It is no surprise that the challenges faced by today’s business leaders are vast and complex – from the rapid adoption of artificial intelligence (AI) and global geopolitical uncertainties to navigating environmental, social and governance (ESG) priorities. Despite the ongoing challenges, global leaders remain resilient and committed to leading their businesses on a path to sustainable growth. The KPMG 2024 CEO Outlook provides a comprehensive analysis of the current landscape faced by global business leaders, highlighting their perspectives on economic conditions, technological advancements, and workforce dynamics. This 10th edition of the report, which surveyed over 1,300 CEOs across 11 markets, reveals a complex interplay of optimism and caution as leaders navigate through a decade marked by disruption.
Economic outlook
The report indicates that CEO confidence in the global economy has fluctuated significantly over the past decade. While 72% of CEOs express optimism about the economy in the near future, this is a notable decline from the 93% recorded in 2015 when the survey first launched. CEOs are increasingly feeling the pressure to ensure long-term prosperity, with nearly three-quarters admitting they are under more pressure than ever before. This additional pressure is largely attributable to operational issues that most CEOs believe will significantly hinder the growth of their business if not properly managed. Specifically, these operational issues revolve around advancing digitization and connectivity across their business, adoption of generative AI and related employee skillsets, and delivery of ESG initiatives.
Technological innovation and AI
A key finding of the report is the pivotal role of AI in shaping business strategies – 64% of global CEOs indicated they would invest in AI regardless of economic conditions, reflecting a strong belief in its transformative potential. The urgency around AI adoption has escalated, with leaders recognizing that it can enhance efficiency, productivity and innovation within their organizations. However, there is also a recognition of the ethical challenges associated with AI implementation, with 61% of CEOs identifying these as significant issues to address.
Despite concerns about job displacement due to AI, 76% of CEOs believe that AI will not fundamentally reduce the number of jobs in their organizations over the next three years. This optimism is tempered by the acknowledgment that their workforces will need to adapt to leverage AI effectively. Currently, only 38% of CEOs are confident that their employees possess the necessary skills to fully utilize AI's benefits. Therefore, organizations will need to upskill their employees to fully harness the power of AI.
Workforce dynamics and talent management
More than ever before, employees are demanding a more agile work environment and seeking employment with organizations that understand the importance of the alignment between their personal beliefs and organizational purpose. While 83% of CEOs anticipate a full return to the office within the next three years (as compared to 64% in the prior year), many employees are seeking more flexible working conditions. This disconnect underscores the need for leaders to invest in nurturing talent and adapting to the evolving expectations of their workforce. Fully 92% of CEOs plan to increase their overall headcount, indicating a commitment to growth despite the widening challenges in employer-employee dynamics.
Moreover, the report emphasizes the importance of upskilling and lifelong learning to address the talent shortage. With a third of CEOs expressing concern about labour market shifts and the impending retirement of skilled workers, there is a consensus that organizations must invest in skills development and lifelong learning within local communities to secure future talent.
Environmental, social and governance (ESG) priorities
In 2015, the majority of CEOs did not consider ESG as one of their key organizational goals; fast-forward to 2024 and almost a quarter acknowledged that the poor communication or execution of ESG strategies could result in a loss of competitive advantage. CEOs are becoming more aware of the reputational risks associated with failing to meet ESG expectations, with 76% stating they would consider divesting from profitable segments that harm their reputation and 68% indicating that they are willing to take a stance on politically or socially contentious issues even if the Board expresses its hesitation.
Despite the CEOs’ clear dedication to ESG as a strategic priority, the report reveals that 66% of CEOs feel unprepared to handle potential scrutiny from shareholders regarding their ESG commitments, especially in the face of growing politicization of issues such as social mobility and climate change. Further, 30% of global leaders have identified the decarbonization of their supply chain as one of their greatest roadblocks in achieving their climate change-related goals – an issue that is worsened by geopolitical uncertainties around the globe.
Conclusion
The KPMG 2024 CEO Outlook presents a nuanced picture of the challenges and opportunities facing global business leaders. While there is a prevailing sense of optimism regarding future growth, it is accompanied by a recognition of the complexities of the current economic landscape. The emphasis on AI and technological innovation, coupled with a commitment to workforce development and ESG priorities, highlights the need for CEOs to be agile and adaptable in their strategies. Investor relations professionals play an essential role in telling shareholders and other constituencies how their organizations address and navigate these complex issues.
Keith Leung, CPA, CA is a Senior Manager, Accounting Advisory Services, and Terry Liu, CPA is Partner, Accounting Advisory, for KPMG LLP in Canada.