PwC CFO survey: More layoffs anticipated and more people will work remotely permanently

PwC CFO survey: More layoffs anticipated and more people will work remotely permanently

The fourth COVID-19 Pulse Survey also revealed that 77% of US CFOs are planning to change workplace safety measures and that 2020 is a “lost year.”

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Some 32% of US chief financial officers are anticipating layoffs in the next six months—up from 26% two weeks ago—and 49% are planning to make remote work a permanent option for roles that allow it, according to PwC’s fourth COVID-19 Pulse Survey released Monday.

Layoffs in traditional manufacturing are expected to be higher and lower in financial services, where roles tend to lend themselves to remote work, PwC officials said during a noontime conference call to discuss the latest survey results.

Additional findings are that 77% of US CFOs anticipate changing workplace safety measures upon returning to on-site work, as employers focus on protecting employees, 65% anticipate reconfiguring work sites to promote physical distancing, and 52% anticipate changing and/or alternating shifts to reduce exposure, the survey found.

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In talks with dozens of CFOs in the past couple of weeks, foremost on their minds is not just the question of how to get people safely back to physical offices but “what does work look like going forward,” in light of the fact that remote work is proving effective, said PwC Chair Tim Ryan. Other questions Ryan said he’s hearing are about how companies should be managing costs and productivity needs.

But consistently, the “main theme” is about employee safety, he said.

“Virtually every company we speak with is putting the health and well-being of employees as a top priority and as they think about coming back to work, that’s first and foremost on their minds,” Ryan added.

“Lost year”

Over 300 CFOs responded to the most recent survey, which PwC conducts every two weeks, the firm said. The key themes where responses have changed between this survey and the last one reveal differences from a sector perspective, said Amity Millhiser, PwC’s chief clients officer. The biggest sentiments are around businesses returning to the workplace and the effect on the workforce, especially in furloughs and layoffs and impact on revenue and earnings, Millhiser said.

On the return to the workplace, 65% of CFOs said their companies will reconfigure worksites to promote physical distance, and “companies will increasingly look to digital solutions to adapt to physical distancing,” she said. 

Some will do some contact tracing and there will be a greater emphasis on “that kind of technology” as opposed to manual workarounds as technology becomes available and the new normal for how companies work in offices, Millhiser said.

Workforce health and safety will also become “a critical job benefit” and more technologies will be leveraged in traditional offices and increasing remote workforces, she added.

As they were two weeks ago, CFOs remain pretty evenly split on how long it will be to get “back to normal,” Millhiser said.
Protecting cash and liquidity positions is paramount for CFOs, the survey found. “Financial impacts of COVID-19, including effects on liquidity and capital resources, remain the top concern of CFOs (71%). Over half (56%) say they are changing company financing plans, up from 46% two weeks ago,” the survey said.

Approaches they’re taking include hiring freezes and tightening controls on discretionary costs, such as ending travel and the use of contractors, according to the survey. At the same time, investments are being made in areas that are considered important to companies’ future growth, including digital transformation, customer experience, and cybersecurity and privacy initiatives, the survey said.

More than half (53%) said they are projecting losses to be greater than 10% this year. While experiences and changes differ by sector, the combination of the increased negative impact on earnings and revenue and the longer time to come back to normal is leading many CFOs to conclude that 2020 is “a lost year for them,” Millhiser said.

As states start to lift stay-at-home orders and reopen local economies, 52% of CFO respondents said their businesses could return to normal in less than three months if COVID-19 were to end immediately, the survey said.
New insight from survey data shows that less than a quarter of respondents (22%) indicate they plan to implement contact tracing as part of their plan to reopen their workplaces.

PwC also announced it has created a Check-In with Automatic Contact Tracing tool that allows companies to help quickly identify and alert employees who may have come into contact with a coworker who has tested positive for COVID-19.

Additional survey results

The top concern of CFOs:
● 71% of respondents indicate that financial impacts remain a top concern.

● 80% of respondents expect that COVID-19 will decrease their company’s revenue and/or profits this year.
● 12% of respondents report that COVID-19’s impact on revenue and/or profits is still too difficult to assess at present.
● 5% of respondents expect a decrease in revenue of over 50%.
Financial actions:
● 86% are considering implementing cost containment (up 4 percentage points).
● 70% are considering deferring or canceling planned investments. Of these respondents, 80% are considering delaying or canceling facilities/general CapEx, 62% considering workforce, and 48% considering IT.
● 40% of CFOs are indicating no change to their strategies (up 6 percentage points) while 15% indicated an increased appetite for M&A.
● 91% plan to include a discussion of COVID-19 in upcoming external reporting.
● 50% plan to include discussion around COVID-19 in financial statements.
Supply chains:
● 56% are planning to develop additional, alternate sourcing options for their supply chains.
● 54% are planning to understand the financial and operational health of their suppliers.

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“We are seeing many geographies being considered [for additional sourcing], not just domestically—and frankly, there’s a lot of excitement about that,” Ryan said. Stressing that “there’s a long tail” with adding additional suppliers, he said areas besides the US that can expect to see an uptick in sourcing include Vietnam and Malaysia, as well as Mexico and Canada.

“If you were to unplug with China completely, it’s a firehose,” Ryan added. “You’ll see many geographies benefit, all in the name of diversification.”

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