The vast majority of CFOs plan to materially increase spending on employee compensation this year with 86% planning to raise compensation spend by at least 3% across their budgets year-over-year, according to Gartner.
Despite recession fears, and ongoing inflation concerns, most CFOs indicate they intend to remain competitive in a historically tight labour market. In a poll of 279 CFOs in December 2022, only 5% of respondents said they plan to reduce compensation spend in their budgets for 2023.
“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,” says 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.”
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. Beyond technology, 78% of CFOs anticipate a higher level of spend for the cost of goods sold.
“Many CFOs are not trying to keep their compensation increases on par with inflation – and they won’t need to as the labour market cools; they also can’t afford to if they want to hit their profitability targets in 2023,” says Bant. “CFOs do not want their digital transformation to be halted by this recession and plan to continue increasing funding for technology at a rapid rate. CFOs must build leaner and faster businesses, with better margin structures, to emerge stronger from a recession.”