CEO's Cutting Payrolls

Business Roundtable released its second quarter economic outlook survey. According to the survey, sales and investment plans are holding steady but 31 percent of the CEOs polled plan on cutting their payrolls.

Focal Points:

• The Business Roundtable's latest economic survey of 110 CEOs of leading U.S. corporations reveals the executives expect sales and capital expenditures to either increase or remain unchanged over the next six months. The association's economic outlook index declined slightly, showing CEOs have tempered their overall expectations against a backdrop of continued housing declines and mounting energy prices. Nonetheless, CEOs remain cautiously optimistic about their sales and spending projections. These results conform to expectations from the Federal Reserve and other economists think the fragile economy will strengthen later this year and into next year.
• Only nine percent of CEOs look for sales to drop while 68 percent expect improved sales over then next six months. 23 percent see no change. On the capital expenditure side 15 percent plan on cutting capital purchases while 33 percent plan on spending more. 52 percent intend on leaving their spending plans as is.
• Nevertheless, CEOs are showing greater caution when it comes to employment. 31 percent of the CEOs expect to cut payroll while only 28 percent plan on increasing it. 42 percent see no change. In the April survey the percent of CEOs expecting to cut payroll sat at 22 percent. As in the past, many CEOs will not ramp up hiring until they are sure the economy is really back on a firm footing.

Experton Group believes resource and training plans should be reevaluated and folded into the fall plans or 2009 budgets to ensure they have the optimum resources and skills available for the upcoming year. Given the feelings in the executive suite, it is likely IT staffing levels will change little or shrink over the next six to 12 months. Additionally, Experton Group has noted a tendency of IT executives to address staffing on a near-term tactical basis, which exposed them to unplanned departures and left them with the wrong resource mix to apply to their upcoming initiatives. IT executives should validate their resourcing, succession, and training plans (including contingent workforce and outsourcers) to ensure they will have the resources required to meet business objectives and requirements over the next three years.