A slight majority of 53 percent of senior finance executives plan to increase headcount over the next 12 months, with a focus on acquiring specialized skills and expertise, according to a new survey.
The survey of 541 senior finance executives at large global companies by American Express and CFO Research Services, also found that they are setting a higher bar for their own companies’ growth. Three in five (60 percent) have set more aggressive growth targets compared with 2011.
While a quarter of the survey respondents report that they are “very confident” that their companies will meet their growth targets in 2012, most respondents are only “somewhat confident” that their companies will meet their targets (56 percent), while 16 percent are “not very confident” in their companies’ ability to meet their targets.
Many respondents believe their companies are dealing well with an unpredictable economic environment—and may even gain an advantage from it. Senior finance executives plan to focus on investments for long-term growth. Fifty percent aim to increase market access by investing more in sales and marketing activity.
Seventy-four percent of the senior finance executives polled said they are likely to use their company’s cash to fund ongoing operations. Other frequently cited cash destinations include activities focused on energizing growth, such as expanded operations and headcount (70 percent), increased capital spending (69 percent), increased research and development (68 percent), and mergers and acquisitions (66 percent).
U.S. respondents are even more willing than their peers working elsewhere to dip into their cash stockpiles, at 52 percent. Nearly two-thirds of the U.S. finance executives surveyed (63 percent) are likely to use these funds for M&A activity — topping their list of eventual destinations for their cash reserves.
With improving economic conditions, a majority of finance executives worldwide (53 percent) plan to increase headcount over the next 12 months. Fewer than one in three (30 percent) plan to reduce jobs.In the U.S., the hiring picture is slightly more positive compared with other participating countries, with 56 percent of respondents planning to add jobs and just 22 percent planning to cut positions.
A majority of companies that are hiring will be looking to acquire specialized skills, expertise or experience (53 percent). This motivation for hiring comes in well ahead of “adding jobs in order to expand production capacity” (20 percent) or “restoring capabilities that were reduced in recent years” (17 percent).
“Finance executives are looking for ways to stimulate growth, in part by deploying some of the cash that has built up on corporate balance sheets in recent years,” said American Express senior vice president of global corporate payments Janey Whiteside in a statement. “Finance executives also report they’ll be keeping a sharp eye on the bottom line, while spending selectively on activities that will drive revenue like sales and marketing and new product development.”
Economic Growth Expectations
When asked about their expectations for growth in the overall economy, 64 percent of the senior finance executives surveyed expect to see modest to substantial expansion over the next 12 months, but that’s lower than in 2011 and 2010 (when 75 percent and 71 percent of all respondents anticipated economic expansion, respectively).
Worldwide, the outlook for economic expansion among the countries covered by the study was brightest in India at 86 percent, followed by the U.S. at 78%, Germany at 74 percent, Mexico at 73 percent, Argentina at 70 percent, Australia at 69 percent, and Canada at 67 percent.
Nearly half of the survey respondents (46 percent) believe “robust” economic growth will return in their countries by the end of 2012.
In terms of when the global economy will gain greater strength, nearly half of the world’s finance executives (46 percent) believe that “robust” economic growth will return in their countries by the end of 2012.
Countries where finance executives are most bullish include Hong Kong, where 83 percent of respondents expect their local economy to return to robust growth by the fourth quarter of 2012, followed by Mexico (77 percent), and Germany (66 percent).
Respondents in the U.S. and the U.K. report a more extended growth horizon. Seventy-five percent of U.S. finance executives and 58 percent of U.K. finance executives see robust growth returning at some point after the close of 2012.
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