PwC’s 25th CEO Survey shows the workforce is ever more pivotal to long-term success

By Bhushan Sethi, Joint Global Leader, People & Organisation, PwC US

Reading PwC’s recently-published 25th Annual Global CEO Survey, I was struck by an interesting paradox.?

At first sight, the top concerns highlighted by the 4,400-plus CEOs PwC interviewed appear to centre on areas aside from their human workforces. But a closer look reveals a very different picture.?

In fact, PwC’s report underlines that effective and responsive management of the workforce in all dimensions – skills, wellbeing, inclusivity, engagement – is an intrinsic aspect of the issues keeping CEOs awake at night, and increasingly pivotal in addressing them. It’s a shift that brings major implications for how they lead their organisations going forward.

Confidence is contagious – but must be nurtured

Everywhere you look in the survey results, the importance of people shines through – starting with the headline findings on confidence. CEOs’ optimism has remained both stable and high, with 77% saying they expect global economic growth to improve during the year ahead, the highest figure on record since PwC’s CEO Survey in 2012.

True, the research was conducted just before the Omicron variant emerged. But as businesses begin to look to the future, the findings bode well for a couple of reasons.

One is that confidence drives investment for the future – including in talent and skills. Last year, our Hopes and Fears research among 32,500 workers globally found that 77% were ready to learn new skills or completely retrain.?

Another is that confidence is contagious: it engages and motivates people, reinforcing the value of building an inclusive workforce aligned with societal purpose. But there’s some way to go on this. The Hopes and Fears study also showed that 50% of workers had faced discrimination at work.???

Addressing the risks to growth – through people?

Returning to our CEO Survey, the rising importance of the workforce is further underlined by CEOs’ top threats to growth. Take their number one concern: cyber risks. People who understand the dangers can be businesses’ strongest shield against cyber risks – making it business-critical to embed cyber awareness and literacy across the workforce.?

Equally vital is having the right technical skills. There’s a war for talent underway, pushing cyber-focused recruitment, reskilling and acumen development up the CEO agenda. 60% of respondents to PwC’s 2022 Global Digital Insights Survey say they expect an increase in cybercrime. Organisations therefore need to be creative when sourcing talent into cyber roles. Firms looking to conduct “skills based hiring” in this area and invest in upskilling need to inclusively source and develop future cyber professionals.

The workforce is even more central to the second-biggest threat: health risks. Caring for employees’ wellbeing is now table stakes for any organisation. But beyond this, the reality is that if you don’t have a workforce who are fit and able to do their jobs, you don’t have a business. Resource constraints to illness or quarantine impact an organisation – and thereby the bottom line.

How concerned are you about the following global threats negatively impacting your company over the next 12 months? (Showing only ‘very concerned’ and ‘extremely concerned’ responses)

The third biggest threat is macroeconomic volatility. The workforce perspective? If you’re running a multinational business with global supply chains, the question of where your workforce is located is key, as you look to balance and pivot investment between countries. Robust scenario-based planning is one way to be ready for whatever may come. Dynamic planning builds responsiveness into plans, allowing the organisation to revisit strategies and reallocate funding based on changes in the market, the workforce and performance. Committing to both types of planning yields dividends and is more effective than doing just one, because doing both prepares leaders for the breadth of possibilities and gets them ready to be flexible. Yet PwC’s Future of Work and Skills Survey found only 26% of organisations strongly agreed that they use a wide variety of external data sources and viewpoints in planning. Investing in data will help leaders avoid being caught off guard by the next disruption and will help them build their ability to be intentional rather than reactive in their strategies.?

A growing role in strategy-setting and incentives

I could detail similar workforce dimensions for CEOs’ other top threats – climate change, geopolitical conflict and social inequality. But the common thread is already clear. And as well as coming through strongly in CEOs’ concerns, the workforce is also increasingly central in other ways.

Are the following non-financial-related outcomes included in your:

a) company’s long-term corporate strategy?

b) personal annual bonus or long-term incentive plan????

Such as? Asked what non-financial metrics are included in their long-term-strategy and personal incentives, CEOs who responded to the survey say employee engagement metrics rank second only to customer engagement and ahead of digitisation goals in both. Metrics related to more social and environmental outcomes don't feature as highly on companies' long term strategy, or in CEO compensation.The top three non-financial outcomes are linked with day-to-day business performance.?

In my view, such findings point to a need for CEOs to lead in a new and different way: one where all risks, opportunities and strategic goals are viewed through the prism of a holistic understanding of their employees – from engagement levels to skills, and from wellbeing to working patterns and location. In addition, by adding environmental, social and governance (ESG) metrics to executive pay packages, organisations will close the ‘say-do gap’ and can be a powerful way for a company to prove its commitment to these principles and to help elevate such metrics to the top of the CEO agenda.

Three things for CEOs to ask themselves today

What should CEOs be focusing on now to turn this type of leadership into reality? Based on my ongoing client conversations, here are three questions to ponder:

• How would you rate the importance of your employee engagement and workforce metrics to your long-term strategy?
• To what extent are these metrics tracked continually and embedded in executive incentives??
• How much do you work with your businesses to understand their top risks and the workforce dimensions to them?

The overall message from our CEO Survey? Whatever issues you’re facing, clear insights into your workforce have never been more important in tackling them. It’s time to double-down on your people.

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