An improving economy should be spurring CFOs to hire workers to handle the increased business that their companies are experiencing lately. But [[xref:http://rhfa.mediaroom.com/2Q11HiringIndex |Robert Half Finance & Accounting Media Room - News Releases]]conducted in conjunction with the latest Robert Half Financial Hiring Index finds that finance executives are being extremely cautious about how they increase headcount.
Indeed, staffing moves in accounting and finance are flat -- with additions coming especially in IT, or tied to particular needs for product improvement, increased revenue, or new business opportunities. That's true despite the sanguine view they hold about prospects for the quarter -- with 89 percent of respondents saying they are confident about business growth.
The conclusions flow definitively from the survey, which found 7 percent of about 1,400 CFOs polled planning to increase staff levels in their accounting and finance departments during the second quarter, and another 7 percent saying they would likely reduce headcount in those divisions.
But both that zero net percentage gain in accounting staffing levels, and the drive to add people in strategic areas, are borne out in interviews with CFOs in a range of industries.
"We've been hiring flight attendants and pilots at a good clip," says US Airways executive vice president and CFO Derek Kerr. "This is partly due to attrition, partly due to growth in the airline. The consumer is flying. Business travel is coming back. We're seeing the economy is a lot better. There is still that risk of what happens going forward."
Part of the risk, for an airline, is that the rising cost of fuel -- a factor that has caused many carriers to recently raise fares -- will undercut efforts to do all but the most essential hiring.
"With fuel where it is, we're staying pretty cost conscious," he said. "We're not adding any heads where we don't have to. We've been able to pass on costs with our increases. But the risk for us is when you're not able to pass that on from a financial perspective."
Although the carrier is not growing its accounting and finance departments, IT head count will increase in the second quarter. The airline's IT staff will work on a project that allows US Airways to expand selling premium aisle and exit row seats from its website to the entire ticket distribution system. The company is focused on hiring for areas that will pay back, Kerr said.
CFO reluctance to hire accounting and finance staff is typical in such economic circumstances, according to Brett Good, senior district president for staffing firm Robert Half International, which conducted the poll.
"Accounting departments tend to lag so it's not a big surprise," he explains. "I think the sign in the survey that is most encouraging is the CFOs are optimistic about growth moving forward. And typically with more confidence comes more spending, more hiring."
He also notes that while CFOs may not be hiring accountants, they are adding staff as they discover that "the volume of work is exceeding capacity."
"What we're finally beginning to see in finance [departments] is payroll is increasing, which means they have more people."
CFOs need to see the case for additional workers translated into an organization's profits and losses, Good adds. A spike in accounts receivable would indicate to a CFO that the finance department needs additional staff.
"They want to see it on paper translated into dollars and cents."
With a sales staff at capacity, adding employees at tech vendor NetSuite is proving critical to meeting the company's fiscal goal of increasing profitability each year, according to CFO Ron Gill. The company "saw a big uptick in demand" for its products, which include Web-based ERP and CRM systems, in the late second half of last year, Gill said. He attributed this spike to a better economy, a shift to ERP over the Web and analysts claims that companies were looking to replace IT systems.
"As a company we are increasing headcount pretty dramatically," he says. "Those heads are primarily in sales and engineering. On the finance, we're pretty right sized."
Hiring sales staff will boost NetSuite's growth rate, a goal it stated during its 2010 fourth quarter earnings call, Gill says. "We want to invest in sales people who can make our business grow faster. The plan has us adding sales people in each quarter."
Bringing on more engineers allows the company to add product components that appeal to potential customers, especially those in vertical industries.
"By adding features, you would win a deal because you have more functions you didn't have the year before," Gill says. "Big companies are demanding. They add more requirements." NetSuite will add "a few" accounting and finance staff to its Manila, Philippines, office that handles back-office functions like billing and accounts receivable as well as "one or two" finance employees in the U.S.
"We grew through 2009, but growth did slow," says Gill, whose 1,000-person firm is based in San Mateo, California. "But we did okay through the downturn. My best gage is our economic health and that is good. Things are very healthy so far."
While bolstering IT staff ranks vital to some CFO's business plans, not all companies are shunning accounting and finance staff additions, of course.
Quest Software, an IT management software vendor, will hire tech employees as well as accounting personnel after seeing business increase, according to CFO Scott Davidson.
"From 2009 to 2010 we saw an uptick in business and we expect continued growth in 2011," Davidson writes an email interview. "To account for this expected growth, I am looking to add key staff in very specific areas, primarily to support new IT/system related initiatives and M&A accounting. We also expect to hire in EMEA, where we're transitioning to a shared service model that requires accounting/finance to be a key part of the team."
Davidson uses the term "guarded optimism" to describe the Aliso Viejo, California, company's growth potential, noting that as an international company, issues beyond U.S. borders influence its business.
"We monitor many data points on the geopolitical radar screen which, when coupled with existing frail economic data across many developed nations, point to a very slow return to positive growth."
Internationally, a staggering U.K. market, sovereign debt in Ireland, Spain and Italy, and political unrest in the Middle East and Africa threaten Quest and the tech sector's fiscal health, Davidson said.
While he acknowledges improvements in the in the U.S. economy, Davidson writes that they " are wholly related to extreme monetary policy that I feel cannot be sustained and this leads to a level of artificial growth that is being viewed as organic while in reality, it is not." The country's "slow growth" combined with increased government regulation and complex tax policy also pose growth challenges.
Davidson believes companies now are more willing to invest in new software after a period of maintaining previous setups. "We do see a fair amount of interest in implementing new improvements into IT using software. As a data point, 2009 was the first year in nearly the last 30 years where depreciation aggregated more than new capital investment."
The tech sector "seems to be doing well, " so strong hiring at IT companies doesn't surprise Robert Half's Good. Businesses maximize existing IT systems in economic downtown turns and now, with a brighter financial outlook, are looking to upgrade. The manufacturing industry serves as another solid sector as depleted inventories lead to an influx of orders.
Good cautions that not every industry has recovered, saying that "clearly, if you are in home construction it is still a challenging sector."
He points to the U.S. Commerce Department's February housing start index, which noted that building permits for the month were down 20.5 percent compared to the year-ago period and privately owned new home construction projects declined 20.8 percent compared to February 2010.
Good says some of this decline could be attributed to the heavy snowfall experienced by parts of the country.
With a "mixed bag based on industries, recovery is spreading to other areas," he says. "We're far from the go-go days of 2006, 2007. But there is cautious optimism."