Efficiency and cost-cutting are two words that CEOs have uttered many times during earnings calls over the past 12 months, and they will be the themes again for corporate America in 2024.
But for business leaders, this year won’t necessarily be a year of refreshment. The labor market pendulum will likely swing back toward employers, creating a “perfect storm” for companies focused on improving productivity, argues Daniel Chao, chief economist at Glassdoor.
“Although the job market is expected to cool, it remains resilient. 2024 could be a perfect storm for companies to focus on efficiency and productivity,” Zhao said.
U.S. worker productivity began to improve during this period. Third quarter of 2023 But it lags behind long-term trends. Labor productivity grew at an annual rate of 1.5% in the current business cycle, while the long-term growth rate was 2.1%.
As investors shift their focus from growth to profitability, increasing profitability and reducing costs may be music to the ears of shareholders, but for the American workforce, the message from management is to try harder. It may be about accomplishing more with less effort.
“Continued concerns about economic slowdown will prompt employers to seek cost reductions rather than hiring in large numbers to sustain growth,” Zhao added.
In a recent memo to employees, Wayfair (W) Chief Executive Officer Niraj Shah said that by being “frugal, nimble, customer-focused, and smart” while spending extra time at work, Encouraged employees to increase productivity.
“Long hours, responsiveness, and blending work and life are things we should never shy away from,” Shah wrote, as first reported by Business Insider.
Mr. Shah has spent the past 18 months cutting costs and reducing headcount to right-size Wayfair’s cost structure.The recent company report It was the second consecutive quarter of positive free cash flow, an achievement Shah called “an important milestone.”
Shah is not alone in his pursuit of efficiency. Mark Zuckerberg of Meta (META), David Solomon of Goldman Sachs (GS), Andy Jassy of Amazon (AMZN) and others are cutting costs to improve long-term growth. He joins a long list of CEOs making headcount adjustments.
How this will affect employees and their workload is still up for debate, but recent data suggests that employees no longer have an edge and have little choice but to do what the company wants them to do. It may be missing.
Planned layoffs jumped 98% in 2023. fewer companies I also received a bonus, and I no longer received a large raise even if I changed jobs.
“The premium between changing jobs and staying in the same job has shrunk from 7% in early 2023 to 2.5% now,” ADP chief economist Nella Richardson told Yahoo Finance Live. .
Richardson added: “The number of workers trying out new jobs for size is actually decreasing, which means there aren’t as many opportunities out there. The unemployment rate is going down. Although still low, the balance between supply and demand is coming closer.”