CEO Insights for What's Ahead | 1.24.24
Addressing Controversial Topics: Employees Say Companies Are Falling Short
Organizations are now expected to play a role in conversations around social change. But according to our recent survey, less than half of US workers (44%) are satisfied with their organization’s response to issues like racism and gun violence.
Internal vs. public action: Most—87%—say organizations should always or sometimes respond to social change issues. But the type of response is important: Most workers prefer that an organization take internal action rather than public action to address an issue.
The type of issue also matters: More employees expect internal action on DEI issues like ageism and gender inequity than on nationalism, geopolitical conflict, or gun violence.
The bottom line: Organizations will need to carefully consider the issues they will respond to and how these issues fit with employee expectations. Employees want to see real action on the issues that matter most to them. Getting it right can improve not only employee engagement, but customer satisfaction as well.
Number of the Week: 3%
Last year, only 3% of Russell 3000 companies mentioned “environmental justice” (EJ), or similar terms, in their ESG and sustainability reports. Expect corporate America to ramp up its focus on EJ in the coming years, especially in the context of the shift to renewable energy.
Reporting doesn’t tell the full story: While reporting on EJ is uncommon today, more than half of surveyed firms already integrate EJ into their sustainability strategies—and expect to increase their EJ resources, programs, and partnerships.
Also, companies may not use the specific term “environmental justice” in the future, but instead talk about the human impact of their environmental initiatives, how they are consulting with stakeholders, and their work to make their environmental initiatives as fair as possible to all affected.
The bottom line: CEOs should ensure that their environmental initiatives are not “siloed” but viewed in a broader social and economic context. They can then consider the human impact of their environmental initiatives in the workplace (facilities, operations, investments); the marketplace (products, services, supply chains); and the public space (government relations, corporate citizenship).
Holiday Shoppers Help Power Another Month of Strong Retail Sales
US retail sales were robust in December, closing out a year in which consumer spending continually surprised to the upside. Retail spending rose 0.6% month-over-month in December, after a 0.4% m/m increase in November, and a 0.3% m/m decline in October.
Outpacing inflation: After adjusting for CPI inflation, real December spending growth was up 0.3% from November. Real retail sales were up by an annualized 1.1% in Q4 2023, compared to 3.2% (annualized) in Q3 2023.
No slowdown in sight—yet: US consumers clearly did not pull back on spending activity over the holiday period. While not quite as robust as spending over the summer, these data will help secure a healthy expansion in GDP in Q4 2023.
Looking into 2024: We expect spending to cool as US consumers contend with high interest rates, elevated prices, rising debt, and a pullback in business investment—which may tip the economy into a mild recession later this year.
CEOs and Their Teams Are Embracing the Challenges of AI Like Their Futures Depend on It
Are we at a point where every business is facing a “Blockbuster, meet Netflix” moment?
Adapt, embrace, or expire? Globally, 91% of CEOs and 93% of C-suite executives say their organizations have already integrated AI into their operations, plan to do so immediately, or are actively exploring options for the future. Only 10% of executives have “no plans to adopt AI.”
Manifest rewards: 88% of CEOs see AI increasing the efficiency and productivity of the enterprise. They also see increases in innovation and creativity (87%); marketing capabilities (79%); and sales, revenue, and profits (68%).
Manifold challenges: The vast majority of CEOs recognize AI will require substantial commitment, including in reskilling and recruiting talent (94%); new capital expenditures (79%); innovation in business models (76%); and enhanced cross-functional collaboration (74%).
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However, only 37% of CEOs currently expect increased regulatory burden from AI—a likely underestimation that might sound a note of caution to boards and regulators.
The bottom line: CEOs need to embrace the changes, explore the options, and carefully assess the risks as 2024 unfolds with tremendous opportunities and challenges to grow the business.
Inflection Point: 2024 Is a Decisive Year for US Policy
We stand at a decisive crossroad. This year will present many challenges to US economic growth and geopolitical stability. But the US can also harness many exceptional opportunities—rapid advances in technology, the strength of a US and allied coalition, the likelihood of a soft economic landing—to lay a stronger foundation for sustained prosperity.
A new Solutions Brief by the Committee for Economic Development , the public policy center of The Conference Board (CED), outlines the most important policy challenges before the nation in 2024, and includes recommendations for business and policy leaders to build a more resilient, sustainable economy that provides equal opportunity for all Americans.
A road map for reform:
QUOTABLE: Pause the Pink Slips
"CEOs of the largest companies focused on the US are not letting people go, because they spent two to three years and a lot of money on attracting talent. Why would you undo all that if you think that there's going to be a temporary slowdown or even no slowdown?in the economies that you're working with?"
— Dana M Peterson , Chief Economist of The Conference Board. She joined the CEO Perspectives podcast to discuss takeaways from C-Suite Outlook 2024, our global survey of leading executives.
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