New outlook shuns layoffs, promotes culture
The best company leaders and human resources executives are completely changing their thinking on managing the workforce, and Grant Thornton’s CFO survey for the second quarter of 2023 demonstrates the new human capital outlook in stark detail.
In the past, after more than a full year of economic stagnation, employees everywhere would wake up each morning just thankful that they had a job. In previous economic downturns, layoffs would be a go-to strategy for employers looking to rein in costs as they struggled to maintain their revenue.
No longer. Even as the economy has remained stuck in neutral with rising interest rates and high inflation, the portion of CFOs who are confident that they can meet their labor needs has fallen from 53% in the fourth quarter of 2022 to 45% in the latest survey. And more than half (55%) of respondents said the ability to execute on their short-term strategy is potentially at risk due to human capital shortages.
Meanwhile, finance executives’ top workforce priority is attracting and retaining key talent. And just 27% of CFOs say there is potential for layoffs at their organization, down from 40% just one quarter earlier.
Margaret Belden, a Grant Thornton Director, People and Organization, who consults with clients on human capital challenges, spoke of a “new normal” in human capital management where recession fears no longer keep workers glued to their jobs. In fact, 25% of employees have switched jobs in the past 12 months and 50% of those switchers are already looking for a new job according to Grant Thornton’s recent State of Work in America survey. In another category, 24% of employees said they are looking for a new job with a different organization and an additional 51% said while not actively looking, they would consider switching if a new opportunity comes along.
“What this means is that organizations have a challenge to attract and retain talent and the areas they need to focus on are no longer as simple as compensation and adequate benefits,” Belden said. “Today’s workforce cares about flexibility, differentiated benefits, equitable pay and support of their overall wellbeing and career development.”
The landscape has shifted. After some employees a generation ago spent their entire careers loyally working for one organization through good times and bad, today’s employees often don’t expect a lifetime connection to their employer. This has inspired them to be constantly on the lookout for a better opportunity and ready to leave.
“This is a very individualized focus, including how each generation experiences work and their preferences,” Belden said. “There is no one size fits all, and this requires leaders to be more in touch with their people through asking questions and listening to employees to understand what matters and what motivates them. This may be a muscle that traditional leaders need to develop as they shift from focusing purely on performance and objectives to people and showing empathy and support that will in turn motivate performance. It is concerning that our survey reported only 51% of workers felt their organization cares about them as a person.”
CFOs' expectations for layoffs as a response to economic conditions showed a substantial decrease in layoff predictions in the second quarter of 2023, according to this line graph based on data from Grant Thornton's quarterly CFO surveys.
A disconnect on mental health?
In large part, the quarterly CFO survey results show that employers are working to create a better workplace for their people. Finance executives rated maintaining or improving organizational culture as their second workforce priority, and it correlates to the first priority of attracting and retaining key talent.
Forty-one percent of CFOs said reskilling or upskilling their employees was a priority. But there’s one area related to the workforce where employers may be falling short.
Grant Thornton’s State of Work in America survey showed evidence that large percentages of employees are stressed out, burned out, and mentally wiped out. More than half (53%) of employees said mental and emotional stress has contributed to burnout on the job.
Meanwhile, just over one-fourth (26%) of CFOs said addressing employee mental health concerns was one of their priorities.
“This is a huge disconnect, and this is alarming to me,” said Kim Jacoby, a Director, People and Organization for Grant Thornton.
Jacoby said employees who don’t believe they’re getting the proper mental health support from their employers may be more likely to look for jobs elsewhere. She encouraged CFOs and organizational leaders to be creative as they think about how to address mental health from a benefit perspective.
“Employees are looking for organizations to create a culture of well-being and to demonstrate to employees that you care about all aspects of their well-being,” she said.
Remote work and hybrid work have had a number of effects -- both positive and negative -- on organizations, according to this bar chart based on data from Grant Thornton's CFO survey for the second quarter of 2023.
CFO priority: Future of workforce
The rest of the CFO survey, though, shows that finance leaders are paying copious attention to human capital issues. They say the top challenge their organizations will face over the next six months is the future of the workforce.
This topic shows the seriousness of attraction and retention issues as well as reskilling/upskilling and getting hybrid work right. Many employers are working to strike the balance between the flexibility provided by remote work and the need for employees to be in the office to build camaraderie and collaborate.
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