CFO Survey: HR-policy of European businesses outdated?

The optimism amongst European CFO’s has dropped in the fourth quarter of 2014, and faith in the national economy’s prospects has decreased more than faith in own business results. Recruiting and keeping qualified personnel on staff remains a point of concern this quarter. Companies do not take extra measures and board level there is hardly any attention for diversity policy. This is according to the results from the 75th quarterly CFO Survey from TIAS School for Business and Society and Duke University.

The optimism amongst European CFO’s about the national economy’s prospects was no longer sustained in the fourth quarter of 2014, after a strong rise in the third quarter. The average level of optimism dropped from 61 to 53,3 (on a scale of 1-100) and is back at the level of six months earlier. The faith in own business also shows a slight decline and ends at a level of 61,5 on a scale of 100. Economic faith amongst financial directors in the US, however, show a rising trend for the fourth quarter in a row and ends this year at 63,7. It remains to be seen if the optimism in the US is sufficient to give the global economy an extra impulse in the coming year.

Lack of diversity in the board

Three-quarters of the surveyed European business indicates there are no guidelines for increasing diversity in the board. Only 12% claim a specific mix of male and female board members. Although over half of the CFO’s do not see any obstacles in complementing the board with women, female board members are quite unrepresented. On average, over three quarter of the boards consists of men. “The determining factors in the selection of new board members are experience, competencies and skills. Thus, businesses do not appear to differentiate between men and women. It is however typical that approximately 40 percent of European business indicates they are unable to find female candidates with sufficient experience. This could be related to the sector, the personal network or general experience at board level. There is a lot to be won here,” says Kees Koedijk, Dean and Director of TIAS.

The new generation is less loyal to the company

Another group the survey focused on this quarter, are the Millennials: people born after1980. Almost 60% of European CFO’s says their “technology savvy” is the main advantage of this generation. Almost 40% of CFO’s also considers Millennials to be more creative and innovative than older employees. The relatively lower salary costs are also mentioned as a big advantage. On the other hand, 44% of businesses see Millennials being less loyal to the company and over a third says this group often requires more intensive guidance. Another 30% says Millennials are more interested in their own personal development than in that of the company they work for.  

This possibly explains why recruiting and keeping qualified personnel has been a regular point of concern on the strategic agenda of European companies for quite some time. Although the future generation of employees possesses qualities that are invaluable for the organization of the future, almost half of the CFO’s says they do not take particular measures to attract these young people. For example, at present, only 20% has loosened work hours or offers extra training and education. Less than 2% has taken the measures that are so attractive to this generation, such as a shorter work week or flexible working hours.

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Quarterly report Q4 2014, CFO Survey(2014)