In 2023, recession preparation and speculation has been a driving element of decision-making. While the year started with preparation, leadership eventually shifted expectations toward revenue growth, cost cutting and internal efficiency.
As Q4 approaches, new data suggest leaders are continuing to doubt a major dip in the economy will take place. In a recent PwC survey of just over 600 executives — 22% represented by CFOs and finance leaders — only 17% said they strongly agree there will be a recession in the next six months, down from 35% in Oct. 2022. Across the C-suite, sentiment varies with just 8% of CFOs anticipating a recession compared to 27% of chief operating officers.
Business leaders are evaluating risk related to cybersecurity, talent acquisition, and the regulatory environment, but in each of those categories, view the respective risks as lower than a year ago. Recession is still considered a serious risk by 23% of respondents, but the threat of cyber attacks outweighs all others, as 36% consider it a serious risk.
Investing in Growth
Striking the right balance between cost-cutting and investing for growth is a top challenge to transformation, 89% of CFOs said. And with 59% of finance chiefs saying cutting costs is a top priority — up from 38% a year ago — CFOs face juggling quick wins to hit near-term goals against investments for long-term growth. Prioritized investments include generative AI and advanced analytics (52%) and environmental, social, and governance (ESG) reporting (34%) to help build strategic advantages.
When asked about their near-term strategic agendas, more than half (59%) of all respondents said they would invest in new technologies — including cloud or AI — in the next 12 to 18 months. Investments in generative AI, as well as making changes to strategic planning based on current business conditions were priorities for just under half of all respondents, at 46% and 44% respectively.
People are the Priority
As efforts shift towards technology implementation, companies are preparing their employees for the changes to come. Nearly two-thirds (64%) of all respondents said their companies are expanding mental health benefits, while an identical amount said they are training employees on new technologies that are being implemented.
Although 61% of employers said they have or are planning on requiring their people to work in person more often, a move that may result in a drop in morale and subsequent turnover at all levels, plans are also in place to preserve morale for top performers. Sixty percent of all respondents said their companies have plans to increase compensation packages for their existing employees or have done so already.
New hires, however, may be taking a hit to preserve the well-being of current staff during business transformations. Nearly half (49%) of respondents said their companies are instituting hiring freezes, alongside 48% who say their company plans or already has delayed starts for new hires. Forty-four percent say their company has, or plans to, rescind new offers.
What is Driving ESG Efforts?
ESG discussions have resulted in tremendous oversight of other areas of ESG but, on the whole, are not working. Less than a fifth (19%) of respondents said climate change was a serious risk to their business, down from just under a quarter (23%) from October of last year.
Despite ESG losing some traction, efforts to comply with upcoming regulations are still prevalent. Nearly 69% of all respondents said their companies are prepared to comply with coming sustainability reporting requirements. Two-thirds (66%) are keeping an eye on SEC regulatory activity to prepare for future compliance.
Efforts are purely regulatory driven, data shows. Less than a quarter (23%) of executives who were surveyed said they are planning for climate disruptions over the next 18 months. This skepticism, once again, is led by CFOs. Only 37% of finance chiefs said they see climate change as a severe or moderate risk. Exactly half of all respondents said the same, while nearly two-thirds (62%) of chief human resource officers credited climate change as a risk.