More than half of the CEOs from the one hundred who participated in the PwC Czech CEO Survey 2012, all of whom are heads of leading domestic companies, believe that the recipe for success this year will be to strengthen a company’s position on the domestic market or come up with a new product or service to attract customers. More than four fifths of companies intend to use their own resources to finance their growth; bank loans will make up about a quarter of them. Overall, this year, domestic enterprises expect little employment growth.
The Czech CEO Survey 2012 showed that the heads of major domestic companies are concerned about the development of the global economy - nearly two thirds (61%) of them expect further deterioration, but they are convinced that they can even push this year to achieve sales growth. More than half of respondents (58%) are at least somewhat confident that they can achieve this aim. Specifically, they see opportunities in increasing their share of the existing markets (36%) and in developing a new product or service (27%). Only less than a fifth (18%) of respondents see growth potential in foreign market expansion. The ambitions of Czech companies abroad are closer to the world average (18%) than to that of the CEE (6%).
Although the Czech companies are not the largest ones globally, they still have not learned to look for strong partners, or at least engage in industry cooperation. Only 7% of Czech CEOs see growth opportunities this year in a joint venture or strategic alliance. When one looks at the CEE average, joint ventures represent a significant growth opportunity for almost a quarter (22%) of respondents.
“Czech companies continuously make the same strategic mistake when trying to do everything by themselves. They are too small and only supplement capacities from global players on the world markets or they take positions on niche segments. They don’t make use of their potential. The way to be successful is to capitalise on my expertise and come together with a stronger player.”
Financial resources for growth
Domestic enterprises plan to finance their growth mainly from their own resources (83%, the same as last year). There is a slight increase in the proportion of those who are considering taking out a bank loan (from 24% to 28%). Other sources of funding are in our region rather marginal and used only in specific cases. For example, 5% of CEOs plan to use private equity this year.
“Czech businesses perceived a moderate easing of credit market last year. However, more strict regulation such as Basel III could make banks tighten conditions again.”
Human resources for growth
Last year, approximately half of the companies increased the number of employees, less than a quarter maintained the same number while more than a quarter let people go. A comparison with the plans for 2011 thus shows that most companies hired more than they had originally planned, or less at least let fewer employees go. This year, one third (33%) of CEOs plan to maintain their current headcounts, 36% of CEOs will increase while 32% will decrease headcounts. The extremes in those who will either increase headcount or decrease it are much less pronounced when compared to the results from 2011. Companies learned the lesson of the past three years, hence mass decreases in headcounts will be an exception.
“Year 2008 spanned the spiral of pessimism, when companies decreased headcounts, and in a panic, dismissed even high-quality, strategic talents, but realised after few months that they desperately missed them. Now, they have learned their lessons. The saving measures are more selective and with respect to strategic needs for next years.”
Middle management - the right motivation and retention will be the main HR agenda for CZ CEOs this year. Permanent questions that remain include hiring and motivating young employees and retaining and motivating experienced technical staff. The issue of young workers is a much hotter question globally than it is in the CEE. Also, the senior management issue is a much greater challenge in the world. Yet, Czech CEOs have still not solved this problem (less than 8% CZ vs. 28% of global CEOs).