Being Planful: CFO News & Helpful Resources for the Office of the CFO

Thanks for stopping by this installment of “Being Planful,” our series recapping the latest CFO news for the Office of the CFO. We’ve scanned the headlines for trending topics relevant to the Office of the CFO and here’s what we found:

• Conflicting Signals: Cost-cutting is underway yet millions of jobs remain unfilled. What’s a CFO to do? Get more data!
• A Changing Workforce: We’re all rethinking our approach to work these days, as are the companies who need our talent. Even with recent news, expect 2023 to remain a job-seeker’s market.
• An M&A Bonanza: Falling valuations are creating a more attractive market for acquirers, fanning expectations for a big year of M&A activity.
• ChatGPT & You: It’s everywhere. It’s passing MBA exams and “helping CEOs think.” Its developer got a $10 billion investment from Microsoft. But can it help finance and accounting teams?

Sales are down, hiring is up. Workforces are being cut, hiring budgets are being raised. It’s a mad, mad, mad, mad world, and for most organizations, it’s up to the Office of the CFO to figure it out.

• It’s a confusing economy: Retail sales and factory output both slumped more than 1% in December, with the Fed adding that businesses “expect little growth” but also see “persistently tight labor markets” keeping wages high.
• CFO Dive writes that “CFOs plan to cut staff, increase hiring budgets” because, even though most CFOs are looking to cut costs, they know wages will continue to increase as long as talent remains in tight supply.
• How can the Office of the CFO navigate these murky economic waters? Redesign the Office of the CFO: Gartner found that 6 of the top 10 CFO priorities for 2023 are focused on “bringing about significant strategic change within the finance function.”

The Bottom Line: Uncertainty and volatility require agility and resilience, along with clear and timely financial data and insights to recognize what’s coming. Good thing we’re in the Golden Age of CFO Technology!

Our changing attitudes toward work simply add to the already shifting workplace caused by fast-moving technologies and fluid demographics. But the risks of a weak workforce strategy go well beyond limited capacity and output as 2023 continues to push the balance of power in favor of workers.

• With respect to workforce risk, Deloitte found that most of the c-suite are worried about external factors—worker activism and negative PR—“a view of workforce risk that is consistent with concerns firmly rooted in the past.”
• Focus on worker satisfaction if you want to boost retention and productivity, because even though workers are showing up, “just 21% of employees were engaged at work in 2022.”
• With pay transparency rules becoming law and Walmart upping its average hourly wage to $17.50, CFOs and HR chiefs can turn wage discussions into cost savings by helping “find talent at the right price.”

The Bottom Line: CFOs need tighter connections with HR to reframe workforce planning strategies beyond just recessionary cost cutting, but HR, too, should be proactive on “getting outside of its comfort zone to understand the needs of the business.”

M&A activity was bursting at the seams during a record 2021 and then fell by 37% in 2022. But all signs point to a once-again hot market in the coming year.

• A Deloitte survey found that nearly two-thirds of companies are preparing for an M&A deal in 2023. What are CFO’s looking to acquire? Technology, namely analytics and ERP.
• Grant Thornton, too, found that M&A activity is poised for an increase: “72% of M&A professionals expect deal volume to increase over the next six months.”
• But, just as low valuations might create some attractive deals, filing feels in the U.S. are set to increase by as much as 700%! Of course, they are still just a rounding error: a $5 billion transaction has a maximum fee of $2.25 million, or just 0.04%.

The Bottom Line: Rising interest rates have put a damper on some investments, but plummeting stock prices are making some deals more attractive: “The M&A market is not going to stop. It just doesn’t work that way,” said Christopher Auld, head of leveraged finance at Stifel Financial Corp.