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When times are tight, the focus turns to spending. Here’s how 15 CEOs are balancing the need to cut costs without hurting growth. BY DALE BUSS
CAUGHT BETWEEN RUNAWAY EXPENSES and con-
tinued fears of an economic slowdown in 2023, many CEOs and CFOs are leaning into good old cost cutting in ways unseen by American businesses since the Great Recession of 2008 and 2009—and maybe before. They’re dealing with a complicated picture, to be sure. Big-tech companies such as Google and Meta are laying off tens of thousands of employees even as America’s overall demand for labor, and the scarcity of qualified workers, continue unchecked for most businesses. The supply-chain difficulties of the pandemic era seem to be moderating. Yet, inflation rates are still setting generational records while the Fed tries to damp down the fires with an unprecedented ramp-up in interest rates. Another challenge: Many, if not most, business leaders with hands on the financial levers of their companies weren’t in such significant roles the last time American business was forced to deal with the indiscriminate demands of a rocky economy. As a result, many companies are adopting a defensive crouch: 97 percent of CFOs recently surveyed by flexible-workspace provider IWG are cutting costs by more than 10 percent per annum, they said, as 91 percent of them believe a recession is on the horizon.
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Among global Fortune 500 CEOs, 74 percent said they plan to reduce office space. At the same time, though, many CFOs and CEOs are taking advantage of this lull in corporate certainty not just to mitigate costs but also to initiate transformative measures that will launch their companies into a future that will commence at the end of whatever “now” is called. Macy’s, for instance, has been wowing Wall Street with an inventory-control scheme that rid the department-store retailer of pandemic-era overstocks and rewarded consumers with roughly 55 percent merchandise newness for Christmas—30 percent higher than in 2019, CEO Jeffrey Gennette told analysts. And Liberty Mutual is among those companies that have been slashing costs significantly by shifting to a cloud environment amid extreme revenue pressures in the insurance industry. By 2024, the company is aiming for a one-quarter reduction in annual IT expenses while it enjoys a much more flexible and resilient computing scheme. Here are ideas from 15 CEOs, CFOs and other company leaders about how they’re effectively, and creatively, checking costs while continuing to overhaul their business. Interviews have been edited for brevity and clarity.