PwC Ireland’s 2016 CEO Pulse Survey gathers the views of over 250 Irish and multinational business leaders. It reflects on the challenges they face in the complex global marketplace.
More than ever, Irish organisations are looking beyond their horizons at opportunities and risks that may have a profound effect on the way they conduct their business.
From global factors such as Brexit and volatility in Chinese markets, to local issues such as the availability of talent and rising labour costs, Irish businesses are less positive about the prospects for the global and national economy. They are confident, however, about increasing revenues and profits in their own businesses.
It is clear from the findings that business leaders today are placing a much greater focus on delivering business success and growth beyond profits and the bottom line.
What are the insights of our experts on the critical concerns of over 250 local and multinational business leaders?
Confidence remains high among Irish CEOs, although the level of confidence has fallen since last year’s survey.
The findings mirror the opinions of global CEOs, and reflect international concerns over the impact of Brexit, local political uncertainties and other global issues, such as over-regulation, cyber-attacks and the speed of technological change.
Despite these external pressures, the survey finds that Irish business leaders intend to grow their operations in areas including investing in people and capital. In fact, plans to grow the workforce are at an 11-year high.
Despite being less positive about the general prospects for their businesses in the year ahead, Irish business leaders expect to see growth in many of the key performance areas such as revenues, profits and employment.
Plans to grow workforces are at their highest since the first CEO Pulse survey, with 62% of CEOs expecting to hire more staff. Capital investment growth plans are similar to last year, and also at a high.
In spite of the external risks, Irish business leaders still feel that they can expand their businesses in key areas. They are actively looking to invest in people and in their capital base.
The survey confirmed that Irish CEOs did not believe that an exit by the UK from the European Union would be good for Ireland. The survey revealed that 93% of Irish CEOs viewed a possible Brexit as the top threat to future business growth. Nearly nine out of ten Irish business leaders believed it would have a negative impact on Ireland’s economy. Only 3% said it would be positive.
The consequences of the vote and the length of time it will take to fully understand the shape of a new European trade landscape is unclear.
95% of Foreign Direct Investment (FDI) companies confirm their investment in Ireland is a success. Nine out of ten are planning on either increasing or maintaining their investment.
Ireland remains competitive despite increased competition from other countries looking to attract inward investment. Direct access to the EU, a pro-business environment and a highly-skilled English speaking workforce make it an attractive FDI location.
The survey suggests that successful businesses in the future will not be driven by profit alone but by a much wider range of priorities driven by what stakeholders expect.
85% of Irish CEOs believe that in five years’ time, they expect successful organisations to prioritise long-term over short-term profitability. Half are of the view that creating value for the wider stakeholder base will help them to be profitable.
Changes in customer behaviours are set to disrupt businesses in all industries over the next five years. Yet, most company operations are not designed to deliver what customers value – now or three years from now. The survey found that only a quarter of CEOs are extremely confident that their operations will provide customer value and a distinctive experience.
Using technology to deliver on wider stakeholder expectations is the area where most CEOs are making significant changes. 41% say this will be a part of their strategy.
Digital technology and the potential of data and analytics have put insights in the hands of CEOs in an unparalleled way in recent years. The challenge now for business leaders is to use it to drive results, increase profits and meet stakeholder expectations.
Technology also comes with its risks. Cyber-attacks are becoming more common as businesses adapt and innovate using digital technology which exposes themselves to hacking.
The demands on business leaders have reached new heights as they strive to meet the changing expectations of current and future employees.
To develop and retain their workforce, CEOs see that changing workplace culture and behaviour is essential. Incorporating effective performance management measures and changes to pay, incentives and benefits are seen as ways of keeping key staff in organisations.
The availability of key skills is the number one business concern for Irish CEOs, and the prevailing opinion is that having a skilled, educated and adaptable workforce is the most important priority for Government.
The majority of Irish CEOs agreed that tax is a business cost that must be managed efficiently. CEOs recognise that their approach to tax and tax transparency affects their reputation.
Over a third of Irish businesses agree that BEPS and other international tax proposals are changing their approach to tax risk management. This, coupled with increased global compliance and transparency requirements, places additional pressures on tax and finance functions.
Irish CEOs think that a skilled, educated and adaptable workforce should be the top priority for the Irish Government to tackle in 2016. This is up a staggering 39% from last year. This is the biggest issue companies face as they look to retain and expand their workforce in an improving economy.
Irish CEOs have already seen personal tax cuts in last year’s Budget with more expected in 2016. This matches the results of the survey. Only 34% of Irish CEOs identify reducing the tax burden as a priority for the Government compared to 53% last year.
CEOs feel the Government must tackle the housing crisis, inefficiencies in the healthcare system and focus on long-term sustainability rather than short-term profit.