Difficult recruitment leads to salary increases
More than half of European CFOs have raised the salary of employees in core functions this quarter, or are planning to do so shortly. The salary increase is necessary because they are struggling to find suitable staff. This is shown in the CFO Survey, conducted for the 78th consecutive quarter. CFO Survey Europe is an initiative of TIAS School for Business and Society (Tilburg) and Duke University North Carolina, USA).
Employment rates are set to grow in the next twelve months, increasing the number of permanent contracts by an average of 4.1%. Outsourcing may even increase by 6.4%. Nearly 85% of European companies say they have vacancies for various core functions. In addition, more than 20% of the surveyed CFOs say that the current situation on the labor market calls for a salary increase.
Despite these positive signs, about 45% of these companies say they face problems hiring suitable candidates. It is, therefore, no surprise that this is one of the main reasons why a third of the companies have raised their salaries and why a quarter of the companies consider it important to raise salaries in line with their competitors.
Investments and operating expenses
The steady increase in economic confidence observed over the past few quarters has flattened somewhat. While the level of optimism among CFOs was at a record high in the last quarter, the average level has fallen again in the present quarter, for the first time in 12 months, from almost 61 to 58 on a scale of 100. Still, there are more optimists among European CFOs than those with a negative view of the economic outlook. In the third quarter of 2015, 42% of financial directors say they are more positive about the economic outlook, while only 22% of CFOs are less confident about the economy.
The European financial directors are also positive about their companies’ prospects. The number of optimists decreased slightly, but the average level of optimism remains high (63.5 on a scale of 100). It is expected that investments in capital goods and operating expenses, including on marketing and technology, will increase (resp. by 6%, 5.5%, and 5%). This indicates that companies are preparing for growth. They expect an 8% growth in sales in the next 12 months.
Business growth will also be realized in the next 12 months through acquisitions. About a third of the companies indicate that they want to make an acquisition. In addition to increased sales, other synergy effects, such as cost savings and product diversification, are also cited as the main motivation. The acquisitions will be largely funded by their own resources (accumulated cash reserves).
Quarterly report Q3, CFO Survey (2015)