Until recently, CFOs could look at a company’s past performance and historic business conditions as a way to predict what the future could likely bring and make risk-management decisions based on that analysis.

But no more. Predicting the future using the past is quickly becoming an exercise in futility. The loss of linear predictability is creating increased uncertainty in the business landscape, according to a recent World Economic Forum white paper.

“In an exponential economy, risk has been supplanted by uncertainty, which can neither be managed or measured,” according to the January 2022 issue of Deloitte CFO Insights.

This new environment can be especially challenging for finance professionals, traditionally tasked with overseeing risk management and financial planning. As the world becomes more uncertain, the role of finance professionals can change, and they, in turn, may need to develop whole new skill sets and priorities.

“Our contention is that, in the world of linear change, where you can use past data as a signal for what’s likely to come in the future and rely on projections and predictions based on good old-fashioned analysis, it was a fundamentally different job to be a CFO,” said Geoff Tuff, a principal at Deloitte Consulting and coauthor of the January issue of Deloitte CFO Insights. “So, finance professionals have to be ready to use different mechanisms…to help them make their decisions than they have historically.”

Ears to the ground. For finance professionals to more successfully navigate uncertainty, they may need to be attuned to weak signals of big change, Tuff said. CFOs will need to identify impending change and shifting trends before they are apparent by scanning the horizon, not the past. Keep reading here.—DA

Fighting an uphill battle to attract and retain talent in an increasingly competitive labor market, companies are planning on boosting salary budgets in 2023, according to the Salary Budget Planning Report from Willis Towers Watson (WTW).

The WTW survey found that nearly two-thirds of respondents said that they are budgeting pay raises next year and that salary budgets will see an “overall average increase of 4.1% for 2023.” This follows a 4% salary budget increase in 2022. While that is the biggest increase since 2008, according to WTW, inflation across the world is still outpacing the 2022 wage boost.

“Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive,” said Hatti Johansson, global product development and innovation leader at WTW, in a statement. “With such a dynamic environment, it’s imperative for organizations not only to have a clear compensation strategy but also a keen understanding and appreciation of the factors that influence compensation growth.”

Labor challenges are almost universal, according to the survey, with 94% of respondents saying that they are having trouble attracting talent this year. However, only 40% said they expected the same talent challenges next year.

Companies are also moving beyond compensation. Many organizations are increasing workplace flexibility and boosting DE&I efforts to attract and retain talent.

“With a possible recession looming, continued high inflation, and employers grappling with talent supply challenges, organizations need to get more creative to address attraction and retention challenges,” Catherine Hartmann, managing director of work, rewards, and careers at WTW, said in a statement.

The survey was conducted in spring 2022, and featured 22,570 responses from companies in 168 countries.—DA

Coworking is a weekly segment where we talk to CFOs and others in the finance space about their experiences, their companies, and the larger economy. Let us know if you are—or you know—a CFO we should interview.

Hilary Maxson is group CFO and EVP at Schneider Electric, which calls itself “the world’s most sustainable company,” due to its early adoption of ESG (environmental, social, and governance) initiatives.

This interview has been lightly edited for length and clarity.

One of the things I wanted to ask about is the idea of “energy as a human right.” Schneider Electric is working to provide 50 million US residents access to green electricity in the coming year. That’s a very ambitious goal. And I’d love to hear your thoughts on why that’s important for Schneider and how you see that coming together.

So, Schneider’s purpose is defined as empowering all to make the most of our energy and resources, bridging progress and sustainability for all, which is very unique, because most people think progress and sustainability work against each other to a decent degree. In Europe, for example, everyone’s quite nervous that winter is coming and the gas is going to be turned off and that type of thing. You cannot build a new LNG [liquefied natural gas] terminal for yourself. But you can figure out a way to reduce your energy consumption by 30% in a much shorter time period.

I’m wondering what you see on the economic horizon and how you are preparing for it.

I’m cautiously optimistic. Everything in front of us from a medium-term standpoint is still positive, over the medium, even long term, because we’re really on the right trends as a company. Now, what that means, though, is that we really need to balance and get through this short term. Keep reading here.

Today’s top CFO reads.

Stat: 23%. That’s how much of its workforce trading platform Robinhood is letting go of after falling short on revenue projections. This comes after the company laid off 9% of its workforce earlier this year. (CNBC)

Quote: “We were either going to die a fast death, or a slow death, or embark on a risky strategy”—former MicroStrategy CEO Michael Saylor, after he bet the company on bitcoin, lost more than $1 billion, and ultimately stepped down last week (the Wall Street Journal)

Read: We might be living in the dumbest timeline: The Feds charged a sneakerhead with running an Air Jordan Ponzi scheme. (Bloomberg)