The 16th PwC Global CEO Survey was presented at this year's World Economic Forum in Davos. 1,330 top managers from over 60 countries were interviewed for the survey. This was the first time the survey was separately carried out among top managers in Estonia.
As usual, one of the most important questions asked in the survey concerned the probability of their company's sales increasing in the coming year. The percentage of managers who are convinced that sales will grow is regarded as a kind of an 'optimism index', which unfortunately has been going down in recent years. The share of managers who believed that their companies would grow was 48% in 2011 and 40% in 2012. This year, however, only 36% of managers believe that growth is possible. Such optimism is considerably below the average in Western Europe and the US. In Scandinavia, which is the most important market for Estonia, it is only 22%.
However, the optimism of Estonian managers is relatively high: 35% of the managers who took part in the survey were convinced that the sales turnover of their companies would increase this year and equally many consider such an increase rather likely. Only 7% believe that the sales revenues of their companies will definitely not grow and 23% doubt that it will happen. As Estonian managers tend to be rather conservative, we hope that their moderate optimism is justified and indicates that the top businessmen in Estonia are feeling relatively secure in the midst of the general turmoil created by the European debt crisis and that this is also reflected in their recruitment plans. Although more than a half (55%) of leading companies already increased their staff numbers last year, approximately one-half of those interviewed expect to also hire new employees in 2013, and just one-fifth believe that the number of their employees will decrease.
Surprisingly, the biggest concern for Estonian managers is the availability of workforce with necessary skills, which was regarded as an even bigger business risk than the increase in energy and raw material prices. Although unemployment in Estonia is still around 10%, it is difficult for businessmen to find suitable employees. This may be one of the reasons why none of the respondents plan to reduce salaries in 2013 and as many as 70% of them plan to increase them.
However, the confidence Estonian managers have in the future of their companies differs from their opinion of the overall economic environment: only 18% of respondents believe that global economy will grow this year. Approximately two-thirds (63%) are of the opinion that it will remain at last year's level whilst 16% believe that the economy will shrink.
Recipes for complicated times. In the global perspective, top managers appear to rely on three important strategies to help them cope with uncertain times. Firstly, careful selection of growth opportunities. Most managers will focus on the organic growth of their companies on existing markets and just one-sixth are thinking about taking over other companies.
Secondly, whilst successful businessmen have always treated their clients as kings, the status of customers is turning into that of a god in complicated times. Understanding customer behaviour, which changed during the recession, is extremely important in the eyes of managers and many of them have therefore involved their clients in product development. Taking advantage of digital marketing platforms (e.g. information collected about consumer behaviour based on loyal customer card usage) is also seen as something with great potential. Thirdly, polishing processes and efficiency in order to adapt to the 'new normal' is continuing. As many as 70% of senior managers plan to cut their costs again this year, but they will no longer do it on account of labour costs as they did a couple of years ago, but by improving the efficiency of processes.
The global risk scenarios seen as most serious and likely to occur by managers are China's economic growth dropping below 7.5% and recession in the US. Only every sixth manager believes that the disintegration of the eurozone, which was seen as the biggest risk not so long ago, is still probable. Some good news at least.