KPMG 2022 CEO Outlook pulse survey

Two years since the World Health Organization’s pandemic declaration, the 2022 CEO Outlook pulse survey reveals how leadership strategies and concerns have shifted during an incredibly challenging time. CEOs are also embracing business agility to determine what a return to normal may look like in the months — and years — ahead. Based on a survey of 500 CEOs in 11 key markets, our CEO survey gives a timely snapshot of their views on business growth, organizational risks, digital transformation priorities and environmental, social and governance (ESG) strategy.

Our 2021 CEO Outlook Survey revealed increased optimism about economic and organizational growth amid a myriad of risks, while our 2022 Pulse Survey (conducted in January and February) shows that CEOs feel confident in the resilience of their businesses and their local markets. They anticipate growth — a sign that businesses are transforming with the times.

With a positive revenue outlook, CEOs are acutely aware of the risks they face to reach this goal. Overall, the 3-year risk landscape facing businesses of all sizes is starting to reflect those seen pre-pandemic, with cyber and regulatory risk leading the pack. Not far behind are tax and emerging/disruptive technology risk (both 11 percent) and supply chain risk (10 percent).

Respondents believe the pandemic is going to have lasting effects on their organization, and retaining talent is top of their lists. Companies are still addressing the “Great Resignation” — a growing economic trend of employees voluntarily leaving or switching jobs en masse. To solve challenges around attracting and retaining talent, 41 percent of CEOs plan to offer better incentives and higher compensation, which may have a knock-on effect on rising costs. In the near term, skilled talent shortages are a major concern, especially for smaller companies (at 17 percent), compared to larger companies (at 11 percent).

When asked about the greatest concerns currently facing their organizations in the year ahead, nearly one-fifth (19 percent) of CEOs say regulatory uncertainty, as well as pandemic fatigue (15 percent) and supply chain pressures (12 percent). Geopolitical issues and increasing energy costs are also proving worrisome in the short term, but particularly for CEOs at large businesses.

The pandemic is still having an impact on business plans. While pandemic fatigue continues to set in (and CEOs list it among their top current concerns), CEOs say they would need to see a significant drop in infections to move into the “new normal”. A significant drop in COVID-19 infection rates is identified by 62 percent of CEOs as the main trigger that’s needed for their business to return to a new normal, with lifting travel restrictions cited as the second trigger (51 percent). Throughout the pandemic, travel restrictions have stayed in the Top 3 triggers for businesses to adapt to a “new normal”, except for a drop to the fifth spot in mid-2020.

Considering heightened awareness of workforce stress, CEOs continued to show a measured approach to key issues like office space reductions and remote work arrangements, with many slightly more focused on a more hybrid approach than six months ago.

The pandemic has prompted many organizations to rethink their existing strategies and intensified business leaders’ commitment to digital transformations. CEOs are continuing to shift their focus to connectivity with customers and supporting the well-being of their workforce to maintain their digital advantage.

• A new customer experience: The customer experience has been forever altered by the pandemic. Among all areas of digital transformation, the focus on creating seamless customer experiences has increased sharply in the past 2 years. While 92 percent of CEOs have accelerated their customer-facing capabilities in that time, more than one-third (39 percent) say they’re years ahead of where they expected to be.
• An agile approach to digital transformation: Ninety percent of CEOs report they’ve accelerated the digitization of their operations and the creation of a next-generation operating model — some by a matter of months, others by a matter of years. Additionally, about four out of five CEOs (78 percent) say they have an aggressive digital investment strategy to stay ahead of their competition (i.e. securing first-mover or fast-follower status). But despite this, 82 percent claim that they need to be quicker to shift investment to digital opportunities and divest businesses that face digital obsolescence.
• A focus on people: Organizations understand they may need to evolve their approaches to digital — and CEOs plan to invest in their people to help get them to where they need to be. Three-quarters (74 percent) say the accelerated pace of transformation won’t be sustainable without first addressing workforce burnout. As a result, they’re looking to the health and well-being of their people to secure their digital advancements — and to deliver on their anticipated growth over the next 3 years.

Regulatory uncertainty — especially regarding increasing or frequently changing ESG regulations — is challenging for businesses to overcome. One-quarter (23 percent) of CEOs say increased or frequently changing regulations are the biggest hurdle to executing their ESG strategy. Identifying and measuring agreed metrics is named the second biggest challenge. In fact, 14 percent of CEOs say there’s a failure to create value from ESG in business.

Global CEOs also say the complexity of their supply chain is hampering efforts to achieve net zero. More than one-third (37 percent) say the complexity of decarbonizing supply chains is the main barrier to carbon neutrality, and more than a quarter (27 percent) cite a lack of appropriate technology as the biggest hurdle. And with supply chain risk in the Top 5 global risks to growth, organizations may need to keep a close eye on their partners and how they can better work together.

Tracking and reporting on a business’s carbon footprint can help it reduce its ESG impact — but non-cohesive ESG metrics weigh heavily on CEOs’ net zero ambitions. Nearly one-third (31 percent) of CEOs see measurement as the top challenge to delivering on their ESG strategy: 19 percent say that identifying/measuring agreed-upon metrics is their top challenge, and 12 percent say they need the necessary technology to measure and track ESG initiatives. In the longer term, a lack of skills and talent could hamper efforts to achieve net zero, a concern shared by 16 percent of CEOs.

When it comes to diversity and inclusion (D&I), CEOs understand scrutiny will increase — but they’re keenly aware that gender equity is tied to growth. More than nine out of ten (91 percent) CEOs say they have a responsibility to drive greater social mobility. Half (52 percent) agree progress on diversity and inclusion has moved too slowly in the business world, and the bigger the organization, the more likely their CEO believes D&I progress is moving too slowly.

Now that 2 years have passed since the pandemic first stirred abrupt uncertainty and change, CEOs have found their footing. Though CEOs are eager to return to a new normal, they understand that the business environment has changed. To continue the dialogue about these trends, and their significance, we’ll continue to share more key findings from the survey and how you may glean insight for your business and face the future with confidence.

_{Unless otherwise indicated, throughout this report, “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.}