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CEOWORLD magazine - Latest - CEO Opinions - KPMG’s CEO Outlook: CEOs Face New Challenges in a Decade of Change With AI, ESG, and Workforce Dynamics Taking Center Stage

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KPMG’s CEO Outlook: CEOs Face New Challenges in a Decade of Change With AI, ESG, and Workforce Dynamics Taking Center Stage

KPMG’s CEO Outlook launched a decade ago, surveys over 1,300 global business leaders overseeing companies with revenues exceeding $500 million across key industries and major economies. Over the past ten years, these CEOs have had to navigate a landscape marked by significant disruptions, including the COVID-19 pandemic, inflation spikes, and geopolitical tensions. These challenges have tested leaders’ adaptability and eroded confidence in the global economy.

Despite this volatility, global business leaders remain resilient, focusing on sustainable growth strategies. The 2024 survey reveals that CEOs are still optimistic about their organizations, with 92% planning to increase their workforce. However, they also recognize the need to future-proof their employees’ skillsets and enhance their value proposition to attract and retain top talent. Balancing ambitious growth plans with a cautious approach to environmental, social, and governance (ESG) issues will be critical to maintaining stakeholder trust and driving long-term success.

Over the past decade, CEO confidence in the global economy has declined, reflecting the increasing complexities of today’s business environment. While 72% of leaders remain optimistic about the economy, this marks a noticeable drop from the 93% recorded in 2015, when the survey was first conducted. CEOs now face mounting pressure to ensure their businesses’ long-term success, with 72% reporting they feel the weight of this responsibility more than ever.

The survey identifies several key threats to business growth over the next three years, with supply chain disruption and operational issues topping the list. These concerns now overshadow last year’s top threat, geopolitical instability. CEOs have responded to these challenges by prioritizing digitization and the implementation of AI and ESG initiatives. By investing in technology and workforce development, they are positioning their companies for sustainable growth in an increasingly digital economy.

Technological innovation has been the most disruptive force in the past decade, consistently ranking among the top risks to business growth. When the CEO Outlook was first launched, AI was in its early stages, with advancements in areas like image recognition and autonomous vehicles. Today, 64% of global CEOs plan to invest in AI, regardless of economic conditions. While AI garners widespread attention, leaders understand its transformative potential across industries. Despite public concerns about job displacement, 76% of CEOs believe AI will not significantly reduce jobs in their organizations over the next three years, though they acknowledge the need for their workforce to adapt.

Although CEOs are committed to investing in AI, many recognize that realizing a return on investment may take time. 63% expect an ROI within three to five years, similar to last year’s projections. Ethical concerns regarding AI adoption are also growing, with 61% of CEOs identifying ethical challenges as a major issue, an increase from 57% in 2023. Additionally, CEOs worry about insufficient regulation and a lack of technical skills, which further complicate AI’s integration into business operations.

Workforce dynamics have also shifted dramatically over the past decade. Leaders who have successfully adapted to evolving employee expectations—such as flexible working conditions and stronger alignment with personal values—have seen positive results. However, the debate over returning to the office remains contentious. This year’s findings reveal that 83% of CEOs expect a full return to the office within the next three years, up from 64% in 2023. Interestingly, male CEOs are more likely to predict this shift than their female counterparts. Additionally, 87% of CEOs indicate they would reward employees who come into the office with favorable assignments or promotions.

Talent shortages present another pressing concern, as CEOs foresee challenges in replacing retiring employees with skilled workers. To address this, 80% of CEOs agree that businesses should invest in skills development and lifelong learning within their communities. In doing so, they hope to secure access to future talent, with 92% planning to expand their workforce over the next three years.

The growing prominence of ESG in the corporate world has added another layer of complexity for CEOs. While ESG issues were once considered secondary, they have now become a focal point for stakeholders and can impact a company’s reputation and competitiveness. Nearly a quarter of CEOs see failing to meet ESG expectations as a competitive disadvantage, while 76% say they would divest a profitable part of their business if it was damaging to their reputation. Furthermore, 68% are willing to take a public stance on politically or socially contentious issues, even if their boards advise against it.

However, ESG remains an area where many CEOs feel unprepared for the scrutiny of shareholders and the public. Two-thirds admit they are not ready to face the high expectations around ESG initiatives, particularly older leaders. Generational differences are evident, with 43% of younger CEOs (aged 40-49) feeling confident in addressing ESG challenges, compared to 33% of those aged 50-59 and just 30% of CEOs aged 60-69.

As leaders navigate the complexities of AI, workforce evolution, and ESG responsibilities, they continue to seek a balance between driving innovation and managing risks. The next decade will undoubtedly present new challenges, but for CEOs, the ability to adapt and lead with purpose will be the key to sustaining growth and competitiveness in a rapidly changing world.

 

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CEOWORLD magazine - Latest - CEO Opinions - KPMG’s CEO Outlook: CEOs Face New Challenges in a Decade of Change With AI, ESG, and Workforce Dynamics Taking Center Stage
Anna Siampani
Anna Siampani, Lifestyle Editorial Director at the CEOWORLD magazine, working with reporters covering the luxury travel, high-end fashion, hospitality, and lifestyle industries. As lifestyle editorial director, Anna oversees CEOWORLD magazine's daily digital editorial operations, editing and writing features, essays, news, and other content, in addition to editing the magazine's cover stories, astrology pages, and more. You can reach Anna by mail at anna@ceoworld.biz