The top eight issues facing chief executives today: PwC Global CEO survey
Wednesday, January 21, 2015/
Sentiment among Australian chief executives is deteriorating month by month, according to PwC’s annual Global CEO Survey released today.
The research involves interviews with 1322 chief executives in 77 countries, including 44 in Australia, and identified seven key issues Australian chief executives are engaging with.
More than half of the Australian chief executives surveyed (55%) are very confident about company growth over the next three years, up from 34% in 2014.
“This fortitude might be due to an understanding that while no one is immune from the effects of change in our increasingly technology-led world, the opportunities are there for those who grab them,” the study’s authors found.
In Australia 55% of chief executives plan to increase headcount in the next 12 months, higher than the global average of 50% but at the same time, concerns around availability of key skills are at an eight year high.
Michael O’Keefe, chief executive of Aesop, told PwC chief executives are likely to have to focus more on talent management in the future.
“In an era where capital is relatively plentiful, the access to technology and systems is quite ubiquitous, talent just makes the difference,” he says.
“I think in the past perhaps talent management and development was left to the HR department, the CEO focused on strategy in finance and areas like that, but increasingly I think the CEO’s going to have to become the chief talent manager in the organisation and really source and develop talent right throughout the organisation.”
Australian chief executives are taking matters into their own hands when it comes to pursuing growth. The business landscape is set to change in Australia with 40% of those surveyed looking to complete a domestic merger and acquisition.
This is an increase on the 23% who were considering a domestic M&A in 2014.
International M&A deals are also on the agenda with 21% looking to complete a cross-border deal.
Cost-cutting is a key concern for Australian chief executives with 67% of them planning to implement a cost reduction initiative this year, up from 57% last year.
5. Engaging with Asia
Despite much talk about Asia as a key growth opportunity, PwC research shows the level of direct investment and business activity in Asia by Australian businesses is “woeful”.
Australian businesses invest more in New Zealand than they do in both China and Indonesia.
6. Digital disruption
Digital innovation and its irrevocable impact on customer behaviour is a particular concern for Australian chief executives.
Nine out of ten say it is the number one disruptive trend they face.
Customer expectations – based on their online experience both here and overseas – are way ahead of what many companies can currently deliver.
More than half (52%) are collaborating with new partners to build and strengthen innovation capabilities, while 83% see digital technologies creating value for internal and external collaboration.
Grant O’Brien, chief executive of Woolworths, told PwC data is the new eyes and ears for retailers.
“Without it we’re blind, “ he says.
“With it we can be very focused and targeted in what we go after, both from a strategic sense but also in what we offer you personally as a customer, or what we offer a store in a particular town or a digital online offer that we establish.”
7. Tax reform
Tax reform plays a vital role in encouraging innovation, as well as helping foster economic growth with 7 out of 10 chief executives saying the government’s attempts at achieving an internationally competitive tax system were ineffective.
Globally, only chief executives in the US were more critical of their government’s performance in relation to tax.
Diversity and inclusiveness are no longer seen as “soft” issues but are crucial competitive capabilities, according to the PwC survey.
Of the 86% of CEOs whose companies have a formal diversity and inclusiveness strategy, 92% think it’s improved the bottom line.
Further to this, 83% stated it has helped to strengthen the company’s brand and reputation.
Alan Joyce, chief executive of Qantas, told PwC as a business Qantas needs to represent the best of Australia generally, and diversity is a key part to that.
“It also allows you to tap into an unbelievable set of talent that a lot of other companies just miss out on because they don’t take diversity seriously and are not focused in on it,” he says.
“And I think, you know, I look at my own position being a gay CEO with an Irish accent of this great company.”