CEOs Pessimistic on Company Viability, Says Study

Two in five global CEOs believe their company may no longer be economically viable in ten years without a major transformation, according to PwC’s 26^th Annual CEO Survey. Changing customer preferences, regulatory changes and labor and skills shortages are cited as major factors.

The race for the future. 39% of CEOs reported the believe the “half-life” of their business is 10 years or less, with the clock ticking particularly around climate issues.   About 40% view inflation as a key threat in the next 12 months indicating they are “highly or extremely exposed” to this risk.

Today’s tensions. In stark contrast to CEO optimism in 2021 around their company’s growth prospects, today’s CEOs reported a -26% decrease in confidence. To address these concerns, 85% are reducing operating costs or considering this in the next 12 months. 83% are or considering diversifying product and service offering and 80% are or considering raising prices.

CEOs do not foresee recent attrition rates changing significantly and as a result are much less likely to take actions related to workforce talent as 60% do not intend to reduce the workforce, 56% do not intend to implement a hiring freeze and 80% do not plan to reduce compensation.

Other areas that concern CEOs include cybersecurity and geopolitical turmoil due to its impact on the global supply chain. 48% of CEOs are considering increasing investments in data privacy and cybersecurity and 46% are adjusting supply chains in response to mitigate their exposure to geopolitical conflict over the next year.

CEOs and Reinvention. A very interesting question from the survey asked CEOs how centrally they view themselves to the company’s reinvention. CEOs reported that they spend about 53% of their time, on average, on driving current operating performance, but what they really want is to spend that time on evolving the business strategy. Only 23% of CEOs said their leaders make strategic decisions for their function or division without CEO consultation, which is a warning sign that “critical preconditions” are absent for executive empowerment.

Next Moves? The report includes suggestions for CEOs to improve across nine key areas and can be used as a blueprint by CHROs to help leaders succeed.