The end of the year is drawing to a close, and CFOs everywhere have their sights set on 2023 — making it a perfect time to fine-tune organizational strategy and business operations. To ensure their companies are well-positioned for success in the new year, C-suite leaders must think big picture yet also focus on the daily details; this unique choreography of visionary oversight and intricate precision will give organizations an edge in a competitive environment.
The upcoming year can signify reaching new heights for many organizations. To prepare, organizations should take a step back, developing pathways and objectives that align with their company’s overarching goals.
Talent Retention
The past year has been a rollercoaster, with businesses having no choice but to adjust to the realities of the Great Resignation and a tight labor market. However, the focus for many companies in 2023 may go beyond finding new employees — it should include options for retention strategies.
A recent study revealed that, on average, 4 million Americans quit their jobs each month in 2022. Some top reasons employees quit their job include low compensation, poor work-life balance and a lack of advancement opportunities.
Understanding why employees are leaving their roles and devising solutions to keep valuable talent should be at the forefront of executives’ minds at the start of the new year.
Some key retention strategies to consider for 2023 include:
- Learning & Development: Forward-thinking employers who recognize the value of leadership development programs understand that continuing education empowers employees to push past limitations, incentivizing growth and retention within and beyond. Allocating funds for such programs enables organizations to stay ahead of the curve by tapping into talent’s latent potential in meaningful ways, yielding a priceless return on investment.
- Increased Compensation: According to a survey, employers worldwide plan to increase their salary budgets by 4.6% next year, the highest jump in 15 years. Most organizations attributed the increase to inflation and a tight labor market. If your organization doesn’t proactively look after the financial well-being of your workforce, your best and brightest could be recruited away.
- Remote and Hybrid Options: During the pandemic, remote work for office jobs became necessary for employers. Nearly three years later, most office workers don’t want to give up that flexibility, and many have proven they will find work elsewhere if that digital option is taken away. Offering flexible schedules and investing in tools and resources that enhance remote and hybrid collaboration will remain critical next year.
Mergers & Acquisitions
For most of 2021, mergers and acquisition (M&A) roared on. However, macroeconomic tensions in the air somewhat diffused that furor in the second half 2022: many large platform deals were halted, even as add-on deals stayed robust. This turning of the rides may be chalked up to the highest inflation in 40 years, rising interest rates, market volatility, supply chain disruptions and the Russia-Ukraine conflict weakening confidence for some transactions. Whether there is further change in store remains to be seen.
Will the market change in 2023? It appears to be a toss-up. Some economic experts argue a sharp turnaround is nowhere in sight. Some investment bankers and private equity advisors insist there will be a surge in transactions next year.
Despite the current wave of uncertainty that has left many companies to reduce some M&A activity, the classic motivations pushing firms towards these transactions remain. Seeking growth, expanding into new markets and gaining access to new products and services have long been a major impetus for companies to pursue acquisitions.
Moreover, with businesses now racing to stay ahead in the tech-driven world economy, acquiring advanced technologies and capabilities is more vital than ever before. M&A also enables firms to gracefully exit businesses they can no longer sustain while investing more resources in core activities that strengthen their competitive edge. With the proper strategic processes, M&A will continue to be an indispensable tool among companies seeking success in today’s volatile marketplace.
Automation
With the current economic climate continuing into the new year, it’s a good time for your organization to take a closer look at day-to-day business operations. Is there potential to save costs here or streamline procedures there? Perhaps it’s time to consider revamping workflow processes, upgrading technology or finding creative methods to improvise from existing systems.
In a downward economy, automation plays an increasingly important role in aiding business operations by streamlining mundane tasks and freeing up resources that can be put to better use, therefore increasing the likelihood of success during uncertain times.
Turning to intelligent automation, also known as robotic process automation (RPA), to conduct financial tasks or other processes requiring high levels of audit and oversight is a great place to start. Automation can also benefit employee retention, supply chain logistics and compliance with new accounting standards.
Vendor and Service Pricing
As we turn to the new year, it is also crucial for organizations to closely analyze their major contracts with vendors, suppliers and service providers. Taking time to reflect on each agreement is a proactive approach that will pay off in the short and long term.
Considering options like renewing existing deals or negotiating more cost-effective terms helps keep costs down and can lead to better business relationships. Look for services and programs that may be underutilized — adapting, re-envisioning or cutting them can result in savings.
Risk Management
When considering potential risks for the coming year, it’s essential to stay ahead of the curve in assessing pitfalls and any areas of vulnerability. Think ahead to what risks your organization may face in the coming year. How can these risks be mitigated or minimized?
Risk management areas to focus on include:
- Cybersecurity: Security and data breaches are becoming so common and detrimental that the SEC recently called for stricter accountability. It’s vital to analyze your organization’s cyber protection and determine its vulnerabilities. What steps and processes can you take to make improvements?
- Supply Chain Vulnerabilities: This past year will be remembered for many things; unfortunately, it will also be remembered as a year rife with supply chain disruptions. Given the current economic state, organizations must prepare for those obstacles heading into the new year. Your organization may want to consider a supply chain audit or assessment to find your specific vulnerabilities and address them.
- Tax Defensibility: With increased funding to the IRS, audits are expected to be on the rise. Organizations must ensure they have a defensible stance regarding complex tax incentives, such as the Employee Retention Tax Credit and the research & development tax credit.
Next Steps
Our professional financial experts stand ready to assist you with any organizational strategies or business operations challenges you may face in the coming year. At CBIZ & MHM, we work closely with your organization to find solutions to your unique problems. With our assistance, you can focus on what you do best — running your business. Contact us today.
Copyright © 2022, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.
CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).