As a result of COVID-19, CEOs leading some 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 conducted two surveys, one at the onset of the pandemic in January and another in July/August.
According to the 2020 KPMG CEO Outlook, 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% 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% confident), and more confident again in the resilience of their own business over the coming three years.
Talent risk 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.
Personal impact of COVID-19 on CEOs
39% of respondents have had their health or the health of one of their family affected by the virus and 55% changed their strategic response to the pandemic as a result. Global executives have also been impacted financially, with 63% citing that they have made changes to their compensation, as a result of the COVID-19 crisis.
Digital transformation key to improving operational resilience
CEOs have invested heavily in technology during the lockdown period and they rely on digital transformation to make their companies more operationally resilient, agile and customer-focused. 80% of leaders have seen the digital transformation of their businesses accelerating during the pandemic. The biggest advancements have been in the digitisation of operations, where 30% say that progress has put them years ahead of where they would have expected to be right now. 67% of CEOs are likely to put more capital investment into technology than people, a figure that has not changed at all since the initial survey.
Increased focus on purpose and ESG
Earlier this year, CEOs said their organisations have a larger role to play in society, with 65% saying that the public are looking to businesses to fill the void on societal challenges. 76% 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’s purpose meets the standard expected from their stakeholders, with 79% saying that they have had to re-evaluate their organisation’s purpose as a result of the COVID-19 crisis and that they feel a stronger emotional connection to their organisation’s purpose since the crisis began.
This development has put ESG near the top of the agenda for CEOs, as 63% 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. 65% of CEOs recognise 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, Global Chairman & CEO, KPMG, said: “The significant change in CEOs’ priorities over the past 6 months is a clear indication that businesses have had to pivot at breakneck speed to deal with the challenges of the pandemic. Business leaders around the world are seeking to manage uncertainty with decisiveness. This crisis has accelerated strategies that were already in place around digitisation 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 is perhaps no surprise that CEOs are focused on the importance of talent to sustain and grow any future business”.
“In addition”, Mr. Thomas continued, “the COVID-19 crisis is redefining what good corporate leadership looks like. Environmental considerations remain important, but societal impact is now much higher on the agenda. CEOs are more connected to their organisation’s purpose and are using it to guide their business decisions through continuing unpredictable times.”
“This year’s survey indicates that the COVID-19 crisis creates the need for even more organisational resilience. In order to rebound and return to the growth path, today’s CEOs need to focus more on agility, digital transformation and skillful talent, while redesigning their strategies regarding corporate social responsibility and sustainability”, said Christos Vasiliou, Managing Director at KPMG in Cyprus.
About KPMG’s 2020 CEO Outlook
The KPMG CEO Outlook provides an in-depth three-year outlook 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 between 6 July and 5 August to understand how CEO thinking has evolved during the crisis. In both instances, all respondents’ organisations have annual revenue over US$ 500 million and a third of the companies surveyed have more than US$ 10 billion in annual revenue.
The January / February survey included leaders from 11 key markets (Australia, China, France, Germany, India, Italy, Japan, Netherlands, 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 8 of key markets (Australia, Canada, China, France, Italy, Japan, UK and US).
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