Irish businesses look to reconfigure work-sites and increase remote working says PwC survey of Chief Finance Officers

The latest PwC CFO Pulse survey which was conducted last week is a fortnightly poll of 871 global financial leaders including Ireland. The survey helps to identify the business and economic impact of COVID-19 and some of its key findings include:

• Irish companies are considering when and how to reopen work sites: 59% plan to change safety measures and requirements, while 61% are considering how to make remote working a permanent option for those staff who can avail of it; 76% will reconfigure worksites to promote physical distancing.
• Nearly half of Irish finance leaders (47%) believe their businesses could return to normal within three months if the coronavirus pandemic were to end today; while 88% remain greatly concerned about the potential impact of the crisis.
• In Ireland, according to the survey, there is an increase in concern about the impact of the pandemic on the workforce, up nearly 20%, though a major decrease in productivity concerns due to lack of remote working capabilities.
• Despite this, over a third (37%) of Irish respondents are planning to scale back digital transformation rather than increase it, double that of global counterparts (18%).
• Nearly half (46%) expect temporary furloughs in the month ahead, up from 39% two weeks ago.  Over one in five (22%) now expect layoffs in the month ahead, down from 26% two weeks ago.

Irish business leaders more concerned than global peers

Irish CFOs are continuing to take a more hardline view compared to global counterparts on the potential impact of the pandemic on their businesses. 88% remain greatly concerned about the impact of the crisis on their businesses (Global: 70%).  An overwhelming majority (98%) expect a decrease in revenues or profits this year as a result of COVID-19 (Global: 80%).  Nearly half (44%) are concerned about the impact on their workforce, up from 26% two weeks ago.

Reconfiguration of worksites and remote working features of the ‘new norm’ – more so than global peers

In spite of concerns for their businesses, finance leaders are thinking about how they might bring their people back to the workplace and a ‘new norm’. For example, 76% of Irish CFOs say that their company will reconfigure worksites to promote physical distancing (Global: 55%) once they start to transition back to on-site work.  61% are planning to make remote working a permanent option for roles that allow (Global: 47%) while 41% are accelerating automation and new ways of working (Global: 46%).  Over half (59%) will change workplace safety measures i.e. wearing face masks, offering testing to employees and 51% will review shift patterns.

Changes in supply chain strategies on the cards

The survey highlights that changes in supply chain strategies are on the cards with Irish finance leaders hungrier to implement more stringent risk protection measures.   Over four out of ten (44%) Irish CFOs stated that they are developing additional alternate sourcing options (Global:52%) while a similar proportion (41%) will seek to improve risk protection measures such as disaster insurance coverage, more flexible force majeure contract clauses (Global: 32%).  Over half (54%) will look to understand the financial health of their suppliers (Global 50%).

More scaling back of planned investment – more severe in Ireland

The survey reveals a jump in implementing cost reductions (up from 78% to 95%) and deferring or cancelling planned investments (up from 61% to 73%) compared to two weeks ago.  This scaling back is also more severe in Ireland compared to global counterparts. Facilities and general capital expenditure are top on the list for deferment or cancellation (73%);  Other key areas for deferment/cancellation include workforce (57%) and operations (37%).  In addition, over a third (37%) are planning to scale back digital transformation, double that of global counterparts (18%).

Garrett Cronin, Consulting Partner, PwC Ireland, said: “The survey shows that most companies have moved beyond the short-term, reactive phase of the novel coronavirus pandemic. While they remain focused on what they need to do, what it takes to ensure the safety of their people and the survival of their businesses, they are also thinking about how to stabilise. They are taking tactical steps that will prepare them to operate in ‘the new normal.’   There is no doubt that technology will play an even more important role in how we work in the future and digital transformation is an important area that should not be scaled back if possible. We need more digital, not less.”

Expected productivity losses due to lack of remote working capabilities more than halved

Just over a quarter (29%) of Irish CFOs now expect productivity losses due to lack of remote working capabilities. This view has more than halved compared to two weeks ago (61%)  –  likely due to the fact that employees and employers may be adjusting to remote working.  Nearly half (46%) expect temporary furloughs in the month ahead, up from 39% two weeks ago.  Over one in five (22%) now expect layoffs in the month ahead, down from 26% two weeks ago.

Positive on return to ‘business as usual’

Almost half (47%) of Irish CFOs still expect to return to ‘business as usual’ within three months if the pandemic were to end now compared to 44% two weeks ago (Global: 49%).  At the same time, more than a fifth (22%) expect this to take more than a year, up from 17% two weeks ago and is substantially higher than for their global peers (8%).

David McGee, Markets & Strategy Leader, PwC Ireland, said: “It is simply essential that companies continue to scenario plan for the ‘new norm’, however, this will look.  To protect our future, Government and business need to continue to work together now to map out how to safely reopen our economy, while balancing the essential health protections we will continue to need for the foreseeable future.”