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PwC Pulse Survey:
Executive views on business in 2022

Growth strategies hinge on talent and digital capability as inflation, pandemic and policy uncertainty persist

  • 77%

    of executives say hiring and retaining talent is their most critical growth driver in 2022

  • 60%

    of executives say digital transformation is their most critical growth driver in 2022

  • 42%

    of companies said tax will be central to their digital transformation efforts

Pulse Survey of C-suite executives 

In our first Pulse Survey of 2022, we find business leaders wrestling with the challenge of achieving profitable growth amid spiralling costs. Inflation is at a 40-year high, creating uncharted territory for today’s executives. They’re pulling multiple levers to manage margins eroded by rising oil and commodity prices, supply shortages and higher wages. In fact, 62% of business leaders surveyed are likely to pass along price increases to customers this year.

In parallel, business leaders are upping investments in what they see as the top drivers of growth this year. For more than three-quarters of them (77%), the ability to hire and retain talent is most critical to achieving growth. Less than a third (31%) expect talent shortages to ease this year. 

Next comes digital transformation, cited by 60% as the most important growth driver. Executives are putting dollars behind these priorities with 62% increasing compensation for employees through bonuses and cost-of-living adjustments and 56% changing processes to address labor shortages. Filling job vacancies and enhancing digital capabilities will also accelerate progress toward other high priorities such as increasing agility, developing new products and services for ever-demanding consumers, improving supply chain resilience, honing pricing strategies and pursuing M&A.

One notable difference from our past surveys centers around cross-C-suite collaboration. Sharpening talent strategies and applying digital transformation across the enterprise to more areas from tax efficiency to pricing strategies have become unified, businesswide priorities. That’s a marked shift from the focus on specific functional goals we’ve seen in the past. With wages likely to stay high and labor shortages increasing risk, talent has risen to the top of CFO and CRO agendas. Meanwhile, tax’s role as a way to unlock transformation value for business continues to grow in importance, helping enhance the return on investment and helping reduce tax exposure in the future. Having a unified executive team that is in lock-step and aligned on these converging and complex business issues will be critical to success.

We started the Pulse Survey series almost two years ago at the start of the pandemic lockdowns. We fielded this survey from January 10 to 14 and polled 678 business leaders across company size and industry. It offers insights into executives’ outlook for 2022, including their top concerns and opportunities. We look at how companies are tackling today’s unprecedented environment and get a reading on their long-term planning and strategies.




The reality of 2022: Headwinds from inflation, talent shortages and supply chain risks as COVID-19 becomes part of life

Business leaders are moving resolutely forward from the pandemic, with 69% telling us that COVID-19 will become endemic, something businesses and society will have to live with. Just days before the Supreme Court struck down the Biden administration’s COVID-19 vaccination and testing rules, we found companies taking different paths on vaccine mandates and contact tracing.

Around a third (33%) require vaccinations for on-site work and will continue to do so. Almost a quarter (23%) require it now but will reconsider it in the future. And 16% have dropped the vaccine requirement in response to labor shortages. Companies are also divided on automatic contact tracing: 38% percent have implemented it (with half of them likely to revisit it) while 29% have no plans to require it.

Executives see no respite from inflation this year. Economic growth, which recovered to pre-pandemic levels in mid-2021, is still robust, but inflation is eating into that growth for many. The consumer price index rose 7% in December 2021 compared to the previous year, marking the highest rise in inflation since 1982. With Omicron prolonging supply and demand imbalances, 69% of executives expect inflation to remain high all year.

The struggle to find enough people to hire has risen to the forefront as the top concern. Almost half (48%) of the respondents say that’s the biggest risk to their business achieving its growth targets. With the economy losing 3.6 million jobs, the workforce today is smaller than it was before the pandemic. The unemployment rate of 3.9% in December suggests the US is close to “full employment.” That means there are simply not enough people left to fill the job openings. Only 36% of executives believe voluntary turnover will return to pre-pandemic rates by the end of the year. Labor shortages and resulting higher wages are adding further upward pressure on inflation.

Supply chain risks remain high. As the virus transmission continues around the world and supply chains remain constrained by a shortage of workers, almost a third (32%) of executives foresee continued supply chain disruptions. There are also other forces leading companies to evaluate alternative sourcing strategies, from policy shifts to opportunities to digitize supply chains and bring them closer to consumers.

More than any other policy issue, executives worry about data and privacy regulations. With digital transformation reaching into all parts of the business, concerns about technology and data regulations are going up too. Fifty-four percent of respondents say policy shifts in this area will be the biggest driver of change for their business. Compare that with the roughly 30% who say potential US and global tax increases, stricter environmental, social and governance (ESG) disclosure requirements and increased US government spending and incentives are leading them to make operational changes.


What to watch for

Labor costs will have the strongest impact on corporate margins in 2022. Price pressures, such as energy costs, could start dissipating in the next few months, but wages will reset at a higher level this year. Automation and data and analytics can help companies respond to this environment with greater agility, from refining pricing strategies to building smarter, more resilient supply chains.

Inflation concerns will affect fiscal and monetary policy. Inflation is driving up concerns about President Joe Biden’s social spending plans in the Build Back Better Act among certain members of his own Democratic party. But the White House is arguing that a fiscal stimulus could lower childcare and other costs, ease more people into the workforce and help to tame inflation. Tax increases are expected to finance the cost of these spending proposals, and 55% of executives we polled predict a higher US corporate tax rate this year. With its eye on inflation, the Federal Reserve has signaled a likely increase in interest rates in March.

Companies will face evolving global data and privacy regulations. The relatively higher concern about tech and data regulations is likely being driven by ongoing cloud transformations that involve moving data outside an organization’s four walls and relying on third-party service providers. Global data and privacy laws are adding to complexity and risk.


Companies are offering higher salaries and better benefits. Will that be enough?

In a tight labor market, employee demands for more competitive compensation and benefits packages are being heard. In our Next in Work Pulse Survey last summer, employees identified those as the most attractive incentives—but companies were falling short of meeting employee expectations. That’s starting to change as the number of available workers stays below job openings. Many companies now pay more for talent, some even at the cost of eroding profitability.

In August around a third of respondents were ready to offer higher salaries, better benefits and more career advancement opportunities. Today, nearly all companies are actively rolling out or considering these incentives. For example, 62% are increasing compensation and an additional 22% are considering it. While some will revisit these decisions, others see more attractive packages and career pathways as a permanent shift.

The change that’s sticking in more companies: new ways of working that allow for greater flexibility. Forty-three percent of respondents now offer hybrid work models. Thirty percent have also made remote work permanent in roles that allow for it. Changing processes to reduce reliance on employees, allowing permanent relocation outside of corporate offices and outsourcing are all part of the mix to address labor shortages.


Digital transformation is increasing agility amid concerns about tech and data regulations

Executives have always told us that investing in digital transformation is the smartest way forward. This year many plan to build on those investments and, with talent in short supply, it will be all the more critical to get the most out of digital investments. Digital capability is at the heart of execution, whether it’s increasing supply chain resilience, rolling out new products and services for consumers or shifting to investor-grade ESG reporting in preparation for new disclosure requirements.

One area in which focus is apparent is in the greater alignment of digital strategy with tax strategy, reflecting tax’s role as a value driver for business in today’s environment. For example, as companies look to uncover R&D tax credits and other tax credits to finance green investments or take advantage of onshoring incentives, digitization and automation of tax is helping to generate insights for faster and better decision-making. Forty-two percent of respondents are accelerating digital transformation of the tax function, 38% are automating tax-related processes and 36% are making large tech investments in tax.


What companies can do

Stay focused on long-term value creation. In an inflationary cycle when the pressure to manage margins is high, it is tempting to apply automation and tech solutions to realize short-term cost savings. The focus on delivering quarterly earnings numbers should not obscure the goal of creating long-term value. With stakeholders demanding faster and measurable climate change and diversity, equity and inclusion (DE&I) progress, companies will need to integrate ESG into business operations and investment frameworks. M&A will continue to have momentum in 2022, and buyers will be looking hard for value creation levers like strategic repositioning and sustainable business and operating models.

Unify and drive clear prioritization across the leadership team to achieve desired business outcomes. Today’s challenges aren’t isolated to any department or corporate function. Labor shortages and the transformation of work in the past year have put the workforce and the customer at the center of all business issues, from growth to cybersecurity to corporate culture. The pandemic has accelerated digital transformation and turned it into a shared responsibility among CIOs, CTOs and their peers in finance, operations and HR. Building and maintaining trust as a unified leadership team will be crucial to achieving growth in 2022.

Collaborate to manage people risk as a business problem. It’s telling that 88% of board members view hiring and retaining talent as very important to a company’s prospects in 2022. The entire C-suite is now focused on talent, and this partnership must balance short-term tactics with longer-term strategies. Ask yourself, will potential pay raises cover the effects of inflation on people? If not, there’s a real risk of dampening consumer spending and a slowdown of the economy. Benefits packages, too, should support people’s evolving needs and aspirations. As the pandemic becomes endemic, for instance, you may find that more employees want to travel in 2022. As digital transformation accelerates, the need to upskill the workforce in roles they find fulfilling will become even more urgent. Consider also how to incorporate ESG goals into your talent strategy to attract employees, grow trust and inspire them to drive change.

Sector implications

Health industry leaders focus on digital, talent and growth plays

As health industries remain on the frontlines of the COVID-19 response, sector leaders are witnessing up close both the impact and the continued promise of innovation in health. Health industry executives remain all in, putting digital first in 2022. Leading the areas of investment for these execs are digital transformation (63%) and talent retention (55%). Close behind (53%) is the drive to create new products and services in response to fast-changing consumer behavior.

The digital landscape is only continuing to expand for innovative pharma and health services executives. Many consumers now demand more mobile, remote and no-touch ways to access healthcare. As one example, both health services organizations and pharmaceutical and life sciences companies are using digital technologies to become more consumer-centric. Technology has made possible the move to decentralized clinical trials and a reduction of provider administrative burdens. The end result is not only creating more time for the patient but a new ability to engage patients more meaningfully as part of a digitally connected clinical and technical ecosystem.

The survey found that health industry leaders remain wary of looming technology and data regulations. More than half of surveyed executives (53%) say potential policy shifts in the areas of cybersecurity, privacy and social media are causing them to make the most changes in their organization. Cyberattacks on patient data as well as pharmaceutical and life sciences intellectual property, R&D and commercial assets have escalated. The expansion of remote work and the increased deployment of digital pharmaceutical and life sciences operations—from smart supply chains to virtual trials—create more points of vulnerability.

In addition, more than half of the health industry leaders surveyed (55%) say failure to hire and retain top talent remains the biggest risk to achieving growth goals. And the talent issues are everywhere — technical, operations, digital, clinical. Already a tight labor pool pre-COVID-19, the past two years have only made the talent shortage more acute. According to PwC analysis, healthcare industry employment grew less than 0.5% in 2021. Gains in outpatient settings barely exceeded losses in long-term care facilities and hospitals. And all 50 states have reported one or more hospitals with a critical staffing shortage in 2022.

Labor shortages are likely to persist as burnout accelerated by the pandemic overlaps with the wider war for talent. Many executives also worry about more virus variants. More than four in ten (43%) health industry leaders say new COVID-19 variants pose a risk to growth, compared with 29% of all executives. Even as the move toward digital models offers the potential to alleviate some burden, there remains the need to upskill and transform the workforce.

Executives at health services organizations and pharmaceutical and life sciences companies also say they are poised to seize opportunities in fast-changing markets. Six in ten executives say corporate M&A, joint ventures and alliances will be very important to their company’s ability to grow in 2022. PwC expects M&A investments to reach $350 billion to $400 billion in 2022, driven by all sectors.

Financial services firms in 2022: Let’s roll up our sleeves and get to work

As we head into 2022, financial services (FS) firms have largely found their footing. Now they’re focused on execution.

When we asked FS leaders to choose from a list of the biggest risks that could prevent their companies from achieving their 2022 growth goals, for example, more than half (55%) cited talent acquisition and retention challenges, ahead of many of their peers, and 78% said that hiring and retaining talent would be very important to growth in the coming year. Just 26% expect these talent shortages to ease by the end of 2022.

The US policy and regulatory environment is cited as a key risk by 39% of FS leaders surveyed, far above the broader average (29%). And when we asked about which potential policy shifts are driving leaders to make significant changes now, FS executives were particularly focused on technology and data regulations (63% FS, 63% all) and ESG disclosure requirements (35% FS, 35% all).

Sixty-nine percent told us that capitalizing on digital transformation initiatives would be very important to their firm’s ability to grow in 2022, well above the broader average of 60%.

Financial firms are less likely to cite headwinds from deals than their peers. Just 38% said that corporate M&A, joint ventures and alliances would be very important to growth in 2022, down from 47% across all sectors. And only 30% cited this as an area of investment, down from 41% overall. The past year was a particularly active deals market across the FS sector, and with asset prices continuing to climb, some financial companies are stepping out of the fray. Still, for firms that can identify realistic paths to value creation, inorganic growth will be part of the mix.

Even before the pandemic hit, FS firms were concerned about losing top talent to tech firms, the potential for re-regulation with a change in political administrations and their need to transform to compete effectively with fintech firms. Now, after making considerable changes to adapt, 76% of FS leaders expect that we’ll just learn to live with COVID-19 by the end of 2022. “It is what it is,” they seem to be saying. “Let’s focus on the fundamentals.”

Supply chain resilience is main priority for consumer-facing companies

Fortifying the supply chain is top of mind for consumer-facing companies in 2022, with 69% of consumer markets (CM) leaders underscoring the pivotal role of the supply chain in company growth (versus 50% for all sectors).

No surprise then that CM leaders believe continued supply chain disruptions and vulnerabilities will present the biggest risk to business growth in the year ahead (43% versus 32% overall). In response, more than half (53%) plan significant supply chain investments (compared with 41% overall).

As with all sectors, talent is crucial to growth for CM companies. More than other sectors, CM leaders also say reevaluating pricing strategies to keep up with rising costs (60% versus 49%) and divesting businesses that aren’t essential to their core capabilities (45% versus 31%) are key to business growth.

Digital transformation and talent top the list of investments that CM companies will make in 2022, in line with other sectors. CM companies also plan to invest in new products and services (58%, compared with 50% for all sectors) in response to consumer preferences for more sustainable and more online options.

As consumers have ramped up demand for products rather than services in the wake of the pandemic — which has also subverted global supply chains — CM leaders have accelerated automation and diversified locations, resulting in more responsive, adaptive systems. Digital transformation has played a crucial role in these reimagined supply chains, providing end-to-end visibility for up-to-the-minute analytics.

By investing in the supply chain as a means of resilient growth rather than as a cost center, CM leaders reflect a deeper understanding that the supply chain is typically the final touchpoint of the online customer experience.

New roles in the supply chain ecosystem now encompass merchandising, demand planning, supply management, logistics, warehousing and last-mile responsibilities. The objective? To create the ideal customer experience by optimizing fulfillment to satisfy demand.

Industrials strive for agility as inflation adds to mounting challenges

Nearly two years after the onset of the pandemic, US manufacturing, which experienced a 0.3% drop in output in December 2021, continues to face numerous headwinds as we enter 2022.

Supply chain disruptions in the industry are expected to persist through this year. PwC’s latest Pulse Survey finds that more than half of US industrials (58%) agree that improving supply chain resilience and reevaluating inflation-related pricing strategies (55%) are very important to their ability to grow in 2022. This compares to 41% of sector leaders in our October 2020 Pulse Survey who said changing their supply chain footprint was very important to their company’s profitability over the next two years. A minority of these executives see conditions improving, with 43% expecting supply chain disruptions to ease by the end of 2022. 

Meanwhile, fresh concerns surrounding inflation are rising, with 68% of manufacturers agreeing that inflation is likely to remain elevated at the end of 2022. It’s not surprising then that nearly three-quarters (73%) of industry leaders expect that they will need to increase prices of their goods and services through 2022. On top of sustained inflation pressures, more than half of sector leaders (53%) also believe it’s likely that higher US corporate taxes will result in slower US economic growth and decreased US competitiveness.

The industry’s entrenched talent shortage shows no sign of abating, with about three in four (77%) manufacturers agreeing that hiring and retaining talent is very important to their ability to grow their business in 2022. Just 34% of sector leaders expect talent shortages to ease by the end of 2022, while over half (57%) expect to invest a lot in hiring and retaining talent in 2022. 

Industrials are looking for ways to inject agility and resilience into their organizations, with 60% of manufacturers agreeing that increasing agility to better operate in a turbulent business environment will be important to their growth this year. Forming business combinations may be one lever to pull to achieve that, and more than half (53%) of respondents agree that pursuing corporate M&A, joint ventures and alliances will be important for their growth this year.

Spearheading ESG initiatives, despite the myriad other challenges facing the industry, continues to be on the radar for industrials. Nearly half (44%) said championing ESG issues is very important to the growth of their business in 2022. And, looking ahead, it appears the sector sees ESG as becoming more important over time, with 58% of respondents agreeing that ESG and sustainability will be integral to longer-term planning at the end of 2022.

Innovation takes off, deals continue

The pandemic accelerated the digitization of the economy, driving a massive innovation cycle. The race is on to create new products and services to capture opportunities related to the new digital landscape, as 71% of technology, media and telecommunications (TMT) leaders believe it’s likely that COVID-19 will become endemic by the end of 2022.

We’re living through a new “roaring ’20s,” with the number of unicorns—privately owned, venture capital-backed companies valued at $1 billion or more—soaring more than 350% in just over five years. TMT spending priorities reflect the current moment: 63% of TMT leaders say they would invest a lot this year in digital transformation initiatives, in part to keep up with the innovation being driven by these unicorn entrants. 

At the same time, the pace of TMT mergers and acquisitions has been brisk, even frenetic. That’s likely to remain true for now. The slight decline of the market at the start of this year has opened up a tremendous value opportunity that will significantly drive deals in the short term in TMT. Forty-four percent of TMT leaders tell us they’re planning considerable investments in corporate M&A, joint ventures and alliances in 2022. A third reported plans to spend similarly on divestitures and spin-offs. Large companies have analyzed their holdings and recognize they can monetize non-core assets to raise capital to reinvest and refocus.

Despite antitrust actions continuing to make headlines, 29% of TMT leaders report that scrutiny of business competition was causing them to make the most changes to their business. But far more — 61% — cited technology and data regulations as drivers of change.

Turning to another key challenge, TMT is not immune to the workforce crunch. Sixty-five percent say they plan significant spending on hiring and retaining talent. Among TMT leaders, 54% ranked talent acquisition and retention as the No. 1 threat to business growth in 2022.

Tackling the clean energy transition needs people and agility

The fight for talent isn’t something new for the energy and utilities industry. While the pandemic certainly hasn’t helped, this is a reality the sector’s faced for years, with long-time employees retiring and the industry competing for the technical and strategic capabilities needed to meet today’s needs and usher in tomorrow’s cleaner, and digitally enabled, energy future.

It’s not surprising that industry leaders rank hiring and retaining employees as the most important (88%)—as well as the biggest risk (50%)—to growth in 2022. This is where the industry plans to invest the most in the year ahead (59%). Sector leaders are also putting money into digital transformation efforts as well as M&A, joint ventures and alliances, arguably the areas that can help to create workforce efficiencies and bring in needed capabilities.

To compete in this tight talent market, energy and utilities companies may be easing up on an initial preference for returning to the office. When we asked about this in our August 2021 Future of Work Pulse Survey, industry leaders appeared intent on getting as many workers back in the workplace as made sense. That may be changing.

Although not at the same levels as other industries, 75% of sector leaders say they’ve implemented remote work or are actively considering it. There’s even more support for hybrid work, with 88% having implemented or currently considering this option. While at least a third plan to revisit these policies at some point, remote and hybrid remain part of the people strategy—with improved benefits, increased compensation, expanded career advancement and upskilling also rising to the top as important parts of the talent equation.

This industry faces a lot of change in the year ahead as it sits at the heart of decarbonization efforts and pressing policy changes. The industry is expecting policy shifts to require changes to the business. Leaders recognize a need to increase agility to better operate in this turbulent business environment with agility ranking second only to talent as most important for growth in 2022. The need for talent that is increasingly more digitally savvy and strategically agile has never been greater.

Private companies look to raise prices while focusing on talent, digital transformation

Private companies are facing many of the growth challenges their public peers face, some brought on by factors out of their control, including inflation, pandemic-related restrictions and policy precarity. In some cases, private companies are feeling these challenges to a greater extent than public companies. Almost all private company executives (92%) expect to raise prices this year, far higher than the 62% of all respondents that said the same. Some private companies surveyed may not have the procurement capacity that larger public companies do and may not be as protected when costs of raw materials, freight and shipping rise. Raising prices means thinking through how to do it, and 65% of private company respondents see reevaluating pricing strategies as critical to growth, far higher than all executives (49%).

Meanwhile, supply chain woes still weigh on private companies. More than half (54%) of private company leaders say supply chain disruptions present a huge risk to their growth goals, compared to 32% overall. But their top concern has to do with talent—finding it and retaining it. And talent, for many private companies, especially manufacturers, includes laborers who are paid hourly wages and seek the best pay—sometimes from competitors based in nearby areas. Nearly all (92%) of our private company respondents tell us that hiring and retaining talent is very important to their ability to grow in 2022, compared to 77% of all executives we surveyed.

Just over three-quarters of private companies say that talent acquisition and retention challenges are their top risks to achieving their goals in 2022. But private company executives are taking action. They realize they have to make a stronger case to their workforce, and they’re implementing strategies to appeal to employees where it makes sense, like enabling more flexible work options (84%), increasing compensation (70%) and improving benefits (43%).

Like executives in all other companies we surveyed (60%), well over half (57%) of private company leaders say that capitalizing on digital transformation initiatives is very important to their ability to grow this year. However, in 2022, they’re placing higher priority on areas like reevaluating pricing strategies (65%), increasing agility to operate in a turbulent business environment (62%) and improving supply chain resilience (59%).

Executive views on business in 2022

About the survey

Between January 10 and January 14, 2022, PwC surveyed 678 US executives including CFOs and finance leaders (19%), CHROs and human capital leaders (14%), tax leaders (14%), risk management leaders, including CROs, CAEs and CISOs (14%), COOs and operations leaders (12%), CIOs, CTOs and technology leaders (15%) and corporate board directors (12%). Respondents were from public and private companies in six sectors: industrial products (26%), consumer markets (24%), financial services (23%), technology, media and telecom (14%), health industries (6%) and energy and utilities (5%). Sixty-three percent of respondents were from Fortune 1000 companies. The Pulse Survey is conducted on a periodic basis to track the changing sentiment and priorities of business executives.

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Neil Dhar

Neil Dhar

Vice Chair, Consulting Solutions Co-Leader, PwC US

J.C. Lapierre

J.C. Lapierre

Chief Strategy and Communications Officer, PwC US

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