Warning that the coronavirus crisis will have a more profound impact on the economy than initially expected, senior executives are increasingly concerned with the survival of their companies, a recent survey by consulting firm West Monroe shows.
Business leaders are increasingly concerned with survival, including burning through cash reserves.
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Over half of the corporate leaders surveyed—up from just over 40% last month—said that they expect the market crisis to have a deeper impact on the economy than the 2008 financial crisis, predicting a more difficult recovery.
The number of respondents who said the impact would be more acute, with a shorter recovery, fell to 40%—down from 51% last month.
One-third of business leaders still expect their company’s operations to stabilize in the third quarter this year, but 26% don’t expect a recovery until 2021 or beyond.
19% of executives say it will affect the debt position of their companies—the metric increased the most since last month’s survey (from 10%) as more companies take on loans to weather the crisis.
The primary concerns of corporate leaders have also shifted to increasingly focus on survival, with 21% concerned about their companies burning through cash reserves—up from 15% last month.
Collectively, the concern of “survival” jumped up to 18% this month, rising from 11% last month, as some shutdowns have lasted longer than expected, according to West Monroe.
What to watch for
Among the biggest challenges to restarting business and returning to work were 29% who responded with “managing my business through social distancing measures, including flexible scheduling and work location.” Another 26% cited unknown timelines for lifting government restrictions, while 23% are concerned about declining consumer and business confidence. The lowest concerns, surprisingly, with just 1% of respondents each, were “maintaining IT infrastructure” and hiring back employees after furloughs and layoffs.
Big number: 70%
That’s how many executives say the biggest long-term impact will be more localized supply chains; 65% also said their businesses will work faster and with more agility, while 39% said nationalism will rise and travel will decrease.
Responses from corporate leaders also showed that their organizations are rapidly shifting their business models: 33% set up new digital and e-commerce capabilities, while 20% took on new financing—whether through stimulus, loans or bankruptcy—to survive.
Not all businesses are in turmoil, the survey shows. A total of 17% of C-suite executives said their companies’ operations have already stabilized or will do so this quarter, by the end of June.
West Monroe’s report spans a wide range of industries, with corporate executives surveyed coming from companies with annual revenue of at least $250 million—and the majority of respondents were at companies with revenue between $500 million and $3 billion per year. Over half of the executives surveyed are either chief information officers or chief financial officers, while 13% were CEOs or presidents of their respective companies. Other key stats from the report: 21% also cited unpredictable behavior from their partners, employees or clients in the environment; 15% are worried about having to lay off or furlough workers and another 15% are concerned about supply chain disruptions.