Small Business Solutions

Employee goal setting is a key responsibility for any manager. By setting measurable and attainable goals, a supervisor not only guides improvement in employee performance, but can also actively help strengthen the business and enhance its reputation as an employer of choice.

What Is Goal Setting for Employees?

Goal setting uses short-term action items to motivate and inspire an individual to achieve a long-term vision. In a work setting, this can be a combination of setting specific, measurable, and actionable steps that help an employee and the organization move towards a larger, desired result. For an employee, this result typically represents professional and personal growth.

Employee goal setting is usually a collaborative effort between a worker and their direct manager or supervisor. Progress should be measured against benchmarks and a manager can offer guidance to help a worker identify the skills and professional development needed to advance them toward a goal. Managers can also help employees find and establish goals that work within their roles and available resources. Goal setting for employees may also account for that worker's personal targets and future ambitions within the organization.

Employee Goal-Setting Examples

Employee goal-setting examples vary depending on the individual, organizational needs, their role, and professional aspirations. Here are some types of employee goals:

• Personal Growth. These types of goals may or may not be work-specific, though it can be argued that as an employee develops personally, they are more likely to feel satisfied and bring an elevated skill set to their role. For instance, an employee may want to improve their creative thinking abilities and identify several ways in which they can accomplish this such as reading books, taking on a creative assignment within the organization, or enrolling in a class.
• Professional Development. These can be skills or goals set to help an employee develop in their specific role or for a future role. Perhaps the employee needs to sharpen their leadership skills, improve their time management, or attain a professional certification.
• Team Focused. There may be times a department or team within the organization must expand its collective skill set to improve performance or deliverables. For example, consider an HR team that engages in equity, diversity, and inclusion training so they can better understand how to incorporate that into the organization.

How to Define Goals for Employees

Understanding how to define goals for employees can be the difference between improving productivity or the disappointment of stagnation. It's important that goals advance all the involved parties — individual, team, and business. Keep the following pointers in mind when determining employee goals:

• Take a comprehensive approach. As an employee, an individual's goals should be in alignment with their personal development, that of their team, and the organization's priorities.
• Collaborate. Goals can be a powerful motivator and as such, it's important that an employee take ownership in the process of developing them. Supervisors and managers should provide guidance while balancing a certain level of transparency with the team to ensure support and a positive environment.
• Keep goals realistic. Few things are more discouraging to an employee than to be excited about moving towards certain goals only to not be given the resources to attain them. Set employees up for success by establishing goals that work within the employee's role as well as the organization's budget and objectives. Establish measurable steps so progress can be documented and assessed.
• Personal Development. Helping an employee reach their goals is a way to show them that the business cares and supports their personal and professional growth. For a business, investing in an employee's individual growth can also foster a sense of loyalty and increase engagement while reaping the rewards of a more highly skilled workforce.

Why Is Employee Goal Setting Important?

Setting goals at work can offer other benefits such as helping to:

1. Ensure Staff Alignment.

When more staff members are working to further the company's broader short-term and future goals, the coordinated effort is likely to move a business forward, which can be advantageous to everyone in the form of job satisfaction, a healthier bottom line, and a clearly defined sense of purpose.

2. Establish Clear Guidelines.

Well-defined goals for employees that are attainable and measurable give supervisors and employees a set of guidelines and criteria that can be used in employee reviews and evaluations.

3. Deepen Employee Engagement.

Goal setting for employees done right can help inspire and motivate them while helping them thrive in their roles. As a business invests in its employees' growth and development, it can help them feel valued, thus deepening engagement even more.

4. Grow Top Talent.

Helping current employees establish and reach their goals is another way an organization can expand the skill sets of its workforce and promote the development of top talent and high-performance teams within its current ranks.

7 Tips on How to Set Employee Goals

Here are some considerations for goal setting in the workplace that can help make the potential benefits a reality.

1. Set Goals That Align with Company Objectives

Each employee's goals should be tied to the company's overall growth strategy. When employees understand how their individual roles and responsibilities contribute to the bigger picture, they're often more focused and motivated to achieve goals that result in success for both the business and themselves. Consistently communicating strategic business goals (and regularly emphasizing the company mission) can help keep employees engaged in the work they do.

Businesses may choose to link their company performance goals to key strategic objectives, and from there convert those into team-performance goals. As a result, employees may accept increased accountability as they recognize how their individual performance directly impacts the company.

2. Invite Employees to Identify Job-Specific Goals

Managers may have certain objectives in mind for each employee, but they will likely get insightful answers if they ask employees to identify goals specifically related to their job and that are meaningful to them. There's a big difference between imposing goals on employees and encouraging them to suggest goals on their own. When their suggested goals align with company objectives, a manager can work alongside employees to develop action plans to attain those goals.

Depending on the position, employee goal-setting ideas might include those centered around productivity and efficiency. When working with an employee, aim for fewer mistakes on the job and an increase in productivity. This could translate to more sales calls in a day or, for a customer service representative, addressing customer issues in a shorter period of time, so as to interact with more customers on a daily basis.

3. Set SMART Goals

Employees may not know how to make goals for work that they can realistically achieve. In the past, they may have created vague or poorly crafted goals, which tend to feel daunting and set them up for failure in achieving their objectives. Instead, carefully planned, clear, and trackable goals set within the SMART (specific, measurable, achievable, relevant, and time-based) framework can help outline the steps necessary to reach a goal.

Each element of the SMART framework, outlined below, works together to set boundaries, define next steps, identify necessary resources, and pinpoint indicators of progress. Consider using the SMART goal framework when working with employees to help them create a strong foundation for success.

Specific

Create goals that are as clear and specific as possible. When you and the employee first meet and you ask them about a goal they want to achieve, their answer may initially be vague ("I want to do better on sales calls"). But the more the employee can hone in on a specific desired goal ("I want to increase my number of units sold"), the more you can help them understand the steps necessary to achieve it.

Getting into the specifics requires asking the right questions. When working with employees, ask them for more details, such as:

1. What are you looking to accomplish?
2. Who is a part of this goal?
3. What are the steps to achieve this goal?
4. Why do you want to achieve this goal?
5. What outcomes need to happen to make this a success?

Measurable

The measurable part of the SMART framework outlines specific criteria for indicating progress toward a goal. It helps employees stay on track, keeps them accountable, and adds motivation as they quantify how much closer they're getting toward achieving an accomplishment. For the salesperson in the example above, the measurable part of their goal may be: Increase my sales calls to the Midwest region by 2 percent each week and increase overall unit sales by 8 percent.

When working with employees on measuring their goals, drill down into specifics by asking questions such as:

1. How much of an improvement are you aiming for?
2. What key performance indicators have you used before, and how successful were you? Does anything need to change with this new goal?
3. What indicators will signal that you've met the goal?

Achievable

A well-defined goal is one that an employee can realistically attain, but should also stretch the employee in their role so that they feel challenged. During this part of goal-setting, consider any limitations that might stand in the way of the employee hitting the achievement. Work with employees by asking questions such as:

1. Is this goal realistic?
2. Do you have what you need to get it done?
3. How does this goal fit in with your overall workload?
4. Have others been able to achieve similar goals?
5. Are other relevant team members available to help if you need it?

For example, if you ask your salesperson the questions above, they may realize that increasing unit sales by 8 percent is too aggressive. Looking at factors such as the company's sales history and the employee's workload, a target increase of 6 percent may be more realistic.

Relevant

A relevant goal should align with other goals, but also be worthwhile to the employee. They should be able to clearly see the benefit of going after the goal, understand how and why the goal is important to the business, and help reinforce how their work is part of the big picture. When determining the relevance of goals, ask employees:

1. Is this goal worthwhile?
2. How well does this goal align with our company's mission?
3. Does this goal map to current business priorities?

In the salesperson example, the goal of increasing sales in the Midwest may be relevant if the company is focusing on improving market presence in that area of the country in the upcoming year.

Time-Based

You and your employees need to be on the same page about when they need to reach goals. Without a sense of urgency, your team may not feel motivated to achieve them. That's why it's important to set clear target dates for meeting goals. Depending on the position, specific goals centered around productivity and efficiency are often very effective, such as more sales calls in a day or addressing customer issues in a shorter period of time. When building SMART goals, work with your employees to answer the following questions:

1. What is the deadline for this goal?
2. Why is this deadline important?
3. Are there other initiatives hinging on the completion of this goal?

Examples of SMART Goals

Goal-setting in the workplace can range from performance achievements to professional development ambitions. But all well-crafted goals are aligned to larger key business strategies. Some employee goal examples that revolve around performance improvement are:

1. Increase new signups by 15 percent by the end of Q1 to improve the sales pipeline.
2. Contact 100 percent of my customer base each month on either a direct contact or touch basis, using meetings, email, or phone.
3. Reduce call wait times by 10 percent over the next six months to improve customer service ratings.

In the area of professional development, examples of goals include:

1. Network with two company senior leaders every six months to better understand how other areas of the business work.
2. Complete all management training courses in the company Learning Management System (LMS) before my next performance review.
3. Attend one industry event each quarter and share findings with the team during staff meetings.

4. Emphasize Attainable Goals

Attainment is an important factor in the SMART goal framework. As mentioned above, goal setting can fail when the objective is overly ambitious or unrealistic, given the employee's skill set and available resources. Burdening an employee with an out-of-reach goal can lead to frustration with the process and a resulting lack of motivation for further improvement. They might think, "Why should I even bother if this is an unreasonable goal for anyone to achieve?"

Consider previously established benchmarks when working with employees on their goals. One way to consider how attainable a goal can be is to consider if someone else with equal experience and training has achieved a similar goal before.

5. Set Consistent Goals for Employees with Similar Responsibilities

It's the employer's responsibility to foster a healthy working environment that encourages growth opportunities for employees. Goal setting in the workplace may backfire when it's framed as a contest or competition among employees. It can also quickly undermine a positive work culture. Refrain from encouraging internal rivalries, which can lead to diminished morale, frustration, and resentment.

6. Reward Employees Who Achieve Their Goals

It's critical to recognize employees who achieve or exceed set goals. Not only does such a recognition (reward, bonus, certificate, or public acknowledgment at a staff meeting) honor that employee's efforts, but it also demonstrates that the company values this type of commitment and hard work. It may even further incentivize the rest of the workforce to work hard on their own goals. Alternatively, when such hard work goes unnoticed, employees can justifiably feel there's no point in working so hard and may reduce their productivity or even begin looking for a new job elsewhere.

7. Work Closely with Employees Who Fall Short

Not every employee will successfully attain their goals, regardless of how hard they try. Ideally, their manager periodically assesses progress and steps in to provide assistance where needed. In a situation where the agreed-upon deadline arrives and the employee hasn't met their goals, there should be an in-depth discussion about what went wrong, combined with encouragement to try again and address or rework the stated objectives.

Help Your Team Succeed with Effective Employee Goal Setting

Working with your employees to set goals helps strengthen a culture of ongoing feedback and open communication. Employees with clearly outlined goals are also in a prime position to push themselves, meet new challenges, and feel they are contributing to big-picture initiatives.

Create a competitive advantage for your business. Help your workforce stay challenged, motivated, and connected with their work through appropriate goals. Learn more about how goal setting can help deepen employee engagement within your organization or explore how HR consulting may be right for your company.

Looking to maximize resources and execute business functions more efficiently? While it can be challenging, this article offers some starting points.

Knowing how to improve efficiency in your business is a key factor in any company's strategy for growth. When inefficiencies exist, productivity can suffer, creating a ripple effect throughout the organization that can impact leadership, employees, and customers alike.

Definition of Business Efficiency

What is efficiency in business? It's how well a business can convert the required time, effort, materials, and capital in relation to its output. Output can be products, services, revenue, or however the business measures its parameters of success.

Instead of having valuable resources disappear into its systems, an efficient business can maximize its output with the smartest possible use of those resources. A simplified example of efficiency in business is when one business generates $5 million in revenue with the same amount of energy and labor costs as its similarly sized competitor, which only produces $3 million.

Efficiency vs. Effectiveness in Business

Efficiency is not the same as effectiveness and the two terms often cause confusion. A common way to think of effectiveness vs. efficiency is the difference between doing the right things vs. doing things right. It's possible to have an inefficient process with an effective result or an efficient process that is less effective.

For an example of the latter, consider two salespeople. Using scripts and time limits, salesperson A has developed a streamlined system that lets them make 100 calls each day. Salesperson B invests their time in developing a hyper-qualified list of prospects and then spends more time researching each contact. Salesperson B makes only 20 calls each day. However, 3% of salesperson A's calls result in a closed sale, while salesperson B enjoys a 25% closing rate. Salesperson B has developed stronger relationships with those customers, which is likely to lead them to a more positive overall experience and favorable impression of the business.

Efficiency and effectiveness are not mutually exclusive. In the salesperson example above, salesperson A has a system that is vastly more efficient at making phone calls. Salesperson B is effective at closing sales. Ideally, a business figures out how to accomplish both.

Types of Efficiency in Business

Business efficiency can be measured in many ways. Here are some different metrics that you can use to measure business outputs against the resources required to reach your goals. Doing so can help you make improvements in your systems and the use of your overall resources — time, money, labor, effort, materials, and capital.

Labor productivity: How much are your workers able to produce or accomplish during a measured period of time? Equipment, technology, automation, training, physical and mental health, and engagement can all influence an employee's overall productivity.

Eco-efficiency: Eco-efficiency is a measurement of the impact your business operations have on the environment. Ultimately, an eco-efficient business is excellent at reducing all forms of waste. This includes waste in materials, operations, and administration along with minimizing the environmental impacts of your product and packaging. These calculations can be tricky. For instance, calculating the cost of using post-consumer recycled plastics for packaging or materials, which increases eco-efficiency, may come with more upfront costs, but the practice may net you more customers because they seek businesses that prioritize a low environmental impact.

Energy efficiency: Reducing the amount of energy consumed to create products or services is an important sustainable practice that can increase your bottom line. Your energy footprint is the amount of energy needed to operate all aspects of a business — bathroom, office, and warehouse lights, equipment, and even shipping costs, when you recognize fuel consumption as a form of energy usage. You can evaluate business energy efficiency by calculating how much is used to run different areas of your business. Reducing these numbers can save you money. Business energy efficiency is a specific subset of eco-efficiency.

Operations efficiency: Operations are critical to a business model and efficiencies in these core processes can help reduce overall costs. Business operations efficiency can be found in a variety of strategies such as the appropriate use of technology, outsourcing, or bringing tasks in-house for more control.

Process efficiency: Processes are used in every area of a business — internal communications, HR, operations, shipping, and even how meetings are conducted are typically subject to specific procedures. See what is working and what isn't. Make changes when needed. Look for ways to make modifications that can also increase efficiencies in other areas. For instance, packaging products with less material can lower energy consumption and environmental impact, and allow you to fit more product in trucks, thus reducing shipping costs.

Return on investment (ROI): An investment is typically a current cost that is used for future gain. This gain can be any metric — an increased pool of qualified applicants, reduced waste footprint, and generated income are all examples. Measuring the ROI, e.g., lower energy bills due to a new rooftop solar array, is one way to assess efficiency.

Benefits of Efficiency in Business

No one enjoys wasting time or money and your business is no different. Aside from the general satisfaction that comes with running a thriving business, there are many benefits that come with getting the most out of your resources. Here are some of the benefits of efficiency:

• Efficiency may reduce costs. Whatever your metric for calculating efficiency, improving it will likely yield cost savings. Streamlining time-consuming HR tasks, improving worker productivity, and using less to do more all improve your bottom line.

• Efficiency can increase profits. The flip side of reducing costs is increasing profits. Figuring out how to get more products in the hands of your customers for less overhead costs or spending less on operations translate into a more profitable business.

• Efficiency can grow your business. Less time spent on mundane administrative tasks can free staff up to develop strategies for growth and expansion. Improving eco-efficiencies can give staff a sense of purpose and dedication, unleashing the engagement and creativity you need to move into new markets. Developing new ways of packaging or operating can even set your business apart as an industry leader. These are but a few ways that efficiency can grow your business into exciting new directions and create new opportunities.

• Efficiency can improve employee morale. Finding ways to run your operations more efficiently can save employees' time and energy. Done well, this can be seen as a form of respect. Actions such as reducing the number of mandatory meetings or giving staff convenient, on-demand access to their benefits accounts can strengthen their sense of loyalty to your business, thus improving engagement and reducing attrition.

Ways To Improve Business Efficiency

Efficient business practices are less about what you do and more about how you do it. Here are some big-picture ways to help maximize your resources and execute business functions more efficiently.

Use free resources. There are many valuable free resources for businesses that you can turn to when you need them. National organizations such as the U.S. Small Business Administration and SCORE provide advice and resources that offer guidance on startup issues, tax concerns, and in some cases even legal matters.

Invest in quality branding. Having a cohesive brand is invaluable in presenting a clear message to your customers, vendors, key stakeholders, and the public. All aspects of your branding — from your company logo to your website layout and product offerings — must be consistent with the message you want to send to your target audiences.

Think from your customers' perspectives. If you asked customers, "How can we improve our business?" How would they answer? Details about your business might seem obvious to you, and therefore unnecessary to mention in your sales and marketing materials. But if you approach this from your customers' point of view, you may think differently. Productivity improvements start by looking at your business from a potential customer's perspective. Ask for outside opinions to avoid making business decisions based solely on personal bias.

Outsource key business tasks. Business owners and employees often wear many hats, from leader and recruiter to designer and payroll administrator. Often, knowing how to improve business performance starts by recognizing that no one person can do everything on their own.

Consider outsourcing complex tasks that are integral to your business but aren't necessarily within your realm of expertise. Bookkeeping and accounting, for example, don't often fall within a typical business owner's area of expertise. Still, it's an essential part of business efficiency. A skilled outsourcing firm can balance your books much quicker and keep you up to date on financial data that helps you plan for the short- and long-term growth of the business.

Improving Efficiency on a Personal Level Can Help Improve Efficiency on a Business Level

It's not just your business that stands to benefit from greater efficiency. Every business owner and leader can improve productivity with "efficiency hacks" that can include:

• Setting the right goals. Big goals usually have too many moving parts to handle at any one given time. Envision goals you can reach in a manageable way.
• Completing one task at a time. Productivity can easily be wasted when you jump between tasks and try to figure out where you left off.
• Prioritizing. Create your daily task list in order of importance. Get important tasks done first before interruptions take your focus away. And avoid putting anything off. Do it right then and there, if you can.
• Managing your time well. What times of day are you most productive? Tackle difficult tasks during the time when you have the most focus and dedicate other times for less demanding tasks. Consider working in 50-minute blocks with short breaks in between.
• Reducing distractions. Email can be a huge time drain. Consider limiting your email activity by scheduling time every couple of hours to check it and stick to it. Similarly, schedule phone time to make or return calls, and place your phone on silent during your planned work blocks.

Knowing how to improve business efficiency helps everyone in the organization. As part of the process, learn more about how you can help your employees increase efficiency by more effective-goal setting to increase productivity and engagement.

How Do You Measure Efficiency in a Business?

Just as there are different types of efficiency in business, there are many ways to measure them. Some measurements are applicable across the board. Benchmarking your metrics is critical so you can evaluate your progress over time. Comparing your type of business efficiency with similar businesses or industries is another important way to assess whether your business is on target.

There are different strategies to measure business efficiency. For a company selling products, inventory turnover, or the lag time between moving inventory through the warehouse and to customers, can indicate if a product is moving and responding to customer demand. Efficiency ratios are used as an indicator of a business's overall short-term performance and can tell a business owner the lag time between turning inventory into cash. Measuring eco-efficiency can get trickier and involves measuring net sales and quantity of goods produced and sold against energy, materials, and water consumption, along with greenhouse gas and ozone-depleting emissions. The World Business Council for Sustainable Development issued a guide to help businesses measure eco-efficiency and company performance.

The Role of Analytics in Improving Business Strategy

HR is another business operation where efficiency is imperative. Specifically, the process of employee recruitment and retention is simply too important to leave to chance.

HR analytics can provide human resources departments with better data collection, reporting, and the information needed to make data-driven business decisions. Whether a business unit manager needs the latest information on time and attendance to streamline their scheduling process, or a quick payroll audit by the HR manager to address a problem, analytics help makes data accessible to business leaders.

Here are some ways to leverage HR analytics and improve the way you run your business and increase efficiency:

• Recruiting. When a job candidate is brought on board but ends up not being right for the position, turnover can happen, and filling open positions becomes expensive and time-consuming. Recruiting analytics lets you see where your best candidates come from and which profiles tend to succeed more often over the long term. In addition, analytics can help clarify how your recruiting process is working and where there might be room for improvement. For example, if analytics show delays in candidate communication or long review times at the hiring manager level, this can provide actionable insights for making process improvements.
• Time and attendance analytics. With time and attendance analytics, companies can determine the most efficient patterns in employee scheduling to strategically manage the scheduling process, stay in compliance with company and legal requirements, and even identify patterns of absenteeism that could signal trouble at the individual or department level.
• Benefits and other services. HR data analytics can streamline the management of benefits and other services within human resources. Consider the reporting needed during open enrollment. An analytics-driven reporting system makes it easy to see who is enrolled and where decisions are pending. Analytics can also help HR managers understand which benefits are being used and which ones are being overlooked.

Common Payroll Mistakes That Can Lead to Errors and Business Inefficiencies

Payroll processing is a particular company operation where accuracy and efficiency matter. As just one example, businesses must submit taxes to federal, state, and local authorities, at specified times and in designated forms. Such demands require time-consuming administrative efforts which, if mishandled, can lead to costly penalties. Some of the most common payroll errors include:

• Filing late with the IRS. The IRS stipulates specific due dates for depositing taxes and filing returns. Late deposits and late filing of payroll tax returns can result in penalties and interest charges.
• Errors on tax forms. Errors made on tax forms may make it appear that you have remitted too much or too little in payroll taxes. Such mistakes can also impact reconciliation with other tax forms, such as W-2s.
• Misclassifying employees. You must take the appropriate steps to correctly classify each worker as an employee or an independent contractor. Misclassifying an employee as an independent contractor can result in retroactive payroll tax liabilities as well as fines and penalties.
• Processing payroll late or not at all. Late or inaccurate payroll processing not only creates unhappy workers, but it may result in fines and penalties depending on the jurisdiction, as well as, issues like missed premiums or late retirement plan contributions, which can take additional resources to rectify.
• Paying the wrong amount. Incorrect data entered into a payroll database can result in problems connected to paying employees at the right rate of pay and for all hours worked. Corrections can be time-consuming and can wreak havoc on your bottom line.
• Not maintaining adequate payroll records. State and federal regulations mandate businesses keep specific employee records. Some local and state jurisdictions may vary in their recordkeeping requirements, so employers must be familiar with such requirements in the location(s) in which they do business.

Outsourcing Payroll Leads to Productivity Improvements

Outsourcing payroll processing is a solution to both enhancing efficiency and helping to reduce your risk of the payroll processing mistakes described above. Among the key benefits:

More Time for Business Priorities

If you have a workforce, regardless of your business or industry, attending to payroll-related matters likely consumes a great amount of valuable resources. One pay period follows another (without interruption) creating a ceaseless demand for time and energy to ensure that employee data is input correctly — and then reviewed for accuracy.

The complexities of payroll processing require a significant amount of time committed on a daily and weekly basis. Although business owners are ultimately responsible for meeting payroll accuracy and filing requirements, having a provider on hand often saves a great deal of time and helps them feel more confident about staying up-to-date on legislation and regulations.

Integrity of Confidential Employee and Company Data

Data theft and breaches are all too common today, and payroll processing represents a potentially risky area for your company. Threats include identity theft, employees tampering with company records, or even embezzlement. The use of in-house payroll processing software is not risk-free, either.

By contrast, a trusted outsourcing vendor has information security controls designed to safeguard sensitive data. Together with redundant backup and multiple server locations, a quality provider invests in state-of-the-art systems for storing and protecting data, simply because it's part of the service provided to clients.

Stay Current With Tax and Employment Laws and Regulations

Every business with employees must comply with federal, state, and local tax and employment laws and regulations or face stiff financial (and possibly legal) penalties. Not only can these penalties cost you money, but they demand time and attention to avoid — time that takes you away from your business. A vendor that specializes in payroll processing has the knowledge to help you with compliance responsibilities.

Outsourcing HR Functions Boosts Efficiency

Outsourcing HR functions can result in a significant improvement in business efficiency. A skilled outsourcing company helps mitigate the risk of noncompliance with current reporting and filing requirements, as well as assisting with the development of worksite safety programs, and insurance benefits.

More small businesses are investigating the merits of entering an arrangement with a professional employer organization (PEO), which enables business owners to outsource the management of employee benefits and related areas, including these key tasks:

• Creating an employee handbook
• Building job descriptions
• Assisting with monitoring regulatory and legal compliance developments
• Maintaining Affordable Care Act documentation
• Providing comprehensive online HR resources
• Offering onsite employee training
• Helping with risk assessment

Outsourcing other key processes — such as marketing, website maintenance, and social media activity — are worth looking into as well. The more you can outsource to a reliable service or company, the more time you gain to concentrate on what will contribute to the growth of your business.

A More Efficient Business Can Help You Succeed

Employers who look to maximize their resources and execute business functions more efficiently can position themselves to enjoy the advantages that come from doing so. Those who don't are gambling with a future that can render their business obsolete.

Learn more how Paychex HR services can help you avoid costly and frustrating mistakes that waste energy, effort, and money. Instead, you can reap the rewards that come with improved business efficiency in key areas of your organization.

Emerging small-business trends represent the challenges and opportunities that exist for employers in 2023. Over the past few years, businesses and their employees have faced enormous hurdles, undergone an incredible amount of change in the ways work is done, and have had to practice adaptability and flexibility. There's no reason to believe this will change anytime soon. Here are some notable trends in business that could have significant impacts on the way your business works and interacts with customers this year.

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Small Business Trends in 2023

The emerging trends outlined below represent several shifts in the business world that are important to keep an eye on and embrace in a way that makes sense for your organization.

Inflation and Supply Chain Issues

We were inundated in 2022 with headlines about U.S. inflation rates, domestic and global supply chain issues, and other hurdles that threw a wrench in many businesses' plans for growth. The reality is we don't know exactly what will happen in 2023: currently, prices have increased about 8 percent, the highest they have been in nearly four decades, and lingering impacts of both the pandemic and global issues such as the war in Ukraine continue to stall supply chains for many industries.

Businesses should focus on controlling what they can. This may mean using local or regional suppliers to circumnavigate supply chain slowdowns, or putting a system in place to manage cash flow. And don't forget how these challenges, particularly the rate of inflation, impact your employees. The cost of living in the U.S. has skyrocketed, affecting both employees' salaries and employers' budgets as they try to remain competitive and keep great workers in today's labor market. So while employees may be voicing concerns about pay raises, employers need to weigh factors such as competition in the labor market, budgets, and business projections to determine whether pay increases make sense this year.

The Expectation of Seamless Customer Experiences

The pandemic accelerated a shift from brick-and-mortar stores to digital shopping. From groceries to clothing and other consumer goods, shopping entirely online with the option of home delivery or curbside pickup continues to offer customers convenience, efficiency, and even a sense of personal safety.

Although digital experiences have now become common, consumers' shopping habits are shifting yet again. Whether driven by increased awareness to reduce monetary and carbon costs associated with shipping, lending support for their local economy, or simply wanting the experience of shopping in-person again, consumers are embracing a hybrid or omni-channel approach to shopping, with the expectation that there will be a seamless experience as they go from online to in-person with the same brand. They will interchange visits to brick-and-mortar stores, use mobile apps, and shop online to make choices that support their needs and beliefs.

To ensure success, small-business owners should make sure they have a mobile-friendly, easy-to-navigate website with e-commerce options that allow consumers to quickly find what they want and purchase products or services from their mobile devices. The same attention to detail should be applied to "traditional" shopping methods. Look for ways to continue the convenience of blending the two such as curbside pickups, and make sure your in-store customer service leaves customers with a positive experience.

The Rise of Voice-Assisted Technology

As part of the digital transformation that continues to effect change in business, employers are increasingly exploring new ways to use voice technology, both externally to appeal to tech-savvy customers and internally to improve their own business processes. As we mentioned above, customers have come to expect a seamless experience between online and in-person interactions with a business. Companies that embrace voice technology — whether it's leveraging virtual assistants and chatbots to provide service 24/7 or optimizing a website for voice search — stand to gain a competitive edge in 2023 and beyond.

Voice-assisted technology that improves business processes is another part of this emerging trend, particularly since it can expedite critical tasks for small business owners. Take voice-enabled technology for running payroll, where administrators can receive real-time payroll data insights, review and approve rate changes, add new employees, and submit checks for payday — all secure and completely hands-free.

Increased Focus on Sustainability

Growing concerns around how habits, purchasing decisions, and lifestyles impact the environment have cemented the issue of sustainability firmly in many customers' decisions — from which companies they do business with to the types of goods and services they choose to buy or not.

To not only effectively embrace this trend but also respond meaningfully, employers need to take responsibility for implementing meaningful change in their practices to reduce the environmental impact of their business model. Look for opportunities to reduce the energy consumption and greenhouse gas output of your supply chain, assess your internal practices to reduce waste, embrace remote or hybrid workplaces for employees, and evaluate your own business' long-term environmental impacts in the form of packaging and product lines. Ultimately, these are measures that can help your business gain a hiring advantage and increase its own resiliency through being more efficient and responsive to environmental pressures.

Alternative Payment Options

As payment processing evolves and more options become available for safer non-cash transactions, consumers are using mobile, card, and alternative payments more often. The onset of new technology, combined with the rising demand for contactless payments, has further hastened the shift away from cash transactions. Small-business owners should continue to expect increased demand for alternate payment options in the form of applications, mobile wallets, and wearable devices. If they haven't already done so, it's critical that small businesses research contactless payment options. Fortunately, this trend reaps benefits such as a business' ability to leverage the systems to increase sales, improve cash flow, and reduce the risk of accepting fraudulent currency.

Continued Focus on Talent Management

The past year presented businesses nationwide with unprecedented challenges around hiring, and overall talent management. Historically low unemployment levels, the Great Resignation, layoffs in the technology sector, and quiet quitting were just a few examples. To address ongoing talent management challenges, small businesses need to have a firm understanding of what future and current employees want from their employers, what motivates them, and what it will take to keep them for the long term. This might mean offering long-term remote work options or hybrid work spaces, embracing new technology and software solutions, evaluating incentives and benefits that you offer, or putting a renewed focus on employee development and promoting from within.

HR Compliance

While certainly not new, a focus on HR compliance should always be top of mind for businesses of all sizes. The number of employment laws and regulations are on the rise, and the risk of penalties for non-compliance has perhaps never been greater. For example, we may see an uptick in business audits, as the Inflation Reduction Act passed in summer 2022 included additional funding for the Internal Revenue Service (IRS). Overall, there should be a clear strategy for bridging the gap between the company's growth trajectory, objectives, and compliance practices that influence activities such as hiring, employee development, and retention. If you haven't done so in the past, this year may be a perfect time to develop an HR compliance checklist that serves as a compass for compliance-related areas.

Which Industries Are Projected to Boom in 2023?

Despite a currently strong labor market, an economic downturn could lie ahead. We may also continue seeing employees leaving their jobs to launch their own entrepreneurial pursuits. Still, some industries are projected to boom in the upcoming years, as forecasted by the U.S. Bureau of Labor Statistics:

• Healthcare and medical research: The COVID-19 pandemic caused a higher public demand for medical and scientific research and development related to infectious diseases. Finding ways to mitigate viral spread and developing treatments and vaccines have been fast-growing areas of interest in the wake of the pandemic.
• Computer and IT services and security: With many workforces embracing remote work for the long-term, there continues to be a strong demand for computer and IT services, support, and security.
• Leisure and hospitality: Since so many businesses in leisure and hospitality were hit hard during the pandemic, it's anticipated that there will be considerable growth in this sector as it rebounds to pre-pandemic levels, and people look to resume traveling and spending more time outside the home with loved ones.
• Professional and business services: The BLS projects that about 1.5 million jobs will be added in this industry within the next decade, an increase that includes growth in computer systems design and related services, as well as management, scientific, and technical consulting services.

Use Emerging Trends in Business To Drive Your Success

Considering these and other small-business industry trends, along with your many responsibilities as a business owner, you may want to find support to help you meet your goals in 2023. You may be able to outsource many of the duties that require valuable time and resources, such as HR administration, payroll, and assistance with regulatory compliance.