HOW CEOs ARE COPING WITH UNCERTAINTY
So how are the chief executive officers (CEOs) within our top companies preparing for the future when it is increasingly uncertain? Part of the answer to that question can be found in the latest Annual Global CEO survey from accountants PWC.
Through interviews with 1,322 chief executives in 77 countries, it gives us an idea of how those responsible for some of the world’s largest firms are approaching the corporate and economic challenges of 2015 and, more importantly, how their companies will cope with an ever-changing business environment.
From the point of view of the global economy, the economic outlook looks promising in the short term with nearly two thirds of chief executives seeing more opportunities for growth in 2015 than there were three years go.
Unfortunately, this may not last with only 37 per cent believing that the economic outlook will improve over the next twelve months. Over-regulation, rising taxes and the way national governments are dealing with deficit reduction are seen as being matters that businesses are most anxious about. In addition, there continues to be apprehension amongst CEOs that increased competition and changing customer behaviour will be disruptive to their business during the next five years.
Given this, it is not surprising that many are differentiating themselves from competitors as well as making greater efforts to understand and meet customer needs. They are also attempting to anticipate which markets around the World offer the best opportunities for their businesses at a time when growth remains uncertain, especially in Europe and the Asia.
For CEOs in the UK, the main challenge is the lack of access to the right talent and skills, which is seen as the key business threat by 84 per cent of British respondents. This is far higher than for their counterparts in most European economies where businesses seem to have few problems in attracting and nurturing the right people.
However, it is worth noting that most CEOs do appreciate that having an approach that embraces diversity and inclusiveness in terms of talent for the business is seen as something which can boost the competitive capability of the organisation, especially in areas such as innovation, collaboration, and emerging customer needs. Unfortunately, a third of CEOs still state that their organisations don’t have a strategy to promote diversity and inclusiveness despite the fact that a formal approach to this issue can help to broaden the mix of talent.
As discussed in this column last week, soft skills are becoming even more important to organisations and CEOs are looking for the right mix of people who have both the hard technical skills as well as the other competences, such as communication skills and teamwork, than can transform their business. Attracting employees who have both set of skills will be vitally important where innovation and responding to change are the primary means by which firms will aim to grow their operations.
But it is not only new talent that will determine the success of a business and eight out of ten CEOs were supportive of equipping existing employees with new skills as a means of supporting the future of their organisation.
In addition to nurturing talent within the company, external partnerships with various stakeholders are also becoming more important as these leaders of industry look to increase their firm’s competitiveness.
According to the survey, half of them plan to enter into new strategic alliances or joint ventures in the next year in order to enhance their capabilities. Their rationale for this has changed considerably from sharing risks or reducing costs to more positive reasons such as access to new technologies and improving innovation capabilities.
The choice of partners is also changing with large firms engaged not only in increased collaboration with companies within their supply chains but also with firms from other industries, universities and even competitors.
For those that are forming links with their customers, it is clear that these businesses are going out to the market to find new ideas in order to drive innovation. Indeed, the use of digital technologies is now perceived as by such firms as an important tool in creating value for both internal and external collaboration.
Therefore, there remain key challenges for all businesses in an increasingly uncertain environment. However, it is somewhat reassuring for the growth of the global economy this year that, according to the PWC Global CEO survey, the leaders of the World’s major corporations are focused on dealing positively with such challenges and in ensuring their businesses continue to be competitive through increased collaboration, talent development and innovation.