According to KPMG’s 10th annual CEO Outlook survey released on Sept 18, 83% of the over 1,300 CEOs polled say they expect employees to fully return to the office within the next three years, a significant increase from 64% in 2023.
Of those expecting a full return, 87% of them were older CEOs aged 60 to 69 while 83% were aged 50 to 59. In comparison, 75% of CEOs aged 40 to 49 were expecting to see their employees in the office full-time. The split is seen among genders too with 84% of male CEOs predicting a full return to the office compared to 78% of female CEOs expecting the same.
At the same time, 87% of CEOs are likely to reward employees who make an effort to come into the office with favourable assignments, pay increases or promotions.
The survey revealed that only 72% of CEOs polled remain confident in the global economy, which is a significant drop from the 93% a decade ago. This reflects the increasing complexity of the operating environment that businesses are facing.
CEOs are betting big on artificial intelligence (AI) and talent as key drivers of company growth. The survey found that 64% of CEOs held that AI remains the top investment priority regardless of the economic conditions this year. However, their top concerns for implementation include ethical challenges (61%), lack of regulation (50%) and insufficient technical capabilities and skills (48%). Over three quarters (or 76%) of CEOs also see that AI will not fundamentally lower the number of jobs required within their organisations within the next three years.
CEOs are seeing access to future talent as a crucial factor for business competitiveness and growth, with 92% of CEOs looking to increase their overall headcount in the next three years. This reflects the highest proportion since 2020. In the same survey, almost a third of the CEOs polled expressed concern over the impending wave of retirements and the shortage of skilled workers to fill the gap. In response, 80% of them agree that organisations should be investing in skills development and lifelong learning to secure a future-ready workforce.
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Additionally, CEOs are increasingly recognising the importance of environmental, social and governance (ESG) on their reputational and financial risk. The survey found that 69% of CEOs have adapted climate-related terminology and language to convey ESG efforts and meet stakeholder needs, such as preferring to use terms like “sustainability” over the more encompassing term “ESG”. This is in stark comparison to 2015 where environmental risk was deemed the least concerning priority.
This year, 76% of the CEOs polled also said that they would be willing to divest a profitable part of their business that was damaging their reputation. Majority, or 68% of the CEOs, said they would take a stance on an issue that was politically or socially contentious even if their board raised concerns otherwise.
The survey also found that 66% of CEOs acknowledge that they are not fully prepared to meet the potential scrutiny and expectations of shareholders regarding ESG matters, which suggests that they may take action to mitigate this, says KPMG.
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Age matters too, with 43% of younger CEOs aged 40 to 49 feeling more confident that they can take on ESG-related scrutiny compared to 33% of CEOs aged 50 to 59 and 30% of those aged 60 to 69.
Looking ahead, supply chain disruption was seen as the top risk to growth, followed by operational issues and cybersecurity. This is in comparison to last year’s number one threat – geopolitics and political uncertainty.
