A Nightmare in the C-Suite

There is a lot of scary stuff keeping executives awake at night. It may not be a guy with razor nails, but high inflation, scarce talent and supply constraints are enough to give anyone the jitters. Toss in the specter of a recession - almost 70% of the execs we polled are expecting one - and it sounds like the part of the movie when you think the killer is dead but he's RIGHT BEHIND YOU.

It Looks a Little Dark Down There

In the spirit of turning on the lights and NOT going into the basement alone, let's use some good old-fashioned data to illuminate the fears that are keeping your customers up at night.

1. Inflation won't die easily.

Sixty-two percent of CEOs see general price inflation as a long-term issue.[i] While price increases were the go-to response for the majority of CEOs in mid-2022, that strategy may be changing soon.

2. Slashing is on the horizon.

CFOs will increasingly turn to cost cutting if above-average inflation persists. If inflation continues into the fourth quarter of 2022, cost cutting is projected to become the lead strategy for combating inflation-with 39% of CFOs prioritizing cuts. Price increases and greater automation follow behind with approximately a quarter of CFOs planning on those tactics. [ii]

3. Sales and productivity may make it out alive.

IT, Sales and R&D are the most popular recipients of planned budget increases in the next 12 months. Meanwhile, real estate, finance and operations are the most likely targets of future budget cuts.[iii]

4. Employees are on the run.

Forty-nine percent of CEOs agreed that it is very difficult to find and hire necessary talent.[iv] Even scarier, Gartner estimates that leaders can expect an annual turnover rate approximately 20% above pre-pandemic levels for the foreseeable future, due in part to the greater choice granted to employees by remote and hybrid work.[v]

5. The supply chain threat is still lurking.

Forty-eight percent of CFOs believe supply chain volatility and shortages will last beyond 2022.[vi] In light of recent challenges, large-scale supply chain redesign has been a priority for many organizations, but whatever "normal" is…we're not there yet.

We Can Make it Through the Night

OK, so we see the scary guy coming…and we've seen this movie before. Time to prepare. Three focus areas - managing costs, securing talent, and accelerating digital investment - are the running shoes, cell phone, and getaway car that will see you through the night.

Tie on your running shoes.

Managing costs keeps you fast and lean. Even if sales isn't the first target for cost cuts, sales leaders are getting pressure to trim the cost of sales. My colleague Dan Hawkyard recently gave some great advice for using scenario planning to prepare for cost reduction strategies. Keep a steady pace. A consistent, measured approach to cost management - yes, even for the revenue-generating sales function - can help you keep a cool head when the jump scare happens.

Charge up the cell phone.

Secure the talent you need to get you through the night. My colleague Robert Lesser's recent post included invaluable insight on taking action on talent in this environment, where attraction and retention are crucial. Here's another perspective…reconsider your dependency on hard-to-find field sales talent. Can you better focus field sellers on high-value work? Reduce administrative burden? Support them with lower-cost sales roles or digital channels to lighten the load? On a more mercenary front, a downturn also means that talent might be shaking loose and returning to the market. Aggressively source that talent to fill crucial sales and digital talent gaps.

Keep the car running.

It's time to hit the gas on digital investment. Optimal digital investment - supporting the seamless customer experience, predictive analytics and process efficiency - can blunt the negative effects of economic pressures and build long-term competitive advantage. Accelerating the right digital investment will be the difference between organizations that break away from the pack in these early downturn days and those that get left behind. Check out this article for 9 ways to go on the digital offensive.

I don't think any of us are getting out of this unscathed. But that doesn't mean there's no escape. Take action now…pack your go bag, top off the gas tank, and stay well ahead of the scary guy with the axe. Good luck.

For more data and insights (all content is open access):

Adaptive Sales Strategies for a Volatile World

3 Actions CSOs Should Take to Prepare for Growing Economic Headwinds

When Work's a Drag, Deals and Sellers Start to Disappear

Webinar: The Gartner CFO Playbook for Inflation, Recession, and a Tight Labor Market

9 Winning Actions to Take as Recession Threatens

Gartner Survey Shows Significant Rise in Number of CFOs Planning Cost Cuts Due to Inflation

[i]2022 Gartner CEO and Senior Business Executive Survey (n=404).

[ii]CFOs' 2022 Playbook for Enhancing Profitability and Driving Digital Acceleration Webinar (13 May 2022).

[iii]2022 Gartner poll of CFO and finance leaders (n=154).

[iv]2022 Gartner CEO and Senior Business Executive Survey (n=410).

[v]The Gartner CFO Playbook for Inflation, Recession, and a Tight Labor Market Webinar (14 July 2022).

[vi]The Gartner CFO Playbook for Inflation, Recession, and a Tight Labor Market Webinar (14 July 2022).

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