Navigating the Second Half of 2024:Tackling Business Challenges in the Final Stretch of the Year

As we reach the midpoint of 2024, businesses globally are navigating complex challenges.

Now is the opportune moment to reassess your strategies, identify obstacles, and prepare your company for success in the second half of the year.

Let’s identify the potential business challenges that must be addressed and derive actionable insights to overcome them. Whether you lead an established enterprise or an emerging startup, addressing these critical issues is vital to achieving a prosperous year-end.

Impact of New Federal Overtime Pay Requirements

Effective July 1, 2024, the new federal overtime pay requirements mandate that salaried workers earning less than $43,888 annually are eligible for overtime pay. This change aims to extend overtime protections to more employees, ensuring fair compensation for hours worked beyond the standard 40-hour workweek.

The Act applies on a fixed, recurring 168-hour workweek. It can start any day or hour and varies by employee. Employers cannot take the averaged hours over weeks, and overtime pay is due on the regular payday.

While the Act benefits laborers, these new rules could challenge employers. Let’s look through the impact of these new changes in detail: 

Increased Labor Costs

The Act will increase labor costs by expanding overtime eligibility to more employees. By January 2025, companies like yours will need to pay higher wages for overtime worked by salaried employees earning under $58,656 annually. Additionally, you may face administrative burdens and costs associated with tracking hours and adjusting payroll systems to comply with the new requirements, further driving up overall expenses.

Starting July 1, 2027, the earnings thresholds will be updated every three years to match changes in worker salaries.

Compliance Costs

Beyond increased costs, businesses like yours may also face an administrative burden. The Act is estimated to impact 4 million employees. To comply with the new regulations, your company may need to set aside costs to track employee hours efficiently and accurately. 

Legal and consulting fees are another concern in this new federal rule. Your legal and HR consultants must accurately navigate and comply with the latest requirements, creating additional administrative work for your team. 

They must perform necessary tasks such as reviewing current employees’ salaries and hours, reclassifying them based on who is eligible for overtime pay, ensuring time-keeping accuracy, reviewing company overtime policies, reviewing bonuses, and adhering to job contracts. 

Workforce Management

The new Federal Overtime Pay Requirements can boost employee morale by ensuring fair compensation for extra hours worked, recognizing their efforts, and reducing feelings of exploitation. However, improper workforce management could also lead to increased workloads or changes in scheduling, potentially causing stress or dissatisfaction.

To meet these requirements, your company may have to undergo workforce restructuring. You may have to shift responsibilities to other employees or reduce overtime for part-timers to keep costs under control while maintaining employee productivity and morale. 

Soaring U.S. Budget Deficits

According to reports, the U.S. budget deficit will rise to $1.915 trillion for fiscal 2024, surpassing last year’s $1.695 trillion gap and making it the largest outside the COVID-19 period. The Congressional Budget Office attributed this 27% increase over its previous forecast to higher spending.

With the trajectory of the U.S. budget deficit, industry experts foresee the following implications for businesses:Interest Rates

The government may now need to issue more bonds, which could lead to higher interest rates. This would make borrowing more expensive for businesses like yours. Higher interest rates can also come with tight credit markets, making securing loans for your operational needs difficult.

Inflation

A budget deficit this large may lead to inflation, increasing the cost of raw materials, supplies, and other inputs needed for your business. 

Inflation also comes with lower purchasing power, which impacts consumers and disposable income. With this economic impact on the common public’s livelihood, consumers may become more selective when choosing which brands to engage with or even stop purchasing non-essential items altogether.

Cost Management

The current US budget deficit can lead to higher taxes and interest rates, increasing borrowing costs. It may also reduce government spending on programs that benefit your business, making cost management more challenging. To offset these financial pressures, you must adjust your budgets, streamline processes, and increase operational efficiencies.

Strategic Planning

The current US budget deficit affects business strategic planning by creating uncertainty around tax policies and government spending. You may face higher taxes or contend with reduced public sector spending, which can impact investment and consumer spending. Inflation and interest rates can also influence borrowing costs and financial planning, prompting you to adopt more cautious or flexible strategies to navigate potential economic volatility.

The Great Resignation 3.0

The Great Resignation was a phenomenon where employees voluntarily left their jobs, switched careers, or exited the workforce for various reasons. In 2022, around 50 million workers resigned, profoundly impacting businesses and the labor market. 

In 2024, a new term, “The Great Resignation 3.0,” implies a third wave of widespread resignations and staffing shortages. 

Let’s take an in-depth look at the effects The Great Resignation 3.0 may have on your business:

Talent Shortages

Korn Ferry estimates that 2030 there will be a global talent shortage of more than 8.5 million, which could result in $8.5 trillion in revenue loss if not addressed. As this happens, The Great Resignation 3.0 may make it more difficult for recruiters to find qualified candidates, increasing hiring time and recruitment costs. 

Higher Labor Costs

A study by PwC shows that 28% of workers will likely switch employers next year, higher than the 19% threshold the Great Resignation brought. To remain competitive in this tight job market, you must offer better wages and benefits to retain and attract potential talent. In addition to skyrocketing wages, recruitment, and onboarding costs, training expenses for newly hired employees will also increase. 

Decline in Customer Satisfaction

Businesses with a high employee turnover rate can heavily affect customer loyalty and satisfaction. Studies show that 20% of companies with lower employee turnover have 55% better profits, directly correlated to reasonable customer satisfaction. By retaining a stable workforce, you can enhance customer satisfaction and improve overall profitability. 

Dilemma on AI Investments

What are the challenges faced by small businesses and large enterprises? One of the most pressing issues for companies like yours today is deciding whether to invest in artificial intelligence (AI).

AI brings incredible business opportunities with the potential for increased efficiency and innovative capabilities. However, with these opportunities come risks and substantial costs, which gives businesses a tricky dilemma: Should you invest in AI? Let’s explore each of these potential drawbacks and risks in detail:

High Initial Costs

AI implementation involves investing in costly hardware, software, and infrastructure. A report by Goldman Sachs estimates that the overall cost of AI infrastructure for companies may be over $1 trillion. Beyond hardware, software, and infrastructure costs, training employees to use AI technologies will also bring additional expenses.

Uncertain ROI

The same report from Goldman Sachs estimates that AI will only impact less than 5% of all tasks, implying that only a quarter of AI is cost-effective. Given that the estimated cost for infrastructure alone is about $1 trillion, experts criticize the high price as being unable to solve what laborers can do without the extreme cost. Experts also express that the possibility of projects failing with AI is not far off, leading to significant financial losses because of the investment in AI.

Artificial intelligence is highly complex and costly, so you must tread carefully when investing in this new technology. While AI can create efficiency opportunities, it can also lead to risks affecting your company in the long run. Hence, it’s essential to carefully study these factors and devise elaborate strategies for addressing them.

Complexity and Implementation Challenges

Integrating AI into systems can cause complications, especially with outdated business systems. AI may cause substantial changes in business processes.

Technical expertise is also necessary to successfully implement AI, and sadly, not everyone has the in-house capability to leverage AI-driven solutions. Skills such as programming, database modeling, machine learning, and knowledge of intelligent user interfaces are essential expertise for AI integration, which may be costly and difficult to find. Outsourcing AI and ML development support teams can help you accelerate AI projects while keeping costs low.

Ethical and Regulatory Concerns

When left unchecked, AI systems can perpetuate or even exaggerate biases, leading to ethical concerns. This is because the information used to train them comes from the internet, which is riddled with many people’s unfiltered biases. 

In addition to these ethical concerns, businesses like yours must navigate a complex regulatory landscape. When using these technologies, you must comply with stringent data privacy and AI guidelines to avoid penalties and fines. 

Tackle These Business Challenges With a Scalable and Cost-Efficient Approach

As we approach the end of the year, your business may face various challenges. Significant industry developments, such as the new federal overtime pay requirements, the U.S. budget deficits, the Great Resignation, and the rise of AI, may disrupt your operations and keep you from meeting your business goals.

At SuperStaff, we can help you address these challenges through scalable outsourcing models that strategically address your businesses’ pain points and needs. Our cost-efficient processes ensure you can expand your capabilities and operate at maximum capacity while focusing on your core operations. 

Partner with SuperStaff today, and allow us to boost your business for the rest of the year and beyond.