Nearly three-quarters of chief finance officers (74%) expect talent or labor costs to jump substantially in the coming year. This comes as 41% of them feel pessimistic about their companies’ financial prospects during 2022’s fourth quarter, up from 37% in the third.
These are some of the key findings of Deloitte’s Q4 2022 CFO Signals Survey, conducted between Nov. 7 and 21, 2022. The survey included participation from 126 CFOs drawn from the U.S., Canada and Mexico. In addition, the vast majority of the CFOs worked for organizations with over $1 billion in annual revenue.Most CFOs Expect Talent Costs to Climb Substantially in 2023 #HR #HRTech Click To Tweet
The CFOs expect a drop in their company’s revenue and earnings, as geopolitics and political instability stand out as their most pressing external risks, the survey found. Talent retention, in addition to prioritization and execution, emerged as the top internal worry among the executives.
“CFOs again lowered their year-over-year growth expectations for revenue, earnings, capital spending, domestic hiring and domestic wages. The biggest declines in growth expectations were in revenue, which decreased to 4.2% from 6.2%, and earnings, which dropped to 2.9% from 6.4%,” the survey said.
To Hire or Go Digital?
Meanwhile, CFOs dropped their expectations for domestic hiring growth to 2.1% from 2.6% in the previous quarter. They reported that domestic wages and sales slumped to 4.6% from 4.8%, and a significant number of executives (41%) noted that their organization plans to hire more people than they will let go.
A majority (61%) said they plan to implement digital transformation and automation to replace some jobs previously performed by humans. This is even as two-thirds (66%) plan to allocate or reallocate capital to new business investments next year.
“Deloitte’s latest CFO Signals survey reveals that the challenging economic environment that persisted throughout 2022 has impacted CFOs, both in their assessments of global economies and in their planning with respect to strategy, capital, operations and talent for 2023,” said Steve Galluci, national managing partner at Deloitte’s U.S. CFO Program.
“Still, CFOs don’t appear to be pulling back on new business investments, the introduction of new services or products, or their use of automation and digital technologies,” Gallucci said.