The way of doing business has to change if firms are to survive, say CEOs

Despite turbulent economic conditions, 59 per cent of UK CEOs said they won’t cut headcount and 86 per cent won’t reduce employee pay.

Only 21 per cent of UK CEOs expect the global economy to improve over the next 12 months while 48 per cent are very or extremely confident.

The survey of 4,410 CEOs in 105 countries also found that 10 per cent of UK CEOs believe they have less than three years to make these vital changes. 

Globally, the picture is starker, with 39 per cent of CEOs believing their business will not be economically viable within a decade on current trajectories. As such, both UK and global CEOs recognise the need to safeguard their companies and place people and technology at the heart of their plans. 

Currently, 40 per cent of UK CEOs believe their company’s tech capabilities lag behind the demands of their strategic objectives and the gap will only widen without urgent action. Consequently, 86 per cent of UK CEOs are automating processes and systems, while 77 per cent are deploying technology and 74 per cent are upskilling their company’s workforce in priority areas. Encouragingly, UK CEOs are confident that measures such as these will put them in a stronger position both in the short and long term — only 4 per cent said they are not confident about their revenue growth prospects in the next three years. 

Kevin Ellis, chairman and senior partner at PwC UK, said businesses have already undergone massive change this decade, with hybrid working and cloud computing among the big shifts.

“But this is the tip of the iceberg — many CEOs believe their current business models are unsustainable and this means more change ahead,” he said.

“This isn’t about tinkering but fundamental changes requiring big investment in people, skills and technology. It’s positive businesses [that] are focused on making the changes needed, despite challenges including inflation and skills shortages which could be overwhelming.   

“CEOs recognise that future success is very much contingent on their people and they need to protect this commodity, particularly in a tight labour market. As such, 59 per cent say they won’t reduce headcount and 86 per cent won’t reduce employee pay.”

One of the decisive issues facing CEOs around the world is the economy. In the UK, only 21 per cent of CEOs expect the global economy to improve over the next 12 months, down from 82 per cent last year. Interestingly, UK CEOs are generally more optimistic than their global counterparts — only 4 per cent expect the economy to decline significantly, compared to three times as many (12 per cent) global CEOs who said the same. Some 73 per cent of global CEOs believe global growth will decline in the next 12 months — the most pessimistic outlook since this question was first asked 12 years ago. 

However, global CEOs are more positive than their UK counterparts about their own country’s economic outlook, whereas UK CEOs are bullish about their company’s revenue prospects. Indeed, 48 per cent of UK CEOs are very or extremely confident about their prospects over the next 12 months (42 per cent for global CEOs) and 64 per cent are very or extremely confident over three years. 

Over a quarter (26 per cent) of UK CEOs said they are moderately or extremely exposed to the threat of climate change over the next 12 months. Globally, 39 per cent of CEOs said the same, with CEOs in China feeling particularly exposed (59 per cent). When thinking about climate risks over the next five years, it ranks fourth for UK CEOs above health risks, whereas over the next 12 months, health ranks higher. Given the longer-term focus on climate, 34 per cent of UK CEOs are progressing and 31 per cent have implemented a measurable data-driven strategy to reduce emissions and mitigate climate risks.