Improved confidence, but challenges remain – says PwC 2012 CEO Pulse Survey

  • Nearly half (44%) are favourable about the prospects for their own businesses while only a fifth (22%) are favourable about the outlook for Ireland’s economy over 2012/13
  • 93% of MNC CEOs rate their investment in Ireland a success with a third (34%) considering increasing this investment here
  • 40% plan to grow employment levels over 2012/13, a further 40% will hold employment levels
  • Costs are still a major area for change (72%) in the coming year

PwC’s 2012 CEO Pulse Survey, launched today, reveals some improvement in overall business and investment confidence. The vast majority of multinational CEOs indicate that their investment in Ireland is considered to be a success. Echoing that sentiment, 86% said that they are either increasing or holding their investment in Ireland, up from 72% last year. While nearly half (44%) of all CEOs are positive about the outlook for their own businesses, only 22% regard the outlook for the Irish economy as favourable, with over half (58%) envisaging no material change. A fifth (20%) are still concerned about an unfavourable outlook for the Irish economy. This reflects continued difficult domestic trading conditions and exposure to instability within the EU and overall global volatility.

The top two factors critical for Ireland’s attractiveness as a location of choice for foreign direct investment are the retention of our 12.5% corporate tax rate (82%) and maintaining our track record as a good place to do business (61%).

The survey suggests that increased exports will drive our economic success into the future. Half of all Irish companies plan to expand into foreign markets with Central/Eastern Europe (42%), the UK (40%) and China (32%) being the top three favourite hotspots.

Speaking at the survey launch, Richard Bruton T.D., Minister for Jobs, Enterprise and Innovation said:

“It is very telling that according to this survey only 1% of business leaders will not be supporting the stability treaty this week, with 82% planning to vote Yes. These are the people who run the multinational and Irish companies which will create the jobs we need, and they are saying that they need the stability offered by this treaty to grow their businesses and create employment.

“With 40% of businesses planning to increase employment and 40% planning to hold employment levels, prospects for job-creation are at their most positive for four years – and it is very interesting to note that indigenous companies are even more positive about job-creation than multinationals.

“What this excellent survey shows is that, although major challenges remain, the people running the businesses that will create the jobs we need are seeing some reasons to be positive about the Irish economy. We in Government are determined to continue working day and night to build on this progress, by improving access to finance, reducing costs, and encouraging innovation. The Irish people can take a significant step towards continued stability this Thursday and I urge them to vote Yes for certainty and Yes for investment in the economy”.

Ronan Murphy, PwC’s Senior Partner, said: “It is clear that Irish companies continue to address significant challenges and are actively targeting opportunities in international markets. There continues to be a strong focus on change and efficiency with a renewed emphasis on organisation agility and talent management. The survey suggests that businesses are positioning themselves for growth opportunities, albeit such growth will, initially, be sector and market specific.”

Other key findings in the survey include:

  • The majority (82%) of Ireland’s business leaders will support the upcoming Fiscal Stability Treaty referendum, 17% don’t know and 1% will not support it
  • Overall, business confidence is improving with 80% having a ‘favourable’ or ‘no change’ outlook for Ireland’s economy, up from 59% last year. Interestingly, the CEOs of indigenous businesses are more positive (27%) on the outlook for Ireland’s economy next year compared to their multinational (MNC) counterparts (19%)
  • Over half of the CEOs are anticipating growth in revenues (59%) and profits (54%). MNC CEOs are more confident in terms of profit growth (60%) compared to their Irish based CEOs (51%)
  • The top barrier for business growth for the MNC community is margin pressure (55%) while for the indigenous Irish CEOs it is the lack of demand (60%)
  • The most important factor for the stabilisation and recovery of Ireland’s economy for the MNC CEOs is growth in the EU markets (55%) while the critical factor is availability of bank finance for the Irish based CEOs (56%)
  • Over a quarter (28%) indicated that talent constraints significantly impacted business performance in the last year. This had the impact of reducing innovation levels, cancelling or delaying strategic initiatives, curtailing new market opportunities and reducing profits
  • Over a third (40%) of all CEOs indicated that they would recruit staff in the coming year with a further 40% indicating that they would hold employment levels. Irish based CEOs are slightly more positive with 44% planning to expand employment compared to 39% for their MNC counterparts
  • On reward, a third (35%) of all CEOs anticipate that they will have to increase basic pay. However, over half (56%) of MNC CEOs plan to increase pay while this was only 20% for the indigenous Irish companies

The survey confirms that a significant amount of change will continue to take place within Irish businesses in the year ahead primarily focusing on cost containment (72%), strategies for managing talent (68%) and technology investment (63%)

The survey highlights the need for more insightful input from Board members particularly with regard to managing risk and stewardship of their business. Nearly half (48%) of survey respondents said that Board performance will be an area of greater scrutiny. Other areas of focus include Board input on risk management issues (34%), the quality and relevance of Non-Executive Directors (33%) and Board size (31%)

Ann O’Connell, Consulting Partner, PwC said: “It is not surprising, given the current environment, that more attention is focused on Board effectiveness and the value delivered by Non-Executive Directors. The increased business challenges may have made the role of the Non-Executive Director more interesting, however, many feel challenged by the complexity of the business, regulatory changes and the general demands associated with an increased involvement and responsibility which these roles now bring.”

If Irish CEOs had more time, they would focus this on meeting with customers (67%), developing leadership and talent pipeline (64%) and improving organisational efficiency (50%).

CEO views on top priorities for Government are that they should be reducing public sector costs (47%), focusing on job creation (46%) and continuing to market our 12.5% corporate tax regime internationally.

Ann O’Connell, Partner, PwC Consulting Practice concluded: “The survey confirms that talent and the retention of key people have become significant challenges for businesses. Human capital is increasingly becoming more scarce than financial capital in the future. It is therefore not surprising that Irish business leaders are planning significant changes to their talent management strategies in the year ahead. Increasingly, organisations are seeking to measure and report on their return on investment in human capital.”


Notes to editors:

The survey was carried out in April 2012, having 195 responses from Ireland’s leading CEOs.

1.Anticipated performance of Irish operations (% of all respondents)

Indicator Growth Decline No change
Year 2012 2011 2010 2009 2012 2011 2010 2009 2012 2011 2010 2009
Revenues 59% 54% 53% 29% 19% 22% 20% 55% 22% 24% 27% 16%
Costs 43% 30% 23% 25% 25% 30% 38% 50% 32% 40% 39% 25%
Net profit 54% 49% 57% 23% 19% 25% 20% 55% 27% 26% 23% 22%
Employment 40% 33% 34% 19% 20% 30% 27% 29% 40% 37% 39% 52%
Capital investment 33% 32% 39% 18% 14% 19% 16% 46% 53% 49% 45% 36%

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