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Washington State University
Carson College of Business 2019 – Business in the Northwest

Business in the Northwest 2019

Insights from the Carson College of Business

Foreword

Last year, business in the Pacific Northwest was one of opportunity and, at times, uncertainty. We witnessed the implementation and repeal of Seattle’s controversial head tax, marveled at the continued growth of Greater Portland’s start-up and tech communities, and were thrilled by Amazon’s announcement of a new fulfillment center in Spokane. Indeed, 2018 provided many newsworthy moments. But no matter what stories dominated the news, one thing remained clear: Business leaders and their employees continue to have a positive outlook on the future of business and industry in the region.

In our second annual Business in the Northwest report, the Washington State University Carson College of Business sheds light on the growing confidence among the business community in the region, specifically focusing on three key areas:

  1. Opportunity: The prospect of growth and general optimism felt by the business community
  2. Community: The mutually beneficial relationships companies have with the cities, towns and people they serve
  3. Capability: The workforce and skills essential to turning the Northwest’s opportunities into reality

These key areas not only help drive economic growth, but also help shape the lifestyle and ethos of the Northwest community. As a community, we are innovators, philanthropists, and hard workers. We care about our neighbors, and we know that the success of one depends on the success of all.

This year, we extended the survey to include employees—the heartbeat of the Northwest economy. While employees and business leaders disagree on some business and workforce issues, there were areas of clear alignment—both groups want the Northwest to be a great place for families, and they want to drive growth and help local communities. In addition, concerns over issues such as traffic congestion, automation, and the talent pipeline are on the minds of both business leaders and their employees.

I’ve never been more excited for the Northwest’s growth potential and the opportunity we have to bring prosperity to people across our region. My hope is that the data from this year’s report can help drive impactful conversations among business leaders, employees, local governments, higher education, and community leaders to address some of these issues and propel us forward as a business community.


Chip Hunter, Dean

Methodology

To learn more about how business leaders in the Northwest (Washington, Oregon, Idaho) perceive the business health of the region and key issues impacting businesses and communities, the Carson College of Business commissioned Edelman Intelligence to survey a total of 1,000 members of the Northwest workforce. This included 500 business leaders age 18 or older living in the region, who hold an upper management level position, have decision making or hiring responsibilities at their company, and have at least three years of management experience, along with 500 employees age 18 or older with at least one year of experience.

The survey was conducted online from February 22 to March 11, 2019. The margin of error was calculated at ± 3.1 percent at the 95 percent confidence level.

Opportunity:

The prospect of growth and general optimism felt by the business community

Opportunity for the Northwest wine industry is driven by partnership and collaboration. We were able to partner with WSU to create the new Wine Science Center, a pivotal institution in the elevation of the Washington wine industry.

Key Finding 1:

Business leaders in the region are feeling even more confident than last year about the business climate in the Northwest. This year, 61 percent of business leaders reported they felt that the business climate is steadily strengthening, an 11-point increase from 2018. Moreover, business leaders are less worried about potential growth in the Northwest than last year, with 57 percent reporting they aren’t worried.

When asked why they feel the business climate is strengthening, many business leaders attributed it to advances in technology (38 percent) and improved efficiency (25 percent).

Employees are less certain about the business climate in the region, with less than half (48 percent) reporting that is has been strengthening; however, they aren’t pessimistic.

Key Finding 2:

While many business leaders and employees attribute the strengthening business climate to advances in technology, they also see growing opportunity elsewhere. Specifically, business leaders and employees think the “next big thing” the region will be known for is the marijuana industry, 32 percent and 49 percent respectively, and world-class wine production, 23 percent and 28 percent respectively.

Aside from specific industries and technologies, business leaders and employees also reported the region will be known for softer benefits, with a third (32 percent business leaders; 35 percent employees) stating the region will be known as a good place to start or raise a family. Additionally, a quarter (23 percent of business leaders; 26 percent of employees) believe the region will be known for livable wages, beating the national average for pay increases.

Insights from Carson:

Robert Harrington, professor, Hospitality Business Management
While the Northwest is frequently associated with giant tech companies and innovative startups, the wine industry can’t be overlooked as a growing part of the economy. In the past decade, the Washington wine industry has doubled in size, making it the second largest wine-producing region in the United States. But Washington’s world-class wine industry hasn’t succeeded by pure luck. It has succeeded because the wine innovators of our region got three things right:

  1. The Washington wine industry “brand” has developed a ‘sense of place,’ which includes its natural environment, man-made capabilities, and unique characteristics of the products and services. This model fits with the current marketplace that is searching for local and authentic experiences.
  2. The industry’s focus on producing quality products and experiences facilitates the continuing evolution of the Washington wine industry and its supporting business models.
  3. The Washington wine industry exemplifies a philosophy of hospitality by continuing to maintain a culture of sharing, comradery, and giving to both guests and other members of the field—even those normally considered rivals.

For Washington, and the rest of region, to continue this legacy of wine excellence and innovation, we need more professionals who understand the science behind what it takes to grow and produce wine, along with the business skills to market and sell it.

Finding the opportunity to blend wine science and wine business is rare, but that is exactly what WSU is doing. The Viticulture and Enology (V&E) program teaches students the science and agriculture knowledge they need to successfully grow and blend wine. Meanwhile, the wine and beverage business management program, offered through the Carson College of Business, helps students develop business skills critical to running a successful wine business.

Community:

The mutually beneficial relationships companies have with the cities, towns and people they serve

Key Finding 3:

Business leaders believe their company is supporting the community by improving economic growth, quality of life, job growth, and income stability. In a year-over-year comparison, more business leaders this year (58 percent) feel their business is positively contributing to their community compared to last year (54 percent).

While employees don’t feel their company is hurting these factors in the community, they are not as optimistic that the company is actively helping either. Only 40 percent of employees believe their company is helping the community, in stark contrast to 58 percent of business leaders.

Employees may be less cognizant of the impact their employers have on the community, as they are largely unaware of Corporate Social Responsibility (CSR) programs within their company.

Consistent with 2018 results, most business leaders (58 percent) report their company has a CSR program. However, most employees are unaware of their company’s CSR efforts, with only 18 percent reporting their company has a program.

Although not every company reported having a formal CSR program, most business leaders reported supporting issues relevant to the community, including mental health (28 percent), gender protections (29 percent), higher public education (26 percent), and racial and ethnic protections (25 percent). While business leaders reported their companies supported a wide variety of issues, employee responses were far more concentrated on a few areas: racial and ethnic protections (42 percent), national non-profit groups (40 percent) and hunger assistance (39 percent), indicating these programs may be more advertised or promoted within the companies where they work.

Key Finding 4:

Far above other priorities, business leaders (41 percent) and employees (45 percent) agree that a good brand reputation will be key in helping their company withstand changes in the next few years.

The results from this year’s survey show high profile issues such as mega data breaches and the “Me Too” movement are top of mind for companies when thinking about their reputation. These issues, among others, may reflect growing pressure from consumers who want to support companies that align with their values. Business leaders know this, and 96 percent report that understanding and supporting the values of their customers will be key to maintaining their reputation, a 9-point increase from 2018. Business leaders think the following issues will also be key to their reputation:

  • Higher standards for cybersecurity: 95 percent
  • No tolerance for sexual harassment: 93 percent
  • Using and supporting locally sourced materials: 92 percent

Insights from Carson:

Joan Giese, clinical associate professor, Marketing and International Business
Businesses are more exposed than ever before. This transparency can elevate companies among their consumer base or destroy them with one bad scandal. This year’s survey results show just how aware business leaders and employees are of the risks they face by not knowing and addressing their customers’ values.

Through globalization and increased competition, it is easier than ever for consumers to switch between services and products. There will always be a cheaper option or maybe even a more expedient option, so companies must double down on building loyalty to their brand by providing a consistent customer experience, operating with values that align with their customer base, and reporting on their actions in a transparent manner.

  • Experience: Customer loyalty isn’t built through one big social initiative or moment. It is built through the day-to-day interactions customers have with your people and your products. Ensuring consistency across your offering is key.
  • Values: Your company isn’t operating in a vacuum. Customers want to see that you have strong values that address the social issues of today within and outside of the company. While many leaders are hesitant to be too bold, consider this: 76 percent of consumers want CEOs to take the lead on important issues.
  • Transparency: As the saying goes, you can’t just talk the talk. People want transparency from the companies they buy from, and they want to know promises are being met. Even if your company isn’t required to formally report, consider sharing updates on your growth and performance toward goals on a regular basis.

Capability:

The workforce and skills essential to turning the Northwest’s opportunities into reality

Key Finding 5:

Employees are highly focused on salary and would prefer more money over other benefits. Across the board, salary is prioritized over benefits like paid or unpaid vacation time, a higher ranked title, a flexible work schedule, and a more manageable workload.

Business leaders, however, think their employees prefer some benefits more than a higher salary. Nearly two-thirds (60 percent) believe their employees would prefer a flexible work schedule over a higher salary, and they were split on the importance of a manageable workload over salary.

But when salary is removed from the equation, employees and business leaders are aligned on which benefits matter most: healthcare, job security, and a manageable workload.

Insights from Carson:

Ronald Moser, clinical assistant professor, Management Information Systems and Entrepreneurship
A trait of successful company is finding and retaining motivated and skilled employees. In order to do this, company leaders must properly engage employees in dialogue with the goal to understand their needs and wants.

Unsurprisingly, salary remains the top priority for employees. While business leaders may be quick to brush this aside, I would encourage thoughtful exploration of this issue. Consider larger economic trends that show up for many people – their wages barely keep up with the cost of living and inflation.

To help solve this, business leaders need to strategically ensure they are developing their talent. Developing talent is an integral activity necessary to grow careers and meet the strategic needs of the business. Targeted skill development will lead to enhanced business profitability, which leads to higher paying jobs, and for some, a better living wage. Building focused skills builds your business, and strong businesses build and strengthen communities.

But, it’s important to call out that in many other respects, employers in the Northwest are certainly in tune with employee needs and are striving to meet them. Why is this so important? Because fostering dialogue among a workforce develops a positive culture where employees feel honored and heard, ultimately leading to more engaged employees.

What are some ways that employers can do this?

  • Create avenues for employees to share their needs and feedback.
  • Actively listen to and engage employees by asking questions and diving deep on issues.
  • Finally, demonstrate that you’re listening by implementing thoughtful changes together, and effectively communicating regularly with your employees.

Key Finding 6:

Maintaining a strong workforce is crucial for continued growth in the Northwest. When asked about issues that may prevent their company from succeeding in the next three years, business leaders and employees expressed concerns about attrition, inability to fill positions, and the insufficient skillset of future employees.

Although 85 percent of business leaders agree that graduates in the area are typically prepared and qualified enough to fill entry-level positions, more than half are finding it difficult to find qualified undergraduates from area universities or colleges to fill their company’s needs.

To find more talent, an increasing number of business leaders (79 percent) want to collaborate with community leaders, organizations, or higher education institutions to find qualified applicants.

Insights from Carson:

Dr. Andrew Perkins, associate professor, Marketing and International Business
Nearly three years ago, the Next Carson Coug task force was charged with revising the undergraduate experience to reach the Carson College of Business’s number one goal: to become the first choice for students seeking a business education in the Pacific Northwest.

To be the first choice for students and parents, we also need to be the first choice for employers, meaning our students need to be ready to take on the challenges of the evolving workforce when they graduate. Through research and interviews with companies, we found that more than ever, business leaders are looking for people who can keep up with the rapid pace of innovation, use critical thinking to solve complex business problems, and have the professional skills to build partnerships that advance the company.

So how are we addressing these needs? By changing the way we teach.

I say the way because it is not what we teach – technical business skills are more needed than ever — but how we teach it that matters.

Through more dialogue and fewer lectures, internship opportunities and practical learning experiences, and a greater emphasis on networking, we are transforming how undergraduate business education is delivered. We are creating a more enriching student experience that will benefit the state with stronger job candidates who will foster more ethical and collaborative businesses and higher standards.

As employers prepare to face the region’s growing demands, they are increasingly looking for more ways to collaborate with institutions of higher education to find qualified, local talent equipped to meet these demands. The Next Carson Coug will be rolling out just in time to fill these needs.

Appendix:

Q1: Thinking about the business climate in the Northwest in the past 3 years, do you feel it has…

Q2: (Business Leaders) Please indicate whether you agree or disagree with the following statements.

Q3: Which of the following do you feel are the biggest barriers to success for your company in the next 3 years?

Q4: Compared to 3 years ago, how would you describe the current employee turnover rate at your company?

Q5: Other than traditional methods, what, if any, has your company implemented in the last three years to help reduce employee turnover rate?

Q6: How satisfied are you with your company’s ability to keep up with your industry in filling positions and attracting talent?

Q7: Please select the most applicable answer choice for each statement in regard to attracting new talent at your company. My company…..

Q8: Please indicate whether you agree or disagree with the following statements.

Q9: Please indicate your preference from the following pairs…

Q9a: What are some of the reasons you prefer out-of-state candidates?

Q9b: What are some of the reasons you prefer in-state candidates?

Q10: Which would you prefer?

Q11: Do you feel that your company is helping or hurting the following in your community?

Q12: Which of the following federal policy changes would benefit your company the most?

Q12a: Which of the following local/state policy changes would benefit your company the most?

Q12b: Which of the following employee policy changes would benefit your company the most?

Q13r1: Public K-12 education – Who should be responsible for solving the following community issues?

Q13r2: Higher public education – Who should be responsible for solving the following community issues?

Q13r3: Housing affordability – Who should be responsible for solving the following community issues?

Q13r4: Reducing traffic congestion – Who should be responsible for solving the following community issues?

Q13r5: Gun control – Who should be responsible for solving the following community issues?

Q13r6: Immigration – Who should be responsible for solving the following community issues?

Q13r7: Population growth – Who should be responsible for solving the following community issues?

Q13r8: Development growth – Who should be responsible for solving the following community issues?

Q13r9: Gender protections – Who should be responsible for solving the following community issues?

Q13r10: Job loss from automation – Who should be responsible for solving the following community issues?

Q13r11: Racial/Ethnic protections – Who should be responsible for solving the following community issues?

Q13r12: Homelessness – Who should be responsible for solving the following community issues?

Q13r13: Substance abuse – Who should be responsible for solving the following community issues?

Q13r14: Mental health – Who should be responsible for solving the following community issues?

Q13a: Does your company follow or have a CSR (corporate social responsibility) program? A CSR program takes initiatives to assess and take responsibility for the company’s effects on environmental and social well-being. The term generally applies to efforts that go beyond what may be required by regulators or environmental protection groups.

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Q13b: What issues or community organizations does your company support currently?

Q17: What do you think will be the “next big thing” that the Pacific Northwest will be known for?

Q18: How much do you agree that the following actions will be important for companies to consider in the next two years to maintain their reputation?