Top executives are confronting various challenges as they steer their firm amid what feels like a never-ending storm.
International management consulting giant KPMG conducted a recent survey of more than 1,300 CEOs of the world’s biggest businesses to gain insights into their concerns. Evidencing the rapid changes taking place in the business world, the 2023 CEO Outlook report indicates that geopolitics and political uncertainty are now the leading perceived risks this year and were not considered a top five concern in last year’s study. Executives must deftly navigate a heated political climate that now permeates the workplace, including politicizing environmental, social and governance (ESG) initiatives.
Additionally, record-high inflation and interest rates drive up costs for businesses and consumers, battles over remote work versus in-office, concerns over cybersecurity threats, the ethical adoption of artificial intelligence, and managing shareholder and stakeholder demands are other front-burner issues. There are still lingering matters involving supply chain disruptions and labor shortages.
On the positive side, confidence in the global economic outlook over the next three years is similar to last year’s survey—just over 70%. Nearly 80% of CEOs report that uncomfortably high inflation and the Federal Reserve Bank’s interest rate hikes may lead to a worldwide recession or, hopefully, a soft landing. Unfortunately, around 77% of CEOs feel that the escalation in the costs of living puts downward pressure on businesses’ prosperity for the next few years.
In a conversation about the survey with Bill Thomas, global CEO and chairman of KPMG International, Thomas shared that he, similar to his chief executive cohorts, is focused on the effects of international upheavals, ESG initiatives and using AI in a positive way to help workers do their jobs better and more efficiently.
Thomas, a long-term veteran of KPMG who worked his way to the CEO suite, feels confident that KPMG and other organizations can withstand the recent headwinds and find ways to succeed and overcome obstacles.
“What I find reassuring is that, despite the many macroeconomic and geopolitical challenges right now, mid-term global confidence remains relatively robust,” said the chief executive. He continued, “There’s a consensus that we can, in time, return to a path of international, sustainable long-term growth.”
Return-To-Office Plans
According to the survey, many CEOs are still in the pre-pandemic mindset regarding the physical workplace. About 64% of chief executives predict an eventual total return to in-office work within the next three years. However, almost 90% of the executives acknowledged that offering valid reasons, such as financial incentives and promotional opportunities, will lead to a return to in-office experience.
Prioritizing ESG
ESG—the framework used to assess an organization’s business practices and performance on various sustainability and ethical issues—has created a rift among executives and employees with strong feelings about the initiatives. The study reveals that almost 70% of CEOs are proponents of ESG.
About 35% of CEOs are becoming more interested in the specific parts of ESG and prioritizing the agendas that resonate with the features that have an impact. CEOs are cognizant that many stakeholders are passionate about this program, and 64% believe that the public looks to businesses to help lead the way for improving societal changes.
Thomas said about the initiatives, “For CEOs, the opportunity to drive a return to a more equitable, successful planet is right in front of us.”
Generative AI
The survey tracks the overall interest in generative AI. CEOs are investing in AI to gain a competitive edge, as 70% are prioritizing leveraging the tech to enable employees to work more efficiently, as they won’t get bogged down with rote, low-impact responsibilities. More than 50% of the respondents anticipate reaping a return on their investments within three to five years. There are, however, some concerns. CEOs pointed out the potential for ethical challenges, lack of regulatory oversight and the costs involved.
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