Australian business leaders are increasingly using their company purpose as a framework for decision-making in the COVID-19 era, a global survey of CEOs by KPMG has found.
Australian CEOs were top of the eight countries surveyed in July for using purpose to provide a framework for making quick/effective decisions during the COVID-19 era (90 percent); and to help in driving action to meet needs of stakeholders (84 percent). A large majority of leaders here said they felt a stronger emotional connection to their purpose since the pandemic started (82 percent), although 84 percent also said they had had to re-evaluate that purpose, given COVID-19, to better address the needs of their stakeholders.
The study also found that talent and supply chain risks have risen in the priority order, while a large majority say that the COVID-19 experience has accelerated their digital approach both to customers and internal operations – by years in many cases.
The original KPMG 2020 CEO Outlook survey of 1300 CEOs across the globe was conducted in January and February, before COVID hit, and has been supplemented by a second survey of 315 leaders in July and August (including 50 from Australia) to understand how CEO thinking has evolved during the crisis.
Compared with January, there has been a slip in confidence among both Australian and global CEOs in terms of the three-year growth outlook for their own company – but not hugely so. 74 percent of Australian leaders were still confident about their earnings outlook, compared with 86 percent earlier this year. There were larger falls in confidence in terms of their industry sector and the national and global economies, although 42 percent of Australian leaders were still relatively optimistic about prospects for their country. Only one-third of CEOs here were hopeful about the world economy over the next 3 years.
The huge changes in how we work brought about by the COVID-19 lockdowns were also evident – of the Australian CEOs, 70 percent said widespread flexible/home working had widened their potential talent pool; 72 percent said staff communications had improved; and 78 percent said they would build on use of digital collaboration and communications tools.
Gary Wingrove, KPMG Australia CEO said: “While COVID-19 has been a traumatic experience for everyone and has damaged economic activity, it has nonetheless been a catalyst for some positive and long-lasting impacts on businesses. A large majority of leaders said they felt a greater emotional connection to their company’s purpose since the shutdown, and that it was helping to drive action to meet the changing needs of their stakeholders. Employees are at the heart of this for CEOs, with staff engagement and retention rising in priority. Talent risk moved from 11th place in the list of top risks in January, to first now for both Australian and overseas CEOs.”
He added: “It is stark that digital transformation has accelerated during the crisis. More than three-quarters of CEOs here and internationally said the crisis had brought forward the provision of digital customer experience by years or months and it has also sped up digitisation of operations, and the creation of digital models and revenue streams. Separate KPMG Australia research has recently shown that most consumers now want either wholly or mostly online service in areas like financial services, so this development will have positive and permanent effects.”
“The rise of supply chain risks in the list of key risks facing CEOs again reflects the changed 2020 environment. This was barely mentioned in the January polls, but is now second on the risk list in the Australian and global CEOs responses.”
For many CEOs, the impacts of the pandemic have been felt close to home – both in Australia and overseas. 40 percent said a member of their extended family had had their health affected by COVID-19. Over 70 percent here and internationally said their personal experience of the impact of the virus had reshaped their strategy for addressing the business challenges posed by the crisis.
The COVID-19 crisis has also hit CEO pockets – half of Australian CEOs and 63 percent globally said they had taken a remuneration cut – the most common was partial reduction from future bonus; then a charitable donation from salary.
While the societal impact of business – the ‘S’ in ESG (Environmental, Social and Governance) – has risen during the pandemic, and climate change has taken a temporary backseat in their priorities, 84 percent of Australian leaders said dealing with climate risks effectively would be crucial in their roles over next five years. This is much higher than the 65 percent of overseas CEOs who said this. There was a widespread desire to ‘lock in’ the climate change gains made during the pandemic.
The KPMG CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth. KPMG initially surveyed 1,300 CEOs in January and February, before many key markets were beginning to feel the full impact of the pandemic crisis. KPMG conducted a follow-up survey of 315 chief executives 6 July - 5 August to understand how CEO thinking has evolved during the crisis. In both instances, all respondents have annual revenue over US$500M and a third of the companies surveyed have more than US$10B in annual revenue.
The January/February survey included leaders from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications). The recently conducted follow-up survey included CEOs across the industries mentioned above and from eight key markets (Australia, Canada, China, France, Italy, Japan, UK and US). NOTE: some figures may not add up to 100 percent due to rounding.
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