rh cfoconcerns sec

7/27/2019 RH CFOConcerns Sec

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CFO Concerns

What Are TheTop Challenges Facing TodaysFinancial Executives


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Headline

Robert Half CFO ConcernsWhat Are The Top Challenges Facing Todays Financial Executives

Table o Contents

12About Robert Hal International

11 Endnotes

9 Conclusion: Responses to Tough Challenges

Showcase Importance o CFO Role

7 Need to Retain and Motivate Top Perormers

6 Pressures to Control Costs and Boost Prots

2 Healthcare: Top o List, Top o Mind

1 Overview: Top Concerns


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Robert Half CFO ConcernsWhat Are The Top Challenges Facing Todays Financial Executives 1

Chie nancial ocers (CFOs) have had no shortage o challenges over the past ew years. The

global recession has required them to use every tool available to guide their companies through

a business downturn o unprecedented scope and into a still-recovering economy.

To better dene the concerns o todays nance executives, Robert Hal International conducted

a survey o 1,400 CFOs rom a stratied random sample o U.S. companies with 20 or more

employees. We asked CFOs to rank the most pressing concerns acing their company. Their top

three issues were:

1. Healthcare costs

2. Controlling spending and improving protability

3. Sta morale and motivation

Many concerns that emerged through the survey and in selected interviews with nancialexecutives are perennial ones controlling spending, improving protability, increasing the

demand or products and services, and monitoring risk yet they seem magnied today amid

a backdrop o persistent uncertainty.

One CFO noted that whats troubling about the nascent economic recovery is that it seems likely

to be a prolonged one, rather than a more dramatic snapback, as in past recoveries that had

clear catalysts or growth and job creation.

Moreover, certain issues acing CFOs in particular, the rising cost o healthcare insurance

remain as problematic as ever, even i the nature o the concern has changed somewhat. Other

o-the-moment challenges mentioned by CFOs in interviews include the need to drive topline

growth, the potential or increased regulation, higher xed costs, competition rom outside the

United States, the macroeconomic outlook, pricing pressures, high unemployment and risks

related to doing business in emerging markets.

Overview: Top Concerns


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When Robert Hal Management Resources conducted a similar survey o top CFO concerns in

2006, executives ranked rising healthcare insurance premiums as their top concern. In 2011,

this remains their most worrisome issue, though much o the current uneasiness stems rom the

still-uncertain eect o recent healthcare reorms on their businesses.

One public company CFO who said he

expects his rms costs to rise even more

than in past years as a result o healthcare

reorms refects the assessment o most

nancial executives. Like many, he is

concerned that no one seems completely

certain about what the ull impact o

reorms will be on businesses or what

unintended consequences may result.

Another interviewee, a CFO o a small

private company, noted that while it re-

mains unclear exactly how healthcare re-

orms will aect a small industrial manu-

acturing business such as his, it also is

not desirable to keep paying more every

year or a healthcare plan that doesnt

meet employees needs. The rms premi-

ums climbed 37 percent this year, partly

because o employee health problems.

Despite the act that the manuacturer is

paying more than ever or healthcare, he

said, sta members are dissatised with

their insurance plan. On average, about

10 percent o the companys overall com-

pensation costs goes toward healthcare.

Healthcare: Top o List, Top o Mind

Increased Share of Healthcare Costs for

Employers and Employees

(1999-2009)

Annual premiums or employer-sponsored amily

healthcare coverage rose over our times the rate o in-

fation and nearly our times the average wage increaseduring the last decade:

Average employer premium: +119%

Infation: +29%

Wage earnings: +34%

Due to the size o these dramatic increases, many em-

ployers have had to pass a portion o costs to workers.

As a result, employees have seen their share o job-based

coverage increase at nearly the same rate as employers

during the last decade jumping rom $1,543 to $3,354.

The average cost o employer-sponsored premiums in

2009 was now close to $13,100 a year or a amily o

our. And employees contributed roughly 27 percent,

on average, toward the premium.1

Source: National Coalition on Healthcare


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Conclusion: Responses to Tough Challenges

Showcases Importance o CFO Role




Addressing Rising Healthcare Costs

When it comes to managing rising healthcare insurance costs, theres no easy answer. (See Figure

1.) More than one-third (34 percent) o CFOs said their companies are responding by increasing

employees contributions to their premiums; 28 percent said their companies are assuming thehigher costs, and 20 percent said theyre reducing healthcare benets in the ace o higher costs.

Many respondents are likely using multiple strategies to oset increases.

Forty-one percent o executives said they are not making any changes to their plans, and 8 percent

said their companies are eliminating healthcare benets altogether. Companies that implemented

* Multiple responses allowed.

28%Increasing the companys contributionto employees healthcare insurance

34%Increasing the employees contributionsto their healthcare insurance

20%Reducing healthcare benets

7%Dont oer healthcare benetsto employees

8%Eliminating healthcarebenets

Figure 1: Strategies to Address Rising Health Insurance Costs

CFOs were asked, Which o the ollowing strategies, i any, is your company usingto adapt to the rising cost o healthcare insurance? Their responses*:


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pay cuts or reezes during the recession may be reluctant to pass the cost o higher premiums on

to employees. One private company CFO interviewed said his rm elt that it could and should

bear the cost increase because employees had already been dealt across-the-board salary cuts

and the elimination o bonuses and overtime pay.

A dierent solution was voiced by the CFO o a publicly held consumer goods company who

said his rm might have no choice but to pass costs through to the marketplace. Employees

may not be able to shoulder the added expense and the company has to maintain protability,

but somebodys got to pay or it at the end o the day, he said.

Effect of New Legislation and Regulations

Although businesses are generally averse to the prospect o increased regulation, they may be

especially wary when the details are still in fux, as is the case with several pending reorms.The uncertainties surrounding new and proposed regulations may serve to heighten CFO anxiety.

When asked about their concerns in the regulatory arena, healthcare again topped the list, with

62 percent o CFOs indicating they believe recently passed healthcare reorms will have the

greatest impact on their organizations this year. (See Figure 2.) CFOs seemed most concerned about

the unknown variables still attached to healthcare, such as the extent o government intervention,

implementation issues and the broad nature o reorms. In addition, unlike other pending regulations,

healthcare reorm has more o a direct impact on every business, regardless o size or industry.

By contrast, 7 percent o respondents cited the possible conversion to International FinancialReporting Standards (IFRS) as the regulatory issue that could have the most signicant bearing

on their accounting and nance department. IFRS are the principles-based nancial reporting

requirements adhered to by more and more countries worldwide, with conversion to these standards

well under way in many nations.2

Despite the act that there is not yet a clear timeline or path or IFRS adoption in the United

States, a separate Robert Hal survey o 200 nancial executives ound that 11 percent used

IFRS in 2010, compared to 5 percent the previous year.3 Almost 40 percent o companies surveyed

had both domestic and international operations, which may suggest that some elt they had


7/15Robert Half CFO ConcernsWhat Are The Top Challenges Facing Todays Financial Executives 5

sucient international exposure to warrant voluntary adoption o IFRS, perhaps in addition

to local or U.S.-based Generally Accepted Accounting Principles (GAAP).

The Dodd-Frank Wall Street Reorm and Consumer Protection Act o 2010 represents a press-

ing issue as well. The legislation is considered the most signicant nancial services reorm in

the United States in the last 70 years, though it is not just U.S.-headquartered nancial institu-

tions that will eel the eects o the law.4 By some counts, as many as 350 new rules will need

to be put into eect over the next our years to accomplish the reorm changes mandated by the

Dodd-Frank Act. Although the law is aimed at banks and other nancial institutions, some busi-

nesses wonder how additional regulation could aect them as bank customers.

Figure 2: Impact of Various Regulations

CFOs were asked, Which one o the ollowing new or proposed regulations will have the

greatest impact on your accounting and fnance department in 2011? Their responses:

Healthcare reorm 62%

IFRS 7%

Dodd-Frank Act(nancial reorm law) 3%

Basel III 1%

XBRL 1%

None 24%

Dont know/reused 2%



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Robert Half CFO ConcernsWhat Are The Top Challenges Facing Todays Financial Executives 6Robert Half CFO ConcernsWhat Are The Top Challenges Facing Todays Financial Executives 6

Pressures to Control Costs and Boost Prots

Even as many companies prepare to capitalize on improving conditions, the realities o everyday busi-

ness challenges are keeping CFOs ocused on controlling spending and improving protability. This

need ranked second on respondents list o priorities.

Especially during the downturn, CFOs were keenly aware that allowing spending to remain high when

revenues were alling would cut directly into prots. Now as the economy is rebounding, CFOs are oten

tasked with helping their companies avoid the temptation to return to pre-recession spending levels

beore revenues have had a chance to catch up.

Gaining Staffing Flexibility

One way more and more businesses are actively managing costs is by making use o fexible stang

strategies. By using interim sta, companies can convert a portion o one o their largest xed costs

labor into a variable expense thats tied to actual workload highs and lows. This option provides sta-

ing fexibility or companies that are worried about the ability o their teams to meet rising workloads,

yet are still uncertain whether the long-term outlook justies ull-time hiring.

Contracting interim proessionals can also help boost morale. Bringing in reinorcements can alleviate

demands on existing sta, increasing job satisaction and, in turn, retention.



Executives also are concerned about employee engagement and retention: Third on their list o

top concerns was sta morale and motivation.

The growing possibility o losing loyal employees may prompt businesses to take steps to strength-

en bonds with their most indispensable team members. I employees ail to nd satisaction and

sucient motivation in their work, they may be prepared to seek greener pastures i they can nd

them. Forty-our percent o U.S. workers surveyed or a separate Robert Hal study said they are

more inclined to look or new opportunities outside their rms as a result o their experiences dur-

ing the recession.5

When CFOs were asked about the perks they plan to oer or are already oering to strengthen

employee retention and motivation, subsidized training and education topped the list, ollowed by

fexible schedules or telecommuting and mentoring programs. (See Figure 3.)

Need to Retain and Motivate Top Perormers


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29%Subsidized training/education

11%On-site perks such as childcare, drycleaning, tness center, caeteria

24%Flexible work hours ortelecommuting

10%Subsidized transportation

11% Free or subsidized lunch or

snacks

7%Housing or relocationassistance

13%Matching git programs

8%Sabbaticals

24%Mentoring programs

9%Subsidized gym memberships

Figure 3: Power of Perks

CFOs were asked, What perks, i any, is your company oering or planning to oer

in 2011 in an eort to attract and retain employees?Their responses*:

* Multiple responses allowed.

Need to Retain and Motivate Top Perormers





There is no question nancial executives are aced with myriad challenges, rom coping with

the lingering eects o the recession to trying to maintain service and productivity levels with

smaller employee teams and static budgets to uncertainty about new regulations. Perhaps not

surprisingly, then, more than 80 percent o CFOs said they believe its more dicult to be a

company leader in todays business environment than it was ve years ago. (See Figure 4.)

Figure 4: Business Environment

CFOs were asked, Do you think its more or less challenging to be a company leader

in todays business environment versus fve years ago?Their responses:

Signicantly morechallenging 31%

Somewhat morechallenging 50%

No change 14%

Somewhat lesschallenging 3%

Much less challenging 1%

Dont know 1%





This has been the toughest two to three years o my career, and Ive been working some 35

years, said a consumer goods company CFO. He added that the challenges CFOs ace are more

multidimensional than in the past. Were acing a lot o headwinds on many ronts.

But i there has been a silver lining to this dicult period, it may be that the importance o

the role o nancial executives has been underscored. Indeed, those companies that weathered

the downturn most successully undoubtedly had highly resourceul nancial leadership at the

helm. As the economy recovers, nancial executives will be on to their next challenge: ueling

and sustaining growth.


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1. National Coalition on Health Care, www.nchc.org/issue-areas/insurance.

2.Guide to International Financial Reporting Standards, Protiviti, 2009, www.protiviti.com.

3.Benchmarking the Finance Function, Financial Executives International and Robert Hal

Management Resources, www.roberthalmr.com/benchmarking.

4.Successully Complying with Regulatory Reorms Start the Journey Now, Protiviti, 2010,

www.protiviti.com.

5.Workplace Redefned: Shiting Generational Attitudes During Economic Change, Robert Hal

International, www.roberthal.us/WorkplaceRedefned.

Endnotes


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About Robert Hal International

Founded in 1948, Robert Hal International is a global leader in specialized consulting and stang

services and has a network o more than 400 locations worldwide. The companys nancial stang

divisions include Accountemps, Robert Hal Finance & Accounting and Robert Hal Management

Resources, or temporary, ull-time and senior-level project proessionals, respectively. Robert HalInternational also is the parent company o Protiviti, a global business consulting and internal

audit rm composed o experts specializing in risk, advisory and transaction services.

In addition to CFO Concerns: What Are the Top Challenges Facing Todays Financial Executives,

we oer managers a number o complimentary advice booklets, white papers and resource guides

that can help them hire, motivate and retain highly skilled proessionals, as well as grow their

own careers. To obtain copies o these materials or learn more about our industry-leading service,

please visit www.roberthal.com.

Accountemps

accountemps.com

1.800.803.8367

Robert Half

Finance & Accounting

roberthalf.com

1.800.474.4253

Robert Half

Management Resources

roberthalfmr.com

1.888.400.7474


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robertha l .com 1.800.803.8367

2011 Robert Hal. An Equal Opportunity Employer. RH-0511

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