With a potential economic slowdown looming, the latest results from our first McKinsey CFO Pulse survey1 show that CFOs have sharpened their focus this year on managing the inflation that has stifled economic growth around the world. Supply chain disruptions and interest rate hikes also have commanded their attention, leaving financial leaders less time to focus on building capabilities and organizational growth. Separately, financial officers appear to set priorities that are somewhat different from those of their organizations, especially when it comes to strategic planning and cash management.
The COVID-19 pandemic’s impacts still dominate the landscape
Financial leaders say the biggest risks to future growth are centered around a trio of concerns that rattled markets during the COVID-19 pandemic: rising interest rates, inflation, and supply chain disruptions (Exhibit 1).
According to the survey results, 46 percent of respondents say rising interest rates pose the biggest potential risk to their company’s growth over the next 12 months.2 Thirty-two percent say the same for inflation, and 26 percent cite supply chain disruptions as the top risk.
Only 12 percent of respondents say the pandemic itself is as prominent of a risk to company growth. And around one in ten say they are similarly concerned about unemployment, social unrest, or weak demand. The respondents’ top priorities are similar to those seen in recent McKinsey surveys of general business executives, indicating that financial leaders are somewhat aligned with other leaders when it comes to their top concerns.
Financial officers’ priorities have shifted accordingly
As CFOs focus on pricing, interest rates, and inflation, they appear to be spending less time on long-term strategic goals (Exhibit 2). Results from a similar McKinsey survey in 2021 showed that financial leaders were engaged more often with the setting of corporate strategy, large-scale transformation, and M&A than they have been in the past 12 months.
Financial leaders and companies have some differing views on priorities
In some cases, surveyed financial leaders say they prioritize goals differently from the way their organizations do (Exhibit 3). Respondents report that while their organizations prioritize strategic planning, for example, they are personally more concerned with improving the management of financial risk, liquidity, and resource allocation.
The results suggest that many CFOs are prioritizing the areas that they can affect directly. While proper strategic planning is important for the entire organization to manage uncertainty, financial leaders may not see it as a top priority as they very often don’t solely lead that process. As for the misalignment on budgeting and forecasting, CFOs may view them as areas that are well under control and don’t need as much of their focus.