Key Findings

  • According to Deloitte's fourth-quarter survey, the 200 chief financial officers (CFOs) surveyed expect that the salaries and wages their companies will pay over the next 12 months willincrease by 7.3%. The survey was conducted shortly after the U.S. elections in November, and the minimum revenue threshold for participating companies was $1 billion. This salary growth expectation is nearly double the 3.65% increase reported in the previous quarter (Q3). Deloitte is one of the Big Four accounting firms.
  • Additional survey details show that, by industry, the financial services sector expects the highest salary growth at 8.65%, followed by the consumer sector (7.86%), life sciences and healthcare (7.25%), and technology, media, and telecommunications (7.06%). The energy, resources, and industrial sector expects the lowest growth at 5.69%.
  • The report finds that as salary and wage growth expectations rise, CFO confidence in the economy and business environment has surged to its highest level in ten quarters. This optimism may partly stem from the resolution of election results and the Federal Reserve's second rate cut that month, which reduced uncertainty in their outlook. Steve Gallucci, leader of Deloitte's global and U.S. CFO program, said in an interview: "Growth comes at a cost, and increasing headcount and salaries is clearly one of those costs."

Deeper Analysis

The survey results were released last week, at a time when economists and investors are closely monitoring the labor market to gauge interest rate prospects. As previously reported by CFO Dive, U.S. employers in Decemberadded more jobs than expected, leading some forecasts to suggest that the Federal Reserve will keep the current benchmark interest rate unchanged after its planned monetary policy meeting in May.

The report also notes that the outlook for employees and their compensation is not entirely rosy: the survey found that CFOs have already devised plans to control salary costs. Among various measures, "hiring or promoting from within the company" and "linking part of compensation to performance" were tied as the most favored, cited by 49% of CFOs. Other options mentioned include adjusting benefits to shift some costs to employees, outsourcing labor-intensive tasks, hiring more independent contractors, and reducing work hours.

Additionally, the survey results show that although executives appear to be preparing for increased compensation budgets, talent issues—previously a major concern for CFOs earlier last year—have slipped down the list of issues troubling CFOs. In the ranking of internal concerns, "technology deployment" topped the list, cited by 51% of respondents, followed by "lack of agility and resilience" (51%), "efficiency and productivity" (42%), and "talent" (38%).