Survey: Executives see labor as biggest hurdle in economic decline

Surveys, the external lifeblood of every consulting company, attempt to connect data points from the company’s repertoire to the economic environment we’re living in. PwC is no exception; it puts out a Pulse Survey every quarter detailing what the executives in its reach are pondering and planning for.

This quarter in particular caught our eye, as PwC found that 81% of executives agree there will be a recession in the next six months but, and perhaps most interestingly, 77% of executives also said they are confident they can achieve “near-term growth goals.” Optimism ensues “despite a backdrop of rapid economic deterioration,” the consulting firm wrote.

The survey, released at the beginning of November, polled 657 US executives. It has results that may surprise readers who have seen headline after headline of layoff announcements, recessionary warnings, and the impact of inflation. Neil Dhar, vice chair and chief clients officer of PwC US, told CFO Brew he actually wasn’t that surprised.

The experience—and battle scars—that executives have gained in just the last 36 months alone drives those kinds of optimistic reactions, Dhar told CFO Brew, pointing to the chaos that businesses felt in the thick of the Covid-19 pandemic.

The biggest issue? Labor. However, the problem surrounding employees is now that there are too many instead of too few. “Six months ago, every client I went to, it was all about, ‘I don't have enough people…we are so talent short.’ And now, a couple of months [later], the discussion has so quickly pivoted towards, ‘How do I work through a bit of excess on the talent side?’”

Despite the talent headwind, executives in place now should be well-prepared to weather any impending storm, Dhar remarked. “[The] business and leadership skills and leadership development—and all the things that we’ve been through in such a very concentrated period—I think it’s going to set us up for a lot of great leadership lessons down the road and also some great leaders down the road,” he said.

If you’re scratching your head on just how executives could be confident on reaching goals while also reading grim headlines, remember that this thinking reflects the belief that companies will be able to meet near-term growth goals. That, unfortunately, usually means the workforce will be among the first expenses to be cut, since layoffs typically reflect a company’s longer term future rather than its present.—KT