Grant Thornton’s Q2 2021 CFO survey found that nearly two-thirds of CFOs are worried that talent shortages could impair their ability to meet short-term strategies. A similar percentage are worried about controlling compensation and benefits costs. Addressing this tension will help define success in a post-pandemic world.
CFOs and other senior financial execs may have thought that when COVID-19 receded, so to would the human capital side effects of the pandemic. But our Q2 results and recent news point to rising tensions between what workers want now and companies’ desire to control rising employee costs. Companies are facing a new and different war for talent, one in which employees are reluctant to surrender the increased flexibility they had gained during the pandemic and in which talent scarcities are giving them increased leverage as they consider their employment options.
Fifty-six percent of CFOs chose attracting and retaining key talent as the most important human capital priority for the next 12 months. In addition, 68% strongly agreed or agreed that their organizations would experience a possible shortage of human talent that might risk the achievement of short-term strategies. Yet, recruiting and retention will likely be tougher, based on other information.
Expenses in general are a rising concern. The new normal will be different for every company, but it won’t be cheap for anyone. When asked about expenses in 12 different categories — including costs for workforce, real estate, and technology — CFOs expected increases across the board. Meanwhile, respondents almost universally expected inflation, interest rates, or both to exceed Federal Reserve targets.
As the pandemic recedes, businesses are not headed into a familiar past. Headlined by an employment market that has been transformed by the pandemic, companies are facing a more expensive business environment, and one in which how they respond to the war for talent will help separate winners from losers. The challenge of developing new, hybrid business models against the backdrop of at least short-term inflation and possible interest hikes will require continued creativity.