Mass. CEOs to take it slow

By D.C. Denison, Globe Staff

The chief executives of Massachusetts' leading companies are planning to spend the coming year in turtle mode, playing it safe by not hiring and not spending more on technology, office space, or business travel. These corporate leaders are also concerned about rising healthcare costs, tax rates, and the high cost of living in Massachusetts. Yet at the same time, this powerful group remains tenaciously optimistic about the coming year.

The inaugural Globe 100 CEO Survey, distributed to the heads of Massachusetts' leading companies, shows that the leaders of the state's top 100 companies are not in an expansive mood, but they remain bullish about the prospects for their firms, and the Massachusetts economy, over the next year.

The survey was conducted in late April and early May. Eighty-one percent of The Globe 100 top executives filled out the 27-question survey. All responses were anonymous.

Sixty-eight percent of the respondents indicated that they expect the US economy to be in better shape a year from now. Sixty-eight percent said that it's "not likely" that the US economy will slide into recession. On the subject of the Massachusetts economy, 58 percent said that it will "stay about the same" over the next 12 months.

When it comes to their own companies, the CEOs are even more bullish: 80 percent expect that they will increase revenue; 71 percent believe they will increase profits over last year.

Yet will they be hiring to fuel that growth? Probably not. The majority, 53 percent, said they expected no change in their hiring plans, although 43 percent said they are planning on an increase in hiring. Only 5 percent responded "layoffs pending."

As for capital spending, which many economists see as a major driver in any future economic recovery, exactly half of The Globe 100 CEOs predicted "no change in rate of capital investment"; 36 percent predicted that "our investment will increase"; 14 percent said "capital spending will decrease."

Technology spending, particularly important to many Massachusetts companies, is unlikely to see dramatic growth, according to the CEOs: 56 percent predicted "no difference" in their company's technology purchasing; 34 percent predicted an increase; 10 percent forecast a decrease.

Questions about the CEOs' personal use of technology revealed that the majority own a cellphone that's more than a year old and a laptop computer that's less than two years old. Twenty-four percent don't own a laptop at all, and there is one CEO out there who admitted that he does not own a cellphone.

The current high vacancy rate in the Boston-area office market is not likely to go down, according to the executives we surveyed. The majority said they do not anticipate needing more office space in the coming year (72 percent expect that "our needs will stay the same.")

The survey also contains bad news for the beleaguered travel industry: 56 percent of the leaders of Globe 100 companies are expecting that their business travel over the next year will be "about the same" as last year, and it's not because they will be doing more videoconferencing. Fifty-four percent said that advances in videoconferencing software have not made any impact on their company's business travel.

So what will it take to fuel the growth these executives predict? The majority of executives felt that the drivers will come from outside the walls of their companies: 51 percent are hoping that an "improved business climate" will contribute to their company's growth in the coming year. Similarly, if their company's growth is dampened in the next 12 months, 60 percent believe that the primary reason will be "the US economy."

And what is the current condition of the economic climate? Fifty-seven percent of the executives rated the state of the Massachusetts economy as "good." Fifty-six percent believe that the state's economy will perform "the same" as the US economy.

Most of the executives are also putting their faith in the policies of Governor Mitt Romney. In fact, the vast majority (71 percent) expect that Romney's economic policies will be "good for the state's economy in the long term." A much smaller percentage believe that Romney's policies will directly benefit their own individual businesses: 43 percent said that Romney's policies would be good for their company in the long term. The next largest group, 34 percent, said the governor's policies would have "no impact."

Asked about the greatest economic challenge facing Massachusetts, the executives' responses were not surprising: It's "the high cost of living" according to 48 percent, followed by the state's "unfavorable tax burden." (41 percent).

And the most significant costs these executives expect their own companies to face in the coming year? Sixty-eight percent named "health benefits." Labor costs (28 percent) were next in line.

Yet, despite these concerns, a dogged confidence prevails. Sixty-five percent predict that the Dow Jones industrial average will be around 8,500 a year from now. Thirty-three percent believe that it will be up around 10,000. Under 3 percent believe it will go down substantially, to around 7,000.

And interest rates? Fifty-four percent expect the Federal Reserve will raise its benchmark rate a half point or more higher by May 20, 2004. A slightly smaller group, 42 percent, expect it to be "about the same as it is now."

On broader issues of business culture, 34 percent of the respondents favor the Four Seasons Hotel's Aujourd'hui as the best place for a "power breakfast." Number two is the "nearest Starbucks." (29 percent).

The worst business cliche? It's "thinking outside the box" by a landslide (43 percent), followed by "mission critical" (21 percent), any phrase that contains the words "solutions" or "synergy" (19 percent), and "at the end of the day" garnered 16 percent of the votes.

Thirty-six percent of The Globe 100 executives said they were glad business casual is over, but a far larger group (59 percent) had a different response: "You mean it's over?"

Finally, we asked The Globe 100 executives to pick the next Boston team to win a championship. We offered a wide variety of choices: the Red Sox, Patriots, Celtics, Bruins, even the Revolution. The Patriots turned out to be the overwhelming choice, with 39 percent of the responses. But what surprised us, and reminded us that Globe 100 CEOs are probably also Boston sports fans at heart, was the second-place choice: a dead heat at 23 percent between the Red Sox and "none of the above."

D.C. Denison can be reached at denison@globe.com.

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