Predictions, really?

3 minute read

Predictions, really?

Surely not 

Scroll through LinkedIn, or any social media, and you’ll see multiple posts longing for some precedented times. The past six years have been a rollercoaster with the whole world being taken for a ride. 

With a large part of their role including forecasting and predicting trends, it’s fair to say the task of being a CFO has been damn-near impossible. 

That’s why this post is not going to make predictions about the coming year (surely we’ve learnt the world just doesn’t work like that anymore, right?) Instead, we’re drawing attention to the potential problems CFO’s are going to have to steer through this year. 

Covid-19 (again)

It ain’t over. 

There are promising signs that with the Omicron wave came, albeit a more transmissible variant, a trend that the virus is becoming less deadly. Despite this, the hangover from the pandemic is going to last a while. 

Firstly, many companies are still navigating the political and legal minefield of vaccine mandates. 

Biden’s workplace vaccine declaration has been blocked by the US Supreme Court. UK leaders have hinted their vaccine requirements are due to be relaxed in the Spring. Across Europe, and many other parts of the globe, any mention of compulsory vaccination has been met with protest. 

CFO at Delicato, Ian Swanson, succinctly summarized the problem that the reality is “you’re damned if you do, and you’re damned if you don’t.” By making it compulsory, you will lose some workers. Do the opposite, and you’ll also lose some workers. 

And it’s not just employee safety and retention that CFO’s need to consider. Carhartt are the latest company to face some blowback and calls for a boycott after a leaked email revealed the company’s vaccination requirements. 

Other prolonged effects of the pandemic are still manifesting and creating more questions; will working from home become the norm? Will the emphasis on employee welfare remain as high? Will another variant plunge the world back into a lockdown?

A changed labor market

There’s plenty of people unemployed, at the same time as there are record job vacancies. How?

Patrick Watson of Forbes wrote ‘How the pandemic is changing the labor market’ which highlights some reasons the dynamics have shifted. 

  • A large-scale reevaluation of what people want; the city worker life has lost its appeal
  • A decline in migrant labor causing shortages in low-wage service jobs, forcing higher salaries
  • Job descriptions changing to incorporate Covid-19 health and safety measures
  • A major skills mismatch between available jobs and those seeking employment

The latest UK labour market overview shows a decrease in unemployment whilst simultaneously showing an increase in the economic inactivity rate. 

There’s more people in work, and more people choosing not to be in work. 

The fine balance CFO’s are going to have to strike is between offering incentives to attract top talent, whilst maintaining streamlined cash flows to deal with any potential market upsets. 

Greater benefits, alongside increased salaries, have been seen across industries during the pandemic. If current trends continue, 2022 is set to be an employee’s market. 

Inflation

Ranked the second highest external threat by over 50% of CFOs is inflation, just behind the pandemic. 

European households are facing skyrocketing energy costs, US inflation is sitting at a four decade high, and Japan has increased it’s inflation forecast for the first time since 2014.

Inflationary pressures are mounting with shipping costs increasing, as well as raw materials, and the aforementioned wage boost.

CFO Dive reported towards the end of 2021 that CFO’s were passing on higher costs to consumers further fuelling the inflationary spiral. 

“In addition to raising prices, companies are adjusting to higher inflation by cutting costs, negotiating with suppliers, diversifying their supply chains and relying more heavily on advanced technology such as data analytics, the CFOs and other top executives told analysts.”

Cybersecurity

With the world going remote, cybersecurity possibly slipped through the cracks as a bit of an afterthought. Maintaining operations took priority over the reality of a cloud-based workforce. 

Deloitte concluded that “companies should be proactive in addressing the threats, and plan ways of preventing successful cyberattacks rather than responding when they occur” in an article on the impact of Covid-19 on cybersecurity. 

Some statistics from their surveys hammer home the importance for CFO’s to invest in stronger defences:

  • 47% of individuals fell for phishing scams working from home
  • From January to July 2020, City of London Police reported £11 million had been lost due to scams
  • One in seven Swiss respondents had experienced a cyberattack during the pandemic
  • Over 500,000 video conferencing users experienced data breaches
  • Pre-pandemic about 20% of cyberattacks used previously unseen malware, that number has jumped to 35%

What else?

As we said at the start of this piece, we’re not even attempting to make predictions for this year. These four areas are definitely going to be at the top of C-suite agendas at the beginning of this first quarter, but who knows what else is going to happen. 

Join us in London and Los Angeles over the next couple of months to hear from CFOs at the top of their game who are dealing with these problems and much more. 

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