By Dr. Rasheed Al-Qenae, Managing Partner KPMG in Kuwait

Last month, we released the 2021 CEO Outlook Pulse Survey where we interviewed 500 CEOs across the 11 largest global economies to get an interim understanding of the recovery from the ongoing pandemic. Traditionally, CEO Outlook has been one of KPMG’s leading annual publications. However, considering the current market volatility, we decided to conduct this survey on a biannual basis to take the pulse of the economy and present a more timely picture for our readers.

While going through this edition of the survey, I couldn’t help but compare the results from the previous edition as there are stark differences between the two. The market has certainly shifted in the last six months and CEOs now have an almost entirely different set of priorities. 

 

The KPMG 2020 CEO Outlook Pulse Survey found that CEOs were focused on enhancing relations with their workforce and society at large. However, in 2021 CEOs are now planning what the post-pandemic new reality will look like but are concerned about the lack of access to a COVID-19 vaccine for their workforce, which is forcing them to alter their strategies.

 

Digital transformation remains a common growth agenda for CEOs.  About 80% of the CEOs in 2020 had seen their digital transformation programs accelerate during the lockdown period. Continuing this trend in 2021, 15% of the CEOs say the transformation has sharply accelerated progress. It is a similar picture in the creation of new digital business models and revenue streams, where 69% of the CEOs say progress accelerated by months, while 20% say it accelerated by years.

Let’s look at the various aspects of these two reports to understand where we may be in the recovery phase and how the market is shifting gears. 

The COVID-19 aspect

According to the 2020 Pulse Survey, the COVID-19 pandemic shook the confidence of CEOs. The report published in September 2020 found about 32% of the CEOs were less confident than they were at the beginning of the year when reflecting on global growth prospects.

In contrast, the 2021 study shows that the rollout of the COVID-19 vaccine program across the world, including Kuwait, is offering CEOs a dose of optimism. About 90% are keen to ensure their employees are safe and report to the workplace once they are vaccinated. However, 55% said they are worried about their employees’ access to a vaccine. Speaking about returning to the pre-COVID-19 state, 24% of the CEOs believe their organization has transformed completely and may not return to that place. The majority of CEOs, however, believe that business will normalize in 2022.

 

Risks and challenges

Perhaps the most interesting aspect of the Survey is the change in risk priorities.  In 2020, when asked about the biggest risk affecting their organization, about 21% of the CEOs acknowledged talent risk as the main threat. Compared to the beginning of the year, this had risen 11 places to be a major concern for long-term growth. This was followed by supply chain risk (18%) and environmental/climate change risk (12%).

In 2021, concerns over talent risk have decreased with just 1% naming it as their biggest risk and instead, 18% of the global leaders identified cybersecurity as the top concern impacting their operations and growth. Cybersecurity, which was ranked fifth in August 2020, is now considered of greater concern than regulatory (14%), tax (14%) and supply chain (12%) challenges.

 

ESG and geopolitical agenda

In 2020, we saw that organizations could not just focus on financial growth and that they needed to consider their role in society as a whole. About 79% of CEOs said they had a stronger emotional connect to their purpose compared to the start of the pandemic. Additionally, the pandemic had partly accelerated the business’s efforts to address the ESG (environmental, social and governance) efforts. Almost 63% of the CEOs acknowledged that the pandemic had shifted their focus toward ESG’s social component.

In the 2021 findings, ESG continue to top the corporate agenda. About 89% of the leaders are keen to lock in the climate change and sustainability gains their company had made because of the crisis and 49% are considering more stringent ESG practices in future. In addition, 96% said they look forward to giving increased importance to the ESG program’s social factor.

 

Society and diversity

In early 2020, CEOs saw a significant role for their organizations in tackling the global challenges facing society, as well as a personal responsibility for addressing societal issues. About 65% of the CEOs stated that the public expected businesses to fill the void on societal challenges and 76% agreed they had a personal responsibility as a leader for societal issue changes.

In 2021, however, global CEOs are split about the progress; 51% stated that diversity and inclusion have moved too slowly in the business world but 91% believed scrutiny on the diversity performance of organizations is expected to increase in the next three years. A vast majority (87%) still believe that there is a lot to do in terms of diversity in businesses.

The future of work post-pandemic

In 2020, most CEOs (68%) felt more connected to their workforce despite the physical barriers. As remote working widened the talent pool of potential employees, 75% of the businesses opted to change their recruitment strategies. This development was consistent with the finding that 69% of the CEOs would consider short-term reduction of office spaces.

As per the 2021 survey results, just 17% of the global leaders plan to reduce office space. Nearly 30% of the CEOs are dedicated to a hybrid working model, where employees work remotely for 2–3 days in a week. Moreover, only 21% are looking to hire people to mostly work remotely, down from 73% in the last year’s survey.

The findings from both the reports clearly indicate that while we have weathered the earlier wave of COVID-19, the pandemic is far from over and while the vaccination drive has brought in much-needed relief to businesses around the world, including Kuwait, the future remains uncertain. CEOs are constantly adapting to this unpredictable environment while working to ensure their businesses grow.  

The next version of CEO Outlook will be published by October 2021. I hope by that time, that the positive progress made to date in the fight against the pandemic has established itself in the economy and society at large.

Take care and stay safe.