Research conducted with global CEOs before COVID-19 and today show significant changes in the risks and priorities.
As a result of COVID-19, CEOs of the world’s most influential companies have identified talent risk as one of the most significant challenges to growth, and are examining their wider societal contributions and company purpose. In the first study of its kind to measure how CEOs’ priorities and concerns have changed during the global pandemic, KPMG teams globally conducted two surveys, one at the onset of the pandemic in January and another in July/August.
The KPMG 2020 CEO Outlook finds that the agenda of leaders has radically shifted since the beginning of the year, as existing trends like ESG (Environmental, Social and Governance) factors, flexible working and digital transformation have accelerated. When reflecting on prospects for growth over the next three years, 32 percent of CEOs are less confident now than they were at the start of the year in the global economy. CEOs, however, are more optimistic about their own country’s growth prospects (45 percent confident), and more confident again in the resilience of their own business over the coming three years.
Jamal Fakhro, Managing Partner of KPMG in Bahrain, commented ““The report highlights the evolving priorities, concerns and behaviors during the global pandemic. The impact from COVID-19 is driving uncertainties within the marketplace, which may even have a residual impact on organizations and individuals in Bahrain and worldwide in the foreseeable future. However, the impact from the pandemic has also accelerated solidarity between the public, private and civil society sectors, and the focus on ensuring safety and security for the people and community validates the business imperative in relation to societal well-being. Another critical highlight has been around how organizations have significantly accelerated their investment towards technology during the lockdown; taking serious steps towards digital transformation and digitization to make their organizations more operationally resilient, agile and customer-focused.”
Bill Thomas, Global Chairman and CEO, KPMG, elaborated on the report’s findings and said: “The significant change in CEOs’ priorities over the past six months is a clear indication that businesses have had to pivot at breakneck speed to deal with the challenges of the pandemic. Business leaders the world over are seeking to manage uncertainty with decisiveness. This crisis has accelerated strategies that were already in place around digital transformation and social responsibility. However, in other areas planning for the future is a lot harder, particularly thinking about future ways of working and problem solving. So, it’s perhaps no surprise that CEOs are focused on the importance of talent to sustain and grow any future business.”
Talent risk rises eleven places, named the largest threat to businesses
In January, CEOs ranked talent risk behind 11 other risks to growth. However, since the start of the pandemic, talent has risen to be named as the most significant threat to their businesses ahead of supply chain and environmental risk.
Digital transformation key to improving operational resilience
A majority (80 percent) of leaders have seen the digital transformation of their businesses accelerating during the pandemic. The biggest advancements have been in the digital transformation of operations, where 30 percent say that progress has put them years ahead of where they would have expected to be right now. Two-thirds (67 percent) of CEOs are likely to put more capital investment into technology than they are people, a figure that hasn’t changed at all since the initial survey.
Increased focus on purpose and ESG
Earlier this year, CEOs said their organizations have a larger role to play in society. Two-thirds (65 percent) of CEOs said that the public is looking to businesses to fill the void on societal challenges and three-quarters (76 percent) agreed that as leaders they are personally responsible for change on societal issues.
The pandemic has accelerated global executives’ focus on their roles in society and added further scrutiny on business practices. CEOs feel that the recent developments have made them question if their company purpose meets the standard expected from their stakeholders, with 79 percent saying that they have had to re-evaluate their organization’s purpose as a result of the COVID-19 crisis. That same majority (79 percent) saying they feel a stronger emotional connection to their organization’s purpose since the crisis began.
This development has put ESG near the top of the agenda for CEOs and nearly two-thirds (63 percent) of leaders have shifted the focus towards the social component of ESG during this period of global uncertainty. Despite the increased emphasis towards societal issues, many sectors are at risk from climate change. A large group of CEOs (65 percent) recognize that managing this risk will be key to determining their success, specifically whether they can keep their jobs over the next five years.
Bill Thomas concluded: “The COVID-19 crisis is redefining what good business leadership looks like. It is making demands of CEOs that few people could have imagined just months ago. Environmental considerations remain important, but societal impact is now much higher on the agenda. CEOs are more connected to their organization’s purpose, their reason for being, and are using it to guide their business decisions through continuing unpredictable times.”
© 2021 KPMG Fakhro, a Bahrain partnership registered with the Ministry of Industry, Commerce and Tourism (MOICT), Kingdom of Bahrain and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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