In the Conference Board’s annual survey of senior executives, executives express concerns about inflation, the search for talent, and obstacles to recovery from a pandemic, including a possible recession in China and chain issues supply in the United States and Europe.
As the pandemic enters its third year, senior leaders around the world are rethinking their operations in the face of new and ongoing threats that are expected to last until at least 2023.
Inflation has become the second biggest concern for businesses around the world this year, up from 22 just a year ago, according to C-Suite Outlook 2022, a survey of more than 1,600 senior business executives. This annual Conference Board survey, which supports and influences the agendas of world conferences such as Davos, is now in its 23rd year. Global Finance worked with the Conference Board this year to increase the participation of CEOs and CFOs outside of the United States.
Supply bottlenecks and labor shortages complicated by record infections from the highly infectious variant of Omicron have pushed inflation up. In December, US consumer prices recorded their fastest rise in 40 years. Globally, 82% of CEOs say they face an increase in input prices, according to the survey, which was carried out between October and November 2021. More than half said they expected prices to increase. remain high until mid-2023 or beyond.
Beyond shared global concerns, the survey reveals differences in priorities according to geographic areas and sectors. While supply chain disruption is a major stressor for CEOs in the United States and Europe, Chinese executives are more concerned about an economic slowdown. Almost 40% of Chinese CEOs said they fear a recession in the next 12 months, according to the study.
Supply chain disruptions are felt overwhelmingly by executives in the manufacturing sector, who rank them as the main issue of external impact in the coming year. However, only 28% of CEOs globally say their organizations are well prepared for future supply chain shocks (senior executives are typically 34% more optimistic).
Manufacturing officials cited cutting costs and passing higher prices on to consumers as a short-term solution, leaving questions about a more permanent strategy.
“Many of our customers are dealing with inflation by raising prices and addressing supply chain challenges by executing contingency plans to manage supply risk,” said Gina Gutzeit, Head of CFO solutions office at FTI Consulting.
CFOs polled by FTI Consulting in their annual survey said problems and the slowdown in the supply chain “are erasing our projections and severely depleting our cash reserves.”
In healthcare, companies have faced both challenges related to delayed elective procedures and labor shortages, among other issues, and headwinds related to testing, vaccines and labor. to telemedicine.
“It is still not clear when these winds will turn and when companies will have to face these consequences, which leads to a high level of uncertainty and difficulty in thinking about business strategies,” said Andreas Dirnagl, manager global health research company at Mitsubishi. UFJ Financial Group (MUFG), one of the world’s leading lenders in the healthcare industry.
Favored by strong public capital markets, healthcare executives refocused their portfolios on their core business, leading to company divestitures, splits and targeted acquisitions.
“I think the pandemic has forced CEOs to further define their strategies and what they’re doing well,” says Beth Everett, managing director of healthcare banking and head of mid-market healthcare at MUFG. “Because of this internal focus, we find that many large companies are selling, separating or deprioritizing parts of their business. I think we will continue to see this regularly in 2022 and 2023. “
Labor shortages have prompted CEOs in the United States, Europe and China to consider attracting and retaining talent as their # 1 priority for 2022. Some are shortening the interview process and offering higher salaries and benefits to retain staff. A hybrid model of remote and in-person working is expected to last beyond the pandemic. Such logistics are only part of the equation, however, and the survey shows a keen awareness of the need to offer a vision of the future that catches the attention of both talent and markets.
CFOs themselves face challenges in a context of shorter tenure and increased responsibilities. Almost half of corporate CFOs surveyed by FTI Consulting said they expect their CFO to stay for less than five years. The pandemic has accelerated a trend that began before the health crisis. The success or failure of CFOs can be defined in just two to three years, according to the global business consultancy firm.
“For some, the increased pressures and risks associated with the position have reduced this role to become the bedrock of the career, which has resulted in the pursuit of other opportunities,” said Gutzeit.
Overall, the results show a growing acceptance of stakeholder capitalism and strong incentives to reinvent business models to align with social relations through digital media and the ways of working transformed under Covid. The challenge is not just to take advantage of technology to speed things up, but to meet the new and different needs of this rapidly changing world.