CEOs plan to increase their workforce expenses.

As signs of economic recovery continue to positively trend, approximately 57 percent of CEOs interviewed for PricewaterhouseCoopers’ Private Company Trendsetter Barometer survey plan to increase their total workforce expenses over the next 12 to 18 months, while 35% plan to remain the same, and only 5% expect a decrease.

Concurrently, the majority of private companies surveyed (57%) reported being affected by reductions in their companies’ workforces as a result of the economic crisis. While most employment areas were affected, there was a particular emphasis on middle management and skilled labor. In contrast, of those surveyed, 40% reported no layoffs or reductions as a result of strain economic conditions.

“We’re seeing the leading private companies looking to hire new workers or increase the compensation of existing employees, reinforcing Trendsetter Barometer data that CEOs are planning for an upturn,” says Ken Esch, partner with PricewaterhouseCoopers Private Company Services practice. “While many are simply looking to fill skills gaps or retain their qualified workforce, this is a clear signal that CEOs believe the tide is turning.”

Despite workforce reductions, 61% of Trendsetter CEO’s believe their companies’ current workforce is well aligned to business objectives that must be met over the next 12-24 months. Thirty-four% believe they are only somewhat aligned, and only two% believe their company is not well aligned. Sixty-one% believes their organization has the right skills at the management level to effectively lead their company over the next 12-24 months. However, 35% believe they will have skill gaps.

Filling in skills gaps

Interestingly, among the 35% of leading private companies that believe they will have to fill in some skills gaps, 82% are planning to fill the gap by hiring new talent. Additionally, 68% plan to train/develop existing talent, 32% plan to redeploy talent and 22% plan to us contractors as means to fill skills gaps at their companies.

“Because of recent layoffs, there’s talent in the marketplace that may not have been available a few years ago at current salary levels. Private companies should be looking for catalyst hires – employees who will join the business, share their experience and move the company forward at a faster pace than otherwise would have been possible,” adds Esch.

Investment in talent management programs and ROI

Over the next 12 months, 39% of private company CEOs also plan to invest or are currently investing in talent management programs, while approximately 54% reported they have no plans to invest. The goal of the talent management programs as highlighted by 88% of those currently investing or planning to invest in these programs, is to better capitalize on existing workforces. One-in-five (20 percent) reported their goal is to better position their company from a recruiting perspective as an employee of choice as the economy recovers.

“Many companies are analyzing their salary and benefit programs to attract and retain the best talent. Some are restoring salary reductions and/or benefits cut during the recession. Others are training and developing existing employees to work in other areas of the business – overall, it’s important to have the right number of people and have those people in the right seats,” says Esch.

Only 8% of private companies’ CEOs claim to know what return their companies are currently getting from their investment in critical talent. Overall, 67% do not know; creating a unique opportunity for companies to understand and communicate the cost associated with talent development.

“In a tight economy like today, businesses should take a close look at every expense to ensure the money being spent will move their business forward. The same is true for new hires; it’s imperative to decide what a new employee’s impact on the business will be and map that back to how they’re being compensated,” adds Esch.

For more information at http://www.pwc.com