Tag Archive: jobs

“Cautiomistic” Directors in Q1

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The new word is “cautiomistic.” Used to describe the economy, few are willing to describe their outlook  as optimistic. While there are some positive signs, for every two steps forward the economy seems to move one step back. Each metric that may describe an economic recovery can be hedged with something equally pessimistic—increased employment opportunities and decreased consumer confidence, or rising corporate profits and the soaring federal budget deficit.

NACD’s most recent Board Confidence Index (BCI) mirrors this view of restrained optimism. First exhibited last winter, directors no longer feel the hesitancy that somewhat immobilized companies in autumn of 2010, but current business conditions have not yet improved to a level encouraging outright enthusiasm. The overall BCI rose to 64.9 in Q1 2011, a slight improvement over the previous quarter’s overall index of 64.4.

Despite this incremental improvement, directors are less confident about the future in the short run, as opposed to a year out. Waiting for final rules from the Securities and Exchange Commission on shareholder voting and transparency, proxy access, and the new whistleblower programs, it is no surprise that on the cusp of proxy season boardroom expectations for the next quarter dropped to 57 from 60 in Q4 2010.

It should be noted that the BCI is a snapshot, taken nearly a month ago. Since then, significant events have dominated the news. The economy has been shaken by the aftermath of the terrible natural disasters in Japan, the unrest and turmoil in the Middle East, and the near-shutdown of the U.S. federal government over budget debates.

While fewer consumers believed jobs were plentiful in March, directors were more optimistic. In Q1 2011, 48% of directors responded that their hiring remained the same, while a third said their companies’ hiring practices resulted in a net gain. Looking forward, more than half responded that their hiring practices would remain the same.

The Board Confidence Index is conducted by NACD in conjunction with Heidrick & Struggles and Pearl Meyer & Partners. Q2 2011 results can be expected in early June.

Bigger Paychecks Expected for American Workers

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American workers may be justified in expecting bigger paychecks in 2011.

A combination of booming exports and growing corporate profits is providing momentum to the national economic recovery, with U.S. workers poised to reap the benefits in the form of wage increases.

While companies have single-mindedly focused on cutting costs in recent years, the latest Duke University/CFO Magazine Global Business Outlook Survey found that chief financial officers expect wage increases of 2.5% for 2011, up from the 1.9% they predicted for 2010.

In addition, a recent Wall Street Journal survey found economists are expecting 2011 to see the creation of 180,000 jobs a month. The National Association of Corporate Directors’ (NACD) latest Board Confidence Index (BCI) concurs with this optimistic outlook. A majority of U.S. corporate directors predict that their companies will either retain or expand their workforce, according to data from the NACD BCI for Q4 2010.

While it isn’t clear how widespread the increase in wages might be, some industries, such as manufacturing (which added 136,000 jobs over the past year), may have to actually compete to attract and maintain employees. That is a dramatic shift from today’s job market, providing much-needed relief to individuals who have been worried about finding jobs or keeping the ones they have.

With the official end of the recession having occurred in 2009, the prospect of higher wages and an increase in employment is long-overdue good news for the U.S. workforce. It also means that boards of directors can focus on longer-term goals for their companies, and not worry about simply keeping their companies afloat.