In the latest Fortune/Deloitte CEO Survey, approximately half of CEOs expect strong growth for their organizations over the next 12 months, a decline from just over five months ago
NEW YORK, June 29, 2022 – Key takeaways
Approximately half of CEO survey participants have “very strong” or “strong” expectations about their organization’s growth over the next 12 months, down from 65% in January 2022.
More than 80% of CEOs surveyed expect inflation to influence or disrupt their business strategy within the next 12 months, surpassing labor and skills shortage from its previous top position but remaining a top disruptor for over half (59%) of CEOs.
When it comes to confronting the “Great Resignation,” the majority of CEOs believe allowing more flexibility and empowering employees will have far more impact than increasing pay or expanding benefits.
The focus on diversity, equity, and inclusion (DEI) has sharply increased, with 92% of CEOs indicating it’s been built into their strategic priorities and goals, up from 61% in June 2021.
When asked how the Russia-Ukraine war has adversely affected their organization, mental health implications for employees and families were mentioned the most by CEOs.
Why it matters to CEOs?
The Fortune/Deloitte CEO Survey series tracks the perspectives and actions of CEOs from the world’s largest and most influential companies. The survey gives key insights into CEOs’ priorities, challenges, and expectations across more than 15 industries, including technology, finance and health care.
Overview
As we enter the Summer of 2022, CEOs are becoming less optimistic, particularly about the global economy, where they see inflation and geopolitical instability having significant impacts on their businesses over the next 12 months. Still top of mind for CEOs, the effects of the “Great Resignation” also remain a major disruptor as business leaders deploy new tactics to attract and retain top talent.
CEOs see the year ahead as one of uncertainty and volatility
CEOs have traditionally remained a beacon of hope and optimism throughout turbulent times. However, after leading their organizations through an unprecedented health crisis over the last two years and now facing a new wave of social, political and economic disruptions, survey participants indicated their biggest challenges today are “uncertainty” and “volatility.” Other top challenges noted were “inflation,” “managing stakeholders,” “supply chain,” and “navigating change.”
When this survey was fielded in January 2022, there was a balance in CEOs’ expectations for 2022, with just as many describing their outlook as “hopeful” as those who viewed it as “uncertain.” Now, halfway into 2022, with a number of external factors including rising inflation, the mounting mental health crisis, and geopolitical instability, coupled with a broadening array of stakeholders with diverse interests, opinions, and expectations, it is not surprising that CEO optimism has declined.
Growth expectations trend downward, while optimism for company performance remains positive
As concerns about inflation and the market rise, CEO optimism regarding growth expectations for their organizations is down 16% from January 2022 and 28% from a year ago, with less than half saying they expect strong or very strong growth for their organization over the next 12 months.
Regarding CEOs’ personal outlook on the global economy, less than 10% take a very optimistic view. This marks a significant shift from five months ago when only 12% of survey participants felt pessimistic or very pessimistic about the global economy. Optimism about their industry and individual company performance shows a rosier picture at 46% and 72%, respectively.
Key quotes
“The complexity and uncertainty of the economic environment are weighing on CEOs today as they plan for the next 12-18 months while navigating a myriad of disruptive factors such as inflation and supply chain issues, talent and skills gaps, and geopolitical instability. But despite lower economic growth expectations shared by CEOs, they remain relatively optimistic about the performance outlook of their own organizations.”
— Joe Ucuzoglu, Chief Executive Officer, Deloitte US
“This poll shows that Russia’s invasion of Ukraine, persistent inflation, talent shortages, supply chain problems, and increasing forecasts of recession have all had their effect on the CEOs’ outlook. But it’s remarkable how confident they remain, in spite of that, in their own business prospects. Let’s hope they are right!”
— Alan Murray, Chief Executive Officer, Fortune
Disruptors are many and in flux
After spending the past two years navigating significant disruption, more than 80% of CEOs expect inflation to influence or disrupt their business strategy within the next 12 months. While labor/skills shortage has been unseated from its previous top position, it remains a top disruptor for more than half (59%) of CEOs. Geopolitical instability and supply chain disruptions round out the list (49% and 45%, respectively). When asked how the Russia-Ukraine conflict has adversely affected their organization, mental health implications for employees and families were mentioned most (32%).
To attract and retain top talent in an extremely tight labor market, CEOs report that providing greater flexibility (83%) and training leaders to empower and engage workers (62%) is more impactful in confronting the “Great Resignation” than expanded benefits (23%) and pay increases (26%). In addition, CEOs recognize that training is not just for leadership, offering that one way to confront the current talent gap could be through reskilling, upskilling, and more career development opportunities.
CEOs remain committed to DEI priorities
DEI practices have seen positive strides over the past year. CEOs are demonstrating their commitment, with 92% reporting that they have built DEI into strategic priorities/goals, up from 61% last year. Boards also demand more regular updates on DEI progress (71%), up from just 49% in June 2021.
And while more businesses are disclosing DEI metrics to employees (72%), up from 59%, less than half are disclosing those numbers externally (46%) compared to 33% a year ago. Furthermore, just over a third of CEOs (36%) indicate DEI goals are linked to individual performance and pay, which was only a slight increase from a year ago (30%).
Survey methodology
Fielded between June 7 – 15, 2022, 116 leading CEOs representing more than 15 industries shared their perspectives, expectations, thoughts, and priorities for the next 12 months. Those leaders surveyed include Fortune 500 CEOs, Global 500 CEOs, and select CEOs in the global Fortune community.
Check out the full report here:
https://www2.deloitte.com/us/en/pages/chief-executive-officer/articles/ceo-survey.html
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SOURCE Deloitte