Research Reveals CFOs Are Prioritizing Cost Cutting As Recession Fears Loom

New data reveals that an overwhelming majority of CFOs are cost-cutting amid rising inflation and recession concerns. 

Senior financial executives are expecting the economy to enter into recession in the next 12 months and have begun cutting costs in preparation, according to new research1 from IWG, the world’s largest flexible workspace operator. 

The study, conducted among 250 CFOs, found that 91% believe an economic crisis is inevitable, with more than a third (36%) of these predicting a recession this year. As a result, nearly all (97%) have started implementing, or planning to implement, cost cutting measures. Facility spend is a key target for businesses, with two-thirds (65%) of CFOs targeting a reduction of more than 10% per year. 

Hybrid working is viewed as a key way of achieving saving targets, with 82% of CFOs saying it’s a more affordable business model as demand for office space remains high. On a similar note, a recent US survey by workplace software provider Robin, found that 83% of executives said they expect hybrid work to be a cost saver, while 60% said they plan to reduce office space by 50% or more. 

Companies have long used office space inefficiently, but the proliferation of hybrid and remote work has them re-evaluating these expenses. In fact, among Fortune 500 CEOs, 74% said they plan to reduce office space.

IWG’s latest usage data shows that office usage across the US saw double-digit growth since the start of the year, as firms such as Goldman Sachs and HSBC ask employees to come back into the office for at least a couple of days a week2. 

CFOs surveyed confirm this trend, with half (50%) of businesses saying they have already opted for short-term leases or shared workspaces, giving them flexibility to quickly scale up or down depending on budgets, without being locked into lengthy contracts. 

Research3 shows that on average, hybrid working can save organizations an average more than $11,000 per employee, explaining why two-fifths (39%) of CFOs are considering moving to exclusively shared spaces.

Global enterprise tech company Cisco went hybrid five years ago, cutting 50% of its real estate footprint and saving the company around $500 million.

But it’s not just the financial savings driving the changes. More than half (53%) say they believe their workforce prefer a hybrid working model, and 87% agree that it is more affordable for employees at a time when the cost of living is rising. Data4 suggests that hybrid working can save employees up to $377 a month on train travel and up to $147 a month if they commute by car. 

Personnel cuts are also being relied on to reduce staffing costs in light of economic pressures, with more than two-fifths (44%) of CFOs introducing forced redundancies and others looking at reviewing current staff salary bands (28%) and reducing the number of promotions (27%). CFOs are also limiting the onboarding of new staff members, with more than a third (36%) reducing new hires and a similar number delaying new hires (33%).

IWG has committed to opening 1,000 new spaces in the next year to cater to the increasing demand for hybrid working, with the majority set to open in rural and suburban locations as it sees enquires for locations outside of city centers rise by 36% since January this year. Research5 shows that a resounding 77% of employees say an office close to home is a must-have for their next job.

IWG Founder and CEO Mark Dixon commented: “Hybrid working helps businesses stay competitive and resilient, especially in times of economic uncertainty. With economic pressures mounting, research shows that CFOs and business leaders are adopting hybrid working for many reasons. Not only does it support the work-life balance and well-being of their teams, but it provides a meaningful boost to a company’s bottom line. Independent studies have shown that businesses can save more than $11,000 per employee working in the hybrid model”.

Notes to Editors: 

1 Research conducted by Censuswide among 250 UK CFOs in an online survey from 30th June 2022 to 4th July 2022 

2 https://www.ft.com/content/32f1fc7f-202e-457c-9849-4b86aafb8bba 

3 Global Workplace Analytic

4 Confused.com research, February 2021

5 IWG, WILL EMPLOYEES RETURN TO THE OFFICE FIVE DAYS A WEEK?