CFO optimism falls as inflation rises
On the positive side, half of CFOs believe the economic impact of COVID-19 is waning.
Inflation, labor shortages and financial concerns are having an effect on economic optimism at the CFO level. According to a Grant Thornton LLP 2022 Q1 CFO Survey, optimism has fallen 30 percentage points to just 49%.
Inflation topped the list of concerns with 80% of CFOs citing rising costs as the top reason for their negative outlook. Supply chain issues and the war in Ukraine were also bringing down the numbers.
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On the positive side, 50% of the more than 270 CFOs surveyed said they believe the economic impact of COVID-19 is waning. And whereas one-third (33%) of the respondents in Grant Thornton’s previous CFO survey (released in February 2022) said they expect inflation to impact their business for more than a year, that number fell to 25% in the Q1 survey.
“Given the aggressive rate hike schedule the Fed is now proposing, many CFOs are hopeful that inflation will begin to moderate,” said Enzo Santilli, national managing partner of Transformation at Grant Thornton. “Still, finance leaders are preparing to grapple with a host of complex challenges throughout the rest of 2022.”
Grant Thornton’s 2022 Q1 CFO Survey also found many leaders still struggling with the Great Resignation. Fifty-seven percent of CFOs said talent attraction and retention is their primary human capital challenge, while 48% of CFOs are expecting their compensation and benefits investment to increase. Nearly half (45%) plan to spend more on recruiting.
When asked about their return-to-office plans, CFOs were speaking from both sides of their mouths. While 74% believe hybrid and remote work are here to stay and are committed to improving that model, 61% of respondents also said they are focused on getting most or all their people returning to work on-site. The latter stat runs contrary to what most employees covet: In Grant Thornton’s most recent State of Work in America survey, 80% of respondents said they want flexibility in where and even when they work.
Interestingly, the survey revealed a slow-down in investment plans for environmental, social and governance (ESG) initiatives, as well as diversity, equity and inclusion (DE&I). Just 34% of the CFOs surveyed expect to increase their investments in DE&I, and only 31% plan to increase investments in ESG.
“It may be tempting for CFOs to let focus on DE&I and ESG slip when conditions begin to tighten,” said Marjorie Whittaker, a managing director of ESG & Sustainability at Grant Thornton. “However, the new SEC regulations won’t be the last we see in this area, and public, employee, and investor focus isn’t going away. Organizations will need to maintain, and probably even increase, these efforts.”
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