Deloitte: Mid-market executives focus on moving forward during uncertain economic recovery

"Because of the significantly slower growth than we've seen in previous recoveries, mid-market executives are increasingly cautious about their expectations for 2012," said Tom McGee, national managing partner, Deloitte Growth Enterprise Services, Deloitte LLP. "Mid-market companies are now trying to meet the challenges of this volatile economy by taking a more adaptable approach to managing certain key business fundamentals."

Moving forward during uncertain times

To prepare for continuing, uneven market conditions, mid-market executives are taking careful actions in three key areas in 2012; talent, finance and technology.

Talent

In last year's survey, respondents were overly optimistic about hiring plans. This year, executives are investing in their people and moderating plans to hire new employees:

• The percentage of executives planning to expand their domestic workforce dropped to 42% from 48% in 2011.
  
• Despite high unemployment, every executive interviewed acknowledged that it is difficult to find certain categories of skilled talent especially in engineering, healthcare, and IT.

More companies (51%) plan to invest in their existing workforce through training compared to last year (34%). Additionally, fewer firms plan to increase the number of part-time workers (only 13% compared with 18% in 2011).

Financing

Mid-market companies remain focused on balance sheet health and improving their cash positions while continuing to invest.

• 35% of respondents are predicting higher cash balances.
  
• 90% expect capital investment to grow or at least remain stable.
  
• 27% are not planning to secure external financing this year, compared to 14% last year.

Interestingly, only 7% of privately held mid-market companies would consider going public in the next year.

Technology

Last year's survey showed that mid-market executives understand the importance of technology to their business. This year, respondents re-affirmed that technology continues to be vital to increasing productivity.

• Business process automation remains the top investment pick to increase productivity for 46% (down from 52% last year).
  
• 40% - up from 29 last year - recognise cloud computing and Software as a Service (SaaS) as one of the top three technology investments for 2012.

Research Methodology
528 executives at US midsize companies were polled about their expectations, experiences and plans for becoming more competitive. Respondents were senior executives at companies with annual revenues between US$50m and US$1bn. The Deloitte survey was conducted by OnResearch, a market research firm.

Some 23% of the companies represented are public; the other 77% are privately held. Of the private companies, about one-third are family-owned and another third are private-equity backed; one-quarter are closely (non-family) held. The remaining companies represented are venture capital-backed, employee-owned or other ownership structures.

Diverse industries were surveyed. The three largest sectors were professional/business services, retail and distribution and technology, comprising 24% of the respondents. The other 76% were spread across 18 different sectors. Respondents to the survey also represented a diversity of management positions. Finance professionals contributed 23% of the responses; general management, 16%; information technology, 16%; operations and production, 13%; and sales and marketing, 11%. The other 25% were spread across 10 different functions, from customer service to supply chain, procurement, and R&D. Exactly one-half were owners, board members, or C-suite executives; the rest were vice-presidents, department heads, or managers.

The full survey results are included in the Appendix; some percentages may not add to 100% due to rounding, or for questions where survey participants had the option to choose multiple responses.

About Deloitte Growth Enterprise Services

Deloitte's Growth Enterprise Services team delivers a distinctive client experience through service offerings tailored to address the unique needs of mid-market and privately held companies. View the entire Mid-Market Perspectives report here.