Nearly all business leaders (99%) in a recent survey said their organizations are preparing to cut costs in 2023 amid economic uncertainty.
The survey of 500 U.S.-based executives and managers — both in finance and non-finance roles — suggests that companies are planning as if a recession will happen, even if there are mixed views about the economy.
The possibility of an economic downturn is forcing business leaders to make tough choices, according to the study, which was conducted by CFO.com. Sixty-one percent of respondents anticipated cuts to hiring or talent retention investments. Yet, at the same time, 83% said they will face critical hiring needs in the first half of 2023.
The study revealed that finance departments are far more optimistic about the economy than their non-finance counterparts. About one-quarter of finance respondents expected a recession versus 42% of non-finance corporate executives.
"A potential 2023 recession remains on peoples’ radars, though likelihood and duration remain a question mark," the report said.
Marketing and advertising topped the list of key areas where companies might be looking to cut costs. Other such areas include hiring and retaining talent; expanding products and services; and adding production capabilities.
Technology ranked high as an area that will receive priority treatment from finance departments, regardless of the economic outlook. Three-quarters of CFOs anticipated an overall increase in tech spending, and 84% said they will be more involved in developing a tech strategy in 2023 than they were in the previous year.
Respondents continued to rank inflation as a top business concern, with 78% of CFOs and 76% of non-finance executives looking at cutting costs or products to help fight higher-than-normal price increases.
However, the poll found that inflationary pressures may not be completely crippling, at least on the revenue side. Fifty-six percent of non-finance executives believed that inflation could positively impact revenue in 2023. This is most likely due to companies’ ability to increase prices to keep pace with inflation, the report said.
The study also found that CFOs and finance departments are particularly confident heading into 2023, with 82% expecting revenue growth, though with modest expectations.
CFO.com is owned by Industry Dive. It is a sister publication to Construction Dive.