No return to normal in the near-term
According to the 2021 CEO Outlook Pulse Survey, CEOs of the world’s most influential companies are planning what a return to ‘normal’ will look like, mindful that their workforces’ potential lack of access to a COVID-19 vaccine could force them to rethink their strategies.
Our 2020 CEO Outlook COVID-19 Pulse Survey revealed that executives were focused on stabilising their business amid immediate unknowns, while our 2021 Pulse Survey, conducted in February and March, indicates that CEOs have a clearer, near-to mid-term strategy. In particular, close to half (45 percent) articulated that a return to ‘normal’ will not occur this year.
Based on a survey of 500 CEOs in 11 key markets, our 2021 Pulse Survey provides a timely snapshot of CEOs’ views on business growth resumption, their views on vaccine distribution, their top-of-mind organisational risks, and business transformation priorities going forward.
Many CEOs now doubt if there can be a return to normal, as we previously understood it. A smooth and uniform vaccine roll-out across most countries is clearly key to many multinationals. The risk is that nationalism or other geopolitical issues could prevent that.
Dr Brendan Rynne
Return to ‘normal’ in 2022
CEOs of the world’s most influential companies are planning what a return to ‘normal’ will look like, but their workforces’ lack of access to a COVID-19 vaccine is forcing them to rethink their strategies. With only one-third (31 percent) anticipating a return to normal in 2021, nearly half (45 percent) expect normality to resume in 2022. Significantly, 24 percent of leaders say that their business has changed forever.
31% expect it to return to normal this year
45% see a return to normal sometime in 2022
24% say their business is forever changed
Source: KPMG 2021 CEO Outlook Pulse
Though many factors can influence CEO predictions, the perceived pace of vaccination distribution is prominent. More than half (55 percent) of business leaders state they are concerned that not all of their employees will have access to a COVID-19 vaccine, which could put their operations or certain markets at a competitive disadvantage.
As a result, nearly two-thirds (61 percent) of companies will await a successful vaccine rollout in key markets before they ask staff to return to the office. Prudently, three-quarters (76 percent) of companies will wait for governments in key markets to encourage businesses to return to normal, whereas just 5 percent will do so based on the actions by their competitors or similar businesses. A significant majority (90 percent) of CEOs intend to ask employees to report when they have been vaccinated, which will help organisations consider measures to protect their workforce. However, one-third (34 percent) of global executives are worried about misinformation on COVID-19 vaccine safety and the potential this may have on employees choosing not to have it administered.
Defining rules in the ‘new reality’
Safety of their staff dominate CEOs’ plans to operate in the new business landscape. For example, 21 percent of companies will ask clients and visitors to their facilities if they have been vaccinated. They are also taking a cautious approach to business travel, with 26 percent planning to cut down on international travel until the pandemic concludes.
Although they point to several long-term impacts upon the way they will operate going forward, business leaders showed a measured approach to key issues like office space reductions and remote work arrangements. For instance, just 17 percent say they will downsize their company’s physical footprint, whereas 69 percent of those surveyed in August 2020 said they would do so. And, just 30 percent will have a majority of employees working remotely between 2-3 days per week.
Companies are transforming key aspects of their workplace and service delivery, with 61 percent stating they will build upon their digital collaboration and communication tools. More than half (57 percent) plan to conduct customer engagement and queries predominantly via virtual platforms such as chat bots, telephone, web and social media.
In light of heightened awareness of workforce stress and societal issues during the pandemic, 50 percent of companies will increase their HR resources to help manage employee wellbeing and mental health, and 14 percent will examine shared office spaces to increase employee workplace flexibility.
Confidence up, despite shifting risks
The survey results paint a mixed picture, as CEOs are slightly more confident about their company, sector and country over the 3-year horizon than they were last year. The additional confidence can be attributed to the positive momentum of the COVID-19 vaccine rollout, but further lockdowns have had a negative impact on the global economic outlook. By contrast, CEO confidence in the global economy is at its lowest since 2017.
Fuelling these sentiments, CEOs identified their greatest risk to company growth over the next 3 years. Among the key trends, cyber security risk emerged as the number one risk, rising dramatically from fifth place in August 2020. Also rising significantly among CEO priorities: regulatory risk and tax risk tied for second place, while supply chain risk ascended to third place from eighth spot in February 2020.
Which of the following risks poses the greatest threat to your organisation's growth over the next 3 years?
2021 Pulse (Feb – Mar 2021)
2020 COVID-19 Pulse (Jul – Aug 2020)
Source: KPMG 2021 CEO Outlook Pulse
With COP26 taking place this year and the US re-joining the Paris Accord, 49 percent of CEOs plan to put in place more stringent ESG practices. A vast majority (89 percent) of business leaders are focused on locking in the sustainability and climate change gains their companies have made as a result of the pandemic. Nearly all (96 percent) global executives are looking to upweight their focus towards the social component of their ESG programs.
ESG has been the big climber in priorities since the COVID era began. Much more focus on staff mental health and employee engagement will continue but business also now has a heightened ‘green recovery’ agenda. Business has been largely taking the lead on issues like decarbonisation, but they need clear government and regulatory guidance on the road to Net Zero. From our survey, it does seem as if the US re-entering the Paris Accord will give the climate agenda a big push.
Chief Executive Officer
Doubling down on digital
Though the pandemic prompted many organisations to rethink their existing strategies, it only served to intensify business leaders’ commitment to digitisation. In fact, as companies move from crisis mode and attempt to normalise operations, CEOs are shifting their focus to cyber security issues and differentiating themselves through their digital connectivity with customers.
Three-quarters (74 percent) of business leaders report that the digitisation of their operations and creation of a next-generation operating model, have accelerated by a matter of months, up from 50 percent in August 2020. A sizeable majority of leaders have reported acceleration of new digital business models and revenue streams (69 percent) and to develop a seamless digital customer experience (56 percent).
This year, CEOs plan to spend more on digital technologies than last year, with 52 percent prioritising data security measures, 50 percent focusing on customer-centric technologies, and 49 percent committed to digital communications, such as video conferencing and messaging capabilities.
They will also pursue various avenues to bulk up their digital capabilities, since 61 percent state that their M&A appetite over the next 3 years will be driven mainly by the desire to acquire digital technology to transform their customer experience or value proposition.
Now that a year has passed since the pandemic first stirred abrupt uncertainty and change, CEOs have found their footing in stabilising their operations. Though few business leaders anticipate a speedy return to normal, they have a strong understanding of the requirements to ‘restore normalcy’ in the way they work. They also have a clear vision of actions required to reassert their competitiveness in a forever-changed marketplace, including building on their accelerated digital and ESG activities over the past year.
The Pulse Survey asks CEOs from the world’s most influential companies to provide their 3-year outlook on the economic and business landscape, as well as the ongoing COVID-19 pandemic. This Pulse Survey looks at how their views have evolved since July/August 2020.
Five hundred CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK and the US) were surveyed from 29 January – 4 March 2021. It covers 11 key industry sectors (asset management, automotive, banking, consumer and retail , energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications). All respondents represent organisations that have annual revenue over US$500M and 35 percent of the companies surveyed have more than US$10B in annual revenue.
NOTE: some figures may not add up to 100 percent due to rounding.
Unless otherwise indicated, throughout this webpage, “we”, “KPMG”, “us” and “our” refer to the network of independent member firms operating under the KPMG name and affiliated with KPMG International or to one or more of these firms or to KPMG International.