The publication CFO Dive recently conducted a survey of over 750 Chief Financial Officers (CFOs), asking what their gravest concern is as 2022 transitions to 2023. Can you guess it?
Slowing economic growth? Nope.
Higher inflation? Nah.
Higher interest rates? Sorry, that is also incorrect.
Pace of technology implementation? Close, but no cigar.
Over 40% of the CFOs surveyed said that the biggest issue keeping them up at night is a shrinking talent shortage for their finance departments and their companies. The technology industry — combined with the media and telecommunication industries — reported the highest level of concern when it comes to talent shortages. An overwhelming number of CFOs (49%) in these industries, in particular, identified talent shortages as a top risk. We found this interesting, especially with the number of companies that have announced layoffs or planned reductions during the second half of 2022. Through November, well-known companies such as Amazon, Netflix, Snap, Coinbase and Twitter have stated that they will be reducing their headcount in order to maintain their profitability and satisfy shareholders.
So what gives?
We believe that there are a number of reasons for this growing sentiment among finance chiefs. In a previous post, we explored the reasons for the shrinking supply of accounting professionals. However, it appears that there is a “right-sizing” of employee headcount at technology companies, which had tremendous growth over the past three years due to the pandemic and popularity of the remote workplace. As the world adapts to a new post-pandemic world, the demand for technology-related products and services have declined. So it makes sense that the companies detailed above would be reducing their headcount. The loss of talent in these sectors is another sector’s gain.
When there is a sector-wide layoff like we are witnessing in the technology industry, this could prove to be a good opportunity for those owners who are experiencing a shortage of labor or are seeking a specific type of skill set to recruit for their organization. For example, a company who has expanded its technology platform in its core services may be able to hire a financial executive who has worked for a technology company or a division that has a heavy technological presence. Outside employees often provide a fresh perspective, which can be healthful for your business.
So how will this play over the next six to nine months? We are advising our clients to begin planning to identify key employees in your organization and ensure that they are happy with the direction of the company and the pay package they receive. If you believe that you have a “bargain” in your department, chances are the “bargain” employee probably knows it too. And if your star employee feels that he/she can make more money or feels underappreciated, they will likely leave for the new opportunity. The companies we partner with are also budgeting for additional positions to supplement their existing headcount with a deeper, more specialized pool of talent that is available as a result of recent restructurings.
As Sir Richard Branson is quoted above, keeping a satisfied workforce needs to be a top priority for the SMB business owner community.
Takeaway: If you are not sure if you have the right mix of employee headcount and technology implemented in your business, ask Brian or Scott for a free diagnostic on your business at firstname.lastname@example.org.
Co-founders & Managing Partners