The vast majority of CFOs plan to raise spending on employee compensation in 2023 despite recession fears and ongoing inflation concerns, said Gartner recently.
In a poll of 279 CFOs by the firm in December 2022, 86% of respondents plan to raise spending on employee compensation by at least 3% across their budgets year-over-year.
In addition, most CFOs indicate they intend to remain competitive in a historically tight labor market while only 5% of respondents said they plan to reduce spending on employee compensation in 2023, Gartner noted.
CFOs know that two things will make or break their ability to drive growth and profits during, and after, the 2023 recession: their investment in technology and people, said Alexander Bant, chief of research, in the Gartner Finance practice.
“Many CFOs are still trying to shake off the negative ramifications from talent shortages since 2020, and they know they must invest in their staff to retain them,” he noted.
Investing in digital technology remained a clear top priority, with 80% of respondents planning to increase their technology spend by at least 3%, and 43% planning to increase technology spend by 10% or more, survey results indicated.
Beyond technology, 78% of CFOs anticipate a higher level of spend for the cost of goods sold, according to Gartner.
Source: Gartner (January 2023)
“Many CFOs are not trying to keep their compensation increases on par with inflation, and they won't need to as the labor market cools; they also can't afford to if they want to hit their profitability targets in 2023,” said Bant.
CFOs also don’t want their digital transformation to be halted by this recession and as a result plan to continue increasing funding for technology at a rapid rate, he observed.
CFOs must build leaner and faster businesses, with better margin structures, to emerge stronger from a recession, he advised.