The CEOs surveyed are the most optimistic they have been in 10 years about the prospects for a stronger economy in the coming year despite the ongoing COVID pandemic and market conditions such as rising inflation, supply chain disruptions and the ‘Great Resignation’ in parts of the world. More than three-quarters of CEOs, 77%, predict the global economy will improve, while only 15% expect worsening conditions. A tick higher than the 76% optimism level from a year ago.
“While the ongoing pandemic and emergence of new variants cast a shadow over the year, the high level of CEO optimism we found speaks to the strength and resilience of the global economy and the ability of CEOs to manage through uncertainty. There is nothing “normal” about the world we are working in, but we are getting used to it. We are seeing differences in confidence among countries, and there is no shortage of challenges to navigate, but it is encouraging that CEOs we spoke with on the whole feel positive about 2022.”
Trust has never been more important to a company’s success, and never more challenging to earn and maintain. Based on CEO responses to a series of questions about their customers’ behaviours, the survey shows a correlation between customer trust and CEO confidence. CEOs of companies ranking highest on perceived customer trust are more confident in their growth prospects in the coming year. Seventy-one percent of CEOs of companies with the highest levels of trust are very or extremely confident in their companies’ prospects for revenue growth in the next 12 months, compared to just 47% of those with the lowest levels of trust.
CEOs’ optimism is high for the most part, but they are also well aware of potential threats that could impact their companies over the coming 12 months. Similar to last year, cyber and health risks rank as the leading global threats, identified by 49% and 48% of CEOs, respectively.
From an industry perspective, cyber risks are top of mind for financial services CEOs, 59% of whom cited cyber as a key threat. Notably, manufacturing (40%) and consumer (39%) CEOs displayed lower concern levels about cyber, despite those sectors’ high volume of cyber attacks. It bears watching to see if this relative level of complacency reverses itself over the coming year.
Understandably, a high percentage of hospitality and leisure CEOs (75%) are concerned about the impact of health risks on their business.
The survey shows that greater progress needs to be made to achieve global climate goals, as fewer than a third of CEOs said their company has made an emissions reduction commitment. Only 22% of the CEOs surveyed said their companies have made net-zero commitments; 29% said this commitment is in progress. A similar percentage – 26% – have made a carbon-neutral commitment while another 30% said this commitment is in progress.
Only one third of CEOs identified climate change as a top concern for the coming year, reflecting a belief that it will not impact revenue growth in the near term. But longer term, ensuring net-zero commitments are central to company strategies will be essential not only to mitigating climate change risks but to meeting customer as well as investor and employee expectations.
Trust was also found to be correlated with net-zero commitments. CEOs of companies ranked highest for trust are significantly more likely to lead organisations that have made a net-zero commitment (29%) than those ranked lowest for customer trust (16%). CEOs of “high-trust” companies are also more likely to lead organisations that have tied non-financial outcomes to their compensation. About half of CEOs who lead organisations ranked highest for trust have customer satisfaction (51%) and employee engagement metrics (46%) tied to their personal bonus or incentive plan.
“Over the next 12 months CEOs are understandably concerned about potential threats to short-term performance that could result in disruptions, including cyber risks. Successful CEOs are still transforming their businesses, and having the appropriate cyber security skills both in their workforce and at board level remains a priority in order to predict, prepare and respond to the risk. While threats such as climate change are further down the list, it is critical not to lose focus on these more long-term issues, and incorporate ESG targets into strategy. The correlation between trust and net-zero commitments highlights the commitment from large organisations leading the way. We believe companies built on a strong foundation of trust will be fortified and their CEOs best positioned to deliver sustained outcomes that contribute to long-term success.”
PwC surveyed 4,446 CEOs in 89 countries and territories in October and November of 2021. The global and regional figures in this report are weighted proportionally to country or regional nominal GDP to ensure that CEOs’ views are representative across all major regions. The industry- and country-level figures are based on unweighted data from the full sample of 4,446 CEOs. Further details by region, country and industry are available on request. Ninety-four percent of the interviews were conducted online and 6% by post, by telephone or face-to-face. All quantitative interviews were conducted on a confidential basis. We also conducted in-depth interviews with CEOs from five global regions (North America, Latin America, Western Europe, Asia-Pacific and Africa). Some of these interviews are quoted in this report; in most cases, the full interviews can be found at strategy-business.com/mindoftheceo.
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