but don’t plan to continue post-pandemic; 92% have not done
Companies battled cybersecurity threats during the pandemic
Significantly, one-third of companies surveyed were directly impacted by some form of cyberattack or fraud during the pandemic. While cyber fraud evolves over time, business email compromise (BEC) was cited as the most common attack, followed by payments fraud and malware. Experts urge midsize companies to build stronger defenses—and according to respondents, several of those measures are proving effective at protecting against attacks.
Chart: Most Common Types of Cyberattack or Fraud
Three charts showing the most common cyberattacks or fraud during the pandemic.
Business email compromise: 18%
Payments fraud: 13%
Malware (including ransomware): 10%
Big Idea #3: Return to Work
Will workspaces change?
Many experts have wondered whether the pandemic would shrink the need for office space, but two-thirds of respondents say they have not and do not plan to make any changes. Meanwhile, business leaders planning to increase their workspace cited business growth/expansion as the key reason (89%). For those planning reductions in office space, employee preference for working remotely was the primary driver (65%) in their decision-making. Whether executives are taking a wait-and-see position regarding their space or are prepared to keep or expand facilities long-term, commercial real estate strategies may continue as one of 2022’s most compelling topics.
Chart: Commercial Real Estate Plans at Midyear 2021
Three charts showing business leaders’ plans for commercial real estate.
Reducing our office/workspace: 18%
Increasing our office/workspace: 14%
No change to our office workspace: 67%
Is flexible work the future?
Business leaders are split in their approach to returning to work. Nearly 40% of companies expect all employees to return to on-site work post-pandemic, though more than half are continuing, expanding or newly implementing some form of remote work model as a result of COVID-19. The split could indicate that business leaders are taking a thoughtful approach to return to work, considering the needs of customers and employees as well as market conditions.
Chart: Who’s On Board With Remote Work—And Who’s Not
A pie chart in three segments showing the percentage of leaders planning to offer a flexible work environment post-pandemic.
In the first segment, 54 percent say they plan a flexible work environment post-pandemic, including:
26 percent implementing a new flexible model
15 percent expanding a flexible model
12 percent already having a flexible, all-remote model in place
1 percent implementing a 100% remote model
In the second segment, 38 percent expect all employees to work on-site post-pandemic.
In the third segment, 8 percent are not sure of their plans yet.
Chart: Top Concerns With Flexible Work
A series of charts showing main concerns among respondents who have implemented or plan to implement a flexible work environment.
Preserving the company culture: 73%
Maintaining productivity levels: 57%
Onboarding and integrating new employees: 50%
Maintaining a high level of customer service: 29%
Preventing or preempting cyberattacks or fraud: 17%
Providing necessary technology and resources for people to do their jobs remotely: 13%
Strategies for the future
At midyear 2021, the nation seems to have a better handle on the pandemic, and optimism on the stock market and at the Federal Reserve stand at historic highs. For many executives, a central worry will be growing pains—how to handle potentially historic demand in a reopening global economy.
It’s an environment that will require midsize companies to stay agile. Luckily, pivots made in response to the pandemic can continue to strengthen your company’s competitive edge. Keeping a close watch on market dynamics and future business needs will help focus your strategic decision-making in three key areas:
- Recruiting, Hiring and Training: In a highly competitive job market, midsized businesses can be at a disadvantage unless they play up their strengths. Lean in to what makes your business great. Things like culture, community and opportunity for growth can be just as appealing as a competitive benefits and salary package. Work with HR partners to understand where your labor needs are today versus where they may be tomorrow so you can be sure to attract and retain the talent you’ll need for the long haul.
- Digital Adoption: During the pandemic, 64% of business leaders made at least one digital adjustment to grow or sustain their business, and the majority intend to make them permanent. While your digital adoption may have accelerated, it can’t stop. Take careful consideration when looking at ways to streamline processes and meet consumer demand in a more digital-forward environment.
- Resiliency Now and for the Future: Simply being able to say, ‘I sustained or grew my business during a pandemic’ is an incredible feat. And while you may want to put the events of the last 18 months behind you, the lessons learned are invaluable. Whether you made changes to your supply chain, digitized certain operations or expanded into new products/services, use these shifts as a model to prepare for future disruptions.
About the survey
The 2021 Business Leaders Outlook Pulse survey provides a six-month view of the current business environment from 1,375 senior executives from midsized U.S. companies with annual revenue between $20 million and $500 million. The survey was conducted June 7-18, 2021.
For year-over-year trends, current data is compared to data collected in second quarter of 2020. Data is also compared to the annual survey, which was conducted in fourth quarter of 2020.
Results are within statistical parameters for validity; the error rate is +/-2.6% at a 95% confidence rate. Some graphical numbers may not add up to 100% due to rounding.
Chart: Who Took the Survey
Bar chart showing the titles of respondents to the survey.
CFO: 43%
CEO/chairman: 25%
Business owner: 14%
Company president: 11%
Other: 6%
Chart: Number of Employees
Bar chart showing the size of the respondents’ companies.
1-49 workers: 18%
50-99 workers: 16%
100-249 workers: 28%
250-499 workers: 17%
500-999 workers: 10%
1,000-4,999 workers: 10%
5,000+ workers: 2%
