In the midst of the COVID-19 pandemic, many U.S. CEOs remain confident in the growth prospects of the domestic economy and their companies and are accelerating investments in digital transformation, according to a study released by KPMG LLP, the U.S. audit, tax, and advisory firm.
The 2020 KPMG CEO Outlook features insights from 315 CEOs at large companies globally, including 100 in the U.S., who were surveyed in July and August about the business landscape over the next three years. Key findings include:
Forty-three percent are “more confident” in the growth prospects of the domestic economy and their company (60%) compared with the beginning of the year, while 37% said they were “more confident” in the growth prospects of the global economy.
Low to moderate growth is expected. Thirty-nine percent predict 2.5-5% growth, 33% expect less than 2.5% growth and 14% predict no growth.
Environmental/climate change risk (21%), talent risk (20%), a return to territorialism (18%), supply chain risk (15%), and cyber security risk (12%) were identified as the greatest threats to their organizations’ growth aside from global health security/pandemic risk.
“U.S. CEOs are resilient and remain optimistic as they continue to rise to meet the challenges and opportunities resulting from the pandemic and ongoing economic uncertainty,” said Paul Knopp, KPMG U.S. Chair and CEO. “They are accelerating the digital transformation of their businesses, but also see a multitude of risks apart from the pandemic—with talent risk becoming front and center in the current environment.”
As a result of the pandemic, CEOs see the world of work changing in numerous ways.
• Sixty-eight percent said they will downsize their office space.
• Seventy-six percent said they will continue to build on their use of digital collaboration and communication tools.
• Seventy-eight percent said remote working has resulted in significant changes to company policies in order to nurture their organization’s culture.
• Seventy-two percent said that working remotely has widened their potential talent pool.
Accelerating digital investments
The majority of CEOs noted the COVID-19 pandemic has accelerated their digital investments and progress across numerous dimensions by at least a matter of months. These areas include:
• The digitization of operations and the creation of a next-generation operating model (74%)
• The creation of new digital business models and revenue streams (70%)
• The creation of a seamless digital customer experience (73%)
• The creation of a new workforce model, with human workers augmented by automation and artificial intelligence (66%).
CEOs cited difficulty making quick technology-related decisions (31%) and a lack of insight into future operational scenarios such as new ways of working (22%) as the greatest challenges associated with accelerating digital transformation within their organization. As they respond to COVID-19 and prepare for the post-pandemic reality, 74% said they were prioritizing investments in new technology and digitization over developing their workforce’s skills and capabilities (26%).
Trust and leadership
• Seventy-seven percent said they need to re-evaluate their corporate purpose as a result of COVID-19 to better address the needs of their stakeholders.
• Seventy-seven percent said their communications with employees have improved during the crisis.
• Eighty-three percent want to lock in the sustainability and climate change gains they have made as a result of the crisis.
• Fifty-eight percent said their response to the pandemic has shifted their focus towards the social component of their environmental, social, and governance (ESG) program.
• Sixty-seven percent said they already had—or planned to—publicly declare new measures this year to combat racial discrimination against Black employees.
“As much as COVID-19 changed how people work and how organizations invest in technology, companies are re-assessing their values and purpose,” Knopp said. “CEOs also are placing a greater emphasis on employee engagement and corporate culture in this new working reality.”