A roaring recovery for emerging and middle market enterprises is in process, backed by increasing investments in talent and technology. 2021 MID-YEAR UPDATE TO CFO-CHRO SENTIMENT STUDY July 2021
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TABLE OF CONTENTS
5
INTRODUCTION
11
STRATEGY
14
PEOPLE AND CULTURE
19
TECHNOLOGY
22
RISK
25
CONCLUSION
26
ABOUT THE SURVEY
3
Buoyed by strong performance and even stronger optimism, mid- market CFOs and CHROs are focusing their efforts on building capabilities and cultures to sustain high performance for the second half of 2021 and beyond.
INTRODUCTION CFOs and CHROs reveal increasing optimism for the recovery From June 15-July 9, 2021, AchieveNEXT surveyed a cross-section of U.S.-based emerging and mid- market Chief Financial Officers and Chief Human Resources Officers about their enterprises’ current and projected financial outlook, with particular focus on business strategy, people, technology, and risk. The survey revealed the depth and breadth of an extraordinary recovery. The results of 2021 to date have more than borne out predictions at the beginning of the year. At that time 72% of respondents in the AchieveNEXT Annual Sentiment Study said they expected higher revenues and 62% higher EBITDA. At the year’s midpoint, CFOs and CHROs expect to exceed those targets slightly, but—remarkably—more than half now predict revenues will increase more than 10%. Indeed, 18% say that as of June 2021 they are already running at least 10% ahead of the plans they made at the beginning of the year, while an even higher number, 22%, say EBITDA is more than 10% ahead of plan. No wonder 80% of respondents feel bullish about their enterprise’s prospects, and only 3% bearish.
Revenue Growth in 2021
July 2021 - 50%+ are predicting additional double digit growth for the remainder of 2021.
January 2021 - 72% committed to optimistic revenue growth
2021
5
Economic confidence has soared alongside enterprise growth. Just six months ago, 52% of middle market and emerging enterprise leaders told us they thought the U.S. economy was weak or extremely weak. Today, 64% say it is strong or extremely strong. Rather than fretting over whether their customers will pay their bills—a top concern a year ago—executives worry most about where to find the talent to sustain and drive their growth. One result of this rising confidence and the accompanying demand for talent: More than ever, finance and HR leaders are on the same page, needing to work shoulder to shoulder to create the conditions under which their enterprises can thrive. Productivity and culture; diversity and compliance; financial planning and workforce optimization; flexible working arrangements and risk management: These issues are not in conflict with each other. Instead, they create greater opportunities for finance and HR to work together to pull the levers of growth.
“The pandemic was a stress test for middle market and emerging business. Growth is a stress test, too—but of a much better kind. It is an historic opportunity for the stewards of human capital and financial capital to transform their enterprises.”
Nick Araco, AchieveNEXT CEO
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Survey participant demographic data • More than 200 finance and HR leaders from across North America participated in the survey. • 55% of the respondents were C-suite leaders in private or closely-held U.S. enterprises. 23% of the respondents were in venture-capital or private-equity-backed enterprises. 11% were in public companies and 9% were in not-for- profit enterprises. 7% were woman- or minority- owned businesses. • More than 64% of the respondents were in enterprises with annual revenues between $10MM and $250MM. • About 70% of the respondents have more than 50 employees, with 24% reporting more than 250 employees, and 10% more than 1,500 employees. • Top industries included: Business and Professional Services; Not-For-Profit; Health Care, Pharmaceuticals, and Biotech; Financial Services; Technology, Software and SaaS; Manufacturing and Wholesale Distribution; Transportation, Logistics and Warehousing; Construction; and Real Estate.
7
U.S. Emerging and Mid-Market Enterprises: A Macro-economic Overview
Responding to the rollout of COVID-19 vaccines, the opening of businesses and schools, rising demand, and government stimulus checks, middle market enterprises in the United States are booking good numbers and foreseeing continued strong gains at least through the end of 2021. Confidence in national and regional economies has surged — and CFOs and CHROs are even more confident in their industries, their markets, and their own enterprises. In fact, confidence rises in direct proportion to executives’ direct knowledge: highest for enterprise, next for industry, next for local economy, next for national, and lowest for global.
Economic Confidence
Low (1-2)
Average (3)
HIgh (4)
Very High (5)
Global Economy
17.4
52.3
28.1
2.3
U.S. Economy
6.7
29.2
55.1
9.0
Local/Metro Economy
6.1
25.3
56.7
11.8
Industry
3.9
20.8
44.4
30.9
Enterprise
2.8
16.3
48.9
32.0
These numbers are a stark contrast from the situation just six months ago. In January, 14% expressed very strong confidence in their industry, less than 1% said the U.S. economy was very strong, and almost no one—one-half of one percent—had much confidence in the global economy.
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“Recovery from the pandemic has been robust and vibrant for many members. It has tested and rewarded enterprises that have sound strategy, strong talent management, and enterprise-wide commitments to innovation, resilience, and agility.”
Greg Wood, AchieveNEXT Managing Director, Member Engagement and Networks
Middle market CFOs and CHROs express relatively little concern that government policies could derail the economic progress they are experiencing. By and large, they believe that government investment and spending will have a positive effect; 45% say so, 35% say the impact will be neutral, and 20% say it will be negative. Those numbers are more or less reversed for regulatory policy. A quarter say government regulations will positively affect their business, a third say the effect will be neutral, and about four in ten say regulations will have a negative impact. A slim majority (52%) say government tax policy will have a negative effect on them. About two thirds say that trade and immigration policy will have no effect on their business. Middle market executives see a huge positive value in a third big macroeconomic factor— technology and innovation. More than 78% expect a positive impact from technology, with only a handful, 5%, seeing a negative impact. Many of the political and social factors that weighed heavily on the middle market a year ago have lifted. Thirty-one percent say that the continuing impact of COVID-19 is one of their top three concerns, and the rising number of cases among the unvaccinated and the stubborn persistence of vaccine “hesitancy” may keep COVID fears high. Political uncertainty and social issues also make the list of biggest concerns. These are not insignificant challenges, but all three rank below acquiring and retaining talent and managing prices and costs.
9
Which of these do you consider to be the biggest source of economic concern for your enterprise? (pick no more than three)
57.58%
Acqui sition to and retention of talent
46.46%
Inflation and costs
30.81%
Continuing impact of Covid-19
28.28%
Overall demand
15.66% 16.16%
Global economic issues
Poli tical uncertainty/confli ct
10.61%
Other
7.58%
Social issues/unrest
0% 10% 20% 30% 40% 50% 60% 70%
“It’s positive to see microeconomic issues like talent, costs, and customers back at the top of CFOs’ and CHROs’ agendas. When executives are focused on their business, that’s a sign that they feel the climate is good overall.”
Thomas A. Stewart, AchieveNEXT Chief Knowledge Officer
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STRATEGY
Growth is the #1 strategic priority for middle market and emerging enterprises, cited as such by 54% of the CFOs and CHROs in the AchieveNEXT 2021 Sentiment Study Mid-Year Update. A pair of profitability-oriented priorities were cited by 25% of respondents, with 14% saying that improving gross margins was top priority and 11% citing increasing EBITDA. But for most, growth rules — and they are experiencing it and see more coming.
How will they grow in the 2nd of 2021?
In sync with the 2021 CFO-CHRO Sentiment Report released in late January 2021, the majority of finance and HR leaders say that their enterprises’ 2021 strategies will not be substantially different from those they had in place pre-pandemic. However, the initiatives and tactics used to achieve strategic objectives are changing. Finding the right talent has become the #1 strategic priority for the middle market, far more urgent than anything else. Next in importance comes a one-two punch of initiatives to increase efficiency and investments in sales and marketing talent. As AchieveNEXT Managing Director Ed Wallace wrote in Harvard Business Review , “If ever there was a perfect time to reduce the friction between the CFO and sales leader, it’s now.” The third-order tranche of strategic initiatives comprises M&A, entering new markets, and strengthening financial planning and analysis.
On a scale of 1 to 5, with 5 being the highest priority for your enterprise for the balance of 2021, rank the following actions you are undertaking for the remainder of 2021.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Expanding into new markets
Upgrading digital capabilities
Improving our leadershi p team
Strengthening enterprise resilience
Investing in new plant and equipment
Identifying inorganic growth opportunities
Improving data analyt ics and financial planning and analysis
Increasing efficiency
Upgrading sales and marketing talent
Addressing talent issues (e.g. engagement,
hiring and retention,
getting back to office, culture, diversity)
1 2 3 4 5 3 Moderate Importance
1 Lowest Importance
2 Low Importance
4 High Importance
5 Highest Importance
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When it comes to organic growth, most place equal emphasis on increasing sales to existing customers, entering new markets, and introducing new products and services. Each gets about 22% of mindshare. In all three growth areas, M&A will play a significant role, with a quarter of companies saying they will continue to attempt to do deals to drive short and long-term growth; there is evidence of increasing interest in buying and selling, in part because many deals were put on hold last year. A significant number of CFOs, 21%, say that identifying inorganic growth opportunities is their highest priority for the balance of the year.
CFOs appear to be holding the line on traditional capital expenditures, preferring to put their money into talent, market growth, and increasing productivity out of existing assets, including digital technologies.
Growth is back, and so are profits!
As 2021 began, we noted that companies were more likely to forecast growth in revenue than in EBITDA. They are holding to that prediction at midyear. What’s different is not how many, but how fast. Now 43% expect to end the year with EBITDA up more than 10% from last year. That suggests that companies are capturing economies of scale that might have eluded them as the recovery began. As we will see, rising labor costs, while a concern, appear not to have held down profitability, at least not so far.
Financing, Credit and the Capital Markets
From a financing, credit, and capital markets standpoint, the majority of finance leaders surveyed continue to expect rates to stay low and access to capital will continue to be fluid. Additionally, there continues to be little worry about bad debt —95% of the participants say they are confident or very confident that their bills will be paid, a big turnaround from Summer 2020, when 62% worried about their getting paid. There is also a significant opportunity for companies to increase the availability of capital—and drive EBITDA growth—through a coordinated set of initiatives to free up working capital currently tied up in inventory or receivables, an initiative described in detail by AchieveNEXT CEO Nick Araco, Jr., and Steven Higgins, Managing Director of Delancy Street Partners, in an article in Harvard Business Review .
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M&A opportunities continue in the middle market.
While more than 25% of middle market CFOs said that mergers, acquisitions, and divestitures would be a core component of their 2021 growth strategy when we released the 2021 CFO- CHRO Sentiment Report in late January 2021, uncertainty led to cautious optimism. Now, with an increasing number of middle market enterprises continuing to explore acquisitions, divestitures and other transactions, deal activity in the second half of 2021 is expected to remain strong and is top of mind for many CFOs. While the pace of recovery has varied among companies and sectors, and some have faced fundamental changes as a result of the health crisis, US deal volume and value overall are up from 2020, according to a PwC analysis of Refinitiv data. And based on the pulse survey data captured from our CFO Alliance Members in Q1 and Q2 2021, we expect that 2021 middle market deal volume will outpace last year’s. Even as private and public company valuations remain high and a seller’s market continues, demand for high-quality companies, plentiful capital, and the increasing willingness of some owners to sell are accelerating deals that were thought to be years away.
17 3
PEOPLE AND CULTURE
Middle market and emerging enterprise leaders express signficant confidence in the quality of the people who work for their companies, with at least 60% expressing high or very high confidence in their companies’ leadership team, management ranks, and operating workforce. Only a handful— fewer than 8%--say that their talent is poor or very poor.
On a scale of 1 to 5, with 5 being the highest level of confidence, how confident are you in the following for the balance of the year:
Your middle management team
Your leadership team
1.62% 2.16%
6.49%
11.35%
14.59%
34.59%
28.65%
53.51%
47.03%
Your current workforce
1 2 3 4 5
1 2 3 4 5
8.11%
12.43%
31.35%
48.11%
1 2 3 4 5 3 Moderate Confidence
1 Lowest Confidence
2 Low Confidence
4 High Confidence
5 Highest Confidence
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“Middle-market companies stand to benefit enormously from leadership development programs, and not employing them can cost them dearly. Designing and delivering a fit-for-purpose program doesn’t need to be out of reach.”
Milton Corsey, AchieveNEXT Director of Human Capital Solutions, in Harvard Business Review
This positive assessment of talent is true across the board and up and down the hierarchy, but leaders express special admiration for the face in the mirror: 35% give their leadership team the highest rating, a 5 on a five-point scale—about three times more than the number who would give an A to their managers and workers. CFOs and CHROs show almost no difference in their assessment of the quality of top- management. However, HR leaders are slightly less enthusiastic than their finance colleagues about the capabilities of middle management and the workforce. While finance and human-resource leaders are happy with the talent they have, they are deeply concerned that they don’t have enough of it or will be unable to keep the people they want and need. Teams are expanding — and expanding quickly. Thirty-eight percent say they expect their workforce to have increased by more than 10% by the end of 2021, and another 34% forecast a 3-10% headcount increase. No wonder, therefore, that nearly three in five (57%) say that “finding the talent we need” is an extremely high concern, ranking five on a five-point scale. Another 27% ranking it a 4. Almost none — only 4% — say finding talent is a minor or nonexistent concern. Since it’s easier to fill a bucket if it’s not leaking, retaining talent is almost as great an issue, ticking the top box for 37% and the next level for 34%.
Wages may be rising, but executives place much higher priority on their investments in training and leadership development than in managing pay and benefits costs.
15
Improving the employee value proposition.
Two headline-grabbing issues ranked lower on the list of concerns and priorities for executives. Managing a post-lockdown return to the workplace (including the question of “hybrid” at-work and remote workplace design) was a top-level concern for only 14% of respondents. And, though mid-2021 newspaper headlines have focused on rising wages, the cost of talent is in fact the least of the concerns of the CFOs and CHROs we spoke to. Out of 11 talent issues, the two cost issues — health/benefit expense and payroll expense — came in 9th and 11th.
Please rank each of the following Human Capital Management concerns with 5 being of the highest concern:
4.40 Average Rating
Addressing Diversity equity and inclusion issues and oppor tunities Managing payroll expense Managing health care/employee benefit costs Managing a return to the workplace/hybrid workforce Measuring and improving employee productivity Strengthening topmanagement capabilities Buildi ng a leadership pipeline / leadership development Training and developing workforce skills Moti vating, engaging, and challenging employees Retaini ng talent Finding the talent we need
4.03 3.78 3.69 3.64 3.63 3.53 3.09 3.07 2.98 2.95
1 Lowest Concern
2 Low Concern
3 Moderate Concern
4 High Concern
5 Highest Concern
1 2 3 4 5
Instead, mid-market and emerging enterprise leaders placed much more emphasis on a series of activities that would improve the quality of talent: motivating and challenging employees, improving top management capabilities, workforce training and development, and building a leadership pipeline. Each of these initiatives (along with diversity, equity, and inclusion) offered as a top or near-top issue by nearly a third of respondents, can have a significant positive impact on the employee value proposition. That means they are practical measures companies can take to proactively address their worries about being able to attract and retain people as their companies grow and the economy booms.
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“The CHRO’s agenda has never been more daunting than it is in 2021. The agenda is particularly difficult for CHROs of midsize and emerging enterprises, which typically must meet big-company tests with small-company resources.”
Robyn Pollack, Executive Managing Director at AchieveNEXT and Dina Prrreault, Vice President, Human Resources at The Faulkner Automotive Group and member of the AchieveNEXT Global Advisory Board in Harvard Business Review
Making the business case for culture change
In addition to direct investment in hiring, developing, and training, the middle market is looking hard at company culture, with a strong focus on making culture changes that have a direct line to performance improvement. Empowering and energizing employees at all levels is the #1 culture issue faced by middle market companies. It’s followed closely by a related issue: closing the trust gap between top leadership and the full workforce. Not far behind: improving the strategy/culture alignment and—surprisingly and interestingly—improving knowledge sharing and eliminating organizational silos.
Thinking about improving your company culture, please rank the importance of each of the following on a scale of 1 to 5, with 5 being the most important.
3.86 Average Rating
Empowering and energizing employees at all level s
Improving communication and trust between top leadershi p and the rest of the enterprise
3.82
3.78
Better ali gni ng culture and strategy
3.75 3.35
Improving knowledge sharing/eliminating silos
Addressing issues and opportunities with diver sity, equity and inclusion Better ali gni ng employee exper ience and customer experience
2.85
1 2 3 4 5 3 Moderate Importance
1 Lowest Importance
2 Low Importance
4 High Importance
5 Highest Importance
17
Sales culture and capabilities will make or break revenue goals and expectations
COVID lockdowns and restrictions had an enormous direct impact on sales teams and selling techniques. Most enterprises say that their sales forces have adapted well to the new environment, but a substantial minority — 44% — are not satisfied by how well equipped their sales teams are to build relationships and sell in the new environment and channels due to changes caused by technology and the pandemic. In an earlier benchmarking study, AchieveNEXT and Amerisure found that sales representatives say they can cope well with managing existing relationships, but fare less well in expanding those relationships or establishing new ones. As more and more companies sell solutions as well as products and services, building relational capital will become an ever-more-important part of the capability set of sales teams and all customer-facing employees.
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TECHNOLOGY
Analytics, automation and security are driving increases in technology spend by the middle market.
Most middle market and emerging enterprises — three out of five — view technology as an enabler, optimizer, and cost-saver. That is, they are fast followers who tend to buy and deploy proven technologies to improve existing operations. Another 15% are digitally advanced and use technology to outpace rivals by making faster, smarter decisions; about the same number use just enough technology to keep up. One out of ten works on the cutting edge , creating new and disruptive business models.
9.19%
14.59%
When you think about technology, is your strategy primarily:
9.19%
14.59%
15.14%
15.14%
61.08% 61.08%
to keep up with best practices in our industry to optimize processes, improve operations, reduce costs, and increase productivity to gain a competitive advantage by making faster, better decisions about talent and customers to develop and deploy new, transformational, and disruptive business models to keep up with best practices in our industry to optimize processes, improve operations, reduce costs, and increase productivity to gain a competitive advantage by making fast r, better decisions about talent and customers to develop and deploy new, transformational, and disruptive business models
Each of these groups has a different investment appetite for IT and a different level of sophistication in the uses to which it is put. Given the fact that a majority follow a strategy of optimization and productivity, it is not surprising that upgrading and integrating IT systems are the #1 and #2 digital priorities of the middle market, rather than making substantial investments in transformational technologies. Sixty-five percent are very or extremely confident that they have the right tech stacks to manage their businesses
This philosophy — do it better, faster, cheaper — holds true in priorities for the use of technology as well as in spending. Analytics and AI, financial planning and analysis, automation, and security are top priorities.
19
Analytics
The events of the past 18 months have certainly brought the need for continued evaluation of non- financial drivers of growth and profitability into sharper focus. Finance and HR leaders need the technology and tools to collect, analyze and deploy internal and external data for real-time use in decision-making across the enterprise. In our conversations with mid-market CFOs and CHROs across North America, we found an increasing number of leaders undertaking projects to bring integrated financial planning, performance reporting, and forecasting across their enterprises.
Financial Planning and Analysis
FP&A is a critical capability for CFOs needing to get a more sophisticated understanding of the sources and uses of capital, more granular data about sales, better use of working capital, and insight into efficiency and productivity. With small finance teams, middle market and emerging enterprises increasingly rely on sophisticated IT and service providers to deliver FP&A. Consequently, 37% say they expect to implement initiatives to enhance FP&A this year, and this is cited as a top-level priority by 21% of CFOs. Automation In addition to tools finance leaders can use to query data without the need to build complex models, an increasing number of finance leaders are using extensive automation to help them focus on the high-value decision-making aspects of their job. Security Concerns around data security, financial processes, and financial statement accuracy have increased during the past 18 months, and headlines have underscored what middle market and emerging enterprise leaders knew or should have known: No company is too small to be a target for ransomware or other cyber attacks. Just 18% of survey respondents say their enterprises have fallen victim to a cybersecurity attack, a number that is almost certainly low. (The saying is that there are two kinds of companies: those that know they have been hacked and those that don’t.) Investments in VPN, mobile device management, endpoint security, identity-based network architecture and cloud-based disaster recovery solutions have increased. We expect this growing trend to continue throughout the remainder of 2021 and beyond.
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Within the last year, has your enterprise:
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
22.70%
41.62%
44.86%
48.11%
81.62%
77.30%
58.38%
55.14%
51.89%
18.38%
Experienced a cyber attack (that you know about)?
Reviewed and updated cybersecurity plans, pol icies, and procedures?
Invested significantly in technology to upgrade security?
Moved significant operations to the cloud?
Delivered cybersecurity trai ning to your workforce?
Yes No
21
RISK
Cybersecurity is far from the only risk that CFOs and CHROs are tracking and managing . There are three main elements in the risk picture these leaders see: macroeconomic and political risk factors; risks to supply, demand, and the business ecosystem; and company specific risks in operations, people, and compliance. Macroeconomic and political risks start with COVID-19. The pandemic’s effects are muted as of Summer 2021 but which, if vaccination rates flag or resistant and aggressive variants emerge, could again disrupt operations, travel, workplaces, and schools. Three out of ten middle market leaders put Covid on their list of gravest economic worries. There are also numerous more-traditional economic risks. One is that strong demand could ignite systemic inflation, beyond the price spurts of the spring and early summer; indeed, 47% of CFOs cite costs and prices as one of their top three economic concerns. But the reverse could also occur: A phasing out of the government stimulus payments that caused demand to fall, weakening the recovery. Tax and regulatory policies always pose a certain amount of risk, as noted earlier. Finance executives from mid-market multinational companies are still trying to assess the potential implications of a global minimum tax for their businesses, with many of them skeptical whether the plan will come to fruition anytime soon. In July 2021, the U.S. won international support for a global minimum corporate tax, which stipulates that companies based in the 130 participating countries pay a tax rate of at least 15% in the jurisdictions in which they operate. Led by the Organization for Economic Cooperation and Development, those countries want to make it harder for businesses to reduce their tax dues by shifting their profits and operations to low-tax jurisdictions. On the other hand (the taxman always has two hands), a global minimum tax might benefit smaller, non-globalized companies by leveling the playing field in their competition with larger rivals. Many business ecosystem risks were newly exposed by the pandemic, as companies of all sizes discovered that their supply and distribution networks were more vulnerable than they had known. When it comes to supply chains, only 42% of companies express strong or very strong confidence (the top two boxes of a five-point scale), and just 55% have similar strong confidence in their distribution. (By contrast, 75% have high confidence in their own operations.)
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When it comes to supply chains, only 42% of companies express strong or very strong confidence in their supply chains and just 55% have similar
55%
strong confidence in their distribution 42%
On a scale of 1 to 5, with 5 being the most confident, how confident are you in the resilience of your:
100%
11.89%
12.43%
18.92%
90%
80%
29.19%
70%
42.16%
60%
54.59%
50%
40%
45.41%
30%
40.00%
20%
20.00%
10%
11.35%
0.5…
2.16%
5.41%
1.08%
4.86%
0%
Supply chain
Operations
Distribution networks
1 2 3 4 5
1 Lowest Confidence
2 Low Confidence
3 Moderate Confidence
4 High Confidence
5 Highest Confidence
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Investing in Human Capital
Increased marketing ROI
Company-specific risks are under better control, CFOs and CHROs assert. Seventy-five percent express confidence in their own operations compared to 42% for suppliers and 55% for distributors. Furthermore, 68% of middle market leaders say their company has a business continuity plan, and all but 5% of those say the plan has been updated within the past year. Certain human capital risks appear to be tightly managed, too: 75% express high confidence in their enterprises’ ability to manage the human capital risks of compliance, discrimination, and the like--the same degree of confidence as they display about their operations.
2.70%
On a scale of 1 to 5, with 5 being the most confident, how confident are you that your current workforce policies, procedures, and culture are effective in limiting workplace harassment, discrimination bias and potential litigation (such as age, race, gender, ethnicity, sexual orientation, etc.)?
22.70%
21.08%
53.51%
1 Lowest Confidence
2 Low Confidence
3 Moderate Confidence
1 2 3 4 5 4 High Confidence
5 Highest Confidence
There is, however, a larger set of human-capital risks, having to do with finding and retaining talent at an affordable price. Those (as we saw above) are less under control. Additionally, many middle market enterprises cite diversity, equity, and inclusion as a significant management challenge and note that the failure to address DEI is not just an exposure to discrimination claims, but puts their talent pool, customer base, and, in some cases, investor base at risk. Dealing with these varied but interconnected risks requires more than a shotgun set of efforts to mitigate or insure against hazard. In the past, a comprehensive enterprise risk strategy was the province only of large global enterprises, but nearly three out of five middle market leaders now have a comprehensive enterprise risk strategy, according to the survey.
Do you have a comprehensive risk management strategy?
41.62%
58.38%
Yes No
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If the recent pandemic has taught us anything, it is that enterprises with a defined risk management strategy are best positioned for explosive growth.”
Acrisure, AchieveNEXT Networks Partner
CONCLUSION
Mid-Market optimism abounds. Compared to six months ago, most CFOs from mid-market enterprises are more optimistic about their own financial prospects, their industry prospects, their primary geo markets prospects, and the U.S. and global economic prospects.
Higher expectations for growth in 4 key financial metrics. The majority of mid-market CFOs project year-over-year growth in revenue, earnings, capital spending and hiring.
Visible concerns over talent, raw material costs, supply chain, and inflation rise. Mid-Market CFOs’ most worrisome internal concern is talent—how to handle returning employees back to work on- site, as well as developing and retaining them. Supply chain disruption, increasing raw material costs and inflation take the lead for mid-market CFOs’ top external concern. M&A and Capital markets activities will increase during the 2nd half of 2021. An increasing number of mid-market CFOs are considering M&A as a growth strategy during the second half of 2021. In addition, both debt and equity financing options remain attractive. Intense focus on business and technology transformation increases demands from finance and HR leaders. A majority of mid-market finance and HR leaders indicate a range of business and technology transformations already underway, including tech-enablement of their offerings and their internal operations, supply chain optimization, integrated financial planning and analysis. DEI efforts are moving from discussion to action. Review of talent acquisition, engagement, leadership and succession programs and policies, addition of DEI leaders, and establishment of clear measurable goals and KPIs are among the top steps being taken to advance DEI in middle market enterprises.
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ABOUT THE STUDY
• AchieveNEXT surveyed more than 175 North American finance and HR leaders between June 15 - July 9, 2021.
• 85% of respondents were from U.S.-based mid-market enterprises. The National Center for the Middle Market (NCMM) defines the U.S. middle market as companies with annual revenues between $10 million and $1 billion.
• AchieveNEXT’s CFO-CHRO Sentiment and Pulse Surveys are executed periodically to track changing sentiment and priorities of Finance and HR leaders.
Visit www.AchieveNEXT.com for additional insights, reports and information about CFO and CHRO Peer Groups, events, and discussions.
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MEET THE AUTHORS
Nick Araco CEO AchieveNEXT Nick.Araco@AchieveNEXT.com @NickAracoJR
Thomas A. Stewart Chief Knowledge Officer AchieveNEXT Tom.Stewart@AchieveNEXT.com @thomasastewart
Greg Wood Member Engagement Officer AchieveNEXT Greg.Wood@AchieveNEXT.com @TheCFOAlliance
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www.achievenext.com
© 2021 AchieveNEXT. All rights reserved.
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