3 Things That Make Mid-Market CEOs Different Than Large-Company CEOs

Here are three of those characteristics and how they affect business chiefs’ outlooks in particular areas, from the view of Thomas Stewart, executive director of the National Center for the Middle Market, in Columbus, Ohio.

1. They are conservative about growth projections. The center’s latest report of expectations, during the first quarter, showed that mid-market chiefs were expecting 5.3% growth for all of 2015, even though they collectively reported mean growth of 7.4% for the previous 12 months, and there were continued signs of U.S. economic strengthening. “Every time we survey them, they under-promise and over-deliver,” Stewart said of mid-market chiefs. “Some of that is their innate caution as executives. I’m just not sure how much of a discount there is for that.”

2. They are careful with cash outlays. More mid-market chiefs – 67%, compared to 63% previously – said that if their company had an extra dollar they would invest it rather than save it, compared with a year earlier. But, Stewart pointed out, these CEOs are “still fairly conservative about spending cash. They like to finance investments from retained earnings rather than selling equity or taking on debt. So they carry a lot of cash partly because they don’t want to go to the capital markets.”

3. They are frustrated at the talent shortage. Only one-third of mid-market firms surveyed during the first quarter expected to hire in the second quarter, while 39% expected to hire at some point this year. This was down from the fourth quarter, when 52% of respondents said they planned to staff up over the next year. But, noted Stewart, most mid-market chiefs report that recruiting and retaining talent remains their No. 1 challenge. “They’re feeling the talent pinch at all levels,” he said. “And going up against larger companies and even startups sometimes, mid-market companies don’t have the big brands – as a selling proposition, they have to work harder to get the attention of people who might actually want to come to work for them.”

Overall, of course, these characteristics bespeak a conservatism that isn’t surprising for a mid-market that forms the backbone of the U.S. economy and accounts for most of its growth. Keeping their powder dry helps mid-market chiefs fight more effectively in the battles that count.