Anxiety in the board room

Just because the recession may be over doesn't mean businesses are ready to sprint again.

In fact, after limping along for more than a year, most executives and board members of Philadelphia-area firms said they don't expect "business as usual" for at least the next four years.

Such was the apprehension detected by the latest survey conducted by KPMG L.L.P.'s Audit Committee Institute.
I know President Obama is eager for "fat cat" bankers to turn on the loan spigots so that the nation's small-business owners can hang up help-wanted signs and put all Americans back to work.

But there's a confidence problem right now. The men and women who run companies big and small are not convinced the economic recovery is for real.

Jerry Maginnis, managing partner of KPMG's Philadelphia office, said both the survey and his own conversations with executives picked up "a fair amount of anxiety."

For one thing, senior executives and corporate boards still focus more on the balance sheet than the income statement.

Leaders remain fixated on when their debt is maturing. "They continue to be concerned about whether they have the financial stability to ride this out," Maginnis said.

"This" means the post-financial crisis, the post-recession recovery, and the policy changes that Washington is debating, orating and enacting.

Pessimism can be seen in the 44 percent of the nearly 100 survey respondents who said they don't expect a return to pre-recession levels of investment, employment, and productivity, until at least 2013 or 2014.

Many companies slashed investment and employment over the last year and have benefitted from higher productivity rates. While costcutting can green up the bottom line, there is a real risk that cuts were made simply for the sake of survival, not strategically, Maginnis said.

With most of the cost-cutting over, those captains of industry should be calculating how quickly they could ramp up their organizations should orders start rolling in and a backlog grow.

Instead, Maginnis said, many have "one foot in the boat and one out."

That may work if the dock is a long one, but it's not getting us anywhere fast.