This survey, our sixth since emergency measures to slow the COVID-19 pandemic took hold in the US, reflects the views of 330 US finance leaders during the week of June 8. It was a week when rising infections in a handful of US states gave voice to fears that the pandemic will not slow down on a reliable timetable. More states lifted stay-at-home orders, businesses started to reopen and US government data signaled a plateau in the number of people seeking unemployment benefits. It was also a week when we learned the US economy officially entered into a recession in February, the Federal Reserve warned of a 6.5% contraction for the year and the number of confirmed COVID-19 cases in the US topped two million. Compounding these pressures, business leaders — and the entire nation — continued to come to grips with racial inequality as demonstrations took place against injustice across the country.
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Multiple paths to grow top line
63% of CFOs plan changes to products and services; 41% look to alter pricing, among other revenue strategies.
Growth drives tech investments
As they reinvent their businesses, nearly one-third of CFOs (32%) look to tech-driven products and services.
Potential for second wave of outbreak looms
59% of CFOs worry about a rise in COVID-19 infections affecting returns to work.
Remote work ready for a new world
No longer viewed as a productivity drain, 54% of CFOs plan to make remote work a permanent option.
Confidence in a safe return
CFOs are very confident their company can both provide a safe working environment (71%) and meet customers’ safety expectations (80%).
Worries about a new wave of COVID-19 infections top the list of threats to business recoveries — a concern for 59% of US finance leaders. The findings indicate that the virus continues to set the pace for growth plans and risk outlooks, even as more US states move to fully reopen their economies, and more CFO respondents say financial prospects are improving. The financial impacts of COVID-19, including on liquidity and capital resources, remain a top concern for 42% of CFOs — down from 75% in April. The rapid shift to remote working opened a window to potential security concerns, and CFOs are responding: Nearly one in five (19%) are currently worried about cybersecurity risks, more than three times what respondents expressed in our April survey (6%). On the other hand, concerns about productivity eased significantly as companies ironed out issues with remote work capabilities and employees acclimated to new ways of working.
As companies adjust and adapt to the new business environment, finance leaders are looking toward the future and what it will take to get back to “business as usual.” One-third of US CFOs now expect it will take more than six months to get there, a dramatic increase from the 2% that predicted a longer recovery when we first launched our survey. Still, some are starting to see green shoots. While only 16% of CFOs say it will take less than a month to bounce back to “normal” if COVID-19 were to end today, that’s up from 10% five weeks ago.
No matter how long it takes for the economy to recover, things aren’t going to look like they did six months ago. The competitive landscape will look different, as some businesses have adapted and entered new markets or pursued different business models, like quick-service restaurants functioning as grocery stores or gyms offering at-home online classes. Customers will have different wants and needs now. Half of US consumers tried new brands or products while home during the pandemic, and 5% used telehealth for the first time. And their comfort levels with what and how they are buying will have changed. Essential items purchased online might continue to trend for a while.
April 8, 2020
June 11, 2020
The economic downturn and growing recognition that there will be no “back to normal” underscore the tremendous challenges companies will face to emerge stronger. Nearly half (47%) of finance leaders expect revenue declines of more than 10% this year. In that grim forecast is a glimmer of optimism, however: Only 13% of US CFOs are now looking at declines of more than 25%, which is a drop from 20% expecting declines five weeks ago. Another hint of tempered optimism: 11% are now starting to see prospects for revenue and/or profit growth in 2020 as the economy reopens.
CFOs are pursuing changes across many dimensions to capture growth. Changes to products or service offerings, whether new or repurposed, are by far the most pressing, according to 63% of respondents. Pricing strategies are also going to play an important role, with 41% of CFOs citing their importance to revenue growth.
Finance leaders also see a silver lining in the current situation: The majority (72%) believe they will be more resilient and agile in the long run, and 53% say the new ways they are serving customers will put them in a better position down the road.
Companies moved quickly to cut costs and jobs to weather the first throes of the pandemic. The federal government’s Coronavirus Aid, Relief & Economic Security (CARES) Act and Main Street Lending Program enabled many companies to survive and keep employees on their payrolls. With economies reopening and consumer sentiment starting to pick up, they now have to shift their focus to rebuilding the top line in an uncertain COVID-19 environment — a challenge that takes time and work. One-third (32%) of US CFOs are very confident in their company’s ability to identify new revenue opportunities. Taking a multi-pronged approach that emphasizes products and services, pricing strategies, distribution channels and customer segments, among others, will be critical to driving revenue growth and being agile enough to confront a potential second wave of COVID-19 cases. Companies that adapt their business models, listen to their customers, adjust their offerings and innovate to drive a strong top line will be the ones that succeed.
Remote working continues to catch on as a viable alternative to the workplace. More than half of leaders (54%) now say they plan to make remote work a permanent option for roles that allow it, up from 43% in our last survey. Only 26% of leaders are concerned about losing productivity due to remote work now, a significant drop from the beginning of the pandemic (63% in our March survey) — while 49% are trying to improve the remote work experience for their people.
Leaders also continue to prioritize new safety measures, with 81% taking steps like requiring masks and offering testing to workers, and 78% reconfiguring work sites to promote physical distancing. They’re also feeling increasingly confident in their ability to meet customers’ safety expectations and provide a safe working environment. Still, these new safety protocols may not appease their employees’ fears: Only 47% of employees in PwC’s Workforce Pulse Survey, which was conducted the same week as our CFO Pulse Survey, say changing workplace safety measures will make them more comfortable returning to the office.
About a third (29%) of leaders also say they’re evaluating contact tracing tools — a slight uptick from our last survey, when 27% of leaders said they were evaluating such tools. This is consistent with contact tracing being seen as an important part of managing COVID-19 transmission — both within the workplace and with consumers.
One bright spot: Fewer leaders anticipate more furloughs or layoffs in the next month, a trend consistent with the slowing number of people filing for unemployment. Less than a quarter of leaders (24%) anticipate layoffs, down 7% from our last survey, while under a third (30%) expect to implement temporary furloughs—a drop of 6% since our last survey.
As the country cautiously reopens, business leaders are beginning to reconcile with their new reality: an increased focus on safety, new remote teams — and the possibility of a second wave of infections. There’s a pervasive sense of uncertainty and rising social tension that underscores the need for companies to have a “purpose led” flexible, agile plan for their workforce, including how and when to move people back into the office, what safety measures they may need to adjust, and the conditions under which they’d need to change plans if there’s a spike in infections.
Meanwhile, remote work may be here to stay, but with that comes a greater need to help people take time away from work and avoid burnout. Well-being is key to productivity, and with many people struggling now with fear, anxiety and anger, many leaders are increasingly investing in resources and benefits that help people create balance and care for their mental health.
Regardless of whether businesses plan to keep teams working remotely or transition people back to the physical workplace, many are considering how they can sustain some of the positive skills and behaviors that emerged as a result of working differently during the pandemic — like agility, faster decision making, flattened hierarchies and transparent communication. However, leaders will also need to focus on personalizing their messages for employees and better meeting people’s individual needs, as our survey of employees found that some of the actions leaders are taking are not resonating with employees. Only 32 percent of employees, for example, say open and frequent communication from leaders makes them feel more confident in their ability to do their jobs.
Facilities and general capital expenditures remain targeted — 78% of CFOs whose companies are considering deferring or canceling investments plan cuts here. Planned spending cuts to other areas are slowing somewhat, however: 48% now expect cuts to workforce efforts, down from 62% in March, and half are considering cuts to operations, down from 54%. Areas integral to growth, notably digital transformation (17%), customer experience (9%) and cybersecurity and privacy (5%) are less likely to be considered. Likewise, environmental, societal and governance (ESG) activities, which have increased in response to the pandemic, according to our May survey, will continue to be protected. Societal engagement efforts will also continue to be important in addressing issues related to racial inequality.
Findings indicate there’s less pressure to take financial action as a result of the pandemic. While many companies continue to cut costs, the decline in plans to defer or cancel investments may signal a hint of cautious optimism about investing in growth initiatives. Maintaining investments in things like digital transformation and customer experience throughout the pandemic underscores how some finance leaders are prioritizing growth and resilience.
Allocations for investments in technologies are not set to change during the next 12 months, despite cost-cutting elsewhere during the pandemic. From March 2019 to the present, 32% of US finance leaders say their tech-related spend was driven by growth, including ecommerce and new products and services — and 32% expect the same for the next 12 months. One in five say their tech investments will enable or accelerate cost reduction efforts, like automation. They also plan to invest slightly more in technology related to health and safety. These investments in safety measures like automated contact tracing and workplace sensors can help employees feel safer than manual efforts as they return to the physical workplace.
The continued focus on investing in technology for growth rather than cost reductions further signals optimism about where companies are headed post-COVID-19. But it’s about finding a balance and making good growth decisions. Tech investments may still be multi-year journeys, but there should be a shift in thinking to more agile sprints — a series of shorter, discrete efforts that demonstrate value along the way.
The findings also highlight the technology thread that connects how CFOs see their companies emerging stronger in the future. Being able to better serve customers, having leaner operations and being more resilient and agile relate directly to technology spend. But in order to accomplish these things, CFOs will need to determine if they have the right budget and the right team — with the right skills — to deliver in a faster and virtual way.
The vast majority of consumer-facing companies — 70% — are understandably concerned about a new wave of COVID-19 infections (vs. 59% for all sectors), since interactions with the public are the lifeblood of their business. As they begin cautiously reopening their doors, CFOs at consumer markets (CM) companies also worry more about consumer confidence dragging down consumption (42%) than their counterparts in all sectors (29%).
To counter concerns about health and safety, CM companies are implementing a variety of safety measures to protect customers and employees alike. Consumer-facing companies are more confident in their ability to meet customers’ safety expectations (72% are very confident) than to provide a safe working environment (56% are very confident), likely because workers in customer-facing roles face a constant stream of potential COVID-19 exposures.
CM companies are also far more concerned about workforce capacity over the coming month than all sectors (35% vs. 20%). To attract new workers and keep them safe, they are more interested in evaluating new tools that support workforce location tracking and contact tracing (40%) than all sectors (29%).
As they look ahead to rebuilding revenue streams, CM companies are increasingly incorporating a digital component into new products, services and distribution channels. While consumers had already been migrating online over the past few years, COVID-19 has provided an acute accelerant. Over the next 12 months, 41% of technology-related spending at CM companies will accrue to “growth” in the form of new products and services (vs. 32% for all sectors). They are responding to a sharp uptick in online buying, the result of consumers in many parts of the country continuing to shelter in place. Ultimately, CM companies want to provide customers with safe, engaging shopping and travel options to keep them coming back: 65% report that new ways of serving customers — by combining the best of physical and digital options forged in the throes of the current crisis — will improve the company over the long term (vs. 53% for all sectors).
The revenue outlook for financial services (FS) is less pessimistic than just one month ago. Fewer FS respondents (78%) expect revenue and/or profits to drop this year, down from 93% in May. Similarly, only 42% forecast larger decreases (greater than 10%), down from 55%. To rebuild the top line, over half (54%) of FS firms are rethinking how they deliver products and services, such as shifting to a virtual business model, compared to 36% overall.
FS CFOs are prioritizing health and safety. Most expect to change workforce safety measures (76%) and reconfigure work sites to promote physical distancing (71%). A similar proportion (77%) feel very confident they’ll meet their customers’ safety expectations too, with clear response and shut-down protocols ahead of a potential second wave (75%). This is reflected in budgets: 8.5% of FS tech spending will go to health and safety measures in the next year, up from 5.3% in the comparable period before the pandemic.
We see optimism mixed with preparations for uncertainty. Fewer (28%) FS CFOs now say it will take at least six months to return to business as usual, down from May’s 35%. They’re also seeing glimpses of how the pandemic might strengthen their firms, with resilience (67%) and “new ways to serve customers” (61%) as potential bright spots. Many of the recent changes could stick, too, including permanent remote work options where possible (61%). This will let them reach larger talent pools — but success could depend on firms redefining how they work and giving remote teams the tools they need. FS CFOs are less able to see a clear path to rebuilding top-line growth, with only 33% feeling very confident in their ability to identify new revenue streams. As concerns about a second wave of infections grow, firms will want to be prepared to change course quickly and plan for multiple scenarios.
US manufacturing is showing some signs of stabilization in the wake of the pandemic’s peak, though caution and uncertainty persist. In May 2020, the sector added 225,000 jobs on the heels of the 1.4 million jobs shed in March and April combined, the steepest decline since 2009. Manufacturing CFOs appear less gloomy in their workforce outlook in the short term, too, with 30% expecting layoffs in the next month, down from 43% who said so in our May survey. And, fewer (65%) manufacturing CFOs said they are planning to cancel or defer planned investments, compared to 73% who said they planned doing so in our last survey.
However, about half of manufacturing CFOs (49%) expect to implement staffing changes (i.e., temporarily furloughing workers) in the next month due to slowed demand. That’s relatively unchanged from 53% in our last survey, yet significantly higher than the cross-industry average of 30% of CFOs who expect to do so. The industry still remains entrenched in cost-cutting mode, with 87% of respondents considering cost-containment measures as a result of COVID-19.
Manufacturing CFOs’ view on their revenue outlook is slightly more optimistic since our last survey: 38% now expect an increase, no change to revenue, or declines of less than 10 percent. One month ago, that cumulative figure was 28%. And, looking ahead to initiatives that could boost revenue, four in ten sector CFOs agreed that acquiring new talent and upskilling will be a most important change to rebuilding or enhancing their revenue streams, while 64% agreed new products and services would be a most important revenue-enhancing factor.
While US manufacturing CFOs are still steering organizations in rough waters, they appear to be in a stabilization phase, planning for a recovery and implementing back-to-work policies and strategies. They’re also confident in their plans: 79% are very confident they can provide a safe working environment (vs. 71% overall), while 83% feel the same about meeting customers’ safety expectations (vs. 80% overall). The same number are very confident in their ability to provide clear response and shut-down protocols if there were a resurgence of infections (vs. 73% overall).
And, interestingly, they acknowledge that some changes precipitated by the pandemic — painful as they have been — may turn out to make their organizations stronger and more agile. The majority (64%) agreed that workforce flexibility policies (changing work schedule and locations) instituted during the pandemic will make their company better in the long term, and 81% agreed that it improved their organization’s resiliency and agility (vs. 72% of cross-industry CFOs). Manufacturers have been examining challenged supply chains since the start of the crisis. In April, when asked to list their top-three priority areas, more IP CFOs cited changes to better understand the financial and operational health of their suppliers and a need to develop additional and alternative sourcing options. Looking ahead, such effects on their businesses may make them more capable, if necessary, of tackling other waves of disruption in the future.
Resilience continues to be the defining feature of technology, media and telecommunications (TMT) companies during the current crisis. Their ongoing investment in technology and human capital — combined with accelerated demand for products and services in certain subsectors — continues to buttress the sector as the recovery unfolds.
Fifteen percent of TMT companies expect to see an increase in revenue and/or profits, ahead of the 11% for all sectors. Having already invested heavily in people and research over the past several years, TMT companies will defer or cancel these investments at a higher rate than all sectors: 62% vs. 48% for workforce and 32% vs. 21% for R&D. They also anticipate fewer furloughs (19%) than all sectors (30%). In line with all sectors, CFOs at TMT companies believe the patterns of increasing work flexibility, resilience, agility and technology investment necessitated by the current crisis will bolster their companies in the long run.
As with all industries, TMT companies are concerned that a new wave of COVID-19 infections, the impact of a global economic downtown and their own financial health in future reporting periods could impede the recovery. Regardless, they plan to double down on products and services — with new, enhanced, repurposed or pared-down offerings (75% vs. 63% for all sectors) to rebuild revenue streams. In fact, over the next 12 months, 44% of technology-related spending at TMT companies will accrue to growth, through such efforts as developing products and services (vs. 32% for all sectors). Concurrently, they also plan to double down on upskilling: 58% are very confident they will build skills for the future, compared to 48% for all sectors.
Keeping employees safe is still top of mind for health industry (HI) finance leaders. HI executives (90%) were more likely than executives from other industries (an average of 81%) to report that they will implement new workplace safety measures and requirements for transition back to on-site work. They were also more likely to say there would be layoffs (33%) versus 24% overall. This may be a reaction to the liquidity crises facing our nation’s hospitals because the pandemic kept consumers from accessing the health system, thereby reducing the volume of services. Prior to the pandemic, many providers had only three to four months of cash and receivables available for operations, according to an analysis of hospital finances by PwC’s Health Research Institute.
HI finance leaders are also looking ahead to a future with a more remote, digitally enabled workforce — a major change for an industry largely built on face-to-face interactions and on-site workforces conducting research, seeing patients and managing operations. While just more than half (54%) of all finance leaders said they would make remote work a permanent option for their employees, 67% of HI leaders said the same thing. A whopping 70% of HI finance leaders plan on improving the remote work experience, compared to 49% of finance executives overall. HI leaders also lead the pack in the desire to accelerate automation and new ways of working. While 44% of all executives in the survey will make this a priority, 57% of HI executives will.
As the health industry plans to bring more of its workforce back on-site, the winning strategy may be bolstered by bringing a better remote working experience and new automations to our nation’s health care workforce. HI finance leaders are more likely than finance leaders in other industries to use technology to help them redesign the experience and potentially better manage staffing uncertainties in challenging financial times. The digitization of the workforce strongly mirrors the changes in how health care is now being delivered. Based on a consumer survey it conducted in early April, PwC’s Health Research Institute estimates that more than 16 million consumers used telehealth for the very first time during the pandemic.
Pharmaceutical and life science companies will also need to lean on technology to conduct the research and clinical trials that fuel drug and vaccine discovery. The ability to conduct clinical trials virtually was attractive to most consumers responding to HRI’s survey. When asked which factors would make them more likely to participate, 62% said the ability to participate from home using telehealth was most influential in increasing the likelihood of participating.
As hints of optimism start to appear, US finance leaders are shifting their focus to growth. But fears of a potential second wave of COVID-19 infections could derail any positive momentum. US CFOs recognize the need for a multifaceted approach to generate revenue in a COVID-19 world. Being agile, having a digital mindset, listening to customers and prioritizing employees and their needs are key to success.
PwC surveyed 330 US CFOs and finance leaders between June 8-11, 2020. Eighty-eight percent of the respondents were from public and private companies in these top five sectors: health industries (9%), consumer markets (13%), financial services (23%), industrial products (23%), and technology, media and telecommunications (20%). Twenty-nine percent of respondents were from Fortune 1000 companies. The PwC CFO Pulse Survey is conducted on a periodic basis to track changing sentiment and priorities. Now in its sixth installment, the inaugural survey was conducted March 9-11, 2020. Sign up to receive regular survey updates.