Affordability: It’s a Crisis for Companies, Too

Healthcare costs are on the rise. So are energy prices. A dollar this year is worth a lot less than it was last year, but prices on basic goods and services remain elevated.

These are top-of-mind concerns this year not just for most Americans, but also for the CFO running the companies where they work. Costs are rising for everyone, businesses included, and CFOs are under pressure to tightly manage budgets. Wholesale prices and input costs—what firms pay to produce their goods or services—are expected to rise 4.2% this year. The price of employer-sponsored family healthcare coverage will top $27,000, while both electricity and telecommunications costs are up over 4.5% year-over-year. “Many of the CFOs I’ve talked to feel like they’re managing an affordability crisis inside their own balance sheets,” says Beau Lambert, a senior client partner in the Financial Officers practice at Korn Ferry.

Some industries have, of course, felt more pain than others. Tariffs and new regulations resulted in an estimated $25 billion bill for automakers in 2025. According to one study, midsized firms with revenue between $10 million and $1 billion saw their costs increase by $82 billion. James Stark, a senior client partner in the Financial Officers and Industrial practices at Korn Ferry, says CFOs aren’t looking at those costs as a onetime thing, either. “The view is that persistent cost growth in budgets is here to stay,” he says.

The challenge is that firms have already pulled many of the usual levers they use to contain—or cut—costs. As Stark notes, on the business-to-business side, firms, suppliers, and vendors have been renegotiating their contracts for the past two years to account for the increased costs of supply-chain disruption caused by tariffs and geopolitical tension.  

Consumer-facing businesses have passed 37% of the increased costs from tariffs along to consumers, according to Goldman Sachs estimates, and given the affordability crisis they face, may risk losing customers if they try to pass on more. Companies have also cut benefits even as wages barely keep pace with inflation, as well as enacted layoffs and hiring freezes. Lambert says CFOs know they can’t keep looking to customers and employees to offset increased costs, but may not have another choice. “They are trying to absorb as much as possible while making targeted changes,” he says. “It’s a matter of deciding where they’re willing to feel the pain.”

On the employee side, CFOs and leaders recognize that the more they chisel away at benefits and wages, the more they risk losing talent, whether to a competitor or to disengagement. Tom McMullen, a senior client partner and leader for the North America Total Rewards practice at Korn Ferry, says that firms, rather than raise costs across the board, are looking at individualized plan designs. “To rein in healthcare costs for both them and employees in an environment of sustained economic pressure,” he says, they’re considering plans with higher deductibles, condition-specific care, and lower-cost access points, such as virtual care.

Instead of major slashing, Lambert says CFOs this year will focus substantially on containing costs through operational efficiencies. That means more investment in AI and automation to drive higher productivity; it also means finding quicker ways of handling some tasks and questioning whether other tasks are necessary. It’s a difficult path to follow, and experts say smart firms are hoping to communicate the importance of this challenge to staffs and clients alike. In addition, firms will have an edge if they can find new ways to push up revenue growth through innovation. “CFOs are walking a tightrope,” Lambert says. “They are trying to protect margins without starving the business in an environment where costs are getting more expensive everywhere they look.”

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