Geopolitical uncertainty as the biggest threat for CEOs in CEE region

Jul 26, 2016

26 July 2016

According to the PwC’s study “19th CEO Survey – CEE” 48% CEOs from the Central and Eastern Europe expect continued stagnation in the global economy. In the same time 63% of them see more threats to the growth of their companies today than were 3 years ago.

Within CEE, 48% of CEOs expect continued stagnation in the global economy, similar to the 49% global level and down just slightly from 50% a year ago. But optimism about their own companies is increasing, with 37% saying they’re “very confident” in their prospects for the next 12 months, and 41% for the next 3 years (up from 30% and 37% respectively last year).

Still, almost two-thirds of CEOs say there are more threats than there were three years ago. In particular, CEE business leaders named geopolitical uncertainty as the biggest threat to their companies’ growth prospects, with 86% “extremely” or “somewhat” concerned. That’s a full 12 percentage points above the global average. Also among the top concerns, the government’s response to the fiscal deficit and debt burden was cited by 81% of CEOs in the region (compared with 71% globally).

PwC’s expert said in the report that technology, innovation and talent will be key as CEE companies seek to move up the value chain and begin to compete on quality and value added rather than remaining low-cost producers. However, employers in the region seem to be fighting the battle for talent with a narrow range of weapons: pay, incentives and benefits were named by 42% as an area where they’re making changes to ensure they attract and retain talent, compared with 33% globally. In areas such as focusing on the pipeline of leaders for tomorrow, and particularly workplace culture and behaviours (36% in the region and just 27% in Russia), CEE trailed behind the global level (41%).

Olga Grygier-Siddons, Chief Executive of PwC in Central and Eastern Europe, says:

“CEOs in Central and Eastern Europe, like their counterparts around the globe, are working to redefine business success as the world around them changes. In addition to global pressures from geopolitical uncertainty, regulatory uncertainty and governments’ responses to the fiscal challenges of recent years, business leaders in our region face unique challenges of managing transition from a business model based on low costs to one that’s based on using human and technological resources to add value through innovation”.

Central and Eastern Europe’s war for talent shows up in responses throughout the CEO survey, and particularly when leaders are asked about how companies and societies measure success in today’s world. A skilled, educated and adaptable workforce was seen as society’s top need by as many as 82% of leaders, compared with 76% globally. That reflects growing awareness in the boardroom that in order to move up the value chain and stop competing on price alone, companies need a deep pool of people with the right skills.

Navigating complexity to exceed expectations

Faced with increasing complexity and rising demands from broader groups of shareholders, what is the recipe for success for Central and Eastern European companies seeking to stop competing on price alone and start moving up the value chain? According to the PwC’s experts there are five key behaviours that will increasingly determine success or failure:

  • Move beyond the lowest-cost mentality
  • Change the workplace culture to attract and retain talents
  • Invest in employee skills
  • Cultivate innovation in the universities
  • End the cult of self-reliance

PwC’s study “19th CEO Survey. Central and Eastern Europe” is a part of “Global CEO Survey, based on responses from over 160 CEOs from CEE region.

The full report can be found at: http://www.pwc.pl/en/publikacje/2016/19th-ceo-survey-central-and-eastern-europe-pwc.html.

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services.

PwC has been active in Central and Eastern Europe for the past 25 years. PwC Central and Eastern Europe (PwC CEE) is a network of firms, consisting of separate legal entities in accordance with applicable local laws and regulations. We work to help our clients in local markets become more successful and globally competitive. Today we have more than 8,800 people, including 260 partners, working in 55 offices across 29 countries* in the region.

“PwC” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for further details.

©2016 PricewaterhouseCoopers. All rights reserved

Contact us

Kalvis Gavars

Kalvis Gavars

PwC Marketing and Communications Manager, PwC Latvia

Tel: +371 67094400

Follow us