CFO Job Confidence by ERA
The saying goes that ‘familiarity breeds contempt’. Through a period of seemingly reliable stability occurred during the mid-2010s, a sea of uncertainty has been the underlying tone since the financial crisis of 2008. Pressures from all sides, including political and macro-economic factors, make these truly testing times for the CFO job across all sectors which is where training and support comes in.
The latest research gathered by ERA paints a bleak picture regarding the wider business outlook. According to Deloitte’s European CFO Job Survey for Autumn 2019, 36% of European CFOs feel less optimistic about the financial prospects for their company compared to three months ago. That is the highest negative figure for that question since the biannual survey began in 2015. The previous high was 26%, recorded in the two surveys prior. The net balance regarding European CFO optimism is at -17% – also the lowest recorded score for that metric.
These sentiments are not a sudden change and instead point to a problematic economic picture which shows little sign of improvement. The European outlook regarding financial prospects peaked in 2017 when 43% of CFOs were more optimistic, and only 11% were less. Since then, optimism has slowly fallen to record lows.
As mentioned, the primary reasons behind this decline in CFO confidence can be roughly grouped into two areas – political and economic. The global political picture is showing an increasing appetite for change, with major and minor economic powers producing surprise election results. These radical changes bring an increased risk of operational upheaval that not only impacts domestically but also internationally.
Sudden changes in domestic policy can have substantial repercussions across global supply chains, with this disruption frequently cited as a critical driver of business uncertainty.
Politics and economics are always linked, but the last few years evidence the strength of that connection and the problems that can arise as a result. An increasing number of trade disputes both in the EU and abroad have caused economic declines in key markets, slowing demand and increasing economic uncertainty. There are even some fears that a new financial crisis may be on the horizon, fueled by slowdowns in major markets and an increasingly reluctant approach to global trade amongst leaders.
The combination of economic and political uncertainty has created a fog which is becoming increasingly challenging for the CFO job to traverse. However, while these factors are the cause of business’ lack of confidence, they may not be the symptom for this condition. This lack of confidence is not born out of global pressures, but the corporate environment that they have created and the subsequent expectations on their shoulders.
Expense reduction, amongst other things, will again play a vital role in CFO operations over the coming years, in both expansionist and defensive strategies. The need to take such actions is stark, but as the confidence figures suggest, CFOs alone may not have the tools required to deliver the desired results.