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CFO Survey

Survey: CFOs’ Confidence Up, But Very Modestly Overall

  • Strong Revenue and Profit Growth Will Translate Slowly to Hiring
  • Healthcare Remains a Problem for CFOs, Bringing Substantial Additional Costs to Employees

MORRISTOWN, N.J. and NEW YORK, April 30, 2010 – A year has made a substantial difference in the practices and mindset of Chief Financial Officers as they continue to lead their companies out of one of the most difficult periods in global financial history. Findings from the first quarter 2010 “CFO Outlook Survey” conducted by Financial Executives International (FEI) and Baruch College’s Zicklin School of Business, reveal that CFOs are undoubtedly more optimistic, and they see several bright spots for the future. Yet, CFOs still remain cautious in their outlook for the overall health of the economy, and they continue to examine and reevaluate staffing, layoffs and compensation. Issues surrounding healthcare remain foremost for CFOs, and the new reform act is anticipated to create added costs for companies that may result in difficult sacrifices for employees.

The CFO Optimism Index for the U.S. economy continued rising for the third consecutive quarter, and increased to 58.14 in Q1 2010. This is nearly a 33 percent increase from an all-time low of 38.96 one year ago, but a modest improvement over the fourth quarter of 2009. Similarly, CFOs’ optimism toward their own companies rose another two points from Q4, reaching 69.49. This represents an 18 percent increase from what it was one year ago (58.93). Significantly, CFOs are predicting double-digit percentage increases over the next 12 months in net earnings (26%), revenue (13%), capital spending (13%) and technology spending (10%).

Although CFOs are expressing increased confidence in the overall health of the economy, they expect a gradual process. Close to half of the CFOs do not foresee the recovery truly underway until the first half of next year, or later. Their overall concern about inflation is heightened, and 38 percent of CFOs stated their concern has increased since last quarter. Furthermore, CFOs expect minimal change with regards to employment numbers (non-farm payroll) in the next year, anticipating that rates will remain relatively high at nine percent. CFOs were also split in their views on the impact of the unemployment Temporary Extension Act of 2010, with a slightly higher percent of CFOs feeling that it had a negative impact (44%) than a positive impact (39%).

“It is clear from the results of our first quarter survey that CFOs are feeling more confident about the economy and the impact of their business, but they are treading lightly, and we are seeing more modest increases in the Optimism Index than we saw in the third and fourth quarters of 2009,” said John Elliott, Dean of the Zicklin School of Business at Baruch College. “Despite some challenges, CFOs are showing that their companies are indeed on the road to recovery, and the substantial increases they are expecting with regard to earnings and revenue make it clear that companies have made good progress over the last year.”

Hiring Improving, but CFOs Still in Evaluation Mode
Jobs and hiring are certainly top-of-mind issues for many Americans, and this quarter CFOs are painting a more encouraging picture, but indicate that they will remain in constant evaluation of staffing situations. Sixty-nine percent of CFOs reported they are not planning to conduct layoffs (eight percent more than last quarter), but 14 percent say they will still need to conduct layoffs this year. In the fourth quarter of 2009, 27 percent of respondents stated that it was too early to determine whether their companies would conduct layoffs, but this most recent survey saw the percentage of CFOs in that category drop to 14 percent. More than one third (34%) say they will still be restructuring and realigning responsibilities among existing employees.

While CFOs plan to increase hiring over the next 12 months by an average of seven percent (twice as much as last quarter), responses indicate the situation is not entirely buoyant. Nearly a quarter (23%) are still planning to delay employment start dates for new hires by a few months, and 11 percent will delay start dates by more than six months, but only three percent will need to rescind job offers completely. However, these numbers are decidedly rosier than responses to the same questions last year when: 46 percent were delaying start dates by a few months; 29 percent were delaying start dates by more than six months; and 17 percent were rescinding job offers completely.

In an effort to retain efficiencies created during the recession, 28 percent of CFOs reported that they are looking for outsourcing opportunities, and more than a third (35%) said they are reevaluating compensation practices. CFOs are planning for an increase in compensation at their companies over the next 12 months, but only by two percent on average. Similar to the fourth quarter, CFOs overwhelmingly stated that they are continuing with process efficiencies (89%) and technological efficiencies (77%) to enhance productivity.

“We have seen over the past few quarters that CFOs have worked hard to create efficiencies and maintain them beyond the recession, and the most recent results demonstrate that this is a trend that will continue, especially with regard to staffing and compensation,” said Marie Hollein, CEO and President, Financial Executives International. “Still, there is cause for celebration - fewer CFOs are resorting to layoffs and we are seeing some modest upticks in hiring. Following the hard work invested over the past year, CFOs are also staying put in their roles and don’t appear to see a need to change positions or companies anytime soon. ”

CFOs expressed relative stability in terms of their own positions. Less than 20 percent of respondents said they were actively looking for another position outside of their company. Respondents to this quarter’s survey have spent an average of 6.4 years in their current position, and plan to stay in their role for another 5.3 years.

CFOs on Healthcare Reform: Not Healthy For American Business
In past quarters CFOs have been vocal about their sentiment regarding a potential healthcare reform, and respondents to the most recent survey are adamant about their dissatisfaction of the recently passed healthcare reform act . An overwhelming majority of CFOs feel that the healthcare reform act will be negative both for Americans (73%) and for their own companies (75%). The majority of CFOs (59%) do not believe that all Americans should be required to have health insurance.

CFOs’ dissatisfaction with the act can be largely attributed to their perceived potential for added costs, as found in the survey. CFOs are anticipating an eight percent increase in costs directly related to the healthcare reform act. CFOs also foresee that these added costs will force them to act in ways detrimental to their employees or retirees. While a mere 15 percent of respondents stated that they are not taking additional actions to offset added healthcare costs, the majority of CFOs are contemplating additional measures. Sixty-two percent stated they may be forced to increase employee co-pay as a result of the new healthcare reform act, and nearly half indicated they would need to reduce the quality of the health care package (48%) or reduce benefits for their employees (46%).

Additional Findings:
Other topics examined in this quarter’s survey included: hiring plans for recent graduates and paid summer interns; predictions for interest rates, and strength of U.S. dollar vs. Euro; perspective on stabilization of the commercial real estate market; companies’ cash positions; and access to credit. Full survey results and historical data comparisons are available at or from Nicole Madison at The study is also available online at the Financial Executives Research Foundation bookstore and on the Baruch College home page at

Overview of the Survey:
This quarter, the CFO Outlook Survey, conducted by Financial Executives International and Baruch College’s Zicklin School of Business, interviewed 368 corporate CFOs electronically from March 31 – April 13. CFOs from both public and private companies and from a broad range of industries, revenues and geographic areas, including some off-shore companies, are represented. Survey respondents are members of Financial Executives International.

Financial Executives International has been conducting surveys gauging the country’s economic outlook from the perspective of CFOs for more than 11 years.

About FEI
Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its 15,000 members hold policy-making positions as chief financial officers, treasurers, and controllers. FEI enhances member professional development through peer networking, career planning services, conferences, publications, and special reports and research. Members participate in the activities of 85 chapters, 74 of which are in the United States and 11 in Canada.

Financial Executives Research Foundation (FERF) is the non-profit 501 (c)(3) research affiliate of FEI. FERF researchers identify key financial issues and develop impartial, timely research reports to FEI members and non-members alike, in a variety of publication formats.

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About Baruch
Baruch College is a senior college of the City University of New York. The Zicklin School of Business at Baruch College is the largest and most diverse AACSB accredited collegiate school of business in the nation. Baruch has a long tradition of producing accounting and finance graduates who become leaders as CPAs and CFOs.

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Media Contacts: Nicole Madison of FD +1-212-850-5647; Kristen Lewko of FD +1-212-850-5756