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Sunk in gloom, CFOs are worried about their company's future viability and are making payroll cuts, according to a new study by Grant Thornton.
Kate O'Sullivan, CFO.com | US
April 17, 2009
The consumer-spending numbers will not be getting any help from CFOs anytime soon, the results of a new study by Grant Thornton suggest. In the accounting firm's recent survey of 530 finance chiefs and senior controllers in the United States, 65% say their company will not raise employees' salaries this year. The number is slightly higher than the results of the most recent Duke University/CFO Magazine Global Business Outlook survey, in which 57% of finance chiefs indicated they would freeze or reduce wages in the next 12 months.
CFOs' concerns about their business's viability may be driving the paycheck pinch. Twenty-nine percent of respondents to the Grant Thornton study say they are more worried than they were this time last year about their organization's ability to continue as a going concern. Eleven percent say they are much more worried, and another 46% say their level of worry is about the same.
As a result, finance chiefs report that their company is trotting out a broad range of cost-cutting measures. Sixty percent are "refining processes and streamlining," while 56% are reducing travel. Many are taking a variety of steps to reduce their payroll costs, with more than half making layoffs and nearly 60% cutting back on recruiting and hiring.
Those workers who manage to keep their job are still likely to take home less money than last year, further darkening the consumer-spending picture. Nearly half of Grant Thornton's respondents will not pay bonuses this year, and a quarter are reducing their 401(k) matches. The accounting firm did not ask how many companies will reduce workers' wages this year, but the Duke/CFO study, released in March, found that 21% of finance chiefs planned such cuts.
Credit woes also continue to plague CFOs. Grant Thornton found that about a third of finance chiefs are having difficulty accessing credit.