Revenue growth is firmly on the agenda. Hiring plans on the increase. Concern about many threats at an all time high. Operational resilience a priority. Digital investment set to accelerate. More action needed to combat cybercrime. Climate change not being approached with urgency. These are some of the key findings from PwC's 24th Annual Global CEO survey, which has polled 153 Irish CEOS and 5,050 global CEOs in 100 countries.
The survey reveals that confidence has bounced back with 49% of Irish CEO respondents feeling favourable about the outlook for Ireland's economy in the year ahead, up from an almost record low of 16% last year. Global CEOs are much more upbeat: 76% are confident about global economic growth (2020: 22%) and this is a record high since we first started asking the question.
CEOs are more optimistic about the outlook for their businesses. An overwhelming 82% of Irish CEOs are confident about their organisation's revenue growth in the year ahead (Global: 85%), up from 67% last year. The survey highlights that organic growth and operational efficiencies will be the two main drivers of this planned growth. In terms of key growth markets, the UK and the US remain the most important overseas markets for Irish businesses.
To achieve and sustain organic growth requires an engaged and able workforce for a post COVID-19 environment. 58% expect to increase their workforce in the year ahead (Global: 44%), up from 39% last year. This is at a time when, for eight years running, Irish business leaders are more concerned about skills shortages (75%) than their global counterparts.
Feargal O'Rourke, Managing Partner at PwC Ireland commented: "A year on since COVID-19 hit, it is encouraging to see that business leaders responsible for making investments and hiring staff are feeling cautiously optimistic about the year ahead. CEOs have been forced to navigate extraordinary circumstances. At the same time, given Ireland is very dependent on global trade, and with the complexities we are now seeing in certain areas following the Brexit Trade Agreement, it is not surprising that Irish CEOs are not as confident about the future as their global counterparts. With vaccines on the way, it still remains uncertain what the recovery will look like. But it is clear that we cannot go back simply to the way things were before.
"Having endured one of the most turbulent times in history, Irish CEOs are focused on growth and operational resilience. They realise that this growth won't happen without having the right people with the right skills. A key consideration will also be how to continue adapting their businesses and deliver sustained outcomes in this rapidly changing external environment. Organisations that get this right will be best placed to come out of the pandemic as strong, resilient and productive businesses, able to withstand future shocks."
The sheer magnitude of concern about most threats to their businesses has increased since our 2020 survey, despite rising economic optimism. Similar to global counterparts, the disruption and uncertainty caused by the pandemic (95%) is the top concern for an overwhelming majority of respondents. On the need for fiscal discipline, nearly two-thirds (63%) of Irish CEOs stated that tax policy changes to address consequent rising Government debt levels will increase their organisation's total tax obligation.
Other concerns which are at a record high in Ireland since we first started asking the questions include: cyberthreats, climate change and environmental damage, the speed of technological change, supply chain disruption and readiness to respond to a crisis. Over-regulation and uncertain economic growth also remain very high.
While COVID-19 has brought about a significant increase in digital adoption, it has also increased the risks associated with digital. As the second greatest concern, nine out of ten (90%) Irish business leaders are worried about cyberthreats, having shot up from 78% last year. Concerns around misinformation in Ireland have doubled (2021: 71%; 2020: 36%).
However, more action is needed: just 27% plan double digit investment in cybersecurity and data privacy in the next three years and lag global counterparts (31%).
The increase in CEOs' concern about cyberthreats and misinformation coincides with many businesses having pivoted to online and remote working. The survey suggests this digital transformation will accelerate, but its intensity could be stepped up even more. Four out of ten (41%) Irish CEOs plan double digit investment in digital transformation, including automation in the workforce, promising productivity and other business benefits, but they lag global peers (49%).
Another top concern, climate change and environmental damage (78%), is at a record high, up from 56% in 2019. At the same time, 68% are not factoring climate change into their strategic risk management. Just one-fifth (20%) plan double-digit investment in sustainability and ESG initiatives over the next three years, with over a quarter (28%) planning no investment at all.
Ciarán Kelly Advisory Leader at PwC Ireland concluded: "Despite the optimism, the survey highlights the considerable anxiety about many of the threats to their businesses. Yet there is still more to do to tackle some of the challenges head-on. Even more significant investment is needed in key areas such as risk management, cybersecurity and digital to keep pace with global peers. More commitment is needed to fully embed climate change, one of the biggest challenges of our generation, into the business strategy. Around half believe their organisation needs to do more to 'measure' and 'report' their environmental impact. More and better corporate information on environmental impact is key to driving the change needed to get to a net-zero economy."
"To achieve the kind of change that's needed, CEOs will need to think differently and constantly evaluate their decisions and actions against broader societal impacts. In doing so, they'll set the course that builds trust and delivers sustained outcomes for shareholders, society and our environment."
Based on the evidence, the survey suggests four key actions companies can take now.
Embrace the constructive elements of fast decision-making developed during the pandemic. Look at your whole operating model and see what you can change for the better. Engage with all your people and foster a sense of purpose and possibility. There is an opportunity now to create a brighter future.
The pandemic saw organisations pivot because they had to. Rapid and decisive change is possible. There has never been a better time to make fundamental changes. Make your business fit for the future, because it's happening now. You need to invest in transformation and your workforce or risk getting left behind.
If the last 12 months has taught us anything, it is that strong risk management frameworks and crisis response strategies are essential. Review the threats facing your business. Have action plans in place and ready to implement. Reassess and stress test them to ensure you won't be caught out in a future crisis.
Putting in place tangible, sustainable and forward-thinking environmental measures is critical now. Commit to net-zero targets, develop a strategy to achieve them, and plan how you are going to communicate your progress to stakeholders and clients.
The survey was carried out in January and February 2021 involving 153 Irish CEOs and 5,050 global CEOs.
PwC surveyed 5,050 CEOs in 100 countries and territories in January and February 2021 including 153 CEOs in Ireland. This is up from 3,501 respondents in last year's survey. The sample of 1,779 CEOs used for the global and regional figures are weighted by national GDP to ensure that CEOs' views are fairly represented across all major regions. Further details by region, country and industry are available on request.
Of the 1,779 CEOs whose responses were used for the global and regional figures:
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