KUCHING: Only 22 per cent of chief executive officers (CEOs) in Asia Pacific remain confident about the growth prospects of the global economy over the next three years, representing a significant drop from 67 per cent since January.
On a more positive note, CEOs are much more assured in the resilience of their own business as 63 per cent expressed confidence in their company’s growth for the same time period.
This was according to the 2020 KPMG Global CEO Outlook report which measures how CEOs’ priorities and concerns have changed during the global pandemic. In the first study of its kind, KPMG conducted two surveys – one at the onset of the pandemic in January and a second survey in July/August.
A clear result from the study reveals that business leaders have radically shifted their perspectives as businesses and governments around the world continue assessing the long-term impact of Covid-19.
During this period of unprecedented uncertainty, CEOs are prioritising digital transformation, talent and ESG (Environmental, Social and Governance) factors at the top of their agendas.
Datuk Johan Idris, managing oartner of KPMG in Malaysia commented: “A majority of CEOs have undertaken critical measures to bolster their company’s medium-term resilience.
“This is particularly evident at the height of the crisis when business leaders worldwide took steps to maintain business-as-usual activities in answer to restricted movements.
“With the extension of the Recovery Movement Control Order (RMCO) until December 31, 2020, business leaders are forced to relook at their operational strategies and key to this is the ability to move away from short-term measures and prepare for mid and long-term growth.”
One way CEOs are collectively doing to secure long-term growth is channeling resources towards digital transformation initiatives. Before the pandemic, 64 per cent of CEOs felt overwhelmed by the lead times required to achieve significant progress on digital transformation.
However, following worldwide lockdowns and the need for physical distancing, 46 per cent of CEOs have reported that progress for their digitization of operations has sharply accelerated, putting them years in advance of where they expected to be. Almost two out of three (61 per cent) plan to prioritize more capital investment in buying new technology and digitization.
“Clearly, there has been a momentous change in mindset in that CEOs are now more confident and willing to invest in technology to make their companies more operationally resilient, agile and customer-focused to achieve growth during this tumultuous time. We expect digital acceleration to increase in speed and scope even after the pandemic subsides,” Johan observed.
CEOs have identified talent risk as the main threat, a category which encompasses recruitment/retention, overall wellbeing and health of staff. This was the threat that CEOs were least concerned about at the beginning of the year. As a result of this pandemic, it has now risen to be the highest perceived threat to long-term growth.
This could reflect the challenges CEOs face with recruiting and retaining personnel while motivating the workforce despite disruption to the usual ways of working. Most CEOs (72 per cent) have said that remote working caused them to make significant changes to their policies to nurture culture, while 69 per cent reported how remote working has widened their potential talent pool for future hires.
In addition, the rise in supply chain concerns compared to earlier in the year could be attributed to the fact that over two-thirds of organizations (72 per cent) have had to rethink their global supply chain approach given the disruptive impact of the pandemic. This could potentially lead to a redesign of global supply chains to become more agile in response to changing customer needs, and more robust to reduce risks and disruptions over the long term.
Recent developments have driven 78 per cent of CEOs in Asia Pacific to develop a stronger emotional connection to their organization’s purpose, with 66 per cent stating how they responded to the pandemic by shifting focus towards the ‘Social’ component of their ESG program. KPMG’s survey also found that 76 per cent have had to re-evaluate their organisation’s purpose as a result of the Covid-19 crisis.
Johan concluded, “Recovery from the pandemic does not mean a return to normal, but instead an opportunity to define our post-pandemic reality. As the crisis continues to change what good corporate leadership looks like, the role of the CEO is more important than ever in steering the business towards growth in the new reality and beyond.”