North American CFOs Report Labor Concerns to be the Top Risk

North American CFOs from the most influential companies consider labor concerns to be the top internal risk according to a Deloitte´s survey, while talent costs and inflation are expected to increase considerable in 2022.

"CFOs are slightly less optimistic this quarter, both about their own company's performance and the economy. Talent concerns, which include rising labor costs, will likely be a defining issue in 2022. Heading into the new year, the organizations that crack the code on attracting and retaining talent in this turbulent labor market should be primed for success," said Steve Gallucci, Global & US CFO Program Leader, Deloitte LLP.

Ninety-seven percent of North American CFOs belonging to companies that report annual revenue of US$1 billion or higher, expect talent costs to increase next year, while the perception of the regional economy being “good” has decreased to 72 percent in 4Q21 from 78 percent in the past quarter. There is also a 17 percent decline in companies’ optimism financial prospects.

CFOs say the top internal risk for companies in the region is talent shortage, development, hiring, burnout, retention, attrition and employee well-being combined with the challenges raised to the return-to-work policy that includes the implementation of hybrid work schemes.

CFOs have reported putting talent and labor matters as top priority during 4Q21 and next year due to hybrid models plus what is known as the Great Resignation, an era that represents the record number of people leaving their jobs after the end of the COVID-19 pandemic that challenges companies with talent retention.

“The number of times CFOs cited talent/labor and related issues heavily outweighed other priorities for 2022. Financial performance was also frequently cited by CFOs in this quarter's survey as a top priority. CFOs are laser-focused on improving their companies' bottom lines, and they plan to use a range of levers to do so. Growth was the third priority that was most frequently mentioned by CFOs, with an emphasis on generating more revenue, increasing sales, optimizing the capital structure to finance growth strategies, investing in growth opportunities, and supporting new product launches,” reads Deloitte’s Signals Survey 4Q21.  

Meanwhile, supply chain matters and wage inflations remain the biggest external risk concerns, causing a drop in risk-making decisions among companies to 57 percent. In addition, 92 percent report following automation and technology-embedded operations for their companies’ future plans by 2022.

These results are highly valued as they follow the thinking of financial officers that present key perceptions in regional business climate every quarter. The Signal Survey was conducted with non-public sector companies allocated along the US, Canada and Mexico.

However, the talent crunch is a topic that has been reported by MBN as Mexico hits its 15-year high of talent deficit. 

“Mexican business leaders face the highest talent deficit since World War II. Although inversely impacted by the COVID-19 pandemic, the country’s logistics and manufacturing industry sectors find themselves disproportionately affected, according to ManpowerGroup’s Employment Outlook Survey,” wrote MBN. 

This shortage has caused international companies, such as leading IT provider Tech Mahindra, to prepare a strategic plan for next year, focusing mainly on Latin America’s talent.

“In an effort to solve a possible talent shortage for the next three quarters, Tech Mahindra has designed a rescue plan to broader its talent base, reskill workforce, increase its hires and upgrade training while boosting its presence in tier II towns,” reported MBN.