PwC’s Annual Global CEO Survey answers: Where will work happen?
As COVID-19 took hold, business leaders around the world faced a series of high-stakes decisions. Confronted with a mounting global health crisis, they had to keep employees and customers safe, find alternative sourcing options, interpret shifting consumer preferences and, in some cases, figure out how to stay afloat. Some of their decisions were quick fixes, meant to solve an urgent problem. But others have revealed capabilities and opportunities that might not have seemed possible before, and that could fundamentally change their company’s business model as countries emerge from various stages of crisis.
PwC’s CEO Panel Survey, conducted in June and July 2020 as an extension of PwC’s Annual Global CEO Survey—which provides unique insight every year into the thinking of thousands of chief executives around the world—reflects the views of 699 CEOs on emerging business models and key trends resulting from the COVID-19 pandemic. The surveyed CEOs are leaders of private businesses and public companies, of small firms and US$1bn-plus enterprises, and they represent a diverse crosssection of industries, countries and regions. The survey findings illustrate the ways in which CEOs are adapting to a new reality. As described by our PwC colleagues, five major forces that had already been shaping society and pressuring leaders to transform their organisations have now been accelerated by COVID-19: asymmetry in the distribution of wealth; technological and climate disruption; age and other demographic pressures; polarisation driven by nationalism and populism; and declining trust in institutions. (Taken together, these forces form what PwC refers to as the ADAPT framework.) In response, company leaders will need to rethink traditional approaches to doing business and reconfigure their business models accordingly.
Two key themes emerged among our respondents, when asked about their priorities: 1. CEOs plan to make their companies more digital and virtual. They will digitise core business operations and processes, and add digital products and services. 2. CEOs plan to develop a more flexible and employeeoriented workforce. They will increase the share of remote or contingent workers, and expand employee health, safety and wellness programmes. Underpinning these emerging business models are several trends identified by respondents as enduring shifts, meaning CEOs expect them to continue after the COVID-19 pandemic ends. Perhaps unsurprisingly, respondents believe shifts towards remote collaboration, automation, low-density workplaces and supply chain safety will have a lasting impact. Less expected were some of the changes caused by COVID-19 that CEOs view as temporary. For example, one-quarter of CEOs believe the trend towards climate change mitigation will be a short-term phenomenon (with another 28% not seeing any change when it comes to climate issues). And 43% think that the shift towards nationalism is temporary, despite the fact that populist and nationalist ideologies were on the rise before the pandemic.
The digital imperative
In the early days of the pandemic, many leaders quickly realised that the digital capabilities of their company would determine its ability to adapt to rapidly changing circumstances. This awareness has helped speed the adoption of digitisation initiatives, among both employees and customers.
For example, as governments implemented various degrees of stay-at-home orders, one of the most immediate challenges executives faced was the inability to conduct business in person or onsite. Whether it meant enabling employees to work remotely, helping customers to access products or services without stepping into a store, or any number of other adjustments, organisations set aside traditional ways of collaborating and interacting to ensure business continuity.
Increased digitisation offered companies resilience and the ability not only to survive but also to overcome obstacles to lasting change. In some countries and regions, cultural norms and preferences or regulatory restrictions have slowed companies’ digitisation initiatives. However, the need to maintain operations during a pandemic has now sped digital adoption.
For many CEOs, the need to continue to serve clients and minimise disruption to operations amid workforce and resources constraints has reinforced the value of automation. In the future, automation will also enable more people to focus on meaningful work rather than on repetitive tasks—which will contribute to companies’ ability to implement the kinds of business model changes CEOs told us they are prioritising. More than three-quarters of CEOs believe the shift towards automation will continue beyond the pandemic.
The trend towards ensuring supply chain safety, which 58% of CEOs say will endure in the post–COVID-19 environment, is another key application of digitisation. In particular, company leaders are focused on the digitisation of their supply chains to enable safety measures and to ensure their suppliers and partners are resilient in the face of crises. This finding coincides with analysis from a recent PwC survey of global supply chain leaders.3 Those companies identified in the analysis as ‘digital champions’ (about 9% of the total sample) have implemented a wide range of advanced technologies, have developed high-level digital capabilities and are upskilling employees to enable digital transformation—and, as a result, they achieved a 7.7% increase in revenue and supply chain cost savings of 6.8% annually.
CEOs in financial services are more likely than their peers in other industries to choose digitising core operations and processes as their highest-priority business model change, with 29% ranking it first. Meanwhile, health industries CEOs (69%) are most likely to put stock in a long-term shift from supply chain speed to supply chain safety, which isn’t surprising given the intimacy they have with customers. Health industries and technology, media and telecommunications CEOs are most likely (24%) to add virtual products and services; the former are eyeing the massive opportunities that have opened up for telemedicine since the onset of COVID-19, and the latter recognise customers’ high demand for in-home entertainment.
Transforming the workforce
Two questions have loomed large for CEOs since the pandemic took hold: where will work happen, and how will it happen? A majority of CEOs surveyed (78%) say the shift towards remote collaboration is enduring, a nod to the momentum building around flexibility. More than half of our respondents (54%) believe the trend away from traditional employment and towards the gig economy is here to stay. Of course, the latter arrangement offers flexibility but often comes at the cost of stability and, in parts of the world, benefits such as healthcare insurance. In this case, the reported trend is at odds with what some workers want and need (flexibility with job security), especially amid a global health emergency and recession.
As workers around the world transitioned to remote work, company leaders found that, in many cases, their prior concerns about productivity losses were unfounded. In the 13 Apr. 2020 PwC CFO Pulse, nearly half of the surveyed financial executives expected productivity loss because of a lack of remote work capabilities. Two months later, when asked again, just 26% of CFOs anticipated productivity loss in the month ahead.
As companies embrace new ways of working, it is with a growing recognition that the shift will need to coincide with an increased focus on health and wellness. When employees are working from home, they are less likely to take time off or unplug, and thus are more prone to burnout. Among our respondents, 11% selected as their top emerging business model change the need to become more employee-oriented by expanding health, safety and wellness programmes.
Navigating challenges and prosperity
CEOs are significantly more pessimistic about the direction of the global economy over the next 12 months now than they were at the end of 2019, with just 30% saying economic growth will improve in the year ahead. And with good reason: The World Bank forecasts that the global economy will shrink by 5.2% in 2020, representing the deepest recession since the Second World War.5 Looking inwards, CEOs also face uncertainty about their own operations, with only 15% indicating that they are very confident in their organisation’s revenue prospects. Yet despite these sobering realities, it’s clear that at least some CEOs feel they’ve passed a critical test and are now armed with important knowledge about their organisation — and are prepared to capitalise on the enduring trends brought about by COVID-19.