Dive Brief:
- Cost control and talent shortages remain top of mind for CFOs as they take steps to protect their companies against an expected economic downturn, leading many to contemplate staff reductions even as they up their hiring budgets, according to a recent report by Mercer.
- While executives report more optimism about their organizations’ ability to weather economic headwinds, an increasingly tough war for skilled talent and rising wage expectations are leading executives to take a fresh look at their talent models, the survey of over 400 CFOs and CEOs found. This comes as 56% of executives say they are increasing their focus on cost controls.
- Fifty percent of executives agree they will struggle to meet oncoming demand with their current talent models, according to the survey, while 59% of CFOs and CEOs expect customer demand for their organizations’ products or service offerings to increase.
Dive Insight:
Rebalancing their workforce is a key priority across industries for CFOs. They are still facing a tight labor market and lingering macroeconomic headwinds despite signs that pricing pressures may be beginning to ease.
Eighty-seven percent of executives surveyed believe the economy is already in or about to enter a recession which most expect to last one to two years, according to Mercer. Nearly half of CFOs and CEOs — 49% — reported they were more concerned about inflation’s impact on their businesses than that of a recession, the report found.
In December inflation fell for the sixth consecutive month to 6.5%, according to data from the Labor Department.
Though inflation may be decelerating, CFOs must still grapple with labor shortages that are likely to persist into the new year, according to data released Monday by the International Labor Organization. Global unemployment is only set to increase by about 3 million to 208 million this year, leaving the unemployment rate largely unchanged at 5.8%, according to the ILO, despite an expected economic downturn.
The slight bump in unemployment is due to a continued deceleration in global labor supply, as retirement ages are increasing and younger generations are staying in school longer and entering the workforce later — which will contribute to significant labor shortages, according to the ILO.
Such shortages are keeping wage pressures top of mind; 55% of both CFOs and CEOs believe wage expectations will increase in 2023, according to Mercer, while one-third of executives believe ensuring pay equity will be one of their more significant challenges moving forward.
Even in the face of such expectations, however, the need to find skilled talent is leading CFOs and their fellow executives to take a second look at the future of work at their organizations in order to increase job attractiveness.
While 57% of executives plan to cut staff as they look to operate in tough economic conditions, half of the CFOs and CEOs also plan to increase their hiring budgets in 2023, according to Mercer. Additionally, more than a third of companies are also planning on taking steps like increasing financial incentives for flexible working options, adding retirement options and offering educational tools regarding finance, according to the survey.
Notably, 57% of CFOs and CEOs also said they plan to increase their use of technologies such as artificial intelligence and AI in the case of a recession, according to Mercer, with one-third saying they are redesigning their workforce to be less dependent on people.
