Sep 9, 2021
Patricia O’Connell interviews Nick Araco, CEO of AchieveNEXT, and Tom Stewart, Chief Knowledge Officer, about AchieveNEXT and recent data they have collected from middle-market CHROs and CFOs regarding where they see business heading for the rest of the year.
Listen in to learn more about
AchieveNEXT and projected upcoming mid-market
growth.
Key Takeaways:
[:28] Patricia O’Connell introduces Nick Araco, CEO of AchieveNEXT, and Tom Stewart, Chief Knowledge Officer.
[1:09] AchieveNEXT helps emerging and middle-market CFOs and CHROs to gather and assemble data, to benchmark, and to share best practices, and do it all better, faster, and smarter.
[1:54] Most of the middle-market companies are private. There is not a lot of benchmarking data on which to rely. AchieveNEXT combines a peer network, data from research with CFO and CHRO alliances, and a suite of human capital and performance solutions that will help CFOs and CHROs improve the performance of their companies.
[2:50] Nick talks about capturing data from CFOs and CHROs of 200 private companies about what they are committing to, how they are doing, and what they project for the next six months. The data shows that optimism abounds for recovery. Top-line and bottom-line performance is up in these mid-market enterprises in 2021.
[4:34] Nick and Tom have spent decades working with mid-market enterprises. For most of that time, CFOs and CHROs made conservative projections of nominal, single-digit growth. Their current projections are for more than 10% growth, which is very different from their past projections.
[5:20] Some hospitality and other businesses are constrained by the impacts of the pandemic; they project negative growth. This group is relatively small compared to the mid-market enterprises that project high growth. The bell curve has shifted to the right. People have more confidence.
[6:22] During Q3 and Q4 of 2020, the mid-market was concerned that even if they were up and running, their customers and vendors would not be financially fit. Now, they are worried about retaining talent and finding new talent to sustain and drive their growth.
[7:35] With the expectation of revenue growth, there is an expectation of employment growth. The data gathered by AchieveNEXT shows that 57% of mid-market enterprises say attracting and retaining top talent is one of their top three challenges. It’s the #1 challenge.
[8:42] One of AchieveNEXT's secrets is that the relationship between the finance leader, the HR leader, and the CEO is the trifecta. That relationship and the functions behind finance and people drive the success of the business. Companies that thrive have brought the numbers and acumen of finance together with the people side.
[9:32] At their highest levels, the CFO and the CHRO are responsible for the development of financial and human capital. That’s what makes the enterprise a combination of financial and human resources.
[10:47] Most of the enterprises surveyed said they are not shifting their strategy. They are focused on doing what they do well, and it seems to be meeting the market’s needs and demands. So they are looking for talent like the talent they already have. It’s a battle for talent.
[11:46] Most enterprises are reporting that the supply of talent they are seeking is either not out there, or hard to find, or is not moving. There is not enough talent. They will either have to create or develop new pools of talent, or pay more and steal them from somebody else, or win them with something that doesn’t involve money, like culture.
[12:42] Enterprises were surveyed about actions they are taking for all their priorities for the remainder of 2021. The most important was increasing efficiency. Right under that was addressing talent issues. Workplace flexibility was highly regarded among women CFOs. Diversity, equity, and inclusion are also high priorities for expanding talent pools.
[14:08] Mid-market enterprises are investing and doubling down on technology to fill functions that can be automated. Instead of eliminating people, they are working to upskill people to work on higher-value functions that cannot be automated.
[15:05] “Technology is my friend,” is the message that middle-market CFOs and CHROs have been telling AchieveNEXT. 78% say that technology is providing a positive benefit. They are not buying new tools and equipment, but focusing on getting the most out of what they have and getting the stacks they have to communicate better.
[16:32] Nick and Tom are hearing almost daily stories of CFOs announcing a deal was done. The Alliance of Merger and Acquisition Advisors (AM&AA) says there is about $1.6 trillion available for M&A. Capital is not particularly hard to find. About 21% of mid-market companies are looking for an acquisition.
[18:39] The private equity timelines are compressed. What was once a five-to-seven-year threshold of buying, developing, and selling a platform has come down to 2.5 years from buying to selling. There’s an attitude of bullishness and excitement. Tom sees cyclical and structural issues creating this increasing M&A.
[20:36] Most private companies expect to stay private. When would a company want to go public?
[21:35] Nick mentions some concerns that exist in the mid-market regarding projected top-line revenue performance: capabilities, cost, and COVID-19. These three dark clouds do not cover up the confidence the mid-market has in their companies, industries, cities, and the U.S. economy.
[24:01] Nick shares helpful links and a peek at their upcoming study on mid-market talent acquisition, compensation, and culture.
[25:26] Patricia thanks Nick and Tom for joining CEO Stories on This is Capitalism.