Rethinking Resources

By Russell Pearlman

July 31, 2025

A trade war. A new technology that could disrupt everything, maybe. The specter of inflation, a recession, or both. And don’t forget volatile stock and bond markets trade war. A new technology that could disrupt everything, maybe. The specter of inflation, a recession, or both. And don’t forget volatile stock and bond markets and their irritated investors. As an executive of a major airline told investors recently, “It’s impossible to predict this year with any degree of confidence.”

What a time to be trying to figure out how to spend the company’s cash! In 2025, this exercise (usually involving dreary spreadsheets and dry meetings to determine the allocation of a company’s resources) has become considerably more fraught. While they’re certain they need to make massive long-term investments—in technology, supply-chain reorganization, workforce development and other pricey projects—companies feel very little certainty about the short-term business environment. “For CFOs steering the ship, the next six to 12 months could be make-or-break,” says John Signa, CEO and founder of E78 Partners, a finance-focused consultancy.

The last time corporate-finance departments faced so much pressure was in 2021. Back then, in a survey of more than 1,000 CFOs worldwide, 56 percent said their asset-allocation plans needed to be completely rethought. Two tough questions faced the CFOs: whether some of the major changes wrought by the pandemic—telemedicine, remote work, supply-chain onshoring, and new safety procedures, to name a few—were going to stick around; and if so, whether they’d need funding. Most firms put their money on changes related to digital—specifically, 68 percent of CFOs reported they’d upped their percentage of capital spending in this area.

Today, technology is a major decision factor again, but this time around, the question is how much to invest in artificial intelligence. Many executives are torn, fearing they’ll fall behind if they don’t invest, but also worrying that a full-throated commitment to AI won’t pay off. “They want to invest in the right place—but they don’t know the right place,” says Shanda Mints, Korn Ferry’s vice president of RPO analytics and implementation. Aside from technology, companies are trying to figure out how much to spend on developing the skills of their own workforces. More than 80 percent of organizations are reporting a skills gap within their employee base. But employee training is often one of the first areas to lose funding when the business environment deteriorates.

For many organizations, however, these financial decisions are small potatoes next to bigger-picture questions, such as, “Where should our stuff be manufactured?” The current US administration has, with its tariff policies, made it considerably more expensive to produce things outside of the country, then import them. But factory construction takes a lot of time and often a lot of money. A semiconductor factory, for example, could cost more than $12 billion to build—and wouldn’t begin producing microchips for years. At this point, many corporate-finance executives aren’t much interested in taking sides between countries during the trade dispute, Signa says. They just want things settled.

And finally, leaders splitting up resources have to keep an eye on shareholders; many have been turned off by this year’s particularly volatile stock market, prompting some firms to consider stock buybacks or raising dividends. Whatever is decided will be pricey: S&P 500 companies returned $1.6 trillion in 2024, an all-time high.

Experts say that the 2021 allocation playbook could still apply this year, at least to some extent. Firms should ensure that they have the best, most up-to-date data on cash flow, working capital, and supply-chain risks, so that they can make smart, informed decisions. They should also consider increasing their short-term cost certainty, potentially by hedging their commodity or currency exposure. These moves won’t necessarily make allocation decisions easier, but they might give executives a little more confidence in making them.

Photo credits: In8finity, Cnythzl, AppleUZR/Getty Images