This survey, our fifth since emergency measures to slow the pandemic took hold in the US, reflects the views of 288 US finance leaders during the week of May 4. It was a week when the scale of the US recession emerged in the economic data for April, the first full month of lockdowns, with the unemployment rate rising to 14.7% with 20.5 million Americans out of work. Authorities in many US states continued to ease some restrictions in order to gradually restart the US economy, and the race for a vaccine raised hopes, as eight candidates were tested in human trials around the world. In the absence of a consensus on how to return to normal activity in a safe way, companies developed their own plans for a return to the workplace.
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Business as usual horizon continues to retreat
For the first time, over half of CFOs expect it to take their company at least three months to recover once the virus recedes.
Investments outlook is stabilizing
58% of all respondents are considering pushing back or canceling planned investments, down from 70% two weeks ago.
Confident in plans to create safe workplaces
Two-thirds are “very confident” their company can create a safe workplace. Employees may not be so sure.
Flexible work is a better model
68% of CFOs say crisis-driven transitions to remote work will make their company better in the long run.
US finance leaders say their companies are drawing strength from the forced adaptations and workarounds they’ve experienced during the past eight weeks of economic shutdowns in much of the US. The majority of respondents (72%) believe their companies will be more agile going forward. Over two-thirds (68%) report that moving quickly to adjust to the sharp drop in activity, and being able to function in a much more flexible work environment, has better equipped their companies for the long run. This indicates that the hybrid at-home/on-premise model that’s taken hold as a contingency is likely here to stay.
Outlooks on COVID-19’s impacts on financial results have not changed in the past two weeks. Over half of respondents (55%) expect their company to suffer a decline of 10% or greater on revenue and/or profits for this year as a result of the pandemic. That is only slightly higher than the 53% who felt that way two weeks ago.
The survey findings suggest that companies are gaining a better handle on conducting business in this transformed environment. Concerns over a loss of productivity due to remote working conditions have declined. Instead, some unexpected opportunities to innovate are rising, as 44% say they’re finding new ways to serve customers. Social technologies we routinely use in our private lives are migrating to the workplace, and many are being absorbed into operational planning, as companies take stock of what’s working well and what isn’t.
CFOs expect some of the cost-containment actions taken in the thick of the crisis to continue in May, even as many US states ease up on restrictions in order to restart the economy. A majority of respondents (80%) continue to report that their company is considering implementing additional cost measures — down from 86% two weeks ago — while 31% of CFOs expect layoffs to occur in the next month, compared with 32% who anticipated that in the previous survey.
Finance leaders are grappling with the reality that the US economy has slid into the deepest downturn of their working lives. And, given projections for a far steeper contraction in the current quarter, in all likelihood, difficult times are ahead. Economic data for the month of April — the first full month to reflect the shutdowns across much of the US — are revealing steep declines in manufacturing and services activity, as unemployment rises to 14.7%.
Costs remain under strict controls. At the same time, findings suggest that the urgency to pull on every lever at hand could be abating. Much will depend on how well customers and suppliers are able to recover, as well as consumer sentiment and the trajectory of the virus. For example, fewer CFOs anticipate furloughs over the next month (36% vs. 44% two weeks ago) or that their company will consider additional delays or outright cuts to planned investments (58% vs. 70%). Once the business stabilizes, the pivot toward shaping opportunities resumes, and in an environment where much will have changed. Around a third of all respondents (34%) say they are “very confident” their companies are identifying new revenue opportunities. This is likely to increase as demand becomes more clear. CFOs may need to shift some of their people to focus on thinking through client needs by segment and new (digital) channels, and how to augment or design products/services to match. With the CFO often acting as an evangelist for business-critical technology, this may be a time for strategic partnering within the company as leaders position for a recovery.
Companies are continuing to independently tackle the challenges of creating a safe workplace in the absence of a consensus on how to go about it — from reconfiguring work sites to evaluating tools for contact tracing. This is one example of the call to the private sector to lead in ways it may not have expected. Going forward, executives should expect demands for private sector leadership to grow, given the mounting pressure the crisis is exerting on governments, public budgets and citizens. CFOs acknowledge it won’t be easy: Only 47% say they are very confident they can balance the needs of all stakeholders, including employees, customers, investors and their communities.
Even so, many companies have already responded. Some are retooling their manufacturing facilities to produce safety products, while others are extending financial support to customers or increasing hazard pay for employees. Separately, half of respondents (51%) say their companies have increased community and societal efforts with financial or other contributions to nonprofits, or pro bono goods and services — and 16% of them expect to sustain this level of commitment for the foreseeable future.
With 85% of respondents either increasing their community and societal commitments or keeping them at the same level as before the crisis, it’s clear corporate responsibility programs are being accepted as fundamental. While they may be trimmed to fit changing needs, they won’t be discarded in tough times. Given the sharp rise in US unemployment as a result of the pandemic, it’s important for firms to engage their people in determining consequential community impacts and being part of the solution to retrain the unemployed or create job opportunities. Business leaders will also want to think about how to share their story around these efforts, including how their companies invested in employees and communities and innovated during the crisis. With just 13% of respondents saying they are considering environmental, social and governance disclosures related to COVID-19 in the next six months, this is an area that may only now be coming into focus.
As business leaders reopen their workplaces, they appear to be relatively optimistic about their ability to create safe worksites — for both customers and employees — and a productive workforce. Two-thirds (64%) say they’re very confident they can provide a safe working environment, and many continue to take measures like implementing new safety protocols and reconfiguring workspaces to allow for social distancing.
Their efforts will be crucial to easing tension with employees who are concerned about workplace safety. In a survey of employees also conducted by PwC during the week of May 4, 2020, 51% of those who have been forced to stop working or forced to work remotely (some 468 respondents) say the fear of getting sick at work would prevent them from returning to the workplace if their employer requested it tomorrow. What would make them feel more comfortable? More than half (56%) want their employers to provide personal protective equipment; 51% would need assurances that their employer would inform them immediately if a co-worker tested positive for the virus; and 51% say requiring that customers entering the workplace follow basic safety and hygiene practices.
Anxiety about the virus, fears of job security, concerns about returning to work on-site and the stress of trying to work from home while also homeschooling children or caring for family members are among the factors that may be taking a toll. With only 47% of leaders “very confident” of their ability to manage their employees’ well-being and morale, it will be important to continue to provide support and to recognize people’s individual challenges.
One area of particular concern is around how employers will track employees who have contracted COVID-19 or are potentially at-risk. In PwC’s employee survey, while respondents who had been forced to stop working or work remotely expect their employers to implement safeguards, they’re also wary of being monitored. For example, 61% of workers are concerned about their employer using a wearable device to track their location and proximity to those who’ve been infected, 52% worry about workplace cameras and 49% are concerned about employer-required COVID-19 virus testing.
Leaders may also need to ramp up efforts to upskill and retrain their people. The pandemic has underscored the need for new skills, including empathetic leadership, resilience and agility, collaboration and digital skills, and technical and trade skills, such as design, manufacturing, cyber and supply chain management. Despite the clear need, less than half of leaders feel very confident in their ability to build new skills for the future.
Deepening their understanding of supplier health continues to be a top priority for CFOs, along with working through supply chain options. Fifty-two percent are planning to work through the financial and operational health of their suppliers, in line with plans two weeks ago. At the same time, the number of respondents planning to use automation in the supply chain rose to 34% from 26% two weeks ago. There’s also been an increase in the number of finance leaders who say they are looking to change the terms of their contracts: 44% vs. 38%.
As CFOs get a better handle on issues related to the financial and operational health of their supplier networks, they are making progress on their priorities. Findings show an increased emphasis on prioritizing automation in supply chain workflows. Companies lost response time during the crisis, and they did not get all the data they needed to make informed decisions around, for example, spending, taking pricing actions to move excess stock or identifying opportunities to shift their mix of offerings. More CFOs also report plans to change contractual terms to help provide more structure going forward, to better manage risk control and to have more consistency across suppliers.
As consumer-facing companies prepare to reopen their doors, safety is paramount: 60% of CFOs in consumer markets (CM) say they are very confident they can provide a safe working environment for employees, while 69% are very confident they can meet customers’ safety expectations. These finance leaders are implementing workplace safety measures, such as wearing masks and offering testing (78%); reconfiguring work sites to promote physical distancing (76%); and alternating work crews to limit exposure (60%).
These measures are important to consumers: 39% of respondents to a survey of more than 1,600 consumers conducted by PwC May 4-7, say they would shop in stores if physical distancing and other safety measures were in place.
After an initial spike, consumer spending is starting to stabilize for essential goods and services, while continuing to plummet in other areas. This reflects CM CFOs’ projections about the adverse impact of the current crisis: More than three times as many (20% vs. 6% for all sectors) project a decrease in revenue and/or profits of more than 50% this year.
Consumer-facing companies were dealing with changing consumer preferences and business models in flux well before the current crisis, which is further catalyzing these existing forces. In PwC’s consumer sentiment survey, a scant 12% said they would immediately shop in stores once they reopened. In fact, consumers are signaling that they will likely stay loyal to new brands they’ve tried over the past few weeks, which offers CM companies the opportunity to nurture these nascent customer relationships.
For a reopening at scale, transparency will matter more than ever, as will brand trust — far more than the relentless pre-crisis quest for customer experience. The current situation has necessitated new ways to serve customers (51% vs. 44% for all sectors), which will allow CM companies to emerge stronger over the long term. CM CFOs told us they will also rely on improved resilience and agility (76%, in line with all sectors at 72%), leaner operations (58% vs. 47% for all sectors) and technology investments (49%, the same as all sectors).
Three in 10 (29%) financial services (FS) CFOs think it could take six months or more to return to business as usual. Other CFOs are starting to agree: 27% now expect this timeline, up from 23% two weeks ago. While FS executives are starting to plan their return to on-site work, only 51% say they’re very confident in their ability to provide a safe work environment (vs. 64% overall). This could explain the rising interest in contact-tracing tools.
Only 18% of FS CFOs expect furloughs in the next month, compared to 36% overall. Fewer expect layoffs, too: 19% in FS vs. 31% in the broader group. While FS CFOs anticipate a big decline in their revenue and/or profits, they’re less likely to consider deferring or canceling investments than others (49% FS vs. 58% all). And of those that might trim, only 12% envision cuts to digital transformation.
We are seeing early indications of an industry rethinking work on a very large scale. FS CFOs cite work flexibility (73%) as a positive outcome of the current situation, second only to resilience and agility (81%). This underscores earlier findings that FS has more interest than other sectors in making remote work permanent for roles that allow it. Finally, 55% of FS CFOs are very confident in their firm’s ability to build skills for the future — the highest among all the sectors we surveyed.
Roughly half of industrial products (IP) CFOs expect changes to company workforces to occur in the next month: 53% anticipate temporary furloughs, compared with 36% of CFOs across industries, and 43% expect layoffs, or permanent separations of employees, compared with 31% of all respondents. Employment levels in the sector have been hit hard during the crisis. In April alone, 1.7 million manufacturing jobs were lost, according to private payroll data, which represents about 13% of the manufacturing workforce.
Yet, as some industrial products companies begin recalling workers — and others anticipate doing so eventually — IP CFOs generally seem confident and well-prepared to bring employees back to the workplace. The majority (57%) are “very confident” they can manage employee well-being and morale (vs. 47% of respondents across industries), and 72% are “very confident” they can provide a safe working environment (vs. 64% of the total). However, not all employees may come back to the workplace or office, with 51% of IP CFOs saying their companies are considering options for remote working for certain roles to become permanent.
Many IP CFOs are still clearly downsizing and slashing costs, but there may be a silver lining. Manufacturers are well-prepared for an eventual recovery, especially in maintaining the emotional and physical well-being of their employees — both now and when demand returns.
Also, the sector seems to understand how automation and digital technologies can help them weather this period. At a time of extreme cost-cutting (73% of IP CFOs plan to cancel or defer investments), only 15% of IP CFOs are planning to cut digital transformation investments (e.g., automation, AI and the industrial IoT), and only 2% say they’ll cut planned investments in cybersecurity and data privacy.
Technology, media and telecommunications (TMT) companies foresee an accelerated path to recovery, with a scant 11% of TMT CFOs saying it would take longer than six months to resume business as usual were the crisis to end today (compared to 27% in all sectors). They also are far more likely to envision business as usual taking between one and six months (76%) compared to respondents across all industries (63%).
With a fairly lean existing workforce, TMT CFOs are less likely (23%) than all sectors (31%) to expect layoffs in the coming month. They are more likely, however, to expect a loss in productivity over the coming month due to the lack of remote-work capabilities (47% vs. 34% for all sectors). The reasons vary across subsectors. For example, streaming, sports and live-event companies are hobbled by physical-distancing mandates.
Resilient and optimistic, and bolstered by a talented workforce and robust technology investments, TMT companies are distinctively well-positioned to give consumers sheltering at home remote connectivity opportunities for education, work and entertainment. Stepping up to take on the responsibility, they are almost twice as likely as all sectors (28% vs. 16%) to increase their responsible business leadership efforts in providing pro bono goods and services to support vulnerable groups in the wake of the pandemic — and to sustain this level of commitment for the foreseeable future.
For the first time since the PwC Pulse survey began tracking CFO sentiment in mid-March, a majority of respondents expect that it will take their companies more than three months to recover once the pandemic recedes, of which 27% say it will take six or more months to bounce back (up from 23% two weeks ago). While CFOs continue to push out the timelines for their companies to recover, the biweekly change has become less pronounced.
The shutdowns showed many companies that they can work virtually better than they thought. Consequently, there’s a growing expectation among many people, including the business leaders we surveyed here, that the workplace is likely undergoing some fundamental changes. These leaders are seeing the results of being able to move quickly and decisively during a crisis, even while away from the office, and they’re making connections to the longer-term health of their companies.
Ultimately, however, the longevity and success of remote work will be driven by the opportunities businesses create for employees to interact, learn and be part of a community. For some organizations, culture also drives innovation and can deliver higher returns, outweighing the costs of on-site work.
PwC surveyed 288 US CFOs and finance leaders between May 4-6, 2020. Eighty-one percent of the respondents were from public and private companies in these top four sectors: consumer markets (16%), financial services (23%), industrial products (26%), and technology, media and telecommunications (16%). Sixty-eight respondents are from Fortune 1000 companies. The PwC COVID-19 CFO Pulse Survey is conducted on an ongoing basis to track changing sentiment and priorities. Now in its fifth installment, the inaugural survey was conducted March 9-11, 2020. Sign up to receive regular survey updates.