A new U.S. Bank survey of large-company finance executives shows them refocusing their priorities away from growth and toward risk and cost management as well using technology to sharpen their operations.
Minneapolis-based U.S. Bank first formally surveyed CFOs 16 months before doing so again this fall. Over that time span, surging inflation and interest rates and Russia’s invasion of Ukraine produced a cocktail of negatives that helped 30% of executives tag risk identification and mitigation as a top priority, up from just 18% in 2021. That was tied atop the list with cutting costs and deploying technology inside their finance functions.
“There’s a focus on ‘How can I build up my defenses and create that little bit of certainty,” said Stephen Philipson, a U.S. Bank executive vice president leading the company’s commercial products group. “This is a big shift in the overall mindset, especially when corporate earnings still look good and balance sheets are generally strong.”
The U.S. Bank poll included responses from 750 finance leaders working at companies with at least $100 million in sales, with nearly half of them at firms with revenues of more than $1 billion. And while the shift toward the idea of “controlling what you can control” is clear, the survey also shows that executives don’t feel great about their organizations making headway on their biggest risks: Just 15% told U.S. Bank they are “very confident” in their ability to manage talent, digital disruption and inflation worries.
On the talent shortage question, Philipson said, executives recognize there’s no quick solution. The classic cost-cutting option of laying off workers isn’t nearly as palatable when it appears that the supply of workers has structurally declined. Instead, executives are often investing in better wage and benefits packages as well as automation options to reduce their organizations’ need for certain types of workers and lift productivity.
“That’s one of the outcomes I see taking shape,” Philipson said. “There’s a big productivity boom coming. We won’t see it overnight but it will show in the coming years.”
U.S. Bank’s survey–you can read it in full here–adds depth and detail to other recent business confidence and attitude data points. The most recent Conference Board survey of CEOs showed that just one in 20 expected the overall economy to improve in the coming six months while 54% expect their industry’s short-term prospects to get worse. And a new KPMG report has corporate leaders bucking the consensus that any recession we’ll see in the near future won’t amount to much: Just one-third of that survey’s 400 U.S. CEOs of companies with at least $500 million in sales think a recession will be mild or short.
“The reality is that, when have synchronous rate hikes, they can amplify each other,” KPMG Chief Economist Diane Swonk said on an Oct. 31 webinar about the rapidly changing interest rate environments around the world and the caution they’re breeding.
Other findings from U.S. Bank’s survey included:
- Just 22% of finance leaders, down from 40% a year earlier, said they plan to lay off workers to save costs. Companies in the automotive and transportation sectors are the most likely to cut workers, however, while chemicals and advanced materials business are among those least likely to go that route.
- Autos and transportation companies are, however, also most active in figuring out the skill sets that might be required of their workers in the future. Nearly 70% of respondents are assessing that aspect of their talent risk, likely a reflection of the pace at which automotive electrification is progressing.
- Nearly half of industrial products, chemicals and mining/metals executives polled said they are actively looking for cost cuts to fight off the impact of inflation but that’s about 10 points below the overall response rate.
- Frustration is rising with organizations’ lack of an enterprise-wide digital transformation strategy: Two out of five respondents this year said the absence of a coordinated plan is now a top barrier, up from 24% last year.
