A study by Big 4 global accountancy firm KPMG revealed how drastically priorities and concerns of Asian CEOs have changed in the wake of the Covid-19 pandemic.
The crisis has shaken CEO confidence, with fewer chief executives saying they are confident now than they were at the start of the year when reflecting on business and growth prospects over the next three years.
In the first study of its kind, KPMG conducted two surveys – one at the onset of the pandemic in January and a second in July/August to measure changes in CEOs’ priorities and concerns during the global pandemic.
The 2020 KPMG Global CEO Outlook revealed only 22% of CEOs in Asia Pacific remain confident about the growth prospects of the global economy over the next three years, a significant drop from 67% in January 2020.
A clear result from the study reveals business leaders have “radically shifted” their perspectives as businesses and governments around the world continue assessing the long-term impact of Covid-19.
It found during this period of unprecedented uncertainty, CEOs are prioritising digital transformation, talent and ESG (Environmental, Social and Governance) factors at the top of their agendas.
On a more positive note, CEOs are much more assured in the resilience of their own business as 63% expressed confidence in their company’s growth for the same time period.
Source: 2020 Global CEO Outlook, KPMG International
Critical Measures to Bolster Resilience
Datuk Johan Idris, managing partner of KPMG in Malaysia commented: “A majority of CEOs have undertaken critical measures to bolster their company’s medium-term resilience.
“This is particularly evident at the height of the crisis when business leaders worldwide took steps to maintain business-as-usual activities in answer to restricted movements. With the extension of the Recovery Movement Control Order (RMCO) until 31 December 2020, business leaders are forced to relook at their operational strategies,” says Johan (pic).
And key to this is the ability to move away from short-term measures and prepare for mid and long-term growth.”
One way CEOs are collectively doing to secure long-term growth is channeling resources towards digital transformation initiatives.
Before the pandemic, 64% of CEOs felt overwhelmed by the lead times required to achieve significant progress on digital transformation.
However, following worldwide lockdowns and the need for physical distancing, 46% of CEOs have reported that progress for their digitisation of operations has sharply accelerated, putting them years in advance of where they expected to be.
Almost two out of 3 (61%) plan to prioritise more capital investment in buying new technology and digitisation.
“Clearly, there has been a momentous change in mindset in that CEOs are now more confident and willing to invest in technology to make their companies more operationally resilient, agile and customer-focused to achieve growth during this tumultuous time,” says Johan, adding he expects digital acceleration to increase in speed and scope even after the pandemic subsides.
New Risk Paradigm
CEOs have also identified talent risk as the main threat, a category which encompasses recruitment/retention, overall well-being and health of staff.
This was the threat that CEOs were least concerned about at the beginning of the year. As a result of this pandemic, it has now risen to be the highest perceived threat to long-term growth.
This could reflect the challenges CEOs face with recruiting and retaining personnel while motivating the workforce despite disruption to the usual ways of working.
Most CEOs (72%) have said that remote working caused them to make significant changes to their policies to nurture culture, while 69% reported how remote working has widened their potential talent pool for future hires.
Regardless of the barrier caused by physical distancing measures, CEOs recognise that losing key employees, attracting specialised talent, keeping workforces productive and the health and wellbeing of their staff can have a critical impact on their future business performance.
Supply chain risk (just 1%) was at the bottom of the list for CEOs in January but catapulted to second place (14%) by July-August, the surveys revealed.
The rise in supply chain concerns could be attributed to the fact over two-thirds of organisations (72%) have had to rethink their global supply chain approach given the disruptive impact of the pandemic.
This could potentially lead to a redesign of global supply chains to become more agile in response to changing customer needs, and more robust to reduce risks and disruptions over the long term.
Renewed Sense of Purpose
Recent developments have driven 78% of CEOs in Asia Pacific to develop a stronger emotional connection to their organisation’s purpose, with 66% stating how they responded to the pandemic by shifting focus towards the ‘Social’ component of their ESG programme.
KPMG’s survey also found that 76% have had to re-evaluate their organisation’s purpose as a result of the Covid-19 crisis.
Johan concluded, “Recovery from the pandemic does not mean a return to normal, but instead an opportunity to define our post-pandemic reality.
“As the crisis continues to change what good corporate leadership looks like, the role of the CEO is more important than ever in steering the business towards growth in the new reality and beyond.”
