Talent and corporate responsibility top the list of CEO concerns in the wake of the COVID-19 crisis
As a result of COVID-19, CEOs 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.
The 2020 KPMG CEO Outlook finds that 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 percent 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 percent confident), and more confident again in the resilience of their own business over the coming three years.
Bill Thomas, Global Chairman & CEO, KPMG, said: “The significant change in CEOs priorities over the past six months, is a clear indication that businesses have had to pivot at breakneck speed to deal with the challenges of the pandemic. Business leaders the world over are seeking to manage uncertainty with decisiveness. This crisis has accelerated strategies that were already in place around digital transformation 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’s perhaps no surprise that CEOs are focused on the importance of talent to sustain and grow any future business.”
Key Fingings:
Talent risk rises eleven places, 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
Four in ten respondents (39 percent) have had their health or the health of one of their family affected by the virus and 56 percent changed their strategic response to the pandemic as a result. Global executives have also been impacted financially, with nearly two-thirds (63 percent) citing that they’ve made changes to their compensation as a result of the COVID-19 crisis.
Digital transformation key to improve operational resilience
CEOs have invested heavily in technology during the lockdown period and they are betting on major dimensions of digital transformation to make their companies more operationally resilient, agile and customer-focused. A majority (80 percent) of leaders have seen the digital transformation of their businesses accelerating during the pandemic. The biggest advancements have been in the digital transformation of operations, where 30 percent say that progress has put them years ahead of where they would have expected to be right now. Two-thirds (67 percent) of CEOs are likely to put more capital investment into technology than they are people, a figure that hasn’t changed at all since the initial survey.
Charoen Phosamritlert, Chief Executive Officer of KPMG in Thailand, Myanmar and Laos, said: “ASEAN CEOs also put technological investment at the forefront. Of all the technology disruptors, ASEAN CEOs focus highly on cloud technology with 79% putting very significant or significant increase in investment in cloud technology. However, as opposed to the belief that technology could make the workforce obsolete, ASEAN CEOs remain optimistic, with 80% of the ASEAN CEOs in the survey firmly believing that technology will create more jobs than eliminate them (global average is 68%). This is a good opportunity for companies to invest in new technology to increase efficiency and upskill their staff with technology skills.”
Increased focus on purpose and ESG
Earlier this year, CEOs said their organizations have a larger role to play in society. Two-thirds (65 percent) of CEOs said that the public are looking to businesses to fill the void on societal challenges and three-quarters (76 percent) 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 purpose meets the standard expected from their stakeholders, with 79 percent saying that they have had to re-evaluate their organization’s purpose as a result of the COVID-19 crisis and that same majority (79 percent) saying they feel a stronger emotional connection to their organization’s purpose since the crisis began.
This development has put ESG near the top of the agenda for CEOs and nearly two-thirds (63 percent) of leaders 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. A large group of CEOs (65 percent) recognize that managing this risk will be key to determining their success, specifically whether they can keep their jobs over the next five years.
Charoen Phosamritlert said: “Similarly, ASEAN CEOs view that the most important factors for increasing brand reputation are connecting the brand with a compelling corporate purpose (27%), gaining trust of new generation and employees (25%), ESG factors (17%) and a commitment to sustainability goals (12%). Companies can no longer focus just on the sales figures and bottom line. They need to be an active member of society and play a sincere role in providing societal benefit in order to survive, thrive and be trusted.”
Bill Thomas concluded: “The COVID-19 crisis is redefining what good business leadership looks like. It is making demands of CEOs that few people could have imagined just months ago. Environmental considerations remain important, but societal impact is now much higher on the agenda. CEOs are more connected to their organization’s Purpose, their reason for being, and are using it to guide their business decisions through continuing unpredictable times.”
