The COVID-19 pandemic has presented chief executives of the world’s largest organizations with the greatest possible test of their leadership abilities. Confronting this unique time in history, they are faced with the challenge of abrupt dislocation of how employees work, how customers behave, how supply chains function, and even what ultimately constitutes business performance.
According to a new KPMG study on the evolving priorities of business leaders in 2020, CEOs of some of the world’s largest companies say they are focused on the importance of talent to sustain and grow any future business. Digital transformation, wider societal contributions, and company purpose also figure prominently on CEO agendas today.
While ‘talent risk’ was the threat that CEOs ranked behind 11 other risks at the beginning of the year, it has now risen to be the number one threat to long-term growth, with CEOs recognizing the need to keep their people feeling safe but also connected, engaged and productive.
The KPMG 2020 CEO Outlook: COVID-19 special edition initially surveyed 1,300 CEOs around the world in early 2020, before the full impact of lockdowns was felt. Then, in July and August, the firm conducted a follow-up survey of 315 CEOs, to gauge how opinion had changed. In addition, 45 CEOs in the UAE participated in the survey and their findings are used to highlight significant or qualitative differences with global sentiment.
Nader Haffar, Chairman and CEO, KPMG Lower Gulf (the UAE and Oman) commented: “As the pandemic unfolded, we saw many leaders re-thinking their organizations’ purpose, while ensuring employees’ wellbeing and doubling down on digitalization efforts. Aligned with accelerated digital transformation, a key priority is ensuring that talent pipeline can meet new demands. As our research shows, corporate purpose is being redefined, so organizations can contribute solutions to the many difficulties the world faces.”
The COVID-19 crisis has served to redefine leadership and reorient CEOs’ priorities. The KPMG report outlines CEO concerns – including talent and geopolitical risk. In January, CEOs ranked talent risk behind 11 other risks to growth. However, since the start of the pandemic, talent has risen to be named as the most significant, perceived threat to their business, ahead of supply chain and environmental risk.
In the survey conducted after the onset of the pandemic, UAE-based CEOs indicated their sense of purpose has helped them better understand what they need to do to meet the needs of their stakeholders, finding it provides a clear framework for making effective COVID-19-related decisions.
Eight in ten (79%) CEOs around the world felt a stronger emotional connection to their organization’s purpose since the crisis began. This may be because four in ten (39 percent) have had their health, or the health of one of their family, affected by COVID-19, and over half (55 percent) changed their strategic response to the pandemic as a result.
According to the study, a majority of global CEOs are now engaging more with local communities where their work is based – a sign the pandemic has shifted priorities inward. During the pandemic, numerous companies played a significant role in their country’s response, from developing products and services for front-line workers to financial contributions.
At the beginning of the year, the KPMG survey found CEOs were increasingly prepared to personally lead the way in tackling society’s major challenges: around two-thirds (63 percent) said the public is looking to businesses to fill the void on societal challenges. At the same time, 76 percent of global CEOs, with a comparable sentiment among their UAE-based counterparts, said they had a personal responsibility to be a ‘leader for change on societal issues’. This development has propelled environmental and social goals (ESG) to the top of the agenda for chief executives.
The COVID-19 crisis slowed down global economic growth, but CEOs are more confident in growth prospects over the coming three years, according to the report. In part, this stems from greater control over levers that determine this, such as digital acceleration.
Many CEOs around the world are betting on digital transformation to make their companies more operationally resilient, agile and customer-focused. A majority (80 percent) of leaders have seen the digital transformation of their businesses accelerating during the pandemic, from customer experience, business model innovation and workforce, to the operating model.
According to the UAE findings of the forthcoming KPMG 2020 Chief Information Officer (CIO) survey, 48 percent of CIOs expect their organizations to “transform to re-emerge”: they will likely overhaul their IT functions to be more flexible, digitally native, and experience-centric to adjust to new business models.
Bill Thomas, Global Chairman and CEO, KPMG, said: “The significant change in CEOs' priorities over the past six months is a clear indication that businesses have had to pivot at breakneck speed to deal with the challenges of the pandemic.”
“Business leaders the world over are seeking to manage uncertainty with decisiveness. This crisis has accelerated strategies that were already in place around digital transformation and social responsibility. However, in other areas planning for the future is a lot harder, particularly thinking about future ways of working and problem solving. So it’s perhaps no surprise that CEOs are focused on the importance of talent to sustain and grow any future business.”