The business world has been profoundly affected by the shocking changes of the past few years. Companies are increasingly opting for efficiency and internal organization strengthening as profit margins come under pressure from a range of global and geopolitical influences. Managers are increasingly valuing their workforce, even as they rely more on automation, AI, and the cloud.
73% of CEOs expect economic growth to decline in the next 12 months. Despite this, the majority (60%) do not plan to cut jobs, and a significant proportion (80%) do not plan to reduce employee pay. High inflation and macroeconomic volatility top the list of global threats. Reducing emissions and mitigating climate risks from corporate operations are among the strategic plans for 2023, according to PwC's 26th Annual Global CEO Survey.
CEOs' view on global economic growth is the most pessimistic ever compared to their expectations in recent years, and differs significantly from their optimistic outlook for 2021 and 2022, when more than two-thirds (76% and 77% respectively) expected the pace of economic growth to improve in the year ahead. In PwC's 26th Annual Global CEO Survey*, 4,410 chief executives from 105 countries and geographies participated at the end of 2022.
CEOs just recovering from the pressures of pandemic Covid-19 now face a highly volatile and unpredictable economic and geopolitical environment, exacerbated by record high inflation and the energy crisis in Europe. As a result, executives, who continue to face new challenges, are understandably gloomy about the economic outlook for 2023, with nearly three quarters forecasting a slowdown in economic growth. In anticipation of this, most are primarily concerned with improving current operational performance, leaving fewer resources to develop their businesses to meet future needs.
Training employees and developing technological transformation programmes remain key to the long-term survival of companies,
says Barbara Koncz, Partner in PwC Hungary's Tax Department, summarizing the main findings of the global survey.
In response to the current economic environment, CEOs are looking to cut costs and drive revenue growth. More than half of CEOs (52%) reported cutting operating costs, while 51% reported raising prices and 48% reported diversifying product and service offerings. However, more than half (60%) of CEOs say they have no plans to reduce their workforce in the next 12 months. And the vast majority (80%) indicate they do not plan to reduce staff remuneration in order to retain talent and mitigate workforce attrition rates.
The survey also looked at what business leaders are focusing on investing in over the next year. The responses suggest that
executives are focusing their resources on automating processes and systems (76%), implementing systems to upskill their workforce in priority areas (72%) and implementing technologies such as artificial intelligence, cloud, and other advanced technologies (69%).
Torn between the demands of short-termism and long-term transformation, CEOs say they are primarily consumed with driving current operating performance (53%), rather than evolving the business and its strategy to meet future demands (47%).
*PwC conducted their annual global survey of 4,410 CEOs between October and November 2022. The global and regional figures in the survey were weighted by the nominal GDP of the country or region in order to ensure that the CEOs' views are representative of all major regions. Sector-level and country-level figures are based on unweighted data collected from a total sample of 4,410 CEOs. Interviews were conducted with CEOs from three global regions (North America, Western Europe and Asia Pacific). The full report is available at pwc.com and the interviews are available at strategy-business.com/mindoftheceo.