Deloitte CFO Survey Q1 2013
Overview by Partner Shane Mohan
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The first quarter of 2013 was anything but a slow, gradual start to the year.
Reducing the national debt burden was a recurring theme making the headlines In Quarter 1: from the liquidation of Anglo to the promissory note deal, from the publication of the Finance Bill to Croke Park II, the last three months have seen Ireland taking strides towards managing our national debt through both deferred payments and returning to the international bond market.
Economic certainty remains high
Sentiments amongst CFOs indicate that they welcome the promissory note deal, with over three-quarters of respondents considering it an effective step on the road to recovery. The creation of jobs is also a crucial step to recovery and remains a central priority for the Government. Yet, CFOs are not wholly convinced that the targets set out by the Government’s ‘Action Plan for Jobs’ strategy are achievable. Our survey findings suggest that CFOs believe this strategy will succeed somewhat in boosting economic growth; however none are convinced that it will have a very significant impact.
The role of the CFO
To ensure that the Deloitte CFO Survey continues to be effectual and relevant for the finance leaders of today, this quarter we focus on both the internal and external environment. The level of external financial and economic uncertainty remains high and the perception of market risk has also increased. The role of the CFO is evolving to address these difficult times and both the CFO and finance function can play a strategic role in decision making and organisation transformation. 88% of CFO respondents recognise the need to place greater emphasis on managing change to drive business transformation and evaluate and execute strategies. 65% of CFO respondents believe part of their role to be that of a gate keeper of risk and provide a financial perspective to risk management. Company performance, multiplicity of stakeholder relationships and economic or strategic ambiguity are considered to be the top three most challenging aspects of the CFO’s role, today.
Growth and increased revenue
CFOs are setting corporate priorities for the next 12 months and it is interesting to note that 69% of survey respondents consider their corporate strategy to be expansionary rather than defensive in the current climate. CFOs are looking to both long term growth for their products and services and actual or expected growth in the US and Asia for a positive effect on their companies' investment plans for the next 12 months. Revenue is the financial metric most expected to increase and operating costs and bank borrowing are the financial metrics most expected to decline over the next year. This suggests that organisations are looking to other markets to increase revenues while tightening up their operating model to improve their current cash flow position.
Talent
According to our survey findings, talent retention remains a priority despite pressures to engage in cost cutting and downsizing. Since companies can easily match compensation packages, Deloitte believes companies can differentiate themselves in the talent marketplace by going beyond financial incentives and creating customised retention strategies that address issues such as career advancements and greater recognition. The availability of people or skill sets is not considered by CFOs to be a current industry challenge. However, anecdotally, CFOs would say it’s hard to get high calibre people or people with specific skills, for example US GAAP experience.
About the survey
The Deloitte CFO Survey is the only survey that seeks to establish the views of CFOs in relation to the financial markets, economic outlook and business trends on a quarterly basis.
