The 2020 KPMG CEO Outlook pulse survey finds the world’s most senior executives are using this unparalleled moment in history to shift and enhance relationships with their employees and society at large. As businesses and governments continue assessing the long-term impact of COVID-19 and prepare for a potential second wave of lockdowns, some fundamental changes have already been solidified.
This year’s study, as in previous years, provides an in-depth three-year outlook of global executives on enterprise, social issues and economic growth. It also includes new and changing questions to capture CEOs’ outlooks on the evolving dynamics stemming from the COVID-19 pandemic. 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. In July and August (6 July - 5 August 2020), KPMG conducted a follow-up survey of 315 chief executives across the globe 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.
This latest CEO Outlook study highlights the following trends and developments:
The CEO Outlook finds that the COVID-19 crisis has shaken CEO confidence. One third (32 percent) say they are less confident now than they were at the start of the year when reflecting on prospects for global growth over the next three years. 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.
Close to a quarter (23 percent) see their company’s earnings outlook over the next 3 years either flatlining or shrinking. But over a third (35 percent) still see earnings growing at more than 2.5 percent a year over the next three years.
We found that 39 percent of CEOs have had their health, or the health of one of their family, affected by COVID-19, and 55 percent changed their strategic response to the pandemic as a result.
Many leaders also cut their compensation to reflect the new realities faced by many businesses. Close to two-thirds of CEOs (63 percent) have made changes to their compensation as a result of the crisis. Nearly half (46 percent) of the leaders took a reduction in their future bonus and just under a third (31 percent) opted to make a charitable donation as a part of their salary.
Business leaders recognize that there have been new challenges to contend with during the lockdown period. A potential second wave of COVID-19 in their key markets would likely deepen these concerns with further adverse impact in retaining key employees, hiring talent and keeping their workforces productive.
When we asked CEOs what poses the biggest risk facing their organization over the next 3 years, they identified talent risk as the main threat, a category which encompasses recruitment & retention, overall wellbeing and health of staff members. This was the threat that CEOs were least concerned about at the beginning of the year. As a result of this pandemic, it has now risen 11 places to be the highest perceived threat to long-term growth. Over a fifth (21 percent) of the global CEOs interviewed identified talent as their main organizational threat in the next 3 years, ahead of supply chain risk (18 percent) and environmental/climate change risk (12 percent).
Supply chain concerns are also rising compared to earlier in the year, as organizations grapple with the immediate need to manage supply chain disruptions and guard against the prospects of a return to territorialism (given the potential of the pandemic to accentuate nationalistic tendencies). Over two-thirds of organizations (67 percent) have had to rethink their global supply chain approach given the disruptive impact of the pandemic.
Earlier this year when we initially surveyed CEOs – they saw a significant role for their organizations in tackling the critical global challenges facing society, as well as a personal responsibility themselves to address big societal issues. Two-thirds (65 percent) of CEOs surveyed in Jan-Feb said that the public is looking to businesses to fill the void on societal challenges and 76 percent agreed that they have a personal responsibility to be a leader for change on societal issues.
COVID-19 has accelerated the call for societal change and added further scrutiny from stakeholders towards businesses and their leaders. These factors have caused CEOs to question whether their current company purpose really meets the needs of stakeholders, with 79 percent also saying they have had to re-evaluate their organization’s purpose as a result of COVID-19. At the same time, the same proportion of CEOs (79 percent) say that they feel a stronger emotional connection to purpose since the crisis began, which has guided their decision-making throughout the crisis.
This has partly accelerated businesses’ efforts to address Environmental, Social and Governance (ESG) efforts. As a result of immediate pandemic pressures, they are in fact intensifying efforts – focusing on the ‘Social’ dimension of ESG. Six in ten (63 percent) of CEOs admit that the pandemic has shifted their focus towards the social component of ESG.
Nearly three quarters (71 percent) of CEOs want to accelerate their climate change gains as a result of the changes made during the pandemic – this is particularly pronounced among the largest companies globally ($10B+ revenues). With many companies and sectors at risk from climate change, 65 percent of CEOs recognize that managing this risk will be key to determining their success, specifically whether they can keep their jobs over the next 5 years.
Being able to draw on a diverse spectrum of talent is critical to addressing the unique challenges of the pandemic, and CEOs are looking to strengthen their anti-discrimination approaches. Furthermore, in the wake of widespread protests following the death of George Floyd on 25 May, 81 percent of organizations will introduce new anti-racism measures – 30 percent have already done so and 51 percent plan to do so shortly. Most leaders (73 percent) are confident in their business's current anti-discrimination and anti-racism measures, and only 7 percent are prepared to concede that they lack confidence.
Despite the physical barriers most CEOs (68 percent) feel more connected to their workforce following this pandemic and over three quarters (77 percent) of companies will continue to embrace digital collaboration and communications tools. These changes mean that three quarters (75 percent) of businesses are looking to change their recruitment strategies as remote working has widened their potential talent pool of potential employees for future positions. This development aligns with the fact that 69 percent of CEOs stated that their companies will be downsizing their office space in the short term.
The data points out that the CEOs who have been personally impacted by the pandemic are more likely to have improved their communications to employees during this crisis. With three-quarters (75 percent) of personally impacted senior executives citing an improvement shaped by their personal experiences, as opposed to the 63 percent of the leaders that haven’t been personally impacted that cited an improvement in their employee interactions.
To hedge against further unprecedented disruption, CEOs are betting on major dimensions of digital transformation and a vast majority () have seen their transformation programs accelerate during the lockdown period. The biggest advance has been in the digitization of operations, where 30 percent say that progress has put them years in advance of where they would have expected to be right now.
Now in its sixth year, the 2020 KPMG CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth. The survey offers a unique perspective on the mindset shift of Global CEOs since the lockdown.
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. In July/August (between 6 July to 5 August 2020), KPMG conducted a follow-up survey of 315 chief executives across the globe 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, with no responses from companies under US$500M.
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 pulse 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.
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.