2017 Central Ohio CEO Survey finds local leaders optimistic, appreciative of collaboration.
Local executives are enthusiastic about opportunities for economic growth at the local, national and international levels in the year ahead, with greater optimism for the global economy than in the past several years. The majority has high expectations for their organizations over the next 12 months; most project gains in revenue, profit, productivity and employee salaries, and over 40 percent expect workforce expansion.
Columbus organizations and leaders continue to be tested by labor availability challenges, including attracting and retaining talent and developing leaders. Most continue to give high priority to improving public school education as a means of enhancing the Columbus business climate. Some see the need for more career-focused, technical and vocational education. Other priorities include improving the business tax structure and public transportation.
Although the opioid epidemic has emerged as a national and statewide crisis, it was not identified as the most significant business challenge facing any of our respondent organizations, though about 7 percent rated “addressing the opioid epidemic” as the top priority for improving the central Ohio business climate.
In a new finding, over half of respondents ranked the collaborative culture as key to making central Ohio an attractive place to do business.
Columbus' reasonable cost of living and educated workforce continue to get high marks from local executives.
CEOs have demonstrated consistent confidence in central Ohio's economic performance across the seven-year history of this survey, which seems justified by current indicators of the region's robust economy. According to the Bureau of Labor Statistics, the August 2017 unadjusted unemployment rate for the Columbus MSA was just 4.3 percent, below all other Ohio MSAs, and both national (4.5 percent) and Ohio (5.3 percent) unemployment rates. The area's low rate positions it in the top third of the nation's 50 largest metro areas, according to the Cleveland Federal Reserve Bank. And Columbus 2020 says the Columbus region experienced employment growth over the past year of 1.1 percent, a labor participation rate of 67.7 percent (the national rate is 63.3 percent) and GDP growth from 2010-2016 of 21.5 percent.
Seventy percent of our 2017 cohort of top executives expects continued gains in the local economy in the next year, while about 30 percent predict the local economy will remain stable. Columbus leaders are somewhat less optimistic about growth in the national economy over the next 12 months, as 37 percent expect to see the US economy improve, 45 percent expect it to “stay the same,” and 18 percent predict national economic decline.
Local executives have higher expectations for the global economy than they have had for the past several years. Over half (50.8 percent) expect the world economy to remain stable in the coming year, while those predicting improving global economic performance jumped from 18 percent in 2016 to 32 percent in 2017. Fewer respondents expect a declining world economy than in past years; while nearly 38 percent in 2015 and 21 percent in 2016 forecasted global economic decline, only about 15 percent of 2017 respondents expect a global downturn in the next year.
Changes & Challenges
President Donald Trump has declared the US opioid epidemic a “public health emergency.” The Buckeye State has been one of the hardest hit by the epidemic, the deadliest drug crisis in American history. Ohio Attorney General Mike DeWine says at least 14 Ohioans die daily from drug overdoses, and the US Center for Disease Control estimates that for every opiate-related death there are 130 individuals who abuse or are dependent on drugs. A survey by the National Safety Council revealed that more than 70 percent of US employers have experienced the direct impact of prescription drug abuse in their workplaces, including increased absenteeism, impaired or decreased job performance, workplace injuries, and positive drug test results.
Therefore, it seemed timely to assess whether central Ohio leaders have experienced the opioid crisis as a top challenge facing their organizations and the Columbus business climate. We added a response option related to employee addiction and the opioid crisis to two survey questions: “What is the top business challenge/issue facing your company?” and “What is the single most important thing that would improve the Columbus Metropolitan Area's business climate?”
However, despite high rates of opioid addiction and deaths in many Columbus MSA counties, drug abuse was not identified as a top business challenge by any of our respondents.
Since 2015, labor availability has emerged in our CEO Survey results as the most salient business challenges. More CEOs continue to rank this concern above others as the top barrier affecting their organization in 2017. Area C-levels also identify changing customer needs and expectations and the current economic climate as the highest obstacles. Other top challenges include: employee attrition/turnover, healthcare reform, and regulation and legal issues other than healthcare.
Notwithstanding the tight labor market conditions, local executives continue to rate the quality of the Columbus workforce favorably. Over 56 percent say that the overall quality of the area workforce is acceptable, and 37 percent say that the central Ohio labor force is of high quality. Still, numerous write-in responses point to the need for increased local attention to workforce development, including the need for career and workforce training and development in the public education system, and measures to attract and develop technical talent.
Where the opioid crisis does register is when it comes to improving the Columbus metro business climate, but it was not in the top three needs.
More survey participants prioritize “improving public school education” as the single most important tactic. Other top climate-improving measures according to these leaders are: “changing the business tax structure” and “improving public transportation,” with “addressing the opioid epidemic” noted next. Trailing recommendations include “increasing financial incentives for businesses” such as tax abatements, fee rebates and expedited permits, and “creating more affordable housing.” In addition to identifying challenges facing their organizations, survey participants named the top three challenges they face in their role as organizational leaders. Throughout the survey's history, area leaders have consistently rated sustaining a competitive advantage, attracting and retaining good employees, and developing leaders as their top challenges.
Despite these organizational and leadership challenges, the executives in our sample generally expect their companies to thrive in the next 12 months. Over 80 percent expect their organizations' revenues to increase, and over half predict their businesses will be more profitable next year.
Nearly two-thirds expect greater productivity, and 43 percent expect their companies to increase staffing levels in 2017 despite labor availability challenges in central Ohio. Local enterprises will likely have to compete with more lucrative compensation plans and other human resource initiatives to attract and retain workers in the tight Columbus labor market. Most respondents expect to increase employee salaries over the next 12 months; 64.8 percent expect to increase salaries by less than 5 percent, although another 18.5 percent predict that employee salary gains will exceed that amount.
Surprisingly, fewer than half expect to increase spending on training and development.
John Tierney wrote about the “collaborative spirit” of Columbus in The Atlantic in 2014, calling it “more than a buzzword.” He quoted Alex Fischer, president and CEO of the Columbus Partnership, as calling it “the secret sauce” to the region's success.
Tangible indicators that the collaborative spirit is more than a feeling include the Columbus Collaboratory, the Columbus Partnership, Columbus 2020—organizations leveraging partnerships between diverse and competitive area enterprises and their leaders to tackle complex challenges and advance the region's success.
We wondered if local leaders also recognize the collaborative culture as a noticeable contributor to business success in central Ohio, so we added it this year as a response choice to the question, “What top three factors make Central Ohio an attractive location for your business?”
The collaborative culture came in third, as 55 percent agree it contributes significantly to the area's business appeal. Columbus C-levels consistently laud the area's affordable cost of living as a top-three factor that makes central Ohio the right location for their organizations. Over 70 percent of this year's sample says that the lower-than-average cost of living makes Columbus a smart business location.
Next, with over 53 colleges and universities in the Columbus region, 60 percent cite the area's educated workforce as one of the most attractive advantages of doing business in central Ohio. The presence of related enterprises makes Columbus the right place for 28.7 percent of respondent businesses, and the area's logistics and distribution channels also get high marks from 23.8 percent of respondents.
Most of these C-suite leaders gauge their success using three measures: the financial performance of their organizations, their ability to attract and retain customers, and their capacity to attract and retain employees. They associate personal success with measures of their business, customer and employee triumphs. Over 70 percent say their company's success is a top indicator of personal success, and 67.6 percent consider their impact on the lives of employees and customers when gauging their personal accomplishments.
Outside of work, 46.2 percent weigh personal success by the amount and quality of time spent with loved ones and 24.2 percent view participating in community service and civic activities as important indicators of personal achievement. Fewer say that they consider compensation or besting their competitors to be among their top-three measures of personal success.
Keirsten S. Moore is a professor in the School of Management and Leadership at Capital University and Beckett A. Broh isDirector of Diversity and Community Life at Columbus Academy.
How the Survey was Conducted
Capital University's School of Management and Leadership and Columbus CEO have partnered since 2011 to examine central Ohio leader perspectives on the Columbus business climate using the annual Central Ohio CEO Survey. The 2017 survey, an adaptation of the SMU Cox CEO Sentiment Survey, captured the views of area CEOs, presidents, and directors in several categories: the economic outlook, top challenges facing their Columbus organizations, expectations for company performance, perceptions of the Columbus metropolitan area, and leadership challenges and success measures. These local C-levels also voted for CEO of the Year in four categories: large for-profit, large nonprofit, small for-profit and small nonprofit. The winners and finalists are profiled in this issue.
Surveys were mailed to CEOs and other high-ranking executives in private, public and not-for-profit sectors across the 10 counties of the Columbus metropolitan statistical area: Delaware, Fairfield, Franklin, Hocking, Licking, Madison, Morrow, Perry, Pickaway and Union counties. CEOs had the option of completing an online or paper survey.
The Central Ohio CEO Survey is an annual poll. CEOs who would like to participate in 2018 may complete the request at www.capital.edu/ceo-survey.