Top CEOs have shown resilience over the last decade as they have backed their businesses to prosper in the face of declining confidence in the global economy, a survey of more than 1,300 corporate leaders from across the world finds.
The KPMG CEO Outlook, now in its tenth year globally, revealed that just 72 percent of CEOs were confident about the direction of the world economy over the next three years, compared to 93 percent in 2015, when the survey first launched.
This confidence is demonstrated in CEOs future hiring plans, with 92 percent saying they were looking to boost employee headcount over the next three years. This is the highest proportion since 2020.
This bullish attitude towards hiring comes despite CEOs feeling the growing demands of leading a large organization keenly, with 72 percent confessing they feel more under pressure than the previous year to ensure the long-term prosperity of their business. Factors that CEOs believe are top threats to growth have also shifted, with supply chain challenges and operational issues pushing ahead of cyber security and last year’s number one threat – geopolitics and political uncertainty.
Bill Thomas, Global CEO & Chairman, KPMG International, adds that: "The last ten years has been framed by a backdrop of volatility and change, from a global pandemic to surging inflation and the rise of AI. In the face of such pressures, CEOs are steadfast about the need to invest in the future. Turbulence calls for leaders to be more resilient, agile and innovative than ever before."
"As we look ahead at the next ten years, CEOs who set bold strategies to adapt to our fast-changing world and invest in the right technologies and talent to make their plans a reality, can deliver sustainable, long-term growth."
Investing in innovation: AI front and centre as the urgency around adoption accelerates
Behind economic uncertainty (53 percent), the race to embrace artificial intelligence (50 percent) is the issue most top of mind for CEOs today – and it is clear that most leaders are reaffirming their commitment to increase investment in innovation and technology, including AI, as a driver of growth. Indeed, a majority (64 percent) identified AI as their top investment priority in 2024 – though most are looking at it as an investment that will pay off in the medium term, with 63 percent expecting to see a return on their investments within the next three to five years.
There is clear evidence that CEOs see people and capabilities as central to realizing the potential of generative AI, with the top three benefits of AI implementation recognized this year being increased efficiency and productivity, upskilling the workforce for future readiness, and increased organizational innovation.
Despite this, CEOs remain aware of the risks that the rapid push to implement new technology presents. Well over half (61 percent) of CEOs cited ethical challenges as some of the most difficult to address when implementing AI within their business, while a lack of regulation (50 percent) and technical skills and capabilities (48 percent) were other areas of concern.
Finally, while over three quarters (76 percent) of CEOs believe that AI will not fundamentally impact the number of jobs in their organization, only 38 percent felt that their employees have the right skills to fully leverage the benefits of AI and 58 percent agree that the integration of generative AI has made them rethink the skills required for entry-level roles.
Putting people first: CEOs doubling-down on the return-to-office debate
Since 2015, CEOs have grappled with shifts in working patterns as employees seek more balance, flexibility and strong alignment between personal beliefs and organizational purpose. This shift has seen successful leaders put people at the heart of their growth strategies and evolve their social contract with employees to attract and retain diverse talent and support growth and productivity.
This year’s survey shows increasing conviction that a full return to the office is on the cards in the near future. In fact, 83 percent now expect a full return-to-office within the next three years – up significantly from 64 percent in 2023. A further 87 percent of respondents say they are likely to reward employees who make an effort to come into the office with favorable assignments, pay rises or promotions.
While the focus remains on the workplace debate, CEOs acknowledge there are other talent-related issues that could affect their future growth. Almost a third (31 percent) say they are concerned about labor market shifts – specifically the number of employees that will soon retire and the lack of skilled workers available to replace them. In response to a perceived talent shortage, 80 percent of CEOs agree that organizations should be investing in skills development and lifelong learning within local communities to safeguard access to future talent.
Committing to ESG: navigating increasing politicization in some countries
The past decade has also seen CEOs renewing their commitment to ESG and sustainability as a source of value creation. In 2015, CEOs ranked environmental risk as their least concerning priority risk; fast-forward to 2024 and almost a quarter (24 percent) acknowledged that the principal downside of failing to meet ESG expectations would be giving their competitors an edge, coming out ahead of threat to their own tenure (21 percent) and recruitment challenges (16 percent).
Moreover, despite the increasing politicization of the ESG agenda in some countries, leaders are particularly sensitive to the impact ESG issues can have on trust and the reputation of their organization. Three quarters (76 percent) of CEOs said they would be willing to divest a profitable part of the business that was damaging reputation, while 68 percent of CEOs say they would take a stance on a politically or socially contentious issue, even if the Board raised concerns with them doing so.
However, well over half (66 percent) of CEOs admit they are not prepared to withstand the potential scrutiny and expectations of stakeholders, as well as shareholders, when it comes to ESG, suggesting they will take action to mitigate this. In response to growing stakeholder and external pressures, CEOs also appear to be shifting in how they communicate their ESG efforts. In this year’s global survey, 69 percent of CEOs revealed that while they’ve retained the same climate related strategies over the last 12 months, they’ve adapted the language and terminology they use to meet changing stakeholder needs.
Tellingly, as we head into 2025, when many organizations will be reporting on environmental targets, 30 percent say the greatest barrier to achieving their climate ambitions is the complexity presented by the decarbonization of their supply chain – an issue further compounded by current geopolitical tensions around the world and activities impacting major global trade routes.
The next generation of CEOs
Finally, as well as tracking trends over the last decade, the 2024 survey revealed a generational shift. Younger leaders (78 percent of 40–49-year-olds) admitted to feeling under greater pressure to ensure the long-term prosperity of their business than older leaders (68 percent of 60–69-year-olds). However, younger leaders also showed higher levels of confidence in navigating some of the critical issues facing their organization. While they are less confident that their organization can address all its ESG priorities simultaneously compared to their older counterparts, they are more confident in their ability to stand up to stakeholder scrutiny over ESG policies, with 43 percent of CEOs aged 40-49 expressing confidence compared to 33 percent of CEOs aged 50-59 and 30 percent for those in the 60-69 age group.
%20copy%20(4)%20copy-Medium-Quality%20(1).jpg)
.png){kind=logo}
Comments