As we ease out of our holiday comas and find 2023 staring us straight in the face, the BOOST team wanted to share some of the trends/topics/ideas that we are most looking forward to in 2023.
- The labor market is finally starting to ease. We hope this isn’t just wishful thinking on our part, but we’re excited to see a hint of a cooling in the labor market. Salaries have gotten out of control, candidates are ghosting more than ever, and employees are sometimes running two gigs at a time remotely. We would definitely welcome quality candidates paid a fair salary for their experience at a rate that is still profitable for the company, and there’s already a hint of that starting to happen. Finding the right candidate for your GovCon is an uphill battle, but it’s one we’re prepared to help you face.
- A return to profitability. As the technology sector continues to implode a bit, the idea that for-profit companies turn a profit is back in vogue. We’ve never understood how the fundamentals of shareholder profit have been completely put to the sidelines in a quest to reach unicorn status. Business fundamentals apply, no matter what sector you are in.
- Utilization of GA4 metrics in marketing. If you are unaware of GA4, it is time you find out. Google is changing the dimensions and metrics in its analytics and it will affect how you market on the web, and web-based marketing is more essential than it’s ever been before.
- My year 2. As any business development professional can tell you, the first year is the hardest. You have to rebrand yourself with the new company you are working for and getting your name out there is hard. After a much needed 2 week stay-cation, a renewed focus on finding the right clients for BOOST, so BOOST can help them grow, will be my on-going focus. – It should be your focus for your clients as well. Remember that we are here to solve someone else’s problem, not sell them what you want to sell.
- Continuing Remote/Hybrid Work. Since 2020, we have come a long way with the concept of working remotely. After realizing that many employees are happier and generally more productive working from home, companies will continue in 2023 to allow remote work and expand and develop their work from home practices and policies in 2023 to remain competitive and retain talent. There will be more focus on how to continue the momentum, keep employees engaged and track productivity, and that’s a good thing for regular companies and government contractors alike.
- A shift to retention. In 2021 and 2022, companies were focused on hiring. The number of people who quit their jobs was astounding and led to an event that has been named “The Great Resignation.” In 2023, the focus will be on retention. As HR professionals, it is our job to listen to employees and determine what motivates them. Now is the time to evaluate your company’s compensation plans, employee benefits (with a strong emphasis on employee wellness), training programs, career advancement opportunities, diversity, equity and inclusion and overall flexibility. A good boutique recruiting firm might also be able to help you with retention for your GovCon.
- Pay Transparency. Pay transparency is here to stay. More and more cities and states are requiring employers to provide applicants and employees salary information throughout various stages of recruitment, hiring and/or employment. People not only want transparency with salaries, but they want to know how raises and promotions are handled and if there are pay bands for their roles. It’s crucial for organizations to get educated on how to manage this topic as many companies are still in the dark.
- Continued emphasis on customer satisfaction/value. With inflation, everyone is paying more, and services are no exception. However, expectations for quality remain high in the consulting world. Demonstrating value for services provided will be critical in 2023. Measuring customer satisfaction is still one thing that doesn’t change much – communication remains a constant for evaluating customer satisfaction. With costs rising, expectations for quality won’t just be high, they’ll also be less flexible. Tolerance for missteps will be lower, and consulting companies that may have been coasting by in some areas will need to scramble to start showing value in terms of hard data that customers can wrap their heads around.
- Focusing on employee experience. This piggy backs on retention, but it’s the new buzz word. It’s thinking about everything that affects the employee’s experience in working with the company – the journey they experience that extends beyond onboarding. The “why” an employee works for a company is so important, and finding that out leads to retention. Personalized attention will become expected. As the job market becomes more competitive, companies will need to focus on employee experience to attract and retain the best candidates. The only way to handle the increased expectations for employee experience in 2023 will be to meet those expectations.
- Cybersecurity Maturity Model Classification. From the anticipated fallout of the Y2K bug to the more recent debilitating Colonial Pipeline hack, the security of our digital world is a critical concern. As individuals, we worry about identity theft and account hacking; and for good reason. The same concern is true for the US government and protecting Controlled Unclassified Information (CUI). CMMC, although in the headlines for the last few years, is a new requirement for Department of Defense (DoD) contractors. It’s how DoD certifies a contractor’s ability to protect the CUI and Federal Contract Information (FCI) that is in a Contractor’s possession. DoD plans to release interim rules in the spring. As we know, once DoD releases new requirements, all government agencies soon follow.
- Veteran-Owned Small Business (VOSB) and Service-Disabled Veteran-Owned Small Business (SDVOSB) Certification. Effective Jan 1, 2023, the Small Business Administration (SBA) amends its regulations to implement a statutory requirement to certify Veteran-Owned Small Business Concerns and Service-Disabled Veteran-Owned Small Business Concerns participating in the Veteran Small Business Certification Program. While there are some exceptions, generally, in order to be eligible to receive prime contracts, VOSB and SDVOSB set-asides (competitive or directed), businesses must obtain SBA certification no later than December 31, 2023.
- Small Business Plans & Goals. The current administration is actively focused on the success of small business as well as breaking up large business monopolies of legacy contracts. This has resulted in renewed energy and scrutiny of federal agencies’ small business and socio-economic goals. This means that mid-size and large businesses will continue to increase their focus on diverse subcontracting and supply chain partners. This, in turn, creates greater opportunities for newer small businesses to break into the GovCon market.
- Antitrust Regulations & Non-competes. With hiring and retention of employees being top of mind, many employers are struggling to find the right way to protect its’ people resources. Many companies have utilized non-compete or no-hire clauses to protect themselves. Antitrust regulators are moving to ban non-competes from employer-employee, independent contractor, and other agreements. Employers will need to take stock of employment and other agreements to assess the impact to the company and their industries as a whole.
- Focus on Accounting and Finance. “For 2023 the focus will be on finding and retaining talent, the impact of inflation, accelerated digital transformation, maintaining culture, broadened corporate reporting, and service development.” “Finding and retaining talent will be one of company’s major concerns in 2023, along with investing in digital transformation, which was accelerated due to the pandemic. Finance professionals will need to upskill and reskill to keep up with digital transformation.”As suggested by these quotes from the link below, as the economy continues to recover from the impact of the COVID-19 pandemic, competition for top talent is likely to increase, making it more difficult for companies to attract and retain the skilled workers they need. This will require companies to invest more in employee training and development programs to keep up with changing skill and knowledge requirements. Source: Learn More.
- Sustainability and ESG. “Sustainability and ESG (Environment, Social, Governance) will become part of the organizational fabric of businesses in the near future, and management accountants are eager to “move beyond reporting” in this space to add value to their organizations.” “According to a KPMG 2020 Survey of Sustainability Report, 80% of top companies now report on sustainability. In this report, the sustainability of a given company is measured under 3 key areas: Risk of biodiversity loss, Climate change and carbon reduction reporting, Reporting on the United Nations Sustainable Development Goals.” In summary, Sustainability and ESG are becoming an integral part of the organizational fabric of businesses, and management accountants are eager to move beyond just reporting on these areas, to add value to their organizations. Companies are now reporting on sustainability and ESG based on three key areas: risk of biodiversity loss, climate change and carbon reduction reporting, and reporting on the United Nations Sustainable Development Goals. Government contractors are not immune to these changes, be sure you’re ready to take on these challenges. Source 1: Learn More Source 2: Learn More
- Automation in Accounting and Finance. “Declining capacity and expanded services are stressing day-to-day workloads at many accounting firms. To help alleviate that workload stress, automation will continue to be a prominent trend in 2023.” “RPA [robotic process automation] is going to help firms compensate for the capacity problems we have in the industry right now and in the future as our work continues to grow and become more complicated.” Automation in accounting and finance is becoming an important trend in 2023 as declining capacity and expanded services are putting pressure on day-to-day workloads at many accounting firms. Robotic Process Automation (RPA) is one specific form of automation that will likely see more widespread adoption as it helps accounting firms to compensate for capacity problems and future growth by automating repetitive, rule-based processes and freeing up staff time for higher-value activities. Source: Learn More
- FASB and Cryptocurrencies. “The FASB is working on setting clear accounting and disclosure rules for companies holding bitcoin and other cryptocurrency assets. The proposed rules, which the FASB expects to issue in the first half of 2023, would affect a smaller swath of companies than some other projects, because only a handful of non-crypto businesses hold crypto.” In summary, The Financial Accounting Standards Board (FASB) is working on setting clear accounting and disclosure rules for companies holding bitcoin and other cryptocurrency assets, which are expected to be issued in the first half of 2023, and are likely to affect a smaller number of companies than some other projects. These rules would help companies understand how to account for these assets and how to disclose them in financial statements, which would help investors and other stakeholders to understand the company’s financial position better. Source 1: Learn More Source 2: Learn More
- Impacts from the Inflation Reduction Act: IRS Audits. “The Inflation Reduction Act will put aside billions to help the IRS chase down tax dodgers. Experts predict a hefty return on investment: The $80 billion added to the IRS budget is expected to bring in $203 billion in taxes. And while the IRS plans to conduct more audits, wealthy Americans and businesses will bear the brunt of that scrutiny, not so much working families.” As a result of the additional funding, the IRS plans to conduct more audits, which will likely focus on wealthy Americans and businesses, rather than working families. The reasoning behind this is that wealthy Americans and businesses are more likely to have complex financial situations and may be more likely to have avoided paying taxes.The Inflation Reduction Act is likely to have a significant impact on the IRS’s ability to identify and correct tax avoidance, which is a positive development for the government and the taxpayers, and businesses, who play by the rules. However, it is important to note that the details of the act are not yet available and it’s not clear how it will be implemented. Either way, make sure that your books are compliant and you dot your Is on your incurred cost proposals. While there’s no reason to think that this increased IRS activity will also mean an increase in DCAA floor checks or anything, it’s probably still a good idea to take another look at the DCAA compliance checklist and make sure you’re squared away. GovCons can always benefit from double-checking these. Be sure you’re ready should the worst happen. Source: Learn More
What are you most looking forward to in 2023? What trends are you seeing from your viewpoint? Drop us a comment below.