Ceos Challenges 2009

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For several years, The Nicolet Bank Business Pulse© has been tracking the Top Challenges CEOs say they expect to face in the Coming Year.

CEO Challenges: 9 in ’09

In 2009, CEOs say there are new challenges on their plate - some they’ve never seen before. Since October, when the whole world changed, CEOs in Northeastern Wisconsin have been rapidly reordering business priorities. Some of the old challenges are still hanging on, but CEOs say it’ll be a Brave New World in the brand new year. Last week, The Nicolet Bank Business Pulse© asked CEOs what they were thinking, doing, (wishing and hoping, too?)

It’s ALL about Sales… As it was last year (and the year before that), the Top Challenge CEOs say they’ll face is Increasing Sales. In fact, Increasing Sales jumped from 47% saying it was a Very Significant challenge to 77% saying the same this year; 18% said Sales would be a Moderately Significant challenge; NO ONE said Sales would not be a challenge in the year ahead. (NOTE TO CORPORATE SALES CONSULTANTS: Get out the “Smile and Shoeshine” Kits.)

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First time on the CEOs’ plate: 53% said the challenge of Operating in the Context of Financial Uncertainty will be a Very Significant challenge in 2009; 32% said a Moderately Significant challenge. From nowhere on the radar to a strong Number Two – it’s an impressive move against the more “routine” CEO challenges of Sales, Marketing, Healthcare Costs. Everything has changed significantly – and quickly – since October. Handling Increasing Health Insurance Costs dropped like a rock to third place on the CEOs’ Top Challenges list (33% said, Very Significant). Handling Increasing Health Insurance Costs was tied for the Top Challenge in 2007 (63% saying, Very Significant). Health costs slipped to second place at 44% last year. Today, it’s 33%. The decline may reflect the changes CEOs have made over the last few years as well as some slowing of healthcare inflation, but chances are CEOs have bigger Fish to Fry! (See Challenges #1 and #2.) Other Very Significant challenges for 20-to-30% of NEWi CEOs include: Improving Quality of Marketing Efforts (30% Very Significant), Operating with Increasingly Tight Credit (28%), Retaining Quality Employees (25%) and Developing New Products/Services (22%).

Executive Summary: Data Collected December 5-12, 2008

“I’m not getting information; I'm not managing.” John Torinus, President & CEO — Serigraph, Inc

Recruiting Quality Employees dropped to its lowest point since Nicolet Bank started asking about it. As a challenge, just 19% said recruiting would be Very Significant in ’09. Recruiting Quality Employees was the third most significant challenge in ’07 at 48%, but dropped to 28% last year. The decline is no doubt a reflection of the softening job market and increasing unemployment that puts more quality employees into the job market – with less bargaining power. While unemployment is

about 6.7% nationally, it is somewhat lower in Northeastern Wisconsin. The Appleton MSA unemployment level was 4.2% in October; Green Bay MSA was 4.4%. These rates are slightly higher than 2007 when Appleton was at 4.1% and Green Bay at 4.2%. Goods producing businesses are somewhat less concerned about Recruiting Quality Employees (10% Very Significant) compared with service providing organizations (25% Very Significant).

The top CEO challenges for 2009 77%

Increasing Sales Increasing Financial Uncertainty

53%

Handling Health Insurance Costs

33%

Improving Quality of Market Efforts

30%

Increasing Tight Credit

25%

Developing New Products/Service

22%

Recruiting Quality Employees

19%

Developing Cohesive Top Management Team

19%

Handling Energy Costs

9% 0%

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Summary With the very significant changes in the worldwide economic situation since October, two brand new challenges were added to the CEO priority list this year: Operating in the Context of Financial Uncertainty and Operating with Increasingly Tight Credit. CEOs said both challenges will be of significant concern in the months ahead. It appears that 2009 is shaping up to be a year of unique challenges for CEOs in NEWi! A key ingredient to success is how the overall economy performs. Several economic forecasts – including the Third Quarter Nicolet Bank Business Pulse©, suggest a long road to recovery. It will surely test the leadership skills of NEWi CEOs.

28%

Retaining Quality Employees

Handling the Increasing Energy Costs dropped from 21% saying it was Very Significant last year to just 9% this year. This is probably a reflection of seeing prices at the pump dramatically lower since October, but more likely a vote of No Confidence that the worldwide economic slowdown will keep demand for energy low and price per barrel, soft.

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How the Survey is Conducted The Nicolet Bank Business Pulse© is a Quarterly Study of CEOs in NE Wisconsin (Brown, Calumet, Door, Kewaunee, Manitowoc, Marinette, Oconto, Outagamie, Shawano, Winnebago Counties) and Menominee, Michigan. It is designed and implemented by IntellectualMarketing, LLC. Participants include: 28% in manufacturing; 25% in services; 18% retail trade; 5% wholesale trade; 6% finance, real estate, insurance; 5% in transportation, communications, utilities; 6% in construction; 7% in other industries. 19% have fewer than 6 employees; 33% have 6-25; 17% have 26-50; 8% 51-100; 16% 101-250; 3% 251-500; 3% 501-1,000; 2% have 1,001 or more. QUESTIONS to Dr. David G. Wegge (920) 217-7738; [email protected]