Survey: Connecticut Business Leaders ‘Cautiously Optimistic’
“I believe in this state.” That’s how iCleanse CEO Christopher Allen responded when asked why he took the risk to open a company in Connecticut in the middle of the pandemic.
“I’ve done it here, and I know that I can do it again,” he told fellow business leaders Sept. 30 at CBIA’s annual The Connecticut Economy conference in Hartford.
Allen spoke on a panel moderated by Michael Brooder, the managing partner of Marcum LLP’s Hartford office, that also featured Beacon Health Options chief administrative officer Carrie Bourdon, and Rohan Freeman, president and CEO of the Freeman Companies.
Allen’s outlook for Connecticut’s economic future mirrors the cautious optimism shared by other business leaders in the 2021 Survey of Connecticut Businesses, released at the conference by CBIA and Marcum.
This year’s survey illustrates how businesses are navigating a fragile, uncertain recovery from one of history’s greatest disruptors.
It also reveals the factors behind that optimism, with many businesses experiencing jumps in profitability, sales, and economic outlook.
Finally, the survey highlights growth challenges, including the most pressing issue facing the state and the country: the continuing labor shortage.
‘Not Sure Where They Are‘
The vast majority (80%) of respondents reported having issues finding and/or retaining employees.
That’s despite a puzzling problem: There are a record number of unfilled job openings, yet 91,000 fewer people are working now than in February last year and the state’s unemployment rate is two points higher than the national average.
What are the obstacles to finding workers?
One-third (33%) of respondents said job candidates do not have the required skills or expertise, 26% cite poor work ethic, and 21% note competition from other employers offering higher wages and/or more expansive benefits.
Competition among employers—with small business often at a disadvantage—is the main obstacle with retaining workers, noted by 53% of employers, with the state’s high cost of living (14%), and lack of employee engagement and recognition (10%), among the other issues.
Freeman talked about his engineering firm’s need to incentivize current employees to work overtime because he could not find new employees.
“We couldn’t find the workforce” to work on new projects, Freeman said. “They’re just not there, we’re not sure where they are.”
“I don’t think we can continue on this trend, but we’re hopeful.”
Bourdon expressed a similar sentiment: “As an employer it is a challenge that there are all of these open jobs, but not the employees to fill them.”
When businesses began opening up again in the spring, “we saw this kind of pent up demand for turnover,” Bourdon said.
“Employees who were feeling disengaged or burned out were looking for different opportunities and started to move on.”
‘Leading with Compassion‘
The labor shortage has led Connecticut employers to reevaluate their relationship with current employees.
“There was very strong communication … really listening to our staff in terms of what they need, our clients, the members that we serve,” Bourdon explained.
“Really leading with compassion with our teams, understanding that people were under a tremendous amount of stress … that impacts workforce productivity, so being very compassionate and empathetic with our teams, and focusing on employee wellness and flexibility, was key for us.”
Given the challenges with finding and retaining employees, those areas are the prime target for company investments.
Twenty-four percent will make their greatest investment in employee retainment—including adding new benefits and improving company culture—while new technology (18%), property and facilities (18%), recruiting (12%), other capital assets (9%), and employee training (9%) were among the other responses.
Allen said his main goal is to truly listen to employees: “People are driven for different reasons … Different people have different wants and desires and just being open and flexible to those are key to retaining them.”
More than half of responding firms (51%) said at least part of their workforce worked remotely since March 2020.
Eighty-three percent said they do not plan on implementing a remote or hybrid work model, and that their employees will primarily work at the office or in the field, a significant change from one year ago, when 72% of employers had a remote work policy.
“The objective is to be productive, so we measure productivity instead of measuring where somebody is sitting,” Freeman said. “That’s the biggest thing we’ve done, is giving employees more flexibility.”
CBIA president and CEO Chris DiPentima told the 250 business leaders at the conference that while challenges lie ahead, there are “numerous reasons to be optimistic about Connecticut’s economic recovery.”
“The opportunities for the state’s economy, job growth, and our communities are vast,” he said.
“Nonetheless, we must continue working together and policymakers must amplify their commitment to rebuilding Connecticut better and stronger than ever.”
Employers are more optimistic about their recovery prospects than last year, when less than half (47%) projected profits for 2020, while 25% predicted they would break even, and 28% expected losses.
The 2021 survey reveals that 64% of respondents saw profits last year—compared with 77% in 2019—15% broke even, and 21% posted losses.
Looking ahead, about two-thirds (67%) project a profitable 2021, 25% said they will break even, and only 8% forecast losses, the lowest percentage in years.
Brooder said that based on the survey, employers are looking for more ways to “continue this success, encourage more success, and get Connecticut back up and running again.”
“There are positive trends even looking back to 2019, which is great,” he said. “Looking at the state from a legislative standpoint … communication is key.
“There really was not that kind of collaboration between business and local government compared to what we’re seeing today.”
Brooder summarized the major goals for business and government to tackle in the future: “retention, finding employees, jobs, jobs, jobs.”
Allen noted that in order to succeed, businesses must be constantly adapting and keeping up with the times.
“We’ve evolved through the pandemic, and we’ll continue to evolve and come out the other side of it,” he said.
“If you want to stay the way of the dinosaur, continue to stay the course.”
Proximity to customers is the greatest advantage to running a business in Connecticut for 32% of companies (down from 36% last year), with 29% citing quality of life (28%), 14% the skilled workforce (12%), and 7% access to major markets (unchanged).
For 35% of the companies we surveyed this year, the lack of skilled job applicants is the main factor—excluding pandemic disruptions—hampering business growth, a 17-point jump from last year.
Eighteen percent cited high business taxes (13% in the 2020 survey), 16% noted the cost of living (17%), 14% pointed to workplace mandates and regulatory compliance costs (24%), and 11% the uncertainty and unpredictability of legislative decision-making (15%).
DiPentima noted that based on the survey results, it is clear “our recovery faces many challenges,” with business leaders sharing their policy priorities for state legislators to tackle during next year’s legislative session.
Twenty-four percent called for prioritizing state spending and pension reforms, 23% for lowering taxes, 16% for workforce development, 10% for business-friendly policies, 9% for economic growth, and 5% for transportation infrastructure.
DiPentima told conference attendees that Connecticut “is fortunate to have such outstanding business leaders working to rebuild our state’s economy and unlock the state’s enormous potential.”
“I am grateful for the progress that we are making as a state in managing and navigating the pandemic and positioning Connecticut for a strong recovery,” he said.
To close out the panel, Brooder asked each panelist a simple question: “Why Connecticut?”
Allen noted his previous business success, saying “it wasn’t done in Silicon Valley, it wasn’t done in Chicago, it wasn’t done in Texas, it was done right here in Connecticut.”
“I believe that we can be a tremendous state, and I only see us going up from here.”
Bourdon listed a number of key factors, including the state’s location between Boston and New York, its excellent school systems, and that “in terms of raising a family, it’s a great environment.”
“It’s a small enough state to make a broad impact across the members we’re serving.”
Freeman gave a unique perspective as someone who is an immigrant and has traveled all over the world.
“I have a taste of what life is like in other places in the world,” he said. “From my experience as an immigrant and my travels, we live in a great state. We live in one of the best states anywhere in the world.”
“I don’t want to go anywhere.”
The Connecticut Economy was made possible through the generous support of Marcum LLP with additional support from Eversource Energy, Liberty Bank, People’s United Bank, Wells Fargo, and Windsor Federal Savings.
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.