Despite the COVID-19 pandemic, many U.S. CEOs remain confident in growth prospects of the domestic economy and their companies and are accelerating digital investments, according to a new report.
KPMG, an audit, tax, and advisory firm with a large practice in downtown Detroit, released its 2020 KPMG CEO Outlook, which features insights from 315 CEOs at large companies globally, including 100 in the U.S., who were surveyed in July and August about the business landscape over the next three years.
About 43 percent of respondents said they were “more confident” in the growth prospects of the domestic economy and their company (60 percent) compared with the beginning of the year, while 37 percent said they were “more confident” in the growth prospects of the global economy.
Low to moderate growth is expected; 39 percent predict 2.5-5 percent growth, 33 percent expect less than 2.5 percent growth, and 14 percent predict no growth.
The greatest threats to organizations’ growth aside from global health security and the pandemic were identified as environmental/climate change risk (21 percent), talent risk (20 percent), a return to territorialism (18 percent), supply chain risk (15 percent), and cybersecurity risk (12 percent).
“U.S. CEOs are resilient and remain optimistic as they continue to rise to meet the challenges and opportunities resulting from the pandemic and ongoing economic uncertainty,” says Paul Knopp, chair and CEO of KPMG U.S. “They are accelerating the digital transformation of their businesses, but also see a multitude of risks apart from the pandemic, with talent risk becoming front and center in the current environment.”
The majority of CEOs noted the COVID-19 pandemic has accelerated their digital investments and progress by at least a matter of months. These areas include:
- The digitization of operations and the creation of a next-generation operating model (74 percent);
- The creation of new digital business models and revenue streams (70 percent);
- The creation of a digital customer experience (73 percent); and
- The creation of a new workforce model, with human workers helped by automation and artificial intelligence (66 percent).
CEOs cited difficulty making quick technology related decisions (31 percent) and a lack of insight into future operational scenarios such as new ways of working (22 percent) as the greatest challenges associated with accelerating digital transformation within their organizations.
As CEOs respond to COVID-19 and prepare for the post-pandemic world, 74 percent said they were prioritizing investments in new technology and digitization over developing their workforce’s skills and capabilities (26 percent).
CEOs said the work world will change in numerous ways due to the pandemic: 68 percent said they would downsize their office space, 76 percent said they will continue to build on their use of digital collaboration and communication tools, 78 percent said remote working has resulted in changes to company policies in order to nurture their organization’s culture, and 72 percent said that working remotely has widened their potential talent pool.
Of the CEOs who responded, 77 percent said they need to re-evaluate their corporate purpose as a result of COVID-19 to better address the needs of their stakeholders; 77 percent said their communication with employees has improved during the pandemic; 83 percent want to lock in the sustainability and climate change gains they have made as a result of the crisis; 58 percent said the pandemic has shifted their focus toward the social component of their environmental, social, and governance program; and 67 percent said they already had, or planned to, declare new measures this year to combat racial discrimination against Black employees.
“As much as COVID-19 changed how people work and how organizations invest in technology, companies are re-assessing their values and purpose,” Knopp says. “CEOs also are placing a greater emphasis on employee engagement and corporate culture in this new working reality.”
KPMG is based in New York.