potential recession is a very real concern and is forcing CFOs to find ways to cut costs, increase efficiency, and improve cash management.
The good news is CFOs are used to tackling the most complex challenges—one look at the role CFOs have played over the past three years tells its own story. Now, as the economy slows, it’s time for careful cost cutting while eying opportunities growth.
To learn how CFOs are balancing budgets and business priorities, NetSuite and CFO.com surveyed 500 CFOs and executives from organizations with $250 million or less in annual revenue. Here’s what our survey found.
Efficiency trumps growth as the economy slows
As the Fed battles inflation, organizations are looking to cut costs and improve efficiency.
- 99% of business leaders are predicting budget cuts if the economy dips into recession.
- 100% of CFOs believe inflation will continue to be the primary issue through 2023, and 78% are looking at cutting costs to help fight inflation.
- To improve cash flow and manage financial health, CFOs identified marketing and advertising, talent acquisition, and expanding products and services as the top three areas for potential budget cuts.
Businesses need to balance budget cuts with talent retention
The survey finds that budget cuts may impact employee retention, as many managers report they are looking to leave and worry about “quiet quitting” among their team members.
- 83% of business leaders believe they will face a critical talent shortage this year.
- Despite that, 39% of CFOs expect to reduce hiring budgets, and 37% said they will reduce allocations for retaining talent in 2023.
- Talent shortages and budget cuts are impacting employee morale. Half of managers are actively looking for new jobs, and 59% of business leaders reported that “quiet quitting” is an issue for their company.
Finance teams are championing tech to help manage the economy and talent shortage
To deal with inflation and a possible recession, CFOs are doubling down on technology to help their teams achieve more with less.
- 94% of business leaders believe their executive team is taking the right action to manage inflation and prepare for a possible recession. 92% believe their finance department is fully prepared to handle a potential recession.
- 73% of CFOs anticipate an overall increase in IT/tech spending over the next 12 months.
- 84% of CFOs will be more involved in developing a technology strategy this year, as they believe technology will increase overall productivity and relieve pressures on an overworked workforce.
There’s no doubt that CFOs face a new reality for workforce management. A confluence of factors including demands for higher salaries, a historically small hiring pool, and increasing employee desire for flexible working arrangements make balancing budgets and business priorities more complicated. The survey reveals that business leaders are confident that their finance teams will meet these challenges in 2023.