A new PwC survey shows 50% of responding businesses are planning layoffs in the coming months, including technology, media and telecom companies.

PwC polled 722 U.S. executives for its latest Pulse Survey. Sixty-three percent were from Fortune 1000 companies.

Executives now see the distinction between merely having people, and having people with the right skills. Therefore, one-half of all respondents are reducing their overall headcount. Furthermore, 46% are dropping or reducing signing bonuses, and 44% are rescinding offers.

Changing the Workforce Mix

Bhushan Sethi is PwC‘s joint global leader of people and organization. He said the high number of businesses planning staff reductions is surprising given the strong labor market and low unemployment.

PwC’s Bhushan Sethi

“This shows that business leaders are prioritizing changing their workforce mix by ensuring they have the specialized talent needed to grow, while also managing labor costs due to the current inflation rate,” he said. “Companies need to find ways to battle rising labor costs. And we are seeing companies take a number of different approaches to this with one of them being layoffs.”

Businesses are going through a “workforce mix change,” Sethi said.

“Business leaders are seeing the need to pivot into new areas to ensure they have the right types of specialized talent to power their business, while also exploring ways to automate or redesign certain processes to decrease capacity,” he said. “At the same time, businesses are being strategic and intentional when it comes to headcount. One way to retain talent is actually through the implementation of hiring freezes as it can help businesses avoid mass layoffs down the road. We are also seeing companies pulling different levers that provide them with more flexibility, including tapping into contingent workers when needed.”

Workforce Investment Important

Companies must continue investing in their workforces, whether that is hiring, total rewards or development, Sethi said.

“In fact, our survey found 53% of respondents are increasing in digital transformation as companies must ensure they don’t lose sight of long-term goals while going through short-term uncertainty,” he said. “It’s important for leaders to remember that although they must focus on growing their business, they also must do it in a responsible, humane and trustworthy way to ensure they are maintaining the trust of their people.”

Executives continue to have significant risks on their radar, according to the PwC survey. Amid increasing geopolitical tensions and consumer privacy concerns, business leaders ranked cybersecurity as the No. 1 serious risk facing their companies. It’s not just top of mind for CISOs and chief risk officers. Executives across the entire C-suite ranked cybersecurity as a serious risk. In addition, 58% of corporate directors said they would benefit most from enhanced reporting around cybersecurity and technology.

“More and more companies are going through digital transformations and moving their operations to the cloud as a means to accelerate their growth agendas,” Sethi said. “Chances are, the cybersecurity tools that many businesses utilize today are a cobbled-together mix of applications and solutions. Their functions may overlap and often won’t work together without special configuration, meaning that they may be paying for more than they need while exposing the company to needless risk. As that digital complexity within the organization increases, environments are becoming even more challenging to secure.”

Finding the Right Talent

Finding the right talent continues to be a challenge for business leaders, according to PwC. Talent acquisition came in second as a risk behind cyber, with 38% of respondents citing it as a serious risk.

Companies continue to look for and attract new talent in creative ways, including:

“When comparing results from this survey to the one launched in January 2022, we are continuing to see that talent remains top of mind for business leaders,” Sethi said. “Our January 2022 Pulse Survey found that 77% of executives believe hiring and retaining talent is their most critical growth driver in 2022, while this survey uncovered talent retention and acquisition is the second-highest serious risk for executives. This shows that there are larger implications for the great resignation than most companies initially thought, especially when considering access to specialized talent.”

Focusing on Growth

With increasing economic uncertainty, 83% of executives are focusing their business strategy on growth, according to the PwC survey. Business leaders are feeling cautiously optimistic about their ability to navigate future economic, social and geopolitical uncertainty.

With growth in mind, executives are exploring both acquisitions and increases in internal investment. They are increasing investments in digital transformation (53%), IT (52%), cybersecurity/privacy (49%) and customer experience (48%). Many of these investment areas can help improve efficiency and scalability. They also introduce new technology to boost productivity as companies continue to deal with talent shortages.

Nearly two-thirds of businesses have changed or are planning to change processes to address labor shortages, according to the PwC survey. That’s up from 56% in January. As businesses pivot even more toward automation, it’s critical to find employees with deep functional knowledge and technology know-how. Without the right talent, automations can fail to deliver on promised efficiencies and increase operational risk.