CEO Insights for What's Ahead 8.1.22
At The Conference Board, our award-winning forecasting team now projects a US recession by the end of 2022, with potential slowdowns also likely in key economies across Asia and Europe. This downturn is just the latest in a wave of shocks—record inflation, the return of war to Europe, a once-in-a-century pandemic—with impacts that continue to ripple and compound across the global economy.
Yet historic crises also present unforeseen opportunities—if you’re armed with?Trusted Insights for What’s Ahead?.?
Updated continuously, our Global Recession hub provides 360° guidance for navigating the economic storm. It brings together resources of a depth and breadth that only The Conference Board can provide—from real-time recession trackers for over 70 global economies; to expert analysis of economic scenarios and monetary policy; to research analyzing the recession’s impact on ESG, public policy, innovation and digital transformation, human capital, marketing and communications, and beyond.
Just six days after the WHO declared COVID-19 a pandemic, Pfizer, in partnership with BioNTech, set out to achieve the impossible: the production of a vaccine in under a year. In an interview with?Dr. Lori Esposito Murray, President of the Committee for Economic Development, the public policy center of The Conference Board (CED),?Albert Bourla, Chairman and CEO of Pfizer, emphasized two components vital to the company’s success. First, a “culture of courage” within the organization; this historic endeavor fueled employees’ relentless commitment to the cause. Second, while Bourla wasn’t originally confident that an mRNA vaccine was the appropriate solution, he trusted his team that advocated for the mRNA technology.
Why It Matters?Despite its history as a legacy organization, a culture of ambition, bravery, and trust enabled Pfizer to innovate at lightning speed to develop and roll out the mRNA vaccine. This historic accomplishment not only saved millions of lives, but also marked one of the most ambitious vaccine development programs in history, shattering the previous record of four years.?
Albert Bourla?is a 2022 CED Distinguished Leadership Awards recipient.
Headline PCE price inflation rose to?6.8 percent?year-over-year (y/y) in June—a fresh four-decade high—and core PCE price inflation rose to 4.8 percent y/y. On a month-over-month basis, both inflation metrics worsened as well.
Why It Matters?June Personal Income & Outlays data, released last week, showed an economy continuing to grapple with inflation. According to the Bureau of Economic Analysis, US income growth fell in real terms in June, but real consumer spending expanded slightly. While a pickup in the June headline inflation measure was expected given trends in energy and food prices last month, the faster pace of core inflation (which strips out energy and food prices) is concerning. This trend suggests that inflation is continuing to spread more broadly throughout the economy and increases the likelihood that the Fed will continue to make large interest rate hikes over the coming months.
Flexibility was among the top reasons workers quit their jobs in the last year, according to a survey by The Conference Board Human Capital Center. Indeed, 17 percent voluntarily left their company for a flexible work location, flexible work schedule, or the ability to work from home. Additionally, job fatigue is driving workers to quit. More than one in 10 quit their jobs over the last year because of job fatigue due to workload.
Why It Matters?“Employees are voting with their feet to gain flexibility. But with flexibility must come boundaries,” said?Robin Erickson, PhD, Vice President of Human Capital, The Conference Board. “Combine the ability to work any time with heavier workloads as colleagues resign amid the Great Resignation, and it’s no surprise we’ve seen a severe increase in employees who are overwhelmed at work. And now, this survey reveals that more than one in 10 are quitting because of it. Managers should regularly monitor their employees’ workload to ensure it is manageable.”
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Passing increasing input costs to customers has been companies’ most common reaction to inflation, taken by slightly more than half of all companies globally, ahead of cost cutting (46 percent) and accepting lower margins (39 percent). However, communicating this isn’t easy for companies: 44 percent report the current biggest external communications challenge to be communicating the impact of rising input costs on pricing. Our research confirms US consumers think corporate explanations of price increases could be improved, and a majority interpret the recent price increases as mainly augmenting corporate profits.
Why It Matters?Communicating price increases can preempt negative interpretations by customers and potentially boost sales, trust, and reputation. This is especially true in an age where authenticity and transparency matter more than ever to consumers. Research shows transparency around pricing and underlying costs can be financially beneficial for brands. Some suggestions for communicating price increases: customizing the communications channel, format, and language to your business; separating out temporary price increases; coupling price increases with enhanced offerings and new promotions; and letting customers know what you’re doing behind the scenes to keep prices in check.
Boards are experimenting with different committee structures to address ESG issues. As suggested at our recent Roundtable for CEOs, boards may want to consider dividing oversight responsibilities into the three main areas where a company’s business intersects with sustainability:
Why It Matters?About three-quarters of companies surveyed by The Conference Board believe ESG will have a significant and durable impact on boards for the next five years. So, it’s important for boards to decide how best to oversee ESG issues not in a siloed manner, but as integral to the company’s business, operations, and public profile.
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“It is very hard to go back and look at past economic cycles to predict an economic scenario, but the thing that is clear is you can borrow from timeless leadership principals to be able to establish and say how you can lead your institution.”
?—ASUTOSH PADHA, Managing Partner at McKinsey & Company in North America, in the?CEO Perspectives?podcast,?Global Recession? Driving Growth Through Uncertainty.
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