Dive Brief:
- CFOs expect their companies to see a 7.3% rise in salaries and wages paid in the next 12 months, according to a Q4 Deloitte survey, which polled 200 finance chiefs at companies with a minimum of $1 billion in revenue shortly after the U.S. election in November. The pay projection was nearly double the 3.65% rise anticipated in Q3, according to the findings of the Big Four firm’s previous quarter’s report.
- Broken down by sectors, the financial services industry is forecasted to see the highest pay rise at 8.65%, followed by the consumer sector (7.86%), life sciences and healthcare (7.25%), and technology, media and telecom (7.06%), according to additional information from the survey shared with CFO Dive. The energy, resources and industrials sector rounded out the group with the lowest anticipated rise of 5.69%.
- The anticipated wage and salary increase comes as CFO confidence in economic and business conditions soared to a 10-quarter high, with that optimism likely partly stemming from less uncertainty surrounding their outlook due to the election being settled and the Federal Reserve proceeding with its second rate cut that month, the report found. “With growth there’s going to be a cost to growth and adding head count and salaries is obviously going to be one of those costs,” Steve Gallucci, Deloitte’s global and U.S. CFO program leader, said in an interview.
Dive Insight:
The survey’s findings, released last week, come as economists and investors are keeping a close eye on the labor market to gauge the outlook for interest rates. In December, U.S. employers increased payrolls beyond expectations, leading to some predictions that the Federal Reserve will hold the main interest rate at the current level beyond a planned monetary policy meeting in May, CFO Dive previously reported.
The report did find that the outlook is not a completely rosy scenario for employees and their compensation: Finance chiefs have some plans in the works to keep wage costs in check, the report found. Hiring or promoting from within the company or tying some compensation to performance tied for the top of the list of approaches, with 49% of CFOs citing it. Changing benefits to transfer some of the costs to workers, outsourcing manually intensive tasks, hiring more independent contractors and reducing hours were among the other options cited.
Also, at the same time, even as executives seemed to be bracing to budget more for pay, talent — which had previously been a major concern of CFOs earlier last year — slipped down the list of issues keeping CFOs up at night, according to the study’s findings. Tech deployment topped the list of internal issues worry list, cited by 51% of respondents, followed by the lack of agility and resilience (51%), efficiency and productivity (42%) and talent (38%).
