TriNet SMBeat Report
Small Business Employment Trends Reflect Cautious Optimism
Small Business Layoffs Dropped 28 Percent in August
TriNet launches monthly report to deliver insight on small, growth-oriented businesses Hiring rates have risen nearly 30 percent year-over-year, according to TriNet’s SMBeat, a monthly report covering key human capital economic indicators for small technology and services companies. December’s data also showed rising employee retention rates, wage growth of 1.3 percent, and meaningful growth in employee tenure since December 2009. “December’s data presents a modestly optimistic perspective on economic growth for the knowledge worker small business economy,” said Jimmy Franzone, TriNet’s vice president of corporate development. “We expect these trends to continue through the year as we have seen a general improvement in key business indicators over the past two quarters with positive hiring trends and also positive growth in compensation.” SMBeat provides a detailed analysis and a predictive forecast for trends in key human capital economic indicators for small technology and services companies. TriNet generates the information by tracking movements within its base of approximately 3,000 entrepreneurial businesses with between 10 and 150 employees. SMBeat measures hiring and retention (i.e., employee stability) every month, and also explores additional data drawn from the small business companies that drive a significant portion of innovation and growth in the U.S. economy. SMBeat also provides ongoing analysis of contributing factors to these trends, including regional, industry and seasonal variables.
Key findings: • Hiring – Four month smoothed rate of 2.4 percent in December vs. 2.7 percent in November; 30.2 percent above year ago levels.
• Retention/Employee Stability – Measuring the share of employees who remained in a company (retention) as compared to measuring those who left (terminations), involuntary retention was 99.6 percent and voluntary retention was 99.3 percent, indicating a total rate of termination of 1.1 percent in December. This compared with a termination rate of 1.3 percent in December 2009.
• Employee Tenure – The average tenure of the sample employees increased from 1.6 years to 2.4 years from December 2009 to December 2010, reinforcing the hiring / termination growth rate imbalance.
• Compensation – Average compensation increased 1.3% year over year in this TriNet client subset. More u
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Hiring Although year-over-year hiring rates have increased 29.2 percent from December 2009 to December 2010, last month’s data confirms the rate of hiring remains firmly positive but in a new declining trend from the stable, measured progress of the previous eight months. This decline reflects the seasonal end-of-year slowdowns in hiring for fulltime roles in the technology and business services sector. The four-month smoothed hiring rate in December is 2.4 percent, a drop from the November rate of 2.7 percent. TriNet’s projection infers with 99 percent confidence that December begins a new trend, which may lead to lower projected hiring in January (shown as “Original Projection”); however, this data may be influenced by business practices that have previously driven a rebound in January (shown as “Adjusted Projection”). Hiring Trends (companies in NAICS Code 5xxxxx)
Hiring Rate (4 month rolling average)
5.5%
4.5%
3.5%
Adjusted Projection Original Projection
2.5%
1.5%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11 TriNet high-value employee hiring rate (companies with 10-150 employees) BLS overall hiring rate (all company sizes)
Retention (Employee Stability) Employee stability represents the share of employees who were retained by a company during the month and did not face either voluntary or involuntary departure. December’s employment stability with respect to terminations has continued an upward trend, reflecting lower rates for both voluntary and involuntary employee turnover. TriNet predicts this trend will continue, further reducing the overall number of layoffs, indicating more employees will remain with their current companies. This segment of the economy saw a marked trend shift in the March to May 2010 timeframe, as layoffs tapered and companies focused on retaining
Overall Employees Retained (4 month rolling average)
Employee Stability (companies in NAICS Code 5xxxxx) 100%
99%
98%
97%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11 Based on TriNet voluntary turnover (high value, 10-150 employees) Based on TriNet involuntary turnover (high value, 10-150 employees) Based on BLS voluntary turnover (all company sizes) Based on BLS involuntary turnover (all company sizes)
their strongest employees. This upward trend of increased retention endured through the remainder of the year, and we expect this to continue. The December stability measurement, based on involuntary turnover, is 99.6 percent, an increase of 0.3 percent from the same time last year, indicating fewer layoffs. The voluntary turnover stability measurement of 99.3 percent is below last year’s value 99.4 percent, indicating increased voluntary departures, yet the data shows a positive trend since April, indicating that the level of voluntary departures has steadily decreased. Overall, trend analysis indicates a continued increase in employee stability for the past eight to nine months, with better-than-average confidence that the trends will continue through January. On a regional basis, December’s hiring and stability rates are presented below. Hiring rates are lowest in the South and highest in the West, a trend that is indicative of the relative health of the entrepreneurial technology environment in Northern and Southern California. Employment stability as it relates to involuntary and voluntary terminations is quite high in all regions, reflecting the focus on growth for all of the companies in the population.
Regional December 2010 Four-Month Rolling Averages “Assessing these hiring and stability trends from 2010, one would conclude that that the average tenure of employees had likely grown due to the overweight of hiring and continued reduction in both forms of attrition,” Franzone added. “The data substantiate that hypothesis, as the median
Learn more at TriNet.com or call 888.874.6388 Ambitions Realized
Region
Hiring
Employee Stability Based on Involuntary Turnover
Employee Stability Based on Voluntary Turnover
East
2.3%
99.3%
99.3%
West
2.6%
99.7%
99.3%
South
1.7%
99.7%
99.2%
Tenure increased from 1.6 years, as measured in December 2009, to 2.4 years in December 2010.
Compensation Average base compensation continues a rising trend seen since May 2010. Moreover, year over year, the average salary in SMBeat’s pool of employees has increased 1.3 percent. This is significant in that due to lower levels of inflation, this modest increase likely reflects sizeable increases in personal spending power in this highly-compensated population; perhaps an indicator for rising consumer confidence in months to come. The extent to which companies in the pool of small and high-wage businesses are continuing to not just grow net employment but also to compensate those employees at high levels, is a measure of confidence in the future direction of the economy.
Disaggregating turnover in 2010 by compensation level provides additional clarity into the reasons for salary movement. The chart below indicates the highest and lowest paid quartiles have experienced lower turnover in 2010 — effectively, management at small technology and business services firms has retained lower-level workers while managing out or terminating middle-income employees. Across the board, turnover, both voluntary and involuntary, is on the decline for all groups and is projected to continue in this fashion into early 2011. Terminations (voluntary and involuntary) by Income Level (companies with 10-150 employees and in NAICS Code 5xxxxx) Employee Termination Rate (4 month rolling average)
tenure of an employee increased by almost a year over the course of the year, a remarkable fact and an indication of the generally positive health of this segment of the economy; these companies hired and retained workers in 2010 after significant restructuring in 2009.”
2% 1.8% 1.6% 1.4% 1.2% Income Level Top 25% Mid - High Low - Mid Bottom 25%
1% 0.8% 0.6%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11
Salary Trends (companies with 10-150 employee and in NAICS Code 5xxxxx)
About SMBeat
Average Employee Salary (thousand $)
115
110
105
100
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11
TriNet developed SMBeat with real-time data from thousands of companies, ranging from 10-150 employees, and earning approximately $100,000 in annual base salary. These companies fall primarily into three broad industry segments: technology, professional services, and financial services. SMBeat aggregates and reports data reflecting hiring and retention (both involuntary terminations and voluntary employee departures). SMBeat is available on a monthly basis with updated figures and projections based on current payroll and HR data compiled as of the 24th of each month. Additional details can be found on the company’s SMBeat web page www.trinet.com/smbeat.
Copyright © 2011 TriNet. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. a046000001L1GR5
Learn more at TriNet.com or call 888.874.6388 Ambitions Realized
Small Business Layoffs Dropped 28 Percent in August
TriNet launches monthly report to deliver insight on small, growth-oriented businesses Hiring rates have risen nearly 30 percent year-over-year, according to TriNet’s SMBeat, a monthly report covering key human capital economic indicators for small technology and services companies. December’s data also showed rising employee retention rates, wage growth of 1.3 percent, and meaningful growth in employee tenure since December 2009. “December’s data presents a modestly optimistic perspective on economic growth for the knowledge worker small business economy,” said Jimmy Franzone, TriNet’s vice president of corporate development. “We expect these trends to continue through the year as we have seen a general improvement in key business indicators over the past two quarters with positive hiring trends and also positive growth in compensation.” SMBeat provides a detailed analysis and a predictive forecast for trends in key human capital economic indicators for small technology and services companies. TriNet generates the information by tracking movements within its base of approximately 3,000 entrepreneurial businesses with between 10 and 150 employees. SMBeat measures hiring and retention (i.e., employee stability) every month, and also explores additional data drawn from the small business companies that drive a significant portion of innovation and growth in the U.S. economy. SMBeat also provides ongoing analysis of contributing factors to these trends, including regional, industry and seasonal variables.
Key findings: • Hiring – Four month smoothed rate of 2.4 percent in December vs. 2.7 percent in November; 30.2 percent above year ago levels.
• Retention/Employee Stability – Measuring the share of employees who remained in a company (retention) as compared to measuring those who left (terminations), involuntary retention was 99.6 percent and voluntary retention was 99.3 percent, indicating a total rate of termination of 1.1 percent in December. This compared with a termination rate of 1.3 percent in December 2009.
• Employee Tenure – The average tenure of the sample employees increased from 1.6 years to 2.4 years from December 2009 to December 2010, reinforcing the hiring / termination growth rate imbalance.
• Compensation – Average compensation increased 1.3% year over year in this TriNet client subset. More u
Learn more at TriNet.com or call 888.874.6388 Ambitions Realized
Hiring Although year-over-year hiring rates have increased 29.2 percent from December 2009 to December 2010, last month’s data confirms the rate of hiring remains firmly positive but in a new declining trend from the stable, measured progress of the previous eight months. This decline reflects the seasonal end-of-year slowdowns in hiring for fulltime roles in the technology and business services sector. The four-month smoothed hiring rate in December is 2.4 percent, a drop from the November rate of 2.7 percent. TriNet’s projection infers with 99 percent confidence that December begins a new trend, which may lead to lower projected hiring in January (shown as “Original Projection”); however, this data may be influenced by business practices that have previously driven a rebound in January (shown as “Adjusted Projection”). Hiring Trends (companies in NAICS Code 5xxxxx)
Hiring Rate (4 month rolling average)
5.5%
4.5%
3.5%
Adjusted Projection Original Projection
2.5%
1.5%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11 TriNet high-value employee hiring rate (companies with 10-150 employees) BLS overall hiring rate (all company sizes)
Retention (Employee Stability) Employee stability represents the share of employees who were retained by a company during the month and did not face either voluntary or involuntary departure. December’s employment stability with respect to terminations has continued an upward trend, reflecting lower rates for both voluntary and involuntary employee turnover. TriNet predicts this trend will continue, further reducing the overall number of layoffs, indicating more employees will remain with their current companies. This segment of the economy saw a marked trend shift in the March to May 2010 timeframe, as layoffs tapered and companies focused on retaining
Overall Employees Retained (4 month rolling average)
Employee Stability (companies in NAICS Code 5xxxxx) 100%
99%
98%
97%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11 Based on TriNet voluntary turnover (high value, 10-150 employees) Based on TriNet involuntary turnover (high value, 10-150 employees) Based on BLS voluntary turnover (all company sizes) Based on BLS involuntary turnover (all company sizes)
their strongest employees. This upward trend of increased retention endured through the remainder of the year, and we expect this to continue. The December stability measurement, based on involuntary turnover, is 99.6 percent, an increase of 0.3 percent from the same time last year, indicating fewer layoffs. The voluntary turnover stability measurement of 99.3 percent is below last year’s value 99.4 percent, indicating increased voluntary departures, yet the data shows a positive trend since April, indicating that the level of voluntary departures has steadily decreased. Overall, trend analysis indicates a continued increase in employee stability for the past eight to nine months, with better-than-average confidence that the trends will continue through January. On a regional basis, December’s hiring and stability rates are presented below. Hiring rates are lowest in the South and highest in the West, a trend that is indicative of the relative health of the entrepreneurial technology environment in Northern and Southern California. Employment stability as it relates to involuntary and voluntary terminations is quite high in all regions, reflecting the focus on growth for all of the companies in the population.
Regional December 2010 Four-Month Rolling Averages “Assessing these hiring and stability trends from 2010, one would conclude that that the average tenure of employees had likely grown due to the overweight of hiring and continued reduction in both forms of attrition,” Franzone added. “The data substantiate that hypothesis, as the median
Learn more at TriNet.com or call 888.874.6388 Ambitions Realized
Region
Hiring
Employee Stability Based on Involuntary Turnover
Employee Stability Based on Voluntary Turnover
East
2.3%
99.3%
99.3%
West
2.6%
99.7%
99.3%
South
1.7%
99.7%
99.2%
Tenure increased from 1.6 years, as measured in December 2009, to 2.4 years in December 2010.
Compensation Average base compensation continues a rising trend seen since May 2010. Moreover, year over year, the average salary in SMBeat’s pool of employees has increased 1.3 percent. This is significant in that due to lower levels of inflation, this modest increase likely reflects sizeable increases in personal spending power in this highly-compensated population; perhaps an indicator for rising consumer confidence in months to come. The extent to which companies in the pool of small and high-wage businesses are continuing to not just grow net employment but also to compensate those employees at high levels, is a measure of confidence in the future direction of the economy.
Disaggregating turnover in 2010 by compensation level provides additional clarity into the reasons for salary movement. The chart below indicates the highest and lowest paid quartiles have experienced lower turnover in 2010 — effectively, management at small technology and business services firms has retained lower-level workers while managing out or terminating middle-income employees. Across the board, turnover, both voluntary and involuntary, is on the decline for all groups and is projected to continue in this fashion into early 2011. Terminations (voluntary and involuntary) by Income Level (companies with 10-150 employees and in NAICS Code 5xxxxx) Employee Termination Rate (4 month rolling average)
tenure of an employee increased by almost a year over the course of the year, a remarkable fact and an indication of the generally positive health of this segment of the economy; these companies hired and retained workers in 2010 after significant restructuring in 2009.”
2% 1.8% 1.6% 1.4% 1.2% Income Level Top 25% Mid - High Low - Mid Bottom 25%
1% 0.8% 0.6%
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11
Salary Trends (companies with 10-150 employee and in NAICS Code 5xxxxx)
About SMBeat
Average Employee Salary (thousand $)
115
110
105
100
Nov Dec Jan 10 Feb Mar April June May July Aug Sept Oct Nov Dec Jan 11
TriNet developed SMBeat with real-time data from thousands of companies, ranging from 10-150 employees, and earning approximately $100,000 in annual base salary. These companies fall primarily into three broad industry segments: technology, professional services, and financial services. SMBeat aggregates and reports data reflecting hiring and retention (both involuntary terminations and voluntary employee departures). SMBeat is available on a monthly basis with updated figures and projections based on current payroll and HR data compiled as of the 24th of each month. Additional details can be found on the company’s SMBeat web page www.trinet.com/smbeat.
Copyright © 2011 TriNet. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. a046000001L1GR5
Learn more at TriNet.com or call 888.874.6388 Ambitions Realized
