Last August KPMG released the results of the 2020 Global CEO Outlook. 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.
Results of the global pulse survey showed that priorities of business leaders all over the world have shifted radically since the beginning of the year as existing trends like ESG (environmental, social and governance) factors, flexible working and digital transformation have accelerated.
In this article I present the latest CEO Outlook highlights and superimpose our firm’s own experiences.
Talent risk rises
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.
No CEO can now claim that their “greatest asset is our people” and not show that they mean it. This pandemic and the resulting lockdowns globally have forced corporate leaders to ensure that their talents are protected not just on their career trajectories, but also – literally – physically and mentally. From the start of the community quarantines in mid-March until this time, we at KPMG in the Philippines have put our peoples’ health as a top management priority.
We’ve strengthened programs targeting physical and mental well-being. For example, employees are encouraged to respond to a daily electronic survey on how they feel. An employee who indicates that he or she is not feeling well will be contacted by the company nurse who shall then guide that individual on steps to take, as well as monitor that person’s progress. An employee may also indicate that he or she is feeling anxious and request counselling from professionals that we have contracted for this purpose. These have certainly added costs to our operations, but we consider this as a must-do. At the most basic level, physically and mentally secure individuals are key to our strategy of success.
Personal impact of COVID-19 on CEOs
The COVID-19 crisis reflected the fact CEOs face the same health and family challenges like their people and communities when it comes to COVID-19. In fact, well over a third of chief executives (39 percent) have had their health, or the health of one of their family, affected by COVID-19, and 55 percent changed their strategic response to the pandemic as a result. Close to two-thirds of CEOs (63 percent) have made changes to their compensation as a result of the crisis. Nearly half (46 percent) of the leaders took a reduction in their future bonus and just under a third (31 percent) opted to make a charitable donation as a part of their salary.
Digital transformation key to improving operational resilience
CEOs have invested heavily in technology during the lockdown and they are looking into major dimensions of digital transformation to make their companies more operationally resilient, agile and customer-focused. In fact, majority (80 percent) of leaders have seen the digital transformation of their businesses accelerating during the pandemic. 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. With the pandemic transforming the world of work, 77 percent of business leaders say they will continue to build on their current use of digital collaboration and communication tools, and 73 percent believe that remote working has widened their available talent pool.
In the past decade we’ve been on a constant quest to transform ourselves digitally. Many of these investments paid off tremendously when the government imposed the community quarantines beginning in March. For instance, our shift to the online communication platform Microsoft Teams in 2019 allowed everyone in our firm – from the chairman on to the executive assistants – to fire up their laptops from home and continue working unhampered on the first day of the lockdown in our country’s history. As so many others have since done, we’ve certainly settled into the “new normal”, but when this first happened it was nothing short of revolutionary! Today, we continue to invest boldly in digital tools such as robotic process automation, digital document management systems with optical reading capabilities, cloud computing and artificial intelligence. These investments will support our drive to remain competitive and be more relevant to our clients.
Increased focus on purpose and ESG
The pandemic has accelerated global call for societal change and added further scrutiny from stakeholders. These factors have made CEOs question whether their company purpose meets the standard expected and needed by 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. The same majority (79 percent) also say that they feel a stronger emotional connection to their organization’s purpose since the beginning of the pandemic.
This has also resulted to acceleration of businesses’ efforts to address their own ESG efforts. As a result of immediate pandemic pressures, businesses are now intensifying efforts – focusing on the ‘social’ dimension of ESG. Six in 10 (63 percent) of CEOs admit that the pandemic has shifted their focus towards the social component.
The COVID-19 crisis has redefined business leadership and leaders are now expected to do more for the society. Environmental considerations remains an important priority, but leaders are also examining their wider societal impact. There is now a larger emphasis on an organization’s purpose over the long run.
Business leaders also recognize that recovery from the pandemic does not necessarily mean returning back to ‘normal’. Instead, there is an opportunity for everyone to redefine the future of work. This 2020 CEO Outlook shows that chief executives are more than willing to lead by example in these most unprecedented times.
This is the first part of our CEO Outlook series. Stay tuned as we discuss different aspects of the results of this pulse survey.
To view additional information about the study please visit home.kpmg/CEOoutlook. You can also follow @KPMG on LinkedIn and Twitter for updates and the conversation with #CEOoutlook.
Emmanuel P. Bonoan is the vice chairman and COO and head of advisory of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.
The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email ph-inquiry@kpmg.com.