Kathy Gibson reports – CEOs in South Africa and ready and prepared to weather geopolitical and economic challenges.
This is one of the headline findings from, KPMG 2022 CEO Outlook Survey, presented in partnership with Business Leadership South Africa (BLSA), which says the economic outlook is positive overall.
Ignatius Sehoole, CEO of KPMG South Africa, says technology is front and centre of plans going forward, with uncertainty driving CEOs to prioritise corporate digital transformation – although, conversely, the threat of recession could put a spoke in those plans.
“With digital transformation comes an increase in cybersecurity risk,” Sehoole says. And this risk is not just to companies but to their customers as well, which CEOs need to be aware of.
Talent is a vital issue, and CEOs are changing how they support and attract talent, the survey finds.
Another issue that has been propelled into the forefront is ESG (environment, social and governance), as CEOs recognise the importance of these initiative to their business, especially when it comes to improving financial performance and driving growth.
In South Africa, CEOs are less confident about the economic outlook, but it is still relatively high.
The top risks as that CEOs expect going forward are supply chain, emerging/disruptive technology and regulatory risk.
The top operational priority for local executives are advancing the digitalisation and connectivity of all functions areas. This is followed by an employee value proposition to attract and retain the necessary talent, increasing pressure to adapt to geopolitical issues, and inflation-proofing capital and input costs.
Globally, 86% of CEOs believe a recession will happen over the next 12 months. On the local front, 72$ of South African CEOs anticipate a recession in the long-term – but they are prepared for it, having already taken active steps to boost productivity.
The talent issue is a big one, with varying ideas on how work will happen in the future. Just 24% of South African CEOs think hybrid working will be the norm, and 75% in-office. Globally, 65% of CEOs would want people to work fully in-office.
At the same time, a massive 82% if South African CEOs plan to implement a hiring freezing the next six months, with 88% looking to downsize their employee bases.
The anticipate recession could be pushing companies to reconsider the digital transformation strategies.
In South Africa, 34% of CEOs plan to pause or reduce their strategy as recession looms – and 38% of them have already done so.
At the same time, 74% of CEOs view their cybersecurity strategy as critical to engender trust with key stakeholders: only 6% believe they are under-prepared for an attack, with 82% saying they are either very well or well prepared.
Meanwhile, one-third (30%) is local CEOs plan to diversify their supply chains in the next six months in response to geopolitical challenges – and 84% note supply chain diversification to prepare for a recession in the short-term.
The downsides of addressing ESG are a higher cost of and/or difficulty in raising finance (34%), recruitment challenges (16%), competitors gaining an edge (20%), threat to continued tenure (10%), disengaged tenure (12%) and loss of customers (8%).
Busisiwe Mavuso, executive director of Business Leadership South Africa (BLSA), believes the survey is critical to gaining an understanding of what CEOs need to survive and attract investment.
“Our main responsibility is to try to respond to whatever the biggest pain is as a country – and that is the ticking timebomb of unemployment,” she says.