Four out of five executives believe there will be a recession in the next six months, according to a survey from PwC, amid growing concerns about high inflation, including declining consumer purchasing power and the higher cost of capital, and the Federal Reserve's aggressive interest rate hikes, the latest of which arrived Wednesday.
The PwC Pulse Survey found that 81% of the executives polled anticipate a recession in the next few months, a significant increase from August, when 60% of executives said a recession was likely in the next 12 months. PwC's Pulse Survey found that 81% of 657 U.S. executive polled believe there will be a recession in the next six months. This is a significant increase from August, when 60% of executives believed a recession was likely within the next 12 months. 77% said they are confident that their organization can achieve its near-term growth goals. Kathryn Kaminsky (Vice Chair and U.S. Trust Solutions co-leader at PwC), spoke Wednesday to reporters. They are aware that there is a possibility of a recession and may need to keep their strategic thinking going in order to survive in the face of macroeconomic changes. Although it's obvious that executives aren't going to let up, there is still much to do. It's more than just about driving growth. It's about taking ownership of it and being accountable for how they transform businesses to maximize success, while still keeping the needs of stakeholders in mind. “
PwC building on Park Avenue in New York
“Companies are going to continue to look at different options,” said Neil Dhar, vice chair and consulting solutions co-leader at PwC US. They are slowing down, but they will continue to look at other options. They will have to navigate the noise in today's competitive environment. “
Economic concerns were cited as the top concern by business leaders. 56% indicated they are very concerned, while 34% said they are concerned. Cyberattacks are still a concern, with 52% saying they're very worried. Cybersecurity was also ranked the No. 1 business risk in August. According to PwC's Pulse survey, cybersecurity was ranked as the No. 1 business risk in August. 40% of respondents cited it as a serious threat. Executives who responded to the survey also indicated they're very concerned about the active legislative environment (43%) and increased U.S. political polarization (43%).
Navigating workforce considerations remained a priority for C-suite executives. C-suite executives are reassessing the composition of their workforce in order to achieve cost and growth goals. They also plan to change how they engage with, manage, and hire their workforce to adapt to fundamental changes in the workplace.
A large majority (81%) of the chief HR officers included in the survey indicated that CHROs have at least one tactic for reducing their workforce. In addition to layoffs, those include voluntary retirement, making performance-based cuts, not replacing people who leave and hiring freezes.
“We're also seeing a return to managing out low performers,” said Julia Lamm, global workforce strategy leader at PwC. “Many of our clients told us they stopped doing this during the pandemic. They were having difficulty finding talent outside, so they basically said, ‘OK. Fine, I'll keep my lower performers just because I don’t think I can find any better out there.' These have always been a tool in the CHRO's arsenal, but companies have been so desperate to find talent in a tight labor market that we haven’t seen much focus on them over the past two years. “
Companies are trying balance the expectations of employees and leadership around remote work vs. site work. Nearly two thirds (64%) of executives polled believed their company needed as many employees back on-site (compared to 59% who agreed in August 2020). Although expectations vary by industry and location, 67% of respondents were concerned that the return to on-site work is taking place more slowly than they expected. Companies have a variety of approaches to encouraging people to return to work, such as improving their workspaces and focusing more on connectivity.
PwC surveyed CHROs to find out what they are doing to encourage people back to the office and whether those strategies work. While the vast majority (98%) are using in-office coaching, mentoring, and training opportunities, only 45% of respondents said it is an effective strategy. Only 54% of those surveyed said that they are changing their workspaces to increase productivity. However, 93% said so.