The Great Resignation is cooling down, with 39% of global chief executive officers implementing a hiring freeze, and 46% considering downsizing their workforce over the next six months, according to the KPMG 2022 CEO Outlook released on Tuesday.
The survey asked more than 1,300 CEOs at the world’s largest businesses about their strategies and outlook, and included leaders from 11 key markets: India, China, US, UK, France, Germany, Italy, Japan, Canada, Australia and Spain.
The three-year view, however, is more optimistic, with only 9% expecting a further reduced headcount. The other good news is that more than half the leaders expect a recession to be mild and short.
A substantial number (14%) of senior executives identify a recession among the most pressing concerns today — up slightly from early 2022 (9%), while pandemic fatigue tops the list (15%).
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Over the next year, more than eight out of 10 (86%) global CEOs anticipate a recession to hit, with 71% predicting it will impact company earnings by up to 10%. A strong majority of senior executives believe a recession will disrupt anticipated growth (73%). However, three-quarters have already taken precautionary steps.
Despite the concerns, senior executives also feel markedly more confident about the resilience of the economy over the next six months (73%) than they did in February (60%), when KPMG surveyed 500 CEOs for its CEO Outlook Pulse survey. Further, 71% of leaders are confident about the global economy’s growth prospects over the next three years (up from 60% in early 2022) and nearly nine in 10 (85%) are confident about their organisation’s growth over the next three years.
While current uncertainty is driving CEOs to continue to prioritise digital transformation, 40% of businesses have paused their strategies for the same and another 37% plan to take such steps in the next six months.
In the longer term, more than a quarter believe that advancing digitalisation and business connectivity is vital to achieving growth objectives over the next three years. Moreover, 74% agree that their organisation’s digital and environmental, social and governance (ESG) strategic investments are inextricably linked.
Emerging and disruptive technology has landed as the top risk to business growth over the next three years. CEOs have also identified several other areas as top risks to growth: reputation, regulatory and operational issues, and climate change.
Reputational risk — such as a misalignment with customer or public sentiment — is raising more concern among CEOs compared to early 2022 (10% in August vs. 3% in February). In response to geopolitical challenges, 51% of the organisations have discontinued working with Russia and 34% plan to do so over the next six months.
CEOs are also putting a number of ESG goals on hold as they try to prepare their businesses for fallout from a possible recession, the report showed.
“Nearly half (45%) of CEOs agree that progress on ESG improves corporate financial performance, an increase from 37% just a year ago. However, as economic uncertainty continues, half are pausing or reconsidering their existing or planned ESG efforts in the next six months, and 34% have already done so, the report said.
In fact, 69% of senior executives noted greater demand from stakeholders for increased reporting and transparency on ESG, up from 58% in 2021, the report showed.