Competition for talent, primarily financial, has never been more intense. Alongside industries like private equity reporting fierce battles in finding and keeping talent as of late, CFOs, regardless of company size or industry, have felt also the impact of a supply-constrained labor market. In addition, although trends such as remote work and salary transparency have proven beneficial to the way companies operate, gauging productivity is still proving to be extremely difficult for many executives and their teams.
Among the labor-induced hurdles for CFOs, over three quarters (78%) of CFOs surveyed in the CFO 2023 Outlook report released on Wednesday indicated “quiet quitting,” or employees doing the bare minimum of work to remain employed, is a problem for their company.
Quiet quitting can stem from employees’ feeling their work is unimportant or has little effect on the company’s results. To avoid this, CFOs must hire a candidate that has the right mix of skill sets. Those skill sets should provide the new hire the greatest chance of being highly productive across a range of projects. If an employee feels as if their presence is meaningless, they may begin to trim efforts to the bare minimum.
Alongside quiet quitting, other effects of the tight labor market include a shortage of skilled workers, which finance teams desperately need. When CFOs were asked which skills and attributes were most important in job candidates, the most common choice (32%) was accounting, a reflection of an ongoing labor issue within corporate finance.
Other top choices included industry knowledge (31%) and project management (29%). The need for skilled labor is so acute that company culture, a once highly coveted part of many executives’ management approaches, was the least selected response. Only a fifth (20%) of CFOs reported fit with the company culture was an important candidate attribute.
As a combined 61% of CFOs reported that hiring and retaining talent were target areas for budget cuts due to recession worries, finance leaders will have to allocate toward talent with particular caution. With a universal desire to spend across an array of areas, according to CFO data, finance leaders must make sure they can acquire and retain the talent they need while also maximizing the value of each dollar spent toward acquiring and maintaining that talent.
While cuts to talent costs are possible, more than two-thirds (69%) of CFOs indicated they expected to increase payroll in 2023. As CFOs continue to implement changes in response to workforce trends, there appears to be an overlap between the desire to build a highly skilled staff and an awareness that this ambition may be halted by macroeconomic factors.
Although CFOs are aware of the potential hurdles in the wider U.S. economy, confidence in their own performance and that of their companies seems to be high. Nearly two-thirds (64%) of CFOs said the near-term U.S. economic environment will have a positive effect on their company.
Some labor issues are standalone problems but others possible symptoms of an even larger organizational issue. Chris Boland, CFO of marketing and communication agency Boathouse, told CFO that it’s not just the numbers that gauge how well an employee is doing. In a recent interview about how advertising and marketing can counter external economic conditions, Boland spoke about strategies for dealing with productivity paranoia, defined as “the disconnect between employee and employer perceptions of productivity,” according to Psychology Today.
As financial leader of a firm with 75 employees, Boland stressed that assessing productivity is about trust and communication between executive leadership and managerial teams.
“Financial metrics and productivity metrics like utilization are the base level, but we listen for feedback from clients, managers, and employees to understand the context behind those numbers,” said Boland. “In the services business, unless you are fully on-site with a client, you are always to some degree remote, and the people who are attracted to this business understand the responsibility that goes along with that degree of autonomy.”
He added: “If our clients can trust our company with their marketing investment, we have to be able to trust our people to be productive.”