Chief financial officers are markedly shifting their focus from cost cutting to revenue growth, but they remain wary of increased hiring at home, according to the results of the Deloitte CFO Signals quarterly survey for the first quarter of 2011. Specifically, the CFOs surveyed said nearly half of their companies' strategic focus is on revenue growth—substantially ahead of their 30 percent focus on cost reduction.

Despite the focus on growth, the survey, which tracks the thinking and actions of CFOs representing many of North America's largest and most influential companies, also indicates that growth may not translate into jobs in the near term. Year-over-year domestic hiring growth projections for the first quarter of 2011 remained low at 1.8 percent, similar to projections from the previous three quarters. Only after a 20 percent revenue gain did a majority of CFOs say they would increase domestic hiring substantially. Also, a 5 percent increase in revenue would have little or no impact for 70 percent of the surveyed companies, and a 10 percent revenue increase would substantially increase hiring for only 11 percent of companies.

"With cash on their balance sheets and cost efficiency gains largely accounted for, many companies are now heavily focused on top-line growth," said Sanford Cockrell III, national managing partner, CFO Program, Deloitte LLP. "Having ridden a wave of recovery-related improvements for the past few quarters, companies are seeking growth on their own terms."

Overall, optimism among CFOs rebounded during the quarter with 62 percent of respondents indicating a more positive outlook regarding their companies' prospects, up from 53 percent in the fourth quarter of 2010. Furthermore, CFOs are upbeat about performance, projecting average year-over-year gains of 8.2 percent for sales (compared to 6.5 percent last quarter), 12.6 percent for earnings (compared to 12 percent in the fourth quarter 2010), and 11.8 percent for capital spending (compared to 8.7 percent last quarter). The projections for both revenues and earnings, however, are substantially lower than estimates from the second and third quarters of 2010 — possibly indicating that many of the strongest recovery gains have already been achieved.

The obstacles to growth that CFOs cite are mainly external. Survey results revealed that 52 percent of respondents view regulation as their industry's top concern.

"As CFOs and their companies turn their focus toward growth investments, they indicate heightened concerns about the specific provisions of regulation they see coming, and also about unanticipated future regulation not accounted for in their current plans," explained Greg Dickinson, who leads the Deloitte CFO Signals survey. "This uncertainty is making many potential investments appear risky and unattractive."

The Deloitte CFO Signals quarterly survey also revealed the following results (estimates are adjusted averages to reduce the effect of outliers):

- Only 16 percent of CFOs are less optimistic than they were the previous quarter — the lowest level recorded in the four quarters of the Deloitte survey.

- CFOs expect significant changes in their sources of growth over the next year as compared to the period prior to the financial crisis and recession. Almost three quarters (73 percent) of CFOs expect increased revenue from new products and services, and 68 percent expect foreign markets to generate more revenue.

- More than half of CFOs (56 percent) expect their companies' prices to increase over the next year than prior to the recession, driven in part by expectations of rising commodity prices. More than 80 percent of CFOs expect commodity price increases over the next year.

- Revenue growth from existing markets is the most prevalent company challenge, cited by more than half of CFOs (55 percent) as a top three concern. One-third of CFOs cite revenue growth from new markets as a top challenge, and another third cite framing and/or adapting strategy.

- CFOs are very concerned about government's impact on their growth plans, particularly tax policies (especially around the tax code and the repatriation of earnings) and health care reform, which they view as unnecessarily burdensome.

- Despite strong concerns about current tax policies and health care reform, CFOs report neither is substantially impacting their investment of available cash. CFOs say health care reform is not substantially affecting their domestic hiring either, but 45 percent say that changes to corporate taxes would raise hiring at least somewhat.