years passed since our first survey
Hungarian CEOs interviewed in 2020
of CEOs think that Hungarian economies will accelerate
anticipate an increase in headcount over the next three years
Overall, the pandemic has made the human factor uncertain for businesses. We are facing the twin challenges of skills shortages and unemployment. The strategic importance of the workforce is well illustrated by the fact that the top two factors on the list of priorities for successful business operation are related to employees.
According to the survey, 65% of CEOs think that the growth of both the global and Hungarian economies will accelerate – our most optimistic outlook to date. This is a huge leap forward compared to last year’s expectations (9% of CEOs were confident about global economic growth, while 16% were confident about Hungarian economic growth). So after the downturn, CEOs expect a rebound now that the end of the pandemic is in sight.
There is no such noticeable shift in CEOs’ confidence about their own prospects for revenue growth. The reason for this could be that since 2015, most CEOs have been steadily optimistic about their 12-month outlook. Companies’ expectations of revenue growth are almost as optimistic this year as they were last year; when looking at the issue over a three-year period, they are even more positive.
Over the past year, staff numbers at large companies did not decline significantly despite the pandemic; only a third of the CEOs interviewed reported that they were forced to reduce their headcount. This suggests that the growth of unemployment at the macroeconomic level is more likely due to layoffs in the SME sector. However, in 2021, half of the CEOs anticipate an increase in headcount once again, and over the next three years, as many as 62% of them expect the same.
According to PwC’s analysis, CEOs have expected a slowdown in the economy in recent years. The pandemic has put the brakes on economic growth, and the new situation has resulted in new emphases and new ways of thinking. The survey findings show that this change has exacerbated CEOs’ existing concerns about their company’s growth prospects.
For each risk factor, the percentage of respondents who are concerned about that factor has increased by an average of ten percentage points. Pandemics and other health crises have moved to the top spot (82%) on the list of CEOs’ concerns. The pandemic is followed by concerns about the availability of key skills and exchange rate volatility, trailed by uncertain economic growth and cyber threats. It is not surprising that CEOs have factored the top four risks into their strategic risk management activities, in addition to changing consumer behaviour and the speed of technological change.
Some threats show a significant change from last year: the rate of respondents who are concerned about an increasing tax burden has increased by nearly 30 percentage points, with half of the CEOs expressing concerns about rising taxes used as a source of funding for economic recovery. Other risks include the level of crisis preparedness, the deteriorating health of the workforce, and the spread of misinformation. The rate of respondents concerned about each of these three factors has increased by approximately 25 percentage points.
Companies are redefining their strategy: half of the CEOs plan to change their organisational goals in response to the COVID-19 crisis. Those who make changes are primarily aiming to make their company future-proof and sustainable, and are more intent on returning to the new normal. More than three-quarters of Hungarian CEOs plan to spend more on digital transformation, and 77% are investing in initiatives to realise cost efficiencies.
When asked about which changes resulting from the crisis will have the greatest long-term impact on their industry, CEOs responses centred around online presence, automation, and technological advancement. Six out of ten CEOs are planning to invest in R&D and new product innovation, and the same percentage want to invest more in cybersecurity. Over half of the companies want to increase their investment in leadership and talent development, and nearly 50% plan to invest more in environmental, social and governance (ESG) initiatives.
While a third of the companies were forced to reduce their headcount in 2020, this reduction is planned to be only temporary. However, the new ways of operating have also led to new expectations of employees. According to CEOs, the primary factors that contribute to competitiveness are organisational culture, internal communication, and the engagement, adaptability and well-being of employees. They intend to achieve efficiency gains through automation and the use of technology.
The strategic importance of the workforce is well illustrated by the fact that the top two factors on the list of priorities for successful business operation are related to employees.
Almost all reported a change in the way they personally work. Even the CEOs of companies whose performance has not been adversely affected by the pandemic are missing something from their pre-COVID lives. Three-quarters of respondents miss forming personal relationships with employees or customers/clients via face-to-face interaction, and the majority also miss the ability to boost employee motivation via in-office collaboration. A third of CEOs miss travelling and ad hoc encounters in the office, while a quarter of them would better understand the concerns of employees or clients via behavioural or physical cues. However, the share of CEOs who miss working from the office is only 8%.
“Overall, the pandemic has made the human factor uncertain for businesses. We are facing the twin challenges of skills shortages and unemployment. The strategic importance of the workforce is well illustrated by the fact that the top two factors on the list of priorities for successful business operation are related to employees,”
We conducted our tenth Hungarian CEO Survey based on PwC’s Annual Global CEO Survey. The aim of the research we conducted in parallel with the global survey was to gain a more comprehensive picture of what Hungarian senior executives think, how they see the market, and what expectations and growth opportunities they have.
In the Hungarian survey, we collected data through in-person interviews: PwC’s experts interviewed the CEOs of 240 Hungarian companies between October 2020 and January 2021. During the interviews, we collected quantitative data by means of questionnaires. We contacted companies that PwC industry groups selected from the automotive, pharmaceutical and health, energy and utilities, retail and consumer industries, financial services, the technology, information, communications and entertainment sectors, the public sector, and manufacturing.
(in Hungarian language)
Dr. Barbara Koncz
Partner, PwC Hungary
PR Senior Manager, PwC Hungary