The HŪMNZ Element: Issue 29 - What Every CEO Is Paying for Standing Still

💡 Editor's Note

Confidence at the top has recovered. Not dramatically, but enough that the mood in most executive meetings has shifted from bracing to waiting.

Waiting is not free, though it rarely appears as a line item.

If the organization looks the same next year, what exactly is the extra payroll buying?

Standing still feels like the prudent option when the outlook is uncertain. It is also the one choice that guarantees your costs rise while your capability does not.

Executive Brief

Bottom line: Most organizations are budgeting a three to four percent payroll increase for a workforce they expect to look identical in twelve months, which makes next year's raise a cost increase rather than an investment in capability.

The Conference Board's Measure of CEO Confidence came in at 52 in Q3 2026, up from 47 the previous quarter. Readings above 50 indicate more positive than negative responses, so this is recovery to barely optimistic rather than anything like conviction.

Underneath the headline, the posture is unchanged. The Conference Board describes CEOs as remaining in "low-hire, low-fire" mode. 37% expect no change to their workforce at all. 34% expect to expand, 28% to reduce.

And yet 58% are planning annual wage increases concentrated in the 3 to 3.9% range. Same headcount, same structure, higher bill. That combination is worth naming before it gets approved.

In 30 seconds

• CEO confidence reached 52 in Q3 2026, up from 47 in Q2, according to the Conference Board's Measure of CEO Confidence, where 50 is the line between net optimism and net pessimism.

• 37% of CEOs expect no workforce change over the next twelve months while 58% plan wage increases of 3 to 3.9%, meaning payroll rises against an unchanged organizational shape.

• Before approving the merit budget, require a one-page answer to what capability the organization will have next year that it does not have now.

⚠️ Four signals leaders should be watching this week

1. Why does a confidence reading of 52 tell you so little?

Signal: Sentiment improves, and the improvement gets treated as a mandate to continue as planned.

Evidence: The Conference Board's Measure of CEO Confidence rose to 52 in Q3 2026 from 47 in Q2, where above 50 signals more positive than negative responses. The Conference Board's own characterization is that CEOs "remained in 'low-hire, low-fire' mode, but tilted toward a slight expansion in their workforces."

Implication: Two points above neutral is not a recovery signal. It is the absence of pessimism, and those are different inputs to a capital allocation decision.

Action: Separate what improved because your outlook changed from what improved because the mood did. Fund only the first.

Related: What leaders miss between the metrics

2. What is next year's raise actually buying?

Signal: The merit budget is approved as a percentage while the organization it applies to is assumed to be constant.

Evidence: The Conference Board found 58% of CEOs planning annual wage hikes in the 3 to 3.9% range, alongside 37% expecting no workforce change at all over the coming year.

Implication: Spread evenly across an unchanged structure, a raise protects against attrition and buys nothing else. That may be the right call, but it should be a decision rather than a default.

Action: Ask what share of the merit pool is going to roles you would fight to keep, and what share is going out because it always does.

Related: What your employees need to perform their best

3. Why is hiring confidence not the same as hiring capability?

Signal: Leaders report that talent will be easy to find, and treat that as evidence their own offer is competitive.

Evidence: 61% of CEOs expected either no problem hiring (13%) or generally no problem with difficulty in some areas (48%) over the next twelve months, according to the Conference Board's Q3 2026 survey.

Implication: That is a forecast about market conditions, not a measurement of your attractiveness as an employer. A loose market flatters weak employers and hides the gap until it tightens.

Action: Test the claim. Look at time-to-fill and offer-acceptance for your three hardest roles, not the average across all hiring.

Related: Where strong strategies lose momentum

4. If labor cost is rising, where is the productivity coming from?

Signal: Payroll grows on schedule while the investment that would offset it quietly flattens.

Evidence: The share of CEOs expecting to increase capital spending eased to 31% in Q3 2026 from 37% in Q2, with 61% planning no revision and 8% expecting to spend less.

Implication: Rising labor cost against flat capital investment means the productivity gain has to come from how work is organized. That is the one lever nobody has been assigned.

Action: Name the person accountable for output per employee next year. If the answer is everyone, it is no one.

Related: Why your AI rollout has nowhere to land

Stat of the Week

Source: The Conference Board, Measure of CEO Confidence, Q3 2026.

The Core Question

Budget season rewards continuity. Last year's plan with this year's percentages is the fastest thing to approve and the hardest thing to argue with.

The problem is that continuity has a price now, and it shows up as a payroll that grows faster than the capability behind it.

The VALŪE lens: A raise distributed across an unchanged structure defends your current position. An investment changes what the organization is capable of. Both leave the same mark on the P&L, and only one of them compounds.

Low-hire, low-fire is a defensible posture for a quarter or two. It is an expensive one to hold for a year.

Know a CEO heading into budget season? Send this on.

Until next time,

The HŪMNZ Element — Weekly Pulse

If this was useful, forward it to one person: a CEO about to sign off next year's plan, or whoever owns the merit budget.

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