CFOs to offer competitive salaries despite economic uncertainty

Despite recession fears and ongoing inflation concerns, most CFOs indicate they intend to remain competitive in a historically tight labour market, according to new research.

In a poll by Gartner of 279 CFOs, only 5% of respondents said they plan to reduce compensation spend in their budgets for 2023.

The vast majority of CFOs plan to materially increase spending on employee compensation this year, with 86% planning to raise compensation to spend by at least 3% across their budgets year-over-year.

“Many CFOs are not trying to keep their compensation increases on par with inflation, and they won’t need to as the labour market cools; they also can’t afford to if they want to hit their profitability targets in 2023,” said Alexander Bant, chief of research, in the Gartner Finance practice.

There are several things CFOs can do to ensure wages remain competitive – not only to hire the best candidates but also to retain the best people. CFOs who manage to hold onto their talent will use compensation as an ‘offensive strategy.’

Compensation strategy

To avoid staff asking for a pay rise, CFOs should consider reviewing staff remuneration packages, and if needed – and if able to – should consider raising their wage or extending additional financial perks. This might include paid time off or spot bonuses.

In addition to auditing staff compensation levels as soon as possible, CFOs could also consider putting a formal process in place to ensure these levels will be monitored and adjusted proactively; someone within the HR function who has access to this data may be the most suitable.

Importantly, CFOs will need to keep an eye out for pay compression. The need to pay higher salaries to new staff could result in new hires earning more than existing employees. Even small differences in pay between employees who are performing the same job, regardless of their skills or experience, can turn into staff turnover.

Inflation, competition for in-demand talent and the company’s failure to keep up with current market rates for compensation can all lead to pay compression.

Graduate jobs in focus

Finance graduates in Switzerland are likely to be paid almost twice as much in their first job compared to their UK counterparts, according to new data from EuroJobs.

The average graduate finance job salary in Switzerland is £61,147 (€70,942), compared with £31,613 in the UK, according to new data.

The data was gathered CMC Markets as part of a study into the number of open graduate finance roles.

UK wage growth accelerated more than expected in the three months to December 2022 but remained below inflation, according to data from the Office of National Statistics (ONS).

Growth in average regular pay, excluding bonuses, rose to an annual rate of 6.7% in the final three months of 2022, up from a revised 6.5% in the three months to November.

Significant differences

There was a significant gap between wages offered for graduate roles across Europe. Denmark (£51,711), Norway (£39,332), and Sweden (£38,016) occupied the top spots behind Switzerland.

At the other end of the spectrum, Turkey (£10,816), Romania (£11,090), Hungary (£14,268) and Portugal (£19,689) offer the lowest average salaries for finance graduates.

“CFOs know that two things will make or break their ability to drive growth and profits during, and after, the 2023 recession: their investment in technology and people,” said Bant.

“Many CFOs are still trying to shake off the negative ramifications from talent shortages since 2020, and they know they must invest in their staff to retain them.”

Booming job market

 The Covid-19 pandemic upended the workplace, causing a significant shift in power to the hands of employees, who are no longer shying away from speaking up about what they want.

As a result, the talent market is more competitive than ever – and with the vast number of job roles to fill within the finance sector, CFOs will need to ensure they have a competitive advantage over their business peers.

In the last 30 days, France posted the highest number of graduate finance roles – a total of 114,947. The UK followed with a total of 113,952 finance-related graduate job listings on EuroJobs,

Germany has 66,338 job listings, whilst the Netherlands has 32,352.

Michael Hewson, chief market analyst at CMC Markets, noted entry-level finance jobs allow graduates “the opportunity to learn quickly in a fast-paced environment whilst developing existing skills and growing in confidence.”

“A career in finance will also improve your analytical thinking, decision-making and reporting skills,” he said.

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