46% of global CEOs are considering downsizing their workforce over the next six months

A survey conducted by KPMG on the strategies and outlook of 1,300 CEOs reveals that 58 percent of leaders expect a recession to be mild and short.

With continued economic turmoil, there are signs the Great Resignation could be cooling down, with 39 percent of CEOs having already implemented a hiring freeze, and 46 percent considering downsizing their workforce over the next six months.

However, the three-year view is more optimistic with only nine percent expecting a further reduced headcount.

According to the survey, titled KPMG 2022 CEO Outlook, 14 percent of senior executives identify a recession among the most pressing concerns today, up slightly from early 2022 (9 percent), while pandemic fatigue tops the list (15 percent).

It was found that around 86 percent of global CEOs anticipate a recession to hit over the next year, with 71 percent predicting it will impact company earnings by up to 10 percent.

A strong majority of senior executives (73 percent) believe a recession will disrupt anticipated growth. However, three-quarters (76 percent) have already taken precautionary steps ahead of a looming recession, the survey said.

When KPMG surveyed 500 CEOs for its CEO Outlook Pulse survey, it was found that despite those concerns, senior executives also feel markedly more confident about the resilience of the economy over the next six months (73 percent) than they did in February (60 percent).

Further, it was observed that 71 percent of leaders are confident about the global economy’s growth prospects over the next three years (up from 60 percent in early 2022) and nearly 9 in 10 (85 percent) are confident about their organization’s growth over the next three years.

Uncertainty fuelling long-term digital transformation while current uncertainty is driving CEOs to continue to prioritize digital transformation, it was found that 40 percent of businesses have paused their digital transformation strategies, and another 37 percent plan to take such steps in the next six months.

In the longer term, more than a quarter believe that advancing digitization and business connectivity is also vital to achieving growth objectives over the next three years. Seventy-four percent also agree that their organization’s digital and ESG strategic investments are inextricably linked.

Evolving focus toward reputational and technological risks emerging and disruptive technology has landed as the top risk to business growth over the next three years. In addition, CEOs have identified several other areas as top risks to growth such as reputation, regulatory and operational issues, and climate change.

Reputational risk such as misalignment with the customer or public sentiment is found to be raising more concern among CEOs compared to early 2022 (10 percent in August versus 3 percent in February). In response to geopolitical challenges, 51 percent of organizations have discontinued working with Russia, and 34 percent plan to do so over the next six months.

Cyber security is no longer corporations’ biggest threat, with more companies prepared for attacks cyber security has dropped from the top five risks to growth over the past year, with only 6 percent of CEOs naming it as their top risk (17 percent in February 2022). However, the cyber environment is evolving with 77 percent saying their organization views information security as a strategic function and as a potential source of competitive advantage. According to 7 of 10 CEOs (73 percent), geopolitical uncertainty is also raising concerns about corporate cyber-attacks.

As per the survey, nearly three-quarters of organizations (72 percent) have a plan to handle ransomware attacks. However, more CEOs recognize that they are under-prepared for a cyber attack with nearly a quarter (24 percent) admitting so in 2022, compared to 13 percent in 2021.

Stakeholder pressure increasing accountability in ESG When asked what their top challenge in communicating ESG performance to stakeholders was, nearly one-fifth (17 percent) of CEOs indicated it was stakeholder skepticism around greenwashing, up from 8 percent in 2021.

More than one-third (38 percent) of CEOs say their organizations struggle to articulate a compelling ESG story. Nearly three-quarters of respondents (72 percent) also believe that stakeholder scrutiny of ESG issues like gender equality and climate impacts will continue to accelerate.

On talent, compared to early 2022, more C-suite executives believe that having talent and skills is also key to achieving net zero or similar ambitions. Nearly a quarter (22 percent) say a lack of skills and expertise is hindering the implementation of solutions, which is an increase from 16 percent earlier this year.

Economic pressure slowing ESG ambitionsIn the survey, global CEOs recognize the importance of ESG initiatives to their businesses, especially in improving financial performance and driving growth. In fact, 69 percent of senior executives noted greater demand from stakeholders for increased reporting and transparency on ESG compared to 58 percent in 2021.

Nearly half (45 percent) of CEOs agree that progress on ESG improves corporate financial performance, an increase from 37 percent just one year ago. However, as economic uncertainty continues, half are pausing or reconsidering their existing or planned ESG efforts in the next six months, and 34 percent have already done so.




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